What changed in this filing

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Item 9A. Controls and Procedures

2025-03-14 compared with 2024-03-15 · 156 added, 205 removed, 1236 unchanged (23% of the section changed)

17 unchanged sentences

Management has concluded that our internal control over financial reporting was effective as of December 31, 2024.

The Company’s internal control over financial reporting as of December 31, 2023 has been audited by BPM, the independent registered public accounting firm who also audited the Company’s financial statements.

BPM has issued a report on the effectiveness of the Company’s internal control over financial reporting as of December 31, 2023, which can be found in this Annual Report on Form 10-K.

Changes in Internal Control over Financial Reporting

3 unchanged sentences

Not Applicable.

Report of Independent Registered Public Accounting Firm

To the Board of Directors and Stockholders of AXT, Inc.

Opinion on Internal Control Over Financial Reporting

We have audited the internal control over financial reporting of AXT, Inc.

(a Delaware corporation) and its subsidiaries (the “Company”) as of December 31, 2023, based on criteria established in 2013 Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2023, based on criteria established in 2013 Internal Control—Integrated Framework issued by COSO.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the consolidated balance sheets as of December 31, 2023 and 2022 and the related consolidated statements of operations, comprehensive income (loss), stockholders’ equity, and cash flows for each of the three years in the period ended December 31, 2023, and the related notes (collectively referred to as the “consolidated financial statements”) of the Company and our report dated March 15, 2024 expressed an unqualified opinion on those consolidated financial statements.

Basis for Opinion

The Company’s management is responsible for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Controls over Financial Reporting.

Our responsibility is to express an opinion on the entity’s internal control over financial reporting based on our audit.

We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects.

Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk.

Our audit also included performing such other procedures as we considered necessary in the circumstances.

We believe that our audit provides a reasonable basis for our opinion.

Definition and Limitations of Internal Control Over Financial Reporting

An entity’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of consolidated financial statements for external purposes in accordance with accounting principles generally accepted in the United States of America (“U.S.

An entity’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the entity;

(2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of consolidated financial statements in accordance with U.S.

GAAP, and that receipts and expenditures of the entity are being made only in accordance with authorizations of management and directors of the entity;

and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the entity’s assets that could have a material effect on the consolidated financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.

Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

San Jose, California

March 15, 2024

The SEC allows us to include information required in this Annual Report on Form 10-K by referring to other documents or reports we have already filed or will soon be filing.

31 unchanged sentences

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2024, and 2023, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2024, in conformity with accounting principles generally accepted in the United States of America.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the Company’s internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control—Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO), and our report dated March 15, 2024, expressed an unqualified opinion thereon.

Basis for Opinion

1 unchanged sentence

Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits.

We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S.

We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

1 unchanged sentence

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud.

The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.

As part of our audits we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting.

Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

3 unchanged sentences

Critical Audit Matter

The critical audit matters communicated below are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that:

The critical audit matter communicated below is matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that:

(1) relate to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

The communication of critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing separate opinion on the critical audit matter or on the accounts or disclosures to which they relate.

Inventories – Reserve for Excess and Obsolete Inventory

1 unchanged sentence

The Company’s inventories are stated at the lower of weighted average costs (approximated by standard cost) or net realizable value.

The Company routinely evaluates the levels of its inventories in light of current market

conditions in order to identify excess and obsolete inventories, and to provide a reserve for certain inventories to their estimated net realizable value based upon the age, quality and life expectancy of the product, and the projections for sale of the completed products.

The Company routinely evaluates the levels of its inventories in light of current market conditions in order to identify excess and obsolete inventories, and to provide a reserve for certain inventories to their estimated net realizable value based upon the age, quality and life expectancy of the product, and the projections for sale

of the completed products.

If actual demand were to be substantially lower than estimated, there could be a significant adverse impact on the carrying value of inventories and consolidated results of operations .

17 unchanged sentences

Total current assets

Long-term investments

Property, plant and equipment, net

4 unchanged sentences

Accrued liabilities

Short-term loans

Total current liabilities

45 unchanged sentences

Net income (loss)

Other comprehensive income (loss), net of tax:

Change in foreign currency translation gain (loss), net of tax

Other comprehensive loss, net of tax:

Change in foreign currency translation loss, net of tax

Change in unrealized gain (loss) on available-for-sale debt investments, net of tax

Total other comprehensive income (loss), net of tax

Total other comprehensive loss, net of tax

Comprehensive income (loss) attributable to AXT, Inc.

12 unchanged sentences

Common stock options exercised

Formation of new subsidiary with noncontrolling interests

Transfer of subsidiary with noncontrolling interests

Investment in subsidiary with noncontrolling interest

Investment in subsidiary with redeemable noncontrolling interest

Restricted stock awards canceled

1 unchanged sentence

Issuance of common stock in the form of restricted stock

Purchase of subsidiary shares from noncontrolling interests

Transfer of subsidiary with redeemable noncontrolling interests

Tongmei stock-based compensation

Noncontrolling interest portion of Tongmei stock-based compensation

Sale of common stock to employees in connection with the reorganization

Other comprehensive income

Investment in subsidiary from noncontrolling interest

Other comprehensive loss

Balance as of December 31, 2022

7 unchanged sentences

Noncontrolling interest portion of Tongmei stock-based compensation

Investment in subsidiary from noncontrolling interest

Other comprehensive loss

1 unchanged sentence

Common stock options exercised

Investment in subsidiary with noncontrolling interest

Investment in subsidiary with redeemable noncontrolling interest

Restricted stock awards canceled

3 unchanged sentences

Noncontrolling interest portion of Tongmei stock-based compensation

Investment in subsidiary from noncontrolling interest

Other comprehensive loss

26 unchanged sentences

Proceeds from sales and maturities of available-for-sale debt securities

Proceeds from sales of equity securities - 15 % of Jia Mei

Proceeds from sales of equity securities - 15 % Jia Mei

Investments in non-marketable equity investments

2 unchanged sentences

Proceeds from common stock options exercised

Proceeds from sale of subsidiary shares to noncontrolling interests

Proceeds from short-term bank loans

Proceeds from long-term loan from noncontrolling interest

Payments on short-term bank loans

1 unchanged sentence

Proceeds from long-term loan

Formation of new subsidiary with noncontrolling interests

Proceeds from issuance of Tongmei's common stock to redeemable noncontrolling interests, net of costs

