What changed in this filing

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Item 1A. Risk Factors

2022-08-12 compared with 2022-05-09 · 22 added, 22 removed, 779 unchanged (5% of the section changed)

26 unchanged sentences

Our stock price could decline.

● The terms of the private equity raised by Tongmei in China grant each investor a right of redemption if Tongmei fails to achieve the IPO on or before December 31, 2022.

● The terms of the private equity raised by Tongmei in China grant each investor a right of redemption if the IPO fails to pass the audit of the Shanghai Stock Exchange, is not approved by the CSRC or Tongmei cancels the IPO application.

This could result in disgorging the cash that we raised from the Investors.

54 unchanged sentences

In late March 2022, as a result of an outbreak of COVID-19, Shanghai was locked down and certain manufacturing facilities were required to close.

In April 2022, rising COVID-19 infections in Beijing may

trigger a lockdown and our manufacturing facilities in Beijing may be required to close temporarily.

In Q2 2022, rising COVID-19 infections in Beijing resulted

in concerns of a city-wide lockdown.

Although some apartment complexes were locked down there was no city-wide lockdown.

Further, we have increased capacity by adding two new sites and this could reduce our utilization rate and increase our depreciation charges.

75 unchanged sentences

The initial tariff rate was 10% and subsequently was increased to 25%.

Approximately 10% of our revenue derives from importing our wafers into the United States.

Approximately 10% to 12% of our revenue derives from importing our wafers into the United States.

In the first half of 2022 we paid approximately $1.6 million in tariffs.

In the years 2021, 2020 and 2019 we paid approximately $1.3 million, $1.3 million and $0.7 million, respectively, in tariffs.

225 unchanged sentences

Countries such as the United States and China continue to be on alert for terrorist activity.

The potential near and long-term impact terrorist activities may have in regards to our suppliers, customers and markets for our products and the economy is uncertain.

The potential near and long-term impact terrorist activities may have in regard to our suppliers, customers and markets for our products and the economy is uncertain.

There may be embargos of ports or products, or destruction of shipments or our facilities, or attacks that affect our personnel.

59 unchanged sentences

In the years 2021, 2020 and 2019 we paid approximately $1.3 million, $1.3 million and $0.7 million, respectively, in tariffs.

In the first half of 2022 we paid approximately $1.6 million in tariffs.

The future impact of tariffs and trade wars is uncertain.

We may be required to raise prices, which may result in the loss of customers and our business,

financial condition and results of operations may be materially harmed.

We may be required to

raise prices, which may result in the loss of customers and our business, financial condition and results of operations may be materially harmed.

Additionally, it is possible that our business could be adversely impacted by retaliatory trade measures taken by China or other countries in response to existing or future tariffs, which could cause us to raise prices or make changes to our operations, which could materially harm our business, financial condition and results of operations.

18 unchanged sentences

In late March 2022, as a result of an outbreak of COVID-19, Shanghai was locked down and certain manufacturing facilities were required to close.

In April 2022, rising COVID-19 infections in Beijing may trigger a lockdown and our manufacturing facilities in Beijing may be required to close temporarily.

In Q2 2022, rising COVID-19 infections in Beijing resulted in concerns of a city-wide lockdown.

Although some apartment complexes were locked down there was no city-wide lockdown.

If there is a renewed surge of the COVID-19 pandemic in cities in which our PRC subsidiaries and PRC joint ventures are located, the Chinese government may require companies to close again.

11 unchanged sentences

We are subject to the risks arising from adverse changes and uncertainty in domestic and global economies.

Uncertain global economic and political conditions or low or negative growth in China, Europe or the United States, along with volatility in the financial markets, increasing national debt and fiscal concerns in various regions and the

adoption and availability of fiscal and monetary stimulus measures to counteract the impact of the COVID-19 pandemic, pose challenges to our industry.

Uncertain global economic and political conditions or low or negative growth in China, Europe or the United States,

along with volatility in the financial markets, increasing national debt and fiscal concerns in various regions and the adoption and availability of fiscal and monetary stimulus measures to counteract the impact of the COVID-19 pandemic, pose challenges to our industry.

Currently China’s economy is slowing and this could impact our financial performance.

169 unchanged sentences

The terms of the private equity raised in China as a first step toward an IPO on the STAR Market grant each Investor a right of redemption if Tongmei fails to achieve its IPO.

Pursuant to the Capital Investment Agreements with the Investors, each Investor has the right to require AXT to redeem any or all Tongmei shares held by such Investor at the original purchase price paid by such Investor, without interest, in the event of a material adverse change or if Tongmei does not achieve its IPO on or before December 31, 2022.

Pursuant to the Capital Investment Agreements with the Investors, each Investor has the right to require AXT to redeem any or all Tongmei shares held by such Investor at the original purchase price paid by such Investor, without interest, in the event the IPO fails to pass the audit of the Shanghai Stock Exchange, is not approved by the Chinese Securities Regulatory Commission (“CSRC”) or Tongmei cancels the IPO application.

The aggregate redemption amount is approximately $49 million.

This right is suspended when Tongmei submits its formal application to the CSRC.

However, if on December 31, 2022 the IPO application has been submitted and accepted by the CSRC or the stock exchange and such submission remains under review, then the date when such Investor is entitled to exercise such redemption right shall be deferred to a date when such submission is rejected by the CSRC or stock exchange, or the date when Tongmei withdraws its IPO application.

On January 10, 2022, the Shanghai Stock Exchange accepted for review the formal application of Tongmei to list its shares in an IPO on the STAR Market.

If the Shanghai Stock Exchange approves the formal application, then the Shanghai Stock Exchange will forward it to the CSRC for review.

The Shanghai Stock Exchange provided comments to the formal application in March 2022 and Tongmei filed an amended application to address the comments on April 14, 2022.

The Shanghai Stock Exchange accepted for review the amended application on April 18, 2022 and provided comments to the amended application on April 26, 2022.

The Shanghai Stock Exchange has not yet approved the formal application.

The process of going public on the STAR Market includes several periods of review and is therefore a lengthy process.

Tongmei does not expect to complete the IPO until second half of 2022.

The listing of Tongmei on China’s STAR Market will not change the status of AXT as a U.S.

Tongmei submitted its IPO application to the Shanghai Stock Exchange and it was formally accepted for review on January 10, 2022.

The Shanghai Stock Exchange approved the IPO application on July 12, 2022.

The STAR Market IPO remains subject to review and approval by the CSRC and other authorities.

The process of going public on the STAR Market includes several periods of review and, therefore, is a lengthy process.

Subject to review and approval by the CSRC and other authorities, Tongmei expects to accomplish this goal in the second half of 2022, probably in the fourth quarter of 2022.

The listing of Tongmei on the STAR Market will not change the status of AXT as a U.S.

public company.

There can be no assurances that Tongmei will complete its IPO by December 31, 2022 or at all.

There can be no assurances that Tongmei will complete its IPO in 2022 or at all.

In the event that investors exercise their redemption rights, we may be required to seek additional capital in order to redeem their Tongmei shares and there would be no assurances that such capital would be available on terms acceptable to us, if at all.

123 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1A. Risk Factors