AXT INC 10-K

Item 9A. Controls and Procedures Evaluation of Disclosure Controls and Procedures Our management, with the participation of our Chief Executive Officer and our Chief Financial Officer, evaluated the effectiveness of the design and operation of our disclosure controls and procedures as of the end of the period covered by this Annual Report on Form 10-K. Based upon this evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures as defined under Exchange Act Rules 13a-15(e) and 15d-15(e) were effective at the reasonable assurance level to ensure that information required to be disclosed in our Securities Exchange Act reports is recorded, processed, summarized and reported within the time periods specified by the Securities and Exchange Commission and is accumulated and communicated to management, including our Chief Executive Officer and our Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure. Our disclosure controls and procedures include components of our internal control over financial reporting. Management’s assessment of the effectiveness of our internal control over financial reporting is expressed at the level of reasonable assurance because a control system, no matter how well designed and operated, can provide only reasonable assurance that the control system’s objectives will be met. 69 Table of Contents Management’s Report on Internal Control over Financial Reporting Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act. Internal control over financial reporting is a process designed by, or under the supervision of, our Chief Executive Officer and Chief Financial Officer, and implemented by our Board of Directors, management and other personnel to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with U.S. GAAP. Internal control over financial reporting includes those policies and procedures that: ● pertain to the maintenance of records that in reasonable detail accurately and fairly reflect our transactions and dispositions of our assets; ● provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with U.S. GAAP, and that receipts and expenditures are being made only in accordance with authorizations of our management and directors; and ● provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the consolidated financial statements. Because of 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. Our management, under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, has assessed the effectiveness of our internal control over financial reporting as of December 31, 2024 based on the criteria established in Internal Control—Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Management has concluded that our internal control over financial reporting was effective as of December 31, 2024. Changes in Internal Control over Financial Reporting There was no change in our internal control over financial reporting during our fourth quarter of fiscal 2024 that has materially affected, or is reasonably likely to materially affect, AXT’s internal control over financial reporting. Item 9B. Other Information N o n e . Item 9C. Disclosure R egarding Foreign Jurisdictions that Prevent Inspections ​ Not Applicable. 70 Table of Contents PART III 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. This is called “Incorporation by Reference.” The Proxy Statement will be filed with the SEC pursuant to Regulation 14A not later than 120 days after the end of the fiscal year covered by this Annual Report on Form 10-K, and certain information therein is incorporated in this report by reference. Item 10. Directors, Executive Officers and Corporate Governance The information required by this item will be included in the Proxy Statement and is incorporated by reference into this Annual Report on Form 10-K. Item 11. Executive Compensation The information required by this item will be included in the Proxy Statement and is incorporated by reference into this Annual Report on Form 10-K. ​ ​ ● ● ​ ​ Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters The information required by this item will be included in the Proxy Statement and is incorporated by reference into this Annual Report on Form 10-K. ​ Item 13. Certain Relationships and Related Transactio ns and Director Independence The information required by this item will be included in the Proxy Statement and is incorporated by reference into this Annual Report on Form 10-K. ​ Item 14. Principal Accountant Fees and Services The information required by this item will be included in the Proxy Statement and is incorporated by reference into this Annual Report on Form 10-K. ​ 71 Table of Contents PART IV Item 15. Exhibits and Financial Statement Schedules (a) The following documents are filed as part of this report: (1) Financial Statements: INDEX TO CONSOLIDATED FINANCIAL STATEMENTS ​ ​ Report of Independent Registered Public Accounting Firm (PCAOB ID: 207 ) 73 Consolidated Balance Sheets 75 Consolidated Statements of Operations 76 Consolidated Statements of Comprehensive Income (Loss) 77 Consolidated Statements of Stockholders’ Equity 78 Consolidated Statements of Cash Flows 79 Notes to Consolidated Financial Statements 80 ​ (2) Financial Statement Schedules All schedules have been omitted because the required information is not applicable or because the information required is included in the consolidated financial statements or notes thereto. (b) Exhibits See Index to Exhibits attached elsewhere to this Annual Report on Form 10-K. The exhibits listed in the accompanying Index to Exhibits are filed as part of, or incorporated by reference into, this Annual Report on Form 10-K. ​ 72 Table of Contents Report of Independent Registered Public Accounting Firm To the Board of Directors and Stockholders of AXT, Inc. Opinion on the Consolidated Financial Statements We have audited the accompanying consolidated balance sheets of AXT, Inc. (a Delaware corporation) and its subsidiaries (the “Company”) as of December 31, 2024, and 2023, 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, 2024, and the related notes (collectively referred to as the “consolidated financial statements”). 