Net cash provided by financing activities

Effect of exchange rate changes on cash and cash equivalents, and restricted cash

Net increase (decrease) in cash and cash equivalents, and restricted cash

Payments on long-term loan

Net cash provided by (used in) financing activities

Effect of exchange rate changes on cash, restricted cash and cash equivalents

Net increase (decrease) in cash, restricted cash and cash equivalents

Cash, restricted cash and cash equivalents at the beginning of the year

51 unchanged sentences

Investments in business entities in which we do not have controlling interests, but have the ability to exercise significant influence over operating and financial policies (generally 20-50% ownership), are accounted for by the equity method.

For the years ended 2023 and 2022, we have three and six companies accounted for by the equity method, respectively.

For the years ended 2024 and 2023, we have three companies accounted for by the equity method.

For the majority-owned subsidiaries that we consolidate, we reflect the portion we do not own as either noncontrolling interests in stockholder’s equity or as redeemable noncontrolling interests in temporary equity on our consolidated balance sheets and in our consolidated statements of operations.

42 unchanged sentences

This new agreement called for additional investment of approximately $ 5.6 million, with Tongmei committing to fund approximately $ 2.3 million.

In December 2023, Tongmei made its initial additional investment of approximately $ 0.6 million in ChaoYang KaiMei.

In December 2023, Tongmei made its initial additional investment of approximately $ 0.6 million in ChaoYang KaiMei, followed by additional investments of approximately $ 0.3 million each in June, July and November 2024.

Tongmei’s ownership of ChaoYang KaiMei remained at 40 % after these equity investments.

44 unchanged sentences

dollar or in the functional currencies of our subsidiaries are included in “Other income, net” for the years presented.

The transaction gain totaled $ 0.2 million and $ 1.6 million for the years ended December 31, 2023 and 2022, respectively.

The transaction loss for the year ended December 31, 2021 totaled $ 434,000 .

The transaction gain totaled $ 0.1 million, $ 0.2 million and $ 1.6 million for the years ended December 31, 2024, 2023 and 2022, respectively.

The assets and liabilities of the subsidiaries are translated at the rates of exchange on the balance sheet date.

7 unchanged sentences

The majority of our contracts have a single performance obligation to transfer products and are short term in nature, usually less than six months.

Our revenue is measured based on the consideration specified in the contract with each customer in exchange for transferring

products that are generally based upon a negotiated formula, list or fixed price.

Our revenue is measured based on the consideration specified in the contract with each customer in exchange for transferring products that are generally based upon a negotiated formula, list or fixed price.

Revenue is recognized when control of the promised goods is transferred to our customer, which is either upon shipment from our dock, receipt at the customer’s dock, or removal from consignment inventory at the customer’s location, in an amount that reflects the consideration we expect to be entitled to receive in exchange for those goods.

13 unchanged sentences

During the three and twelve months ended December 31, 2024, the Company recognized $ 0 and $ 156,000 , respectively, of revenue that was included in the contract balances as of December 31, 2023.

During the three and twelve months ended December 31, 2022, the Company recognized $ 22,000 and $ 760,000 of revenue that was included in the contract balances as of December 31, 2021.

During the three and twelve months ended December 31, 2023, the Company recognized $ 9,000 and $ 278,000 , respectively, of revenue that was included in the contract balances as of December 31, 2022.

Disaggregated Revenue

16 unchanged sentences

We generally purchase these materials through standard purchase orders and not pursuant to long-term supply contracts.

Financial instruments that potentially subject us to concentration of credit risk consist primarily of cash and cash equivalents, investments, and accounts receivable.

Financial instruments that potentially subject us to concentration of credit risk consist primarily of cash, restricted cash, cash equivalents, investments, and accounts receivable.

We invest primarily in money market accounts, certificates of deposit and corporate bonds.

4 unchanged sentences

The credit risk in our accounts receivable is mitigated by our credit evaluation process and the geographical dispersion of sales transactions.

No customer accounted for more than 10% of our accounts receivable as of December 31, 2023 and two customers accounted for more than 10 % of our accounts receivable as of December 31, 2022.

One customer accounted for more than 10% of our accounts receivable as of December 31, 2024 and no customer accounted for more than 10% of our accounts receivable as of December 31, 2023.

No customer represented 10 % of our revenue for the year ended December 31, 2024 and 2023.

1 unchanged sentence

Our top five customers, although not the same five customers for each period, represented 30 % of our revenue for the year 2024, 25 % of our revenue for the year 2023, and 34 % of our revenue for the year 2022.

For the year ended December 31, 2023, two third-party customers for the raw materials products from our consolidated subsidiaries accounted for over 10% of the revenue from raw materials sales.

For the years ended December 31, 2022 and 2021, one third-party customer for the raw materials products from our consolidated subsidiaries accounted for over 10% of the revenue from raw materials sales.

For the years ended December 31, 2024 and 2023, two third-party customers for the raw materials products from our consolidated subsidiaries accounted for over 10% of the revenue from raw materials sales.

For the year ended December 31, 2022, one third-party customer for the raw materials products from our consolidated subsidiaries accounted for over 10% of the revenue from raw materials sales.

Our subsidiaries and raw material joint ventures are a key strategic benefit for us as they further diversify our sources of revenue.

5 unchanged sentences

We maintain restricted cash in connection with cash balances temporarily restricted for regular business operations.

In May 2022, Tongmei and the Bank of Beijing signed a credit facility for $ 3.4 million.