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. Basis for Opinion These consolidated financial statements are the responsibility of the Company’s management. 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 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. We conducted our audits in accordance with the standards of the PCAOB. 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. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical Audit Matter 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 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 As described in Notes 1 and 3 to the consolidated financial statements, the Company’s consolidated inventories balance was $85.1 million as of December 31, 2024, which was net of a reserve of $24.1 million for excess and obsolete inventories. 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 73 Table of Contents 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 . The principal considerations for our determination that performing procedures relating to reserve for excess and obsolete inventories is a critical audit matter are the significant amount of judgment by management in developing the assumptions of the forecasted product demand, which in turn led to significant auditor judgment, subjectivity, and effort in performing audit procedures and evaluating audit evidence relating to the forecasted product demand. Additionally, for certain new product launches there may be limited historical data with which to evaluate forecasts. Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures included testing the effectiveness of internal controls relating to management’s reserve for excess and obsolete inventories, including internal controls over the development of assumptions related to forecasted product demand. The procedures also included, among others, testing management’s process for developing the reserve for excess and obsolete inventories, testing the completeness and accuracy of the underlying data used in the estimate, and evaluating management’s assumptions of forecasted product demand. Evaluating management’s demand forecast for reasonableness involved considering historical sales or usage by product, comparing prior period estimates to actual results of the same period, and determining whether the demand forecast used was consistent with evidence obtained in other areas of the audit. /s/ BPM LLP ​ We have served as the Company’s auditor since 2004. San Jose, California March 14, 2025 74 Table of Contents AXT, INC. CONSOLIDATED BALANCE SHEETS (In thousands, except per share data) ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, ​ ​ 2024 2023 ​ ​ ​ ​ ​ ​ ​ ​ ​ ASSETS ​ ​ ​ ​ ​ ​ ​ Current assets: ​ ​ ​ ​ ​ ​ ​ Cash and cash equivalents ​ $ 22,833 ​ $ 37,752 ​ Restricted cash ​ 10,978 ​ 12,362 ​ Short-term investments ​ — ​ 2,140 ​ Accounts receivable, net of allowances for credit losses of $ 147 and $ 579 as of December 31, 2024 and December 31, 2023 ​ 25,640 ​ 19,256 ​ Inventories ​ 85,077 ​ 86,503 ​ Prepaid expenses and other current assets ​ 13,744 ​ 12,643 ​ Total current assets ​ 158,272 ​ 170,656 ​ Property, plant and equipment, net ​ 159,721 ​ 166,348 ​ Operating lease right-of-use assets ​ 2,479 ​ 2,799 ​ Other assets ​ ​ 18,842 ` ​ 18,898 ​ Total assets ​ $ 339,314 ​ $ 358,701 ​ LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND STOCKHOLDERS’ EQUITY ​ ​ ​ ​ ​ ​ ​ Current liabilities: ​ ​ ​ ​ ​ ​ ​ Accounts payable ​ $ 12,356 ​ $ 9,617 ​ Accrued liabilities ​ 14,556 ​ 19,019 ​ Short-term loans ​ ​ 47,264 ​ ​ 52,921 ​ Total current liabilities ​ 74,176 ​ 81,557 ​ Noncurrent operating lease liabilities ​ ​ 1,977 ​ ​ 2,351 ​ Other long-term liabilities ​ 8,253 ​ 5,647 ​ Total liabilities ​ 84,406 ​ 89,555 ​ Commitments and contingencies (Note 16) ​ ​ ​ ​ ​ ​ ​ Redeemable noncontrolling interests (Note 18) ​ ​ 38,577 ​ ​ 41,663 ​ Stockholders’ equity: ​ ​ ​ ​ ​ ​ Preferred stock Series A, $ 0.001 par value; 2,000 shares authorized; 883 shares issued and outstanding as of December 31, 2024 and December 31, 2023 (Liquidation preference of $ 8,052 and $ 7,875 as of December 31, 2024 and December 31, 2023) ​ 3,532 ​ 3,532 ​ Common stock, $ 0.001 par value; 70,000 shares authorized; 45,358 and 44,239 shares issued and outstanding as of December 31, 2024 and December 31, 2023 ​ 45 ​ 44 ​ Additional paid-in capital ​ 241,514 ​ 238,452 ​ Accumulated deficit ​ ( 43,664 ) ​ ( 32,040 ) ​ Accumulated other comprehensive loss ​ ( 8,657 ) ​ ( 5,999 ) ​ Total AXT, Inc. stockholders’ equity ​ 192,770 ​ 203,989 ​ Noncontrolling interests ​ 23,561 ​ 23,494 ​ Total stockholders’ equity ​ 216,331 ​ 227,483 ​ Total liabilities, redeemable noncontrolling interests and stockholders’ equity ​ $ 339,314 ​ $ 358,701 ​ ​ See accompanying notes to consolidated financial statements. ​ 75 Table of Contents AXT, INC. CONSOLIDATED STATEMENTS OF OPERATION S (In thousands, except per share data) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ ​ 2024 2023 2022 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Revenue $ 99,361 ​ $ 75,795 ​ $ 141,118 ​ Cost of revenue 75,525 ​ 62,477 ​ 88,997 ​ Gross profit 23,836 ​ 13,318 ​ 52,121 ​ Operating expenses: ​ ​ ​ ​ ​ ​ ​ ​ ​ Selling, general and administrative 24,096 ​ 22,806 ​ 25,654 ​ Research and development 14,543 ​ 12,081 ​ 13,913 ​ Total operating expenses 38,639 ​ 34,887 ​ 39,567 ​ Income (loss) from operations ( 14,803 ) ​ ( 21,569 ) ​ 12,554 ​ Interest expense, net ( 1,340 ) ​ ( 1,527 ) ​ ( 1,071 ) ​ Equity in income of unconsolidated joint ventures 3,439 ​ 1,884 ​ 5,957 ​ Other income, net 2,047 ​ 2,179 ​ 3,487 ​ Income (loss) before provision for income taxes ( 10,657 ) ​ ( 19,033 ) ​ 20,927 ​ Provision for income taxes 1,134 ​ 160 ​ 2,185 ​ Net income (loss) ( 11,791 ) ​ ( 19,193 ) ​ 18,742 ​ Less: Net (income) loss attributable to noncontrolling interests and redeemable noncontrolling interests 167 ​ 1,312 ​ ( 2,931 ) ​ Net income (loss) attributable to AXT, Inc. $ ( 11,624 ) ​ $ ( 17,881 ) ​ $ 15,811 ​ Net income (loss) attributable to AXT, Inc. per common share: ​ ​ ​ ​ ​ ​ ​ ​ ​ Basic $ ( 0.27 ) ​ $ ( 0.42 ) ​ $ 0.37 ​ Diluted $ ( 0.27 ) ​ $ ( 0.42 ) ​ $ 0.37 ​ Weighted-average number of common shares outstanding: ​ ​ ​ ​ ​ ​ ​ ​ ​ Basic 43,154 ​ 42,643 ​ 42,104 ​ Diluted 43,154 ​ 42,643 ​ 42,715 ​ ​ See accompanying notes to consolidated financial statements. ​ 76 Table of Contents AXT, INC. CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS ) (In thousands) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ ​ 2024 2023 2022 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net income (loss) $ ( 11,791 ) ​ $ ( 19,193 ) ​ $ 18,742 ​ Other comprehensive loss, net of tax: ​ ​ ​ ​ ​ ​ ​ ​ ​ Change in foreign currency translation loss, net of tax ( 3,292 ) ​ ( 3,818 ) ​ ( 10,994 ) ​ Change in unrealized gain (loss) on available-for-sale debt investments, net of tax 20 ​ 283 ​ ( 238 ) ​ Total other comprehensive loss, net of tax ( 3,272 ) ​ ( 3,535 ) ​ ( 11,232 ) ​ Comprehensive income (loss) attributable to AXT, Inc. ( 15,063 ) ​ ( 22,728 ) ​ 7,510 ​ Less: Comprehensive (income) loss attributable to noncontrolling interests and redeemable noncontrolling interests 781 ​ 1,965 ​ ( 1,117 ) ​ Comprehensive income (loss) attributable to AXT, Inc. $ ( 14,282 ) ​ $ ( 20,763 ) ​ $ 6,393 ​ ​ See accompanying notes to consolidated financial statements. ​ 77 Table of Contents AXT, INC. CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (In thousands) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Common Stock ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Preferred ​ ​ ​ ​ ​ ​ ​ Additional ​ ​ ​ Accumulated Other ​ AXT, Inc. ​ ​ ​ Total ​ ​ Stock ​ ​ ​ ​ ​ ​ ​ Paid-In ​ Accumulated ​ Comprehensive ​ Stockholders’ ​ Noncontrolling ​ Stockholders’ ​ Shares Amount ​ Shares Amount Capital Deficit Income (Loss) Equity Interests Equity ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Balance as of January 1,2022 ​ 883 ​ $ 3,532 ​ ​ 42,886 ​ ​ 43 ​ ​ 231,622 ​ ​ ( 29,970 ) ​ ​ 6,302 ​ ​ 211,529 ​ ​ 18,317 ​ ​ 229,846 ​ Common stock options exercised ​ ​ ​ ​ ​ ​ ​ 172 ​ ​ 1 ​ ​ 517 ​ ​ ​ ​ ​ ​ ​ ​ 518 ​ ​ ​ ​ ​ 518 ​ Investment in subsidiary with noncontrolling interest ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ( 466 ) ​ ​ ​ ​ ​ ​ ​ ​ ( 466 ) ​ ​ 2,699 ​ ​ 2,233 ​ Investment in subsidiary with redeemable noncontrolling interest ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ( 471 ) ​ ​ ​ ​ ​ ​ ​ ​ ( 471 ) ​ ​ ​ ​ ​ ( 471 ) ​ Restricted stock awards canceled ​ ​ ​ ​ ​ ​ ​ ( 91 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ — ​ Stock-based compensation ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 3,273 ​ ​ ​ ​ ​ ​ ​ ​ 3,273 ​ ​ ​ ​ ​ 3,273 ​ Issuance of common stock in the form of restricted stock ​ ​ ​ ​ ​ ​ ​ 587 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ — ​ Tongmei stock-based compensation ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 733 ​ ​ ​ ​ ​ ​ ​ ​ 733 ​ ​ ​ ​ ​ 733 ​ Noncontrolling interest portion of Tongmei stock-based compensation ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 100 ​ ​ ​ ​ ​ ​ ​ ​ 100 ​ ​ ( 42 ) ​ ​ 58 ​ Investment in subsidiary from noncontrolling interest ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ — ​ ​ 1,887 ​ ​ 1,887 ​ Net income ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 15,811 ​ ​ ​ ​ ​ 15,811 ​ ​ 1,333 ​ ​ 17,144 ​ Other comprehensive loss ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ( 9,420 ) ​ ​ ( 9,420 ) ​ ​ ( 901 ) ​ ​ ( 10,321 ) ​ Balance as of December 31, 2022 ​ 883 ​ ​ 3,532 ​ ​ 43,554 ​ ​ 44 ​ ​ 235,308 ​ ​ ( 14,159 ) ​ ​ ( 3,118 ) ​ ​ 221,607 ​ ​ 23,293 ​ ​ 244,900 ​ Common stock options exercised ​ ​ ​ ​ ​ ​ ​ 4 ​ ​ ​ ​ ​ 10 ​ ​ ​ ​ ​ ​ ​ ​ 10 ​ ​ ​ ​ ​ 10 ​ Investment in subsidiary with noncontrolling interest ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ( 153 ) ​ ​ ​ ​ ​ ​ ​ ​ ( 153 ) ​ ​ 861 ​ ​ 708 ​ Investment in subsidiary with redeemable noncontrolling interest ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ( 155 ) ​ ​ ​ ​ ​ ​ ​ ​ ( 155 ) ​ ​ ​ ​ ​ ( 155 ) ​ Restricted stock awards canceled ​ ​ ​ ​ ​ ​ ​ ( 23 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ — ​ Stock-based compensation ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2,779 ​ ​ ​ ​ ​ ​ ​ ​ 2,779 ​ ​ ​ ​ ​ 2,779 ​ Issuance of common stock in the form of restricted stock ​ ​ ​ ​ ​ ​ ​ 704 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ — ​ Tongmei stock-based compensation ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 761 ​ ​ ​ ​ ​ ​ ​ ​ 761 ​ ​ ​ ​ ​ 761 ​ Noncontrolling interest portion of Tongmei stock-based compensation ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ( 98 ) ​ ​ ​ ​ ​ ​ ​ ​ ( 98 ) ​ ​ 55 ​ ​ ( 43 ) ​ Net loss ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ( 17,881 ) ​ ​ ​ ​ ​ ( 17,881 ) ​ ​ ( 391 ) ​ ​ ( 18,272 ) ​ Other comprehensive loss ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ( 2,881 ) ​ ​ ( 2,881 ) ​ ​ ( 324 ) ​ ​ ( 3,205 ) ​ Balance as of December 31, 2023 ​ 883 ​ ​ 3,532 ​ ​ 44,239 ​ ​ 44 ​ ​ 238,452 ​ ​ ( 32,040 ) ​ ​ ( 5,999 ) ​ ​ 203,989 ​ ​ 23,494 ​ ​ 227,483 ​ Common stock options exercised ​ ​ ​ ​ ​ ​ ​ 12 ​ ​ 1 ​ ​ 27 ​ ​ ​ ​ ​ ​ ​ ​ 28 ​ ​ ​ ​ ​ 28 ​ Restricted stock awards canceled ​ ​ ​ ​ ​ ​ ​ ( 6 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ — ​ Stock-based compensation ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2,647 ​ ​ ​ ​ ​ ​ ​ ​ 2,647 ​ ​ ​ ​ ​ 2,647 ​ Issuance of common stock in the form of restricted stock ​ ​ ​ ​ ​ ​ ​ 1,113 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ — ​ Tongmei stock-based compensation ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 450 ​ ​ ​ ​ ​ ​ ​ ​ 450 ​ ​ ​ ​ ​ 450 ​ Noncontrolling interest portion of Tongmei stock-based compensation ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ( 62 ) ​ ​ ​ ​ ​ ​ ​ ​ ( 62 ) ​ ​ 31 ​ ​ ( 31 ) ​ Net loss ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ( 11,624 ) ​ ​ ​ ​ ​ ( 11,624 ) ​ ​ 342 ​ ​ ( 11,282 ) ​ Other comprehensive loss ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ( 2,658 ) ​ ​ ( 2,658 ) ​ ​ ( 306 ) ​ ​ ( 2,964 ) ​ Balance as of December 31, 2024 ​ 883 ​ $ 3,532 ​ ​ 45,358 ​ $ 45 ​ $ 241,514 ​ $ ( 43,664 ) ​ $ ( 8,657 ) ​ $ 192,770 ​ $ 23,561 ​ $ 216,331 ​ See accompanying notes to consolidated financial statements . ​ 78 Table of Contents AXT, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ ​ ​ 2024 2023 2022 Cash flows from operating activities: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net income (loss) ​ $ ( 11,791 ) ​ $ ( 19,193 ) ​ $ 18,742 ​ Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Depreciation and amortization ​ 8,979 ​ 8,722 ​ 8,119 ​ Amortization of marketable securities premium ​ — ​ 18 ​ 58 ​ Stock-based compensation ​ 3,097 ​ 3,540 ​ 4,006 ​ Provision for credit losses ​ — ​ 272 ​ ( 177 ) ​ Loss on sale of equity investment ​ — ​ 166 ​ — ​ (Gain) loss on disposal of equipment ​ 118 ​ 21 ​ ( 85 ) ​ Return of equity method investments as dividends ​ ​ 2,396 ​ ​ 4,316 ​ ​ 1,608 ​ Equity in income of unconsolidated joint ventures ​ ( 3,439 ) ​ ( 2,050 ) ​ ( 5,957 ) ​ Deferred tax assets ​ ​ 265 ​ ​ 553 ​ ​ 104 ​ Changes in operating assets and liabilities: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Accounts receivable ​ ( 6,896 ) ​ 9,306 ​ 4,535 ​ Inventories ​ ( 737 ) ​ 1,073 ​ ( 31,412 ) ​ Prepaid expenses and other current assets ​ ( 6,002 ) ​ ( 652 ) ​ ( 3,486 ) ​ Other assets ​ 1,261 ​ 419 ​ ( 471 ) ​ Accounts payable ​ 3,038 ​ ( 162 ) ​ ( 5,519 ) ​ Accrued liabilities ​ 1,004 ​ ( 1,897 ) ​ ( 2,127 ) ​ Other long-term liabilities ​ ( 3,405 ) ​ ( 1,049 ) ​ 3,297 ​ Net cash provided by (used in) operating activities ​ ( 12,112 ) ​ 3,403 ​ ( 8,765 ) ​ Cash flows from investing activities: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Purchases of property, plant and equipment ​ ( 5,771 ) ​ ( 10,475 ) ​ ( 28,465 ) ​ Purchases of available-for-sale debt securities ​ — ​ — ​ ( 2,158 ) ​ Proceeds from sales and maturities of available-for-sale debt securities ​ 2,160 ​ 9,582 ​ 5,400 ​ Proceeds from sales of equity securities - 15 % Jia Mei ​ — ​ 827 ​ ​ — ​ Investments in non-marketable equity investments ​ ​ ( 834 ) ​ ​ ( 2,538 ) ​ ​ — ​ Net cash used in investing activities ​ ( 4,445 ) ​ ( 2,604 ) ​ ( 25,223 ) ​ Cash flows from financing activities: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Proceeds from common stock options exercised ​ 28 ​ 10 ​ 518 ​ Proceeds from short-term bank loans ​ 54,501 ​ 56,470 ​ 53,078 ​ Payments on short-term bank loans ​ ​ ( 60,092 ) ​ ​ ( 49,210 ) ​ ​ ( 17,798 ) ​ Proceeds from capital increase in subsidiary shares from noncontrolling interests ​ ​ — ​ ​ 708 ​ ​ 2,233 ​ Proceeds from long-term loan ​ ​ 5,831 ​ ​ 635 ​ ​ — ​ Payments on long-term loan ​ ​ ( 804 ) ​ ​ ​ ​ ​ ​ ​ Net cash provided by (used in) financing activities ​ ( 536 ) ​ 8,613 ​ 38,031 ​ Effect of exchange rate changes on cash, restricted cash and cash equivalents ​ 790 ​ ( 646 ) ​ 542 ​ Net increase (decrease) in cash, restricted cash and cash equivalents ​ ( 16,303 ) ​ 8,766 ​ 4,585 ​ Cash, restricted cash and cash equivalents at the beginning of the year ​ 50,114 ​ 41,348 ​ 36,763 ​ Cash, restricted cash and cash equivalents at the end of the period ​ $ 33,811 ​ $ 50,114 ​ $ 41,348 ​ Supplemental disclosures: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Income taxes paid, net of refunds ​ $ 962 ​ $ 686 ​ $ 1,692 ​ Interest expense paid ​ $ 2,069 ​ $ 1,564 ​ $ — ​ Supplemental disclosure of non-cash flow information: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Loan proceeds received by notes receivable ​ $ — ​ $ 1,481 ​ $ — ​ Notes receivables paid to purchase fixed assets ​ $ 4,572 ​ $ 4,170 ​ $ 6,835 ​ Non-cash consideration received from sale of DongFang ​ $ — ​ $ 585 ​ $ — ​ Conversion of related party borrowings to Additional Paid-in Capital ​ $ — ​ $ — ​ $ 1,887 ​ Investment in subsidiary shares from noncontrolling interest ​ $ — ​ $ 308 ​ $ 937 ​ Bank loan proceeds paid directly to a third-party vendor, included in accounts payable ​ $ — ​ $ — ​ $ 474 ​ Sales of land and building to unconsolidated joint venture ​ $ — ​ $ — ​ $ 976 ​ Consideration payable in connection with construction in progress, included in accrued liabilities ​ $ 857 ​ $ 6,574 ​ $ 4,135 ​ ​ See accompanying notes to consolidated financial statements. ​ 79 Table of Contents AXT, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Note 1. The Company and Summary of Significant Accounting Policies The Company AXT, Inc. (“AXT”, “the Company”, “we,” “us,” and “our” refer to AXT, Inc. and its consolidated subsidiaries) is a worldwide materials science company that develops and produces high-performance compound and single element semiconductor substrates, also known as wafers. Our consolidated subsidiaries produce and sell certain raw materials some of which are used in our substrate manufacturing process and some of which are sold to other companies. ​ Our substrate wafers are used when a typical silicon substrate wafer cannot meet the conductive requirements of a semiconductor or optoelectronic device. The dominant substrates used in producing semiconductor chips and other electronic circuits are made from silicon. However, certain chips may become too hot or perform their function too slowly if silicon is used as the base material. In addition, optoelectronic applications, such as LED lighting and chip-based lasers, do not use silicon substrates because they require a wave form frequency that cannot be achieved using silicon. Alternative or specialty materials are used to replace silicon as the preferred base in these situations. Our wafers provide such alternative or specialty materials. We do not design or manufacture the chips. We add value by researching, developing and producing the specialty material wafers. We have two product lines: specialty material substrates and raw materials integral to these substrates. In 2024, our substrate product group generated 68 % of our revenue and raw materials product group generated 32 %. Our compound substrates combine indium with phosphorous (indium phosphide: InP) or gallium with arsenic (gallium arsenide: GaAs). Our single element substrates are made from germanium (Ge). Our raw materials include purified gallium, InP based material and pBN crucibles. We use purified gallium in producing our GaAs substrates and also sell purified gallium in the open market to other companies for use in magnetic materials, high temperature thermometers and growing single crystal ingots including gallium arsenide, gallium nitride, gallium antimonite, gallium phosphide and other materials and alloys. Pyrolytic boron nitride (pBN) crucibles are used in the high temperature (typically in the range 500 C to 1,500 C) growth process of single crystal ingots and epitaxial layer growth in MBE reactors. We use these pBN crucibles in our own ingot growth processes and also sell them in the open market to other companies. Principles of Consolidation The consolidated financial statements include the accounts of AXT, and our consolidated subsidiaries, Beijing Tongmei Xtal Technology Co., Ltd. (“Tongmei”), AXT-Tongmei, Inc. (“AXT-Tongmei”), Baoding Tongmei Xtal Technology Co., Ltd. (“Baoding Tongmei”), ChaoYang Tongmei Xtal Technology Co., Ltd. (“ChaoYang Tongmei”), ChaoYang LiMei Semiconductor Technology Co., Ltd. (“ChaoYang LiMei”), ChaoYang XinMei High Purity Semiconductor Materials Co., Ltd. (“ChaoYang XinMei”), Nanjing JinMei Gallium Co., Ltd. (“JinMei”), ChaoYang JinMei Gallium Ltd. (“ChaoYang JinMei”), ChaoYang ShuoMei High Purity Semiconductor Materials Co., Ltd. (“ChaoYang ShuoMei”), MaAnShan JinMei Gallium Ltd., (“MaAnShan JinMei”) and Beijing BoYu Semiconductor Vessel Craftwork Technology Co., Ltd. (“BoYu”). Baoding Tongmei is located in the city of Dingxing, China. Each of ChaoYang Tongmei and ChaoYang LiMei is located in the city of Kazuo, China. All significant inter-company accounts and transactions have been eliminated. 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 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. ​ 80 Table of Contents When market conditions are warranted, we intend to construct facilities at the ChaoYang LiMei location to provide us with additional production capacity. For the years ended 2024 and 2023, expenses associated with ChaoYang LiMei had a de minimis impact on our consolidated financial statements. ​ In February 2021, Tongmei signed a joint venture agreement with certain investors to fund a new company, ChaoYang XinMei. The agreement called for a total investment of approximately $ 3.0 million, of which Tongmei would fund approximately $ 1.8 million for a 58.5 percent ownership of ChaoYang XinMei. In February 2021, the investors completed the initial funding of approximately $ 1.5 million. Tongmei’s portion of the investment was approximately $ 0.9 million. In May 2021, the investors completed the funding of the remaining balance of approximately $ 1.5 million. Tongmei’s portion of the final investment was approximately $ 0.9 million, for a total investment of approximately $ 1.8 million for a 58.5 percent ownership of ChaoYang XinMei. In September 2021 and October 2021, ChaoYang XinMei received funding from a minority investor of $ 0.9 million and $ 1.0 million, respectively. In December 2021 and January 2022, ChaoYang XinMei received funding from Tongmei of $ 1.4 million and $ 1.4 million, respectively. In January 2022, the China local government certified this additional funding in ChaoYang XinMei as an equity investment. Tongmei’s ownership remained at 58.5 % after these equity investments. In April 2022, Tongmei entered into a capital increase agreement (the “Capital Increase Agreement”) with minority investors to further invest $ 4.5 million in ChaoYang XinMei. Tongmei’s portion of the investment was approximately $ 2.6 million, of which $ 1.1 million was invested in April 2022 and $ 0.8 million was invested in May 2022. The minority investors’ portion of the investment was approximately $ 1.9 million, of which $ 0.7 million was invested in April 2022 and $ 0.6 million was invested in May 2022. As a result, noncontrolling interests increased $ 1.4 million and redeemable noncontrolling interests increased $ 0.1 million. Tongmei’s ownership remained at 58.5 % after the April 2022 and May 2022 equity investments. In July 2022, Tongmei and the minority investors further invested $ 0.8 million and $ 0.6 million in ChaoYang XinMei, respectively. This completed the investment obligations under the Capital Increase Agreement. As