As a condition of the credit facility we must maintain a time deposit at the Bank of Beijing as collateral, and therefore we placed time deposits of $ 2.9 million and $ 1.0 million at the Bank of Beijing in April 2022 and May 2022, respectively.

In December 2022, we

placed another time deposit of $ 2.5 million at the Bank of Beijing as collateral for a bank loan of $ 2.3 million received by Tongmei in January 2023.

In January 2023, our consolidated subsidiary, ChaoYang LiMei, placed a time deposit of $ 3.0 million at the Bank of China as collateral for a bank loan of $ 2.9 million received by Tongmei in January 2023.

When the May 2022 bank loan under the credit facility matured, we utilized the same time deposit of $ 3.9 million as collateral for a new bank loan of $ 3.5 million from the Bank of Beijing in June 2023.

Furthermore, during June 2023 and December 2023, time deposits of $ 1.5 million each were placed at the Bank of Beijing as collateral for two bank loans of $ 1.4 million each received by Tongmei.

Each of the bank loans has a term of 12 months.

Therefore, the January 2023 bank loans, the June 2023 bank loans, and the December 2023 bank loan, along with the respective time deposits, are classified as short-term investments in our consolidated balance sheets.

The time deposits have been excluded from the Company’s cash and cash equivalents balance.

These balances have been excluded from the Company’s cash and cash equivalents balance.

As of December 31, 2024, $ 11.0 million was included in restricted cash in our consolidated balance sheets.

12 unchanged sentences

We evaluate receivables from U.S.

customers with an emphasis on balances in excess of 90 days and for receivables from customers located outside the U.S.

customers with an emphasis on balances in excess of 90

days and for receivables from customers located outside the U.S.

with an emphasis on balances in excess of 120 days and establish a reserve allowance on the receivable balances if needed.

3 unchanged sentences

Foreign business practices generally require us to allow customer payment terms that are longer than those accepted in the United States.

In accordance with ASC 326-20’s current expected credit loss impairment model, we exercise judgment when determining the adequacy of these reserves as we evaluate historical bad debt trends, general economic conditions in the United States and internationally, and reasonable and supportable forecasts of future economic conditions.

In accordance with ASC Topic 326, Financial Instruments – Credit Losses current expected credit loss impairment model, we exercise judgment when determining the adequacy of these reserves as we evaluate historical bad debt trends, general economic conditions in the United States and internationally, and reasonable and supportable forecasts of future economic conditions.

Uncollectible receivables are recorded as provision for credit losses when a credit loss is expected through the establishment of an allowance, which would then be written off when all efforts to collect have been exhausted and recoveries are recognized when they are received.

As of December 31, 2023 and 2022, our accounts receivable, net balance was $ 19.3 million and $ 29.3 million, respectively, which was net of an allowance for credit losses of $ 579,000 and $ 307,000 as of December 31, 2023 and 2022, respectively.

During 2023, we increased the allowance for credit losses by $ 272,000 .

During 2022, we increased the allowance for credit losses by $ 177,000 .

As of December 31, 2024 and 2023, our accounts receivable, net balance was $ 25.6 million and $ 19.3 million, respectively, which was net of an allowance of $ 147,000 and $ 579,000 , respectively.

During 2024, we decreased the allowance by $ 432,000 .

During 2023, we increased the allowance by $ 272,000 .

If actual uncollectible accounts differ substantially from our estimates, revisions to the estimated allowance for credit losses would be required, which could have a material impact on our financial results for the future periods.

As of December 31, 2024 and 2023, the sales returns reserve (included in accrued liabilities) balance was $ 28,000 and $ 39,000 , respectively.

During 2023, we utilized $ 39,000 and reduced an additional $ 34,000 and during 2022, we utilized $ 112,000 and reserved an additional $ 176,000 .

During 2024, we utilized $ 28,000 and reserved an additional $ 17,000 and during 2023, we utilized $ 39,000 and reduced an additional $ 34,000 .

Warranty Reserve

27 unchanged sentences

We monitor our investments for impairment and record reductions in carrying value when events or changes in circumstances indicate that the carrying value may not be recoverable.

Determination of impairment is highly

subjective and is based on a number of factors, including an assessment of the strength of each company’s management, the length of time and extent to which the fair value has been less than our cost basis, the financial condition and near-term prospects of the subsidiary, fundamental changes to the business prospects of the Company, share prices of subsequent offerings, and our intent and ability to hold the investment for a period of time sufficient to allow for any anticipated recovery in our carrying value.

Determination of impairment is highly subjective and is based on a number of factors, including an assessment of the strength of each company’s management, the length of time and extent to which the fair value has been less than our cost basis, the financial condition and near-term prospects of the subsidiary, fundamental changes to the business prospects of the Company, share prices of subsequent offerings, and our intent and ability to hold the investment for a period of time sufficient to allow for any anticipated recovery in our carrying value.

We estimate fair value of our fair value method investments considering available information such as pricing in recent rounds of financing, current cash positions, earnings (loss) and cash flow forecasts, recent operational performance, and any other readily available market data.

1 unchanged sentence

For the year ended December 31, 2023, we divested our equity investment in a PRC joint venture.

The impairment and divestiture resulted in a total of $ 1.9 million in impairment charges in our financial results.

There were no impairment charges during the year ended December 31, 2022.

The impairment and divestiture resulted in a total of $ 1.9 million in impairment charges in our consolidated financial results.

There were no impairment charges during the year ended December 31, 2022 and 2024.

Segment Reporting

We operate in one segment for the design, development, manufacture and distribution of high-performance compound and single element semiconductor substrates and sale of raw materials integral to these substrates.

Our chief operating decision-maker has been identified as our Chief Executive Officer, who reviews operating results to make decisions about allocating resources and assessing our performance for the Company.

Our chief operating decision-maker (“CODM”) has been identified as our Chief Executive Officer, who reviews operating results to make decisions about allocating resources and assessing our performance for the Company.

We discuss revenue and capacity for both AXT and our joint ventures collectively, when determining capacity constraints and need for raw materials in our business, and consider their capacity when determining our strategic and product marketing and advertising strategies.

2 unchanged sentences

Since we operate in one segment, all financial segment and product line information can be found in the consolidated financial statements.

The CODM regularly evaluates consolidated net income (loss) and functional expenses, including cost of revenue, selling, general and administrative and research and development, to manage Company operations.

Stock-Based Compensation

26 unchanged sentences

The dilutive effect of outstanding stock options and restricted stock awards is reflected in diluted earnings per share by application of the treasury stock method.

Potentially dilutive common shares consist of common shares issuable upon the exercise of stock options and vesting of restricted stock awards.

Potentially dilutive common shares consist of common shares issuable upon the exercise of stock options and vesting of restricted

stock awards.

Potentially dilutive common shares are excluded from the computation of weighted-average number of common shares outstanding in net loss years, as their effect would be anti-dilutive to the computation.

Recent Accounting Pronouncements

In March 2022, the Financial Accounting Standards Board (“FASB”) pronouncement Accounting Standards Update (“ASU”) 2022-02, Financial Instruments-Credit Losses (Topic 326):

Troubled Debt Restructurings and Vintage Disclosures was issued as an amendment to ASU 2016-13, Financial Instruments-Credit Losses.

ASU 2022-02 aims to modify disclosure requirements for certain loan refinancings and restructurings by creditors.

The amendment also require that an entity disclose current-period gross write offs by year of origination for financing receivables and net investments in leases within the scope of Subtopic 326-20, Financial Instruments—Credit Losses—Measured at Amortized Cost.

The guidance is effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years.

Adoption of the new standard had an immaterial effect on our consolidated financial statements.

In September 2022, FASB issued ASU 2022-04, Liabilities—Supplier Finance Programs (Subtopic 405-50):

Disclosure of Supplier Finance Program Obligations, to enhance the transparency about the use of supplier finance programs for investors.

The amendments in this Update require that a buyer in a supplier finance program disclose sufficient information about the program to allow a user of financial statements to understand the program’s nature, activity during the period, changes from period to period, and potential magnitude.

The guidance is effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years.

Adoption of the new standard had an immaterial effect on our consolidated financial statements.

In November 2023, FASB released ASU 2023-07— Segment Reporting (Topic 280):

In November 2023, the Financial Accounting Standards Board (“FASB”) released ASU 2023-07— Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures , aiming to enhance the transparency and relevance of segment information provided in financial statements.

2 unchanged sentences

The Update is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024.

Adoption of the new standard will have an immaterial effect on our consolidated financial statements.

Adoption of the new standard had an immaterial effect on our consolidated financial statements.

In December 2023, FASB issued ASU 2023-09— Income Taxes (Topic 740):

3 unchanged sentences

Adoption of the new standard will have an immaterial effect on our consolidated financial statements.

Cash, Cash Equivalents and Investments

Our cash and cash equivalents consist of cash and instruments with original maturities of less than three months.

In March 2024, FASB released ASU 2024-01— Compensation—Stock Compensation (Topic 718).

The update adds an illustrative example aimed at clarifying the scope application of a profit interest award in accordance with Topic 718.

The update is effective for annual periods beginning after December 15, 2024, and interim periods within those annual periods.

Adoption of the new standard will have an immaterial effect on our consolidated financial statements.

In November 2024, FASB issued ASU 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40), which requires public business entities to disclose additional information on specific expense categories in the notes to the financial statements.

The Update is effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027.

Adoption is expected to have an immaterial effect on our consolidated financial statements.

Cash, Restricted Cash, Cash Equivalents and Investments

Our cash, restricted cash and cash equivalents consist of cash and instruments with original maturities of less than three months.

Our investments consist of instruments with original maturities of more than three months.

As of December 31, 2023 and 2022, our cash, cash equivalents and debt investments are classified as follows (in thousands):

As of December 31, 2024 and 2023, our cash, restricted cash, cash equivalents and debt investments are classified as follows (in thousands):

December 31, 2024

1 unchanged sentence

Classified as:

Cash and restricted cash

Cash equivalents:

Certificates of deposit 1

Total cash, restricted cash and cash equivalents

Cash, restricted cash and cash equivalents

Investments (available-for-sale):

Certificates of deposit 1

Corporate bonds

Total investments

Total cash, restricted cash, cash equivalents and investments

1 unchanged sentence

Due within 1 year 2

Due after 1 through 5 years 4

Certificate of deposit with original maturities of less than three months.

15 unchanged sentences

Total in loss position

The following table summarizes the fair value and gross unrealized losses related to available-for-sale debt securities, aggregated by investment category and length of time that individual debt securities have been in a continuous unrealized loss position as of December 31, 2022 (in thousands):

In Loss Position

Loss Position

As of December 31, 2022

Certificates of deposit

Corporate bonds

Total in loss position

Investments in Privately Held Raw Material Companies

1 unchanged sentence

The investment balances for the non-consolidated companies, are accounted for under the equity method and included in “Other assets” in the consolidated balance sheets and totaled $ 14.1 million and $ 12.5 million as of December 31, 2024 and 2023, respectively.

As of December 31, 2023 and 2022, there were three and six companies accounted for under the equity method, respectively.

As of December 31, 2024 and 2023, there were three companies accounted for under the equity method, respectively.

Fair Value Measurements

23 unchanged sentences

Certificates of deposit

Corporate bonds

The following table summarizes our financial assets and liabilities measured at fair value on a recurring basis in accordance with ASC 820 as of December 31, 2022 (in thousands):

Quoted Prices in

Active Markets of

Significant Other

Balance as of

Identical Assets

Observable Inputs

December 31, 2022

Certificates of deposit

Corporate bonds

Items Measured at Fair Value on a Nonrecurring Basis

13 unchanged sentences

(“Dongfang”) for production in the ordinary course of business.

In November 2023, the Company completed the sale of Dongfang to a third party.

As of December 31, 2024 and 2023, amounts payable of $ 0 and $ 0 , respectively, were included in “Accounts payable” in our consolidated balance sheets.

5 unchanged sentences

Short-term loan from noncontrolling interest decreased to $ 0 .

In April 2022, Tongmei entered into the Capital Increase Agreement with minority investors to further invest $ 4.5 million in ChaoYang XinMei.

In April 2022, Tongmei entered into the Capital Increase Agreement with minority investors to further invest approximately $ 4.5 million in ChaoYang XinMei.

In April 2022 and May 2022, ChaoYang XinMei received funding from Tongmei of $ 1.1 million and $ 0.8 million, respectively, as equity investments.

11 unchanged sentences

This policy applies to all of our employees, directors, and our consolidated subsidiaries.

Our executive officers retain board seats on the Board of Directors of the companies in which we have invested in our China joint ventures.

Our executive officers retain board seats on the Board of Directors of the companies in which we have invested in our PRC joint ventures.

See Note 6 for further details.

26 unchanged sentences

Emeishan Jia Mei High Purity Metals Co., Ltd.

Donghai County Dongfang High Purity Electronic Materials Co., Ltd.

* These percentages reflect the ownership currently in effect upon the completion of the reorganization in China and the ownership in effect upon the completion of the new capital funding by private equity investors in January 2021.

7 unchanged sentences

Under China regulations these investments must be formally approved by the appropriate government agency and are not deemed to be dilutive until such approval is granted.

The government approved the approximately $ 49 million investment in its entirety on January 25, 2021 at which time the Investors owned

a redeemable noncontrolling interest in Tongmei of 7.28 %.

The government approved the approximately $ 49 million investment in its entirety on January 25, 2021 at which time the Investors owned a redeemable noncontrolling interest in Tongmei of 7.28 %.

As of December 31, 2022, Tongmei’s noncontrolling interests and redeemable noncontrolling interests totaled approximately 14.5 %.

5 unchanged sentences

We now own 10 % of the equity ownership of Jia Mei and account for it under the fair value method.

******* In November 2023, we completed the sale of our entire 46 % equity ownership interests in Dongfang to a third party.

In May 2023, we reduced our ownership in Jia Mei from 25 % to 10 % by selling a portion of our Jia Mei shares to an unrelated third party for approximately $ 827,000 .

Considering our decreased ownership and that we no longer have significant influence over its operations and financial policies, we adopted the fair value method of accounting to report on the investment in Jia Mei.

Considering our decreased ownership and that we no longer have

significant influence over its operations and financial policies, we adopted the fair value method of accounting to report on the investment in Jia Mei.

As Jia Mei's equity interest is without a readily determinable fair value, we elected to use the measurement alternative to measure at cost, less any impairment, plus or minus fair value changes resulting from observable price changes in orderly transactions for identical or similar investments of the same issuer.

As a result of the share sale, we recognized a gain of $ 575,000 .

Additionally, in accordance with ASC 321-10-35-2, we adjusted the investment in Jia Mei to its fair value at the time of the sale.

Additionally, in accordance with ASC Topic 321, Investments–Equity Securities , we adjusted the investment in Jia Mei to its fair value at the time of the sale.

The gain resulting from the sale and the subsequent remeasurement was incorporated as a component of “Equity in income of unconsolidated joint ventures” in the consolidated statements of operations for the twelve months ended December 31, 2023.

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For AXT’s minority investment entities that are not consolidated, the investment balances are included in “Other assets” in our consolidated balance sheets and totaled $ 14.1 million and $ 12.5 million as of December 31, 2024 and 2023, respectively.

Our respective ownership interests in ChaoYang KaiMei, JiYa, Xiaoyi XingAn and Jia Mei was 40 %, 39 %, 25 %, and 10 %, respectively.

Our respective ownership interests in ChaoYang KaiMei, JiYa, Xiaoyi XingAn and Jia Mei was

40 %, 39 %, 25 %, and 10 %, respectively.

These minority investment entities are not considered variable interest entities because:

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If SAFE approval is denied the dividend payable to the Company would be owed but would not be paid.

For the years ended December 31, 2023, 2022 and 2021, the aggregate dividends paid to us, directly or to an intermediate entity within our corporate structure, by our PRC subsidiaries and PRC raw material joint ventures were approximately $ 4.3 million, $ 2.9 million and $ 774,000 , respectively.

In June 2021, we received a dividend of $ 774,000 from Xiaoyi XingAn.

For the years ended December 31, 2024, 2023 and 2022, the aggregate dividends paid to us, directly or to an intermediate entity within our corporate structure, by our PRC subsidiaries and PRC raw material joint ventures were approximately $ 2.4 million, $ 4.3 million and $ 2.9 million, respectively.

In June 2022, July 2022 and August 2022, we received a dividend of $ 1.3 million from BoYu, $ 1.5 million from Xiaoyi XingAn and $ 0.1 million from JiYa, respectively.

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Additionally, in both April 2023 and November 2023, JiYa distributed dividends to us, totaling $ 2.0 million and $ 0.5 million, respectively.

In May 2024 and November 2024, we received a dividend of $ 2.1 million from Xiaoyi XingAn and $ 0.3 million from JiYa, respectively.

For the years ended December 31, 2024 and 2023, there were no dividends paid to minority shareholders by our PRC subsidiaries or PRC raw material joint ventures.

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As of December 31,

Payable in connection with construction in progress

Accrued compensation and related charges

Preferred stock dividends payable

Accrued compensation and related charges

Payable in connection with construction in progress

Advances from customers

Accrued professional services

Current portion of operating lease liabilities

Accrued product warranty

Other tax payable

Current portion of operating lease liabilities

Advances from customers

Other personnel-related costs

Accrual for sales returns

Accrued income taxes

Accrual for sales returns

Other accrued liabilities

Bank Loans and Line of Credit

Our bank loans and credit facilities typically have a term of 12 months or less and are included in “Bank loan” in our consolidated balance sheets.

The following table represents bank loans as of December 31, 2023 and 2022 (in thousands, except interest rate data):

Our bank loans and credit facilities typically have a term of 12 months or less and are included in “Short-term loan” in our consolidated balance sheets.

The following table represents short-term bank loans as of December 31, 2024 and 2023 (in thousands, except interest rate data):

Bank of China (1)

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Bank of Communications (1)

Bank of Communications (5)

China Merchants Bank (1)

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NanJing Bank (1)

China Citic Bank (1)

Agricultural Bank of China (1)

Industrial and Commercial Bank of China (4)

Industrial and Commercial Bank of China (1)

Bank of China (1)

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Bank of Communications (1)

NanJing Bank (1)

Collateral for the above bank loans and line of credit

(1) Baoding Tongmei’s land use rights and all of its buildings located at its facility in Dingxing, China.

(2) ChaoYang Tongmei’s land use rights and all of its buildings located at its facility in Kazuo, China.

(1) Not collateralized.

(2) ChaoYang LiMei time deposit.

(3) AXT time deposit.

(5) Not collateralized.

(4) BoYu’s land use rights and its building located at its facility in Tianjin, China.

In addition, the December 2023 loan attracts a guarantee fee amounting to 0.7 % of the loan amount.

(5) Baoding Tongmei’s land use rights and its building located at its facility in Dingxing, China.

In addition, the loan attracts a guarantee fee amounting to 1.0 % of the loan amount.

Long-term Loa ns

On January 30, 2024, the Company secured a new line of credit amounting to $ 9.7 million, structured as a five-year bank loan.

The credit facility bears interest at a rate of 6.5 % per annum on the amount drawn from the line of credit.

The credit facility is collateralized by the real estate properties owned by ChaoYang Tongmei.

In January 2024, the Company borrowed $ 5.8 million against the credit facility.

The intended use of the credit facility is for construction projects.

As of December 31, 2024, $ 5.2 million is included in “Other long-term liabilities” and $ 411,000 is included in “Short-term loans” in our consolidated balance sheets.

In December 2023, one of our consolidated subsidiaries, ChaoYang XinMei secured a loan of approximately $ 2.1 million from an unrelated financing company.

According to the agreement, ChaoYang XinMei temporarily transferred ownership of its production line and related equipment to the financing company, while retaining the right to use the property for production.

At the end of the 30-month contractual period, ChaoYang XinMei holds the option to repurchase the production line and related equipment for $ 14.00 .

As of December 31, 2024, $ 619,000 associated with this financing arrangement is included in “Other long-term liabilities” and $ 890,000 is included in “Short-term loans” in our consolidated balance sheets.

As of December 31, 2024, the maturities of our long-term loan liabilities in five years (including current portion) are as follows (in thousands):

Maturity of long-term loans

In summary, short-term loans of $ 47.3 million included under “Short-term loans” in our consolidated balance sheet at December 31, 2024, consisted of $ 46.0 million of short-term bank loans and $ 1.3 million of the current portion of long-term debt.

Long-term loans of $ 5.8 million included under “Other long-term liabilities” in our consolidated balance sheet at December 31, 2024 consisted of $ 5.2 million in a five-year bank loan and $ 0.6 million in a loan secured by ChaoYang XinMei.

Stockholders’ Equity and Stock Repurchase Program

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As of December 31,

Net income (loss) attributable to AXT, Inc.

Net loss attributable to AXT, Inc.

Decrease in additional paid-in capital for:

Investment in subsidiary with noncontrolling interest

Change from net income (loss) attributable to AXT, Inc., net of transfers to noncontrolling interests

Change from net loss attributable to AXT, Inc., net of transfers to noncontrolling interests

Stock Repurchase Program

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In May 2013, the stockholders approved an additional 2,000,000 shares to be issued under the 2007 plan.

Awards may be made under the 2007 Plan are stock options, stock appreciation rights, restricted stock, restricted stock

units, performance shares, performance units, deferred compensation awards and other stock-based awards.

Awards may be made under the 2007 Plan are stock options, stock appreciation rights, restricted stock, restricted stock units, performance shares, performance units, deferred compensation awards and other stock-based awards.

Stock options and stock appreciation rights awarded under the 2007 Plan may not be repriced without stockholder approval.

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The 399,562 share reserve of the 2007 Plan became the reserve of the 2015 Plan, together with 3,000,000 additional shares approved for issuance under the 2015 Plan.

In May 2019, our stockholders approved

1,600,000 of additional shares for issuance under the 2015 Plan.

In May 2021, our stockholders approved 3,600,000 of additional shares for issuance under the 2015 Plan.

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Balance as of December 31, 2024

Options vested as of December 31, 2023 and unvested options expected to vest, net of forfeitures

Options exercisable as of December 31, 2024

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There were 12,000 , 4,000 and 172,000 options exercised in the years ended December 31, 2024, 2023 and 2022, respectively.

The total intrinsic value of options exercised for the years ended December 31, 2023, 2022 and 2021, was $ 7,000 , $ 0.8 million and $ 3.7 million, respectively.

The total intrinsic value of options exercised for the years ended December 31, 2024, 2023 and 2022, was $ 29,000 , $ 7,000 and $ 0.8 million, respectively.

As of December 31, 2024, the unamortized compensation costs related to unvested stock options granted to employees under our 2015 plan was $ 0 .

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If the minimum financial metric for fiscal year 2024 is not achieved, then these awards are forfeited.

On February 18, 2025, the Compensation Committee met and certified that the year-over-year annual revenue growth rate achieved for fiscal year 2024, expressed as a percentage, was 200 %.

Therefore, the maximum number of at-risk performance shares became eligible to vest.

A summary of the status of our unvested at-risk, performance shares as of December 31, 2024 is presented below (in thousands, except per share data):

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*The number of share presented is based on achieving 150 % of the targeted financial performance metric as defined in the at-risk, performance shares agreement.

**The number of share presented is based on achieving 200 % of the targeted financial performance metric as defined in the at-risk, performance shares agreement

As of December 31, 2024, there was $ 0.3 million of unrecognized compensation expense related to unvested at-risk, performance shares that is expected to be recognized over a weighted-average period of 1.9 years.

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Research and development

Net effect on net income (loss)

Net effect on net loss

Shares used in computing basic net income (loss) per share

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Ending accrued product warranty

Consolidated income before provision for income taxes was a loss of $ 19.0 million for the year ended December 31, 2023 and income of $ 20.9 million and $ 17.6 million for the years ended December 31, 2022 and 2021, respectively.

We recorded a current tax provision of $ 0.2 million, $ 2.2 million and $ 1.1 million for the years ended December 31, 2023, 2022 and 2021, respectively.

Consolidated income (loss) before provision for income taxes was a loss of $ 10.7 and $ 19.0 million for the years ended December 31, 2024 and 2023, respectively, and income of $ 20.9 million for the year ended December 31, 2022.

We recorded a current and deferred tax provision of $ 1.1 million, $ 0.2 million and $ 2.2 million for the years ended December 31, 2024, 2023 and 2022, respectively.

The components of the provision for income taxes are summarized below (in thousands):

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Foreign income inclusion

Gain from sale of IP

Tax effect in equity method loss or gain from unconsolidated affiliates

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These factors include our history of losses related to domestic operations, and the lack of carryback capacity to realize deferred tax assets.

The valuation allowance increased for the year ended December 31, 2023 by $ 5.6 million and decreased $ 3.5 million for the year ended December 31, 2022.

The valuation allowance increased by $ 3.3 million and $ 5.6 million for the year ended December 31, 2024 and 2023, respectively.

The China Enterprise Income Tax Law (“EIT”) imposes a single uniform income tax rate of 25 % on all Chinese enterprises.

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In order to retain the preferential tax rate, we must meet certain operating conditions, satisfy certain product requirements, meet certain headcount requirements and maintain certain levels of research expenditures.

We realized benefits from this 10 % reduction in tax rate of $ 47,000 , $ 0.9 million and $ 1.0 million for 2023, 2022 and 2021, respectively.

We realized benefits from this 10 % reduction in tax rate of $ 348,000 , $ 47,000 and $ 0.9 million for 2024, 2023 and 2022, respectively.

As of December 31, 2024, the favorable tax rate is still valid for the Company and it will stay the same for next year if there is no change of the business nature.

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If there is a change of control, utilization of our NOL or tax credit carryforwards would be subject to an annual limitation under Section 382.

Any limitation may result in expiration of a portion of the NOL or research and development credit carryforwards before utilization.

Any limitation may result in expiration of a portion of the NOL or research and development credit

carryforwards before utilization.

Subsequent ownership changes could further impact the limitation in future years.

Until a Section 382 study for the year-ended December 31, 2024 is completed and any limitation known, no amounts are being presented as an uncertain tax position.

The Company does not believe that per Section 382 there will be a limitation on the utilization of the net operating loss and tax credit carryforwards.

A full valuation allowance has been provided against our NOL carryforwards and R&D credit carryforwards and, if an adjustment is required, this adjustment would be offset by an adjustment to the valuation allowance.

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Since the Company has all its manufacturing in China, the Company will not qualify for the investment credit.

On August 16, 2022, President Biden signed the Inflation Reduction Act (IRA) into law.

On August 16, 2022, the Inflation Reduction Act (IRA) was signed into law.

The law is intended to address inflation by paying down the national debt, lower consumer energy costs, provide incentives for the production of clean energy and reduce health care costs.

3 unchanged sentences

Basic net income (loss) per share is computed using the weighted average number of common shares outstanding during the periods less shares of common stock subject to repurchase and non-vested stock awards.

net income (loss) per share is computed using the weighted-average number of common shares outstanding and potentially dilutive common shares outstanding during the periods.

Diluted net income (loss) per share is computed using the weighted-average number of common shares outstanding and potentially dilutive common shares outstanding during the periods.

The dilutive effect of outstanding stock options and restricted stock awards is reflected in diluted earnings per share by application of the treasury stock method.

17 unchanged sentences

In accordance with ASC Topic 280, Segment Reporting, our chief operating decision-maker has been identified as the Chief Executive Officer, who reviews operating results to make decisions about allocating resources and assessing performance for the Company.

In accordance with ASC Topic 280, Segment Reporting, our chief operating decision-maker (“CODM”) has been identified as the Chief Executive Officer, who reviews operating results to make decisions about allocating resources and assessing performance for the Company.

Since we operate in one segment, all financial segment and product line information can be found in the consolidated financial statements.

No additional disaggregated expense categories are presented beyond those already disclosed in the primary financial statements.

Product Information

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We do not expect that any of these matters, individually or in the aggregate, will have a material adverse effect on our business, financial condition, cash flows or results of operations.

We lease certain equipment, office space, warehouse and facilities under long-term operating leases expiring at various dates through July 2029.

On May 6, 2024, a putative shareholder class action complaint was filed in the U.S.

District Court for the Eastern District of New York on behalf of persons or entities who purchased or acquired our publicly traded securities, against us, Morris S.

Young, our Chief Executive Officer, and Gary L.

Fischer, our Chief Financial Officer.

The court transferred the case to the Northern District of California, where our headquarters are located.

A lead plaintiff has been appointed and an amended complaint was filed.

The amended complaint asserts a putative class period from March 24, 2021 and April 3, 2024, inclusive (the “Class Period”).

The amended complaint alleges violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and Rule 10b-5 promulgated thereunder by the defendants, and seeks unspecified monetary relief, interest, and attorneys’ fees.

Defendants ‘motion to dismiss is fully briefed and pending before the Court.

On August 22, 2024, a derivative lawsuit was filed in the Northern District of California by an alleged shareholder against Morris S.

Young, our Chief Executive Officer, Gary L.

Fischer, our Chief Financial Officer, current directors David C.

Chang, Jesse Chen, and Christine Russell, and former director Leonard J.

LeBlanc, with the Company named as a nominal defendant (together, “Defendants”).

Defendants moved to dismiss on November 6, 2024, following which the plaintiff filed an amended complaint on November 20, 2024.

The amended complaint asserts that the Defendants breached their fiduciary duties to the Company based on the allegations asserted in the original complaint in the putative shareholder class action.

On November 27, 2024, Defendants again moved to dismiss.

The motion to dismiss is fully briefed and pending before the Court.

It is not possible at this time to reasonably assess the final outcomes of these litigations or to reasonably estimate the possible loss or range of loss with respect to these litigations.

We believe these claims to be meritless and intend to vigorously defend against them.

We lease certain equipment, office space, warehouse and facilities under long-term operating leases expiring at various dates through November 2029.

The majority of our lease obligations relate to our lease agreement for our facility in Fremont, California with approximately 19,467 square feet, which was scheduled to expire in 2020.

2 unchanged sentences

There are no variable lease payments, residual value guarantees or any restrictions or covenants imposed by the facility lease.

The remainder relate to our lease agreement for a nitrogen system to be used during the manufacturing process for our facility in Dingxing, China.

The remainder relate to our lease agreements for a nitrogen system and a facility.

The nitrogen system is used during the manufacturing process for our facility in Dingxing, China.

The equipment lease became effective in August 2019 and will expire in July 2029.

There are no variable lease payments, residual value guarantees or any restrictions or covenants imposed by the equipment lease.

The facility, located in Tongzhou, China, has a lease effective from December 2024 and expiring in November 2029.

There are no variable lease payments, residual value guarantees or any restrictions or covenants imposed by these leases.

All other operating leases have a term of 12 months or less.

3 unchanged sentences

A lease is classified as an operating lease if it does not meet any one of these criteria.

All of our leases are classified as operating leases and substantially all of our operating leases are comprised of equipment and office space leases.

All of our leases

are classified as operating leases and substantially all of our operating leases are comprised of equipment and office space leases.

None of our leases are classified as, finance leases.

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Unaudited Quarterly Consolidated Financial Data

(in thousands, except per share data)

Net income attributable to AXT, Inc.

per share, basic

Net income attributable to AXT, Inc.

per share, diluted

Net income (loss) attributable to AXT, Inc.

per share, basic

Net income (loss) attributable to AXT, Inc.

per share, diluted

Not applicable.

Redeemable Noncontrolling Interests

25 unchanged sentences

Balance as of December 31, 2023

Investment in subsidiary with redeemable noncontrolling interest

Equity issuance costs incurred

5 unchanged sentences

Subsequent Events

In January and February 2024, the Company obtained a total of $ 7.9 million in new one-year bank loans with interest rates ranging from 3.0 % to 4.3 %.

The $ 5.1 million of the new bank loans are unsecured, while the remaining

$ 2.8 million was collateralized by a ChaoYang LiMei time deposit.

In January, February and March 2025, the Company obtained a total of $ 8.4 million in new one-year bank loans with interest rates ranging from 2.5 % to 3.9 %.

Of the $ 8.4 million, $ 6.0 million is unsecured, while the remaining $ 2.4 million is collateralized by real estate.

In February 2025, the Company secured a fourteen-month unsecured bank loan in an amount of $ 2.7 million with an interest rate of 3.2 %.

The Company repaid $ 7.4 million of existing loans in January and February 2025 .

In January 2024, the Company secured a new line of credit amounting to $ 9.9 million, structured as a five -year bank loan.

The credit facility bears an interest rate of 6.5 % on the amount drawn from the line of credit.

The credit facility is collateralized by the real estate properties owned by ChaoYang Tongmei.

In January 2024, the Company borrowed $ 5.9 million against the credit facility.

The primary intended use of the credit facility is for construction projects.

In January, February and March 2024, our consolidated subsidiaries, collectively, received approximately $ 715,000 in subsidies from the Chinese government.

These funds are designated to support digital projects within enterprises and initiatives aimed at waste recycling, etc.

Form 10-K Summary

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Employment Letter Agreement between the Company and Mr.

2015 Equity Incentive Plan

2015 Equity Incentive Plan, as amended

Executive Incentive Plan

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Computation of Ratio of Earnings to Fixed Charges

Insider Trading Policy

List of Subsidiaries

3 unchanged sentences

Certification by principal financial officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

Certification by Chief Executive Officer Pursuant to 18 U.S.C.

Certification by Chief Einsiderxecutive Officer Pursuant to 18 U.S.C.

Section 1350, as adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

17 unchanged sentences

(8) Incorporated by reference to exhibit 10.1 to registrant’s Form 8-K filed with the SEC on October 31, 2014.

(9) Incorporated by reference to exhibit 10.29 to registrant’s Form 8-K filed with the SEC on January 5, 2009.

(10) Incorporated by reference to exhibit 10.30 to registrant’s Form 8-K filed with the SEC on January 5, 2009.

(9) Incorporated by reference to exhibit 10.31 to registrant’s Form 10-K filed with the SEC on March 31, 2009.

2 unchanged sentences

(12) Incorporated by reference to exhibit 10.1 to registrant’s Form 8-K filed with the SEC on August 12, 2014.

(15) Incorporated by reference to appendix A to the registrant’s Definitive Proxy Statement on Schedule 14A filed with the SEC on April 8, 2015.

(13) Incorporated by reference to exhibit 10.1 to registrant’s Form 8-K filed with the SEC on May 20 , 20 2 4.

(14) Incorporated by reference to exhibit 10.1 to registrant’s Form 8-K filed with the SEC on February 26, 2016.

(17) Incorporated by reference to exhibit 10.1 registrant’s Form 8-K filed with the SEC on November 9, 2018.

Management contract or compensatory plan.

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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-K

Item 9A. Controls and Procedures