a result, noncontrolling interests increased $ 610,000 and redeemable noncontrolling interests increased $ 57,000 . Tongmei’s ownership remained at 58.5 % after the July 2022 equity investment. ​ In April 2022, ChaoYang JinMei signed a joint venture agreement with a certain investor to fund a new company, ChaoYang ShuoMei, our consolidated subsidiary. The agreement calls for a total investment of approximately $ 4.4 million, of which ChaoYang JinMei will fund approximately $ 3.3 million for a 75 percent ownership of ChaoYang ShuoMei. In July and August 2022, ChaoYang JinMei completed the initial funding of $ 1.0 million in ChaoYang ShuoMei. In August 2022, the investor invested $ 334,000 in ChaoYang ShuoMei. As a result, noncontrolling interests increased $ 406,000 and redeemable noncontrolling interests increased $ 73,000 . In January 2023, ChaoYang ShuoMei received $ 0.5 million in funding from ChaoYang JinMei and $ 0.2 million in funding from one of the minority investors. As a result, noncontrolling interests increased $ 0.2 million and redeemable noncontrolling interests increased $ 36,000 . In May 2023, ChaoYang ShuoMei received $ 1.0 million in funding from ChaoYang JinMei and $ 0.3 million in funding from one of the minority investors. As a result, noncontrolling interests increased $ 0.4 million and redeemable noncontrolling interests increased $ 75,000 . In August 2023, ChaoYang ShuoMei received $ 0.6 million in funding from ChaoYang JinMei and $ 0.2 million in funding from one of the minority investors. As a result, noncontrolling interests increased $ 0.2 million and redeemable noncontrolling interests increased $ 44,000 . ChaoYang JinMei has completed its investment obligations under the ChaoYang ShuoMei Joint Venture Agreement. ChaoYang JinMei’s ownership of ChaoYang ShuoMei remained at 75 % after these equity investments. ​ 81 Table of Contents In April 2022, Tongmei signed a joint venture agreement with certain investors to fund a new company, ChaoYang KaiMei. The agreement called for a total investment of approximately $ 7.6 million, of which Tongmei would fund approximately $ 3.0 million for a 40.0 percent ownership of ChaoYang KaiMei. In July 2022, the investors completed the initial funding of approximately $ 2.2 million. Tongmei’s portion of the investment was approximately $ 0.9 million. In January 2023, Tongmei made an investment of $ 0.9 million to ChaoYang KaiMei. In each of July 2023 and August 2023, Tongmei made an investment of approximately $ 0.6 million in ChaoYang KaiMei. These contributions culminated in the fulfillment of all of Tongmei’s financial obligations under the April 2022 ChaoYang KaiMei Joint Venture Agreement. In September 2023, Tongmei entered into another joint venture agreement with the same group of investors. 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, 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. ​ All activities for MaAnShan JinMei ceased during the first half of 2022 and the subsidiary was subsequently dissolved in May 2022. The dissolution of MaAnShan JinMei had a de minimis impact on the consolidated results. ​ During the quarter ended December 31, 2020, Tongmei entered into two sets of definitive transaction documents, each consisting of a capital increase agreement along with certain supplemental agreements in substantially the same form (collectively, the “Capital Increase Agreements”), with several private equity investors in China. ​ In preparation for Tongmei’s application for a listing of shares in an initial public offering (the “IPO”) on the Shanghai Stock Exchange’s Sci-Tech innovAtion boaRd (the “STAR Market”), in late December 2020, we reorganized our entity structures in China. JinMei and BoYu and its subsidiaries were assigned to Tongmei and effectively merged with Tongmei although they retained their own respective legal entity status and are wholly owned subsidiaries of Tongmei. The 33 % minority interest stakeholders of BoYu converted their ownership to a 7.59 % minority interest in Tongmei. The 8.5 % minority interest stakeholders, employees of JinMei, converted their ownership to a 0.38 % minority interest in Tongmei. Further, a number of employees, key managers and contributors purchased a 0.4 % minority interest in Tongmei. Additionally, Baoding Tongmei and ChaoYang Tongmei, were assigned to Tongmei as wholly owned subsidiaries. In 2020, the private equity funds (the “Investors”) had transferred approximately $ 48.1 million of new capital to Tongmei. An additional investment of approximately $ 1.5 million of new capital was funded in January 2021. 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 %. As of September 30, 2022, Tongmei’s noncontrolling interests and redeemable noncontrolling interests totaled approximately 14.5 %. AXT remains the controlling stakeholder of Tongmei and holds a majority of the board of director positions of Tongmei. In June 2021, AXT sold AXT-Tongmei to Tongmei for $ 1 . Since Tongmei is 85.5 % owned by AXT, and the transaction was between common interest holders, the transaction was accounted for at net book value and resulted in an increase of $ 1.2 million to noncontrolling interests and $ 1.2 million to redeemable noncontrolling interests. ​ Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”) requires management to make estimates, judgments and assumptions. We believe that the estimates, judgments, and assumptions upon which management relies are reasonable based on information available at the time that these estimates, judgments, and assumptions are made. These estimates, judgments, and assumptions can affect the reported amounts of assets and liabilities as of the date of the consolidated financial statements as well as the reported amounts of revenues and expenses during the periods presented. To the extent there are material differences between these estimates and actual results, our consolidated financial statements would be affected. 82 Table of Contents Fair Value of Financial Instruments The carrying amounts of certain of our financial instruments including cash and cash equivalents, restricted cash, short-term investments and long-term investments, accounts receivable, accounts payable, accrued liabilities and bank loans approximate fair value due to their short maturities. Certain cash equivalents and investments are required to be adjusted to fair value on a recurring basis. See Note 2. Fair Value of Investments ASC Topic 820, Fair value measurement (“ASC 820”) establishes three levels of inputs that may be used to measure fair value. Level 1 instruments represent quoted prices in active markets. Therefore, determining fair value for Level 1 instruments does not require significant management judgment, and the estimation is not difficult. Level 2 instruments include observable inputs other than Level 1 prices, such as quoted prices for similar instruments in markets with insufficient volume or infrequent transactions (less active markets), issuer bank statements, credit ratings, non-binding market consensus prices that can be corroborated with observable market data, model-derived valuations in which all significant inputs are observable or can be derived principally from or corroborated with observable market data for substantially the full term of the assets or liabilities, or quoted prices for similar assets or liabilities. These Level 2 instruments require more management judgment and subjectivity compared to Level 1 instruments, including: ● Determining which instruments are most comparable to the instrument being priced requires management to identify a sample of similar securities based on the coupon rates, maturity, issuer, credit rating, and instrument type, and subjectively select an individual security or multiple securities that are deemed most similar to the security being priced. ● Determining which model-derived valuations to use in determining fair value requires management judgment. When observable market prices for similar securities or comparable securities are not available, we price our marketable debt instruments using non-binding market consensus prices that are corroborated with observable market data or pricing models, such as discounted cash flow models, with all significant inputs derived from or corroborated with observable market data. Level 3 instruments include unobservable inputs to the valuation methodology that are significant to the measurement of fair value of assets or liabilities. The determination of fair value for Level 3 instruments requires the most management judgment and subjectivity. We place short-term foreign currency hedges that are intended to offset the potential cash exposure related to fluctuations in the exchange rate between the United States dollar and Japanese yen. We measure the fair value of these foreign currency hedges at each month end and quarter end using current exchange rates and in accordance with generally accepted accounting principles. At quarter end any foreign currency hedges not settled are netted in “Accrued liabilities” on the consolidated balance sheets and classified as Level 3 assets and liabilities. As of December 31, 2024 and 2023, the net change in fair value from the placement of the hedge to settlement had a de minimis impact to the consolidated results. 83 Table of Contents Foreign Currency Translation The functional currency of our Chinese subsidiaries is the renminbi, the local currency of China. Transaction gains and losses resulting from transactions denominated in currencies other than the U.S. dollar or in the functional currencies of our subsidiaries are included in “Other income, net” for the years presented. 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. Revenue and expense items are translated at the average rate of exchange for the period. Gains and losses from foreign currency translation are included in “Other comprehensive income (loss)”, net of tax in the consolidated statements of comprehensive income (loss). Revenue Recognition We manufacture and sell high-performance compound semiconductor substrates including indium phosphide, gallium arsenide and germanium wafers, and our consolidated subsidiaries sell certain raw materials, including high purity gallium (6N and 7N Ga), pyrolytic boron nitride (pBN) crucibles and boron oxide (B2O3). After we ship our products, there are no remaining obligations or customer acceptance requirements that would preclude revenue recognition. Our products are typically sold pursuant to purchase orders placed by our customers, and our terms and conditions of sale do not require customer acceptance. We account for a contract with a customer when there is a legally enforceable contract, which could be the customer’s purchase order, the rights of the parties are identified, the contract has commercial terms, and collectibility of the contract consideration is probable. 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. 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. ​ We have elected to account for shipping and handling as activities to fulfill the promise to transfer the goods. Shipping and handling fees billed to customers in a sales transaction are recorded as an offset to shipping and handling expenses. Sales taxes and value added taxes in foreign jurisdictions that are collected from customers and remitted to governmental authorities are accounted for on a net basis and, therefore, are excluded from revenue. ​ We do not provide training, installation or commissioning services. We provide for future returns based on historical data, prior experience, current economic trends and changes in customer demand at the time revenue is recognized. We do not recognize any asset associated with the incremental cost of obtaining revenue generating customer contracts. As such, sales commissions are expensed as incurred, given that the expected period of benefit is less than one year . 84 Table of Contents Contract Balances We receive payments from customers based on a billing schedule as established in our contracts. Contract assets are recorded when we have a conditional right to consideration for our completed performance under the contracts. Accounts receivables are recorded when the right to this consideration becomes unconditional. We do not have any material contract assets as of December 31, 2024, or 2023. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, ​ December 31, ​ ​ ​ 2024 ​ 2023 ​ Contract liabilities ​ $ 1,590 ​ $ 305 ​ 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, 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 In general, revenue disaggregated by product types and geography (See Note 14) is aligned according to the nature and economic characteristics of our business and provides meaningful disaggregation of our results of operations. Since we operate in one segment, all financial segment and product line information can be found in the consolidated financial statements. Practical Expedients and Exemptions We elected to use the following practical expedients: (i) not to adjust the promised amount of consideration for the effects of a significant financing component when we expect, at contract inception, that the period between our transfer of a promised product or service to a customer and when the customer pays for that product or service will be one year or less; (ii) to expense costs as incurred for costs to obtain a contract when the amortization period would have been one year or less; (iii) not to assess whether promised goods or services are performance obligations if they are immaterial in the context of the contract with the customer. In addition, we do not disclose the value of unsatisfied performance obligations for contracts with an original expected length of one year or less. ​ Accounting for Sales and Use Taxes We record sales taxes collected on sales of our products and for amounts not yet remitted to tax authorities as accrued liabilities on our consolidated balance sheets. Risks and Concentration of Credit Risk Our business is very dependent on the semiconductor, lasers and optical industries which can be highly cyclical and experience downturns as a result of economic changes, overcapacity, and technological advancements. Significant technological changes in the industry or customer requirements, or the emergence of competitive products with new capabilities or technologies, could adversely affect our operating results. In addition, a significant portion of our revenues and net income is derived from international sales. Fluctuations of the United States dollar against foreign currencies and changes in local regulatory or economic conditions, particularly in an emerging market such as China, could adversely affect operating results. We depend on a limited number of suppliers for certain raw materials, components and equipment used in manufacturing our products, including quartz tubing and polishing solutions. We generally purchase these materials through standard purchase orders and not pursuant to long-term supply contracts. 85 Table of Contents 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. The composition and maturities are regularly monitored by management. Such deposits are in excess of the amount of the insurance provided by the federal government on such deposits. We are exposed to credit risks in the event of default by the issuers to the extent of the amount recorded on the consolidated balance sheets. ​ We perform ongoing credit evaluations of our customers’ financial condition, and limit the amount of credit extended when deemed necessary, but generally do not require collateral. The credit risk in our accounts receivable is mitigated by our credit evaluation process and the geographical dispersion of sales transactions. 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. One customer represented 15 % of our revenue for the year ended December 31, 2022. 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 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. Cash and Cash Equivalents We consider investments in highly liquid instruments purchased with an original maturity of three months or less to be cash equivalents. Cash equivalents consist primarily of certificate of deposits. Cash and cash equivalents are stated at cost, which approximates fair value. Restricted Cash ​ We maintain restricted cash in connection with cash balances temporarily restricted for regular business operations. 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. Short-Term and Long-Term Investments We classify our investments in marketable securities as available-for-sale debt securities . Short-term and long-term investments are comprised of available-for-sale marketable securities, which consist primarily of certificates of deposit and corporate bonds. These investments are reported at fair value as of the respective balance sheet dates with unrealized gains and losses included in accumulated other comprehensive income (loss) within stockholders’ equity on the consolidated balance sheets. The amortized cost of securities is adjusted for amortization of premiums and accretion of discounts to maturity. Such amortization is included in “Other income, net” in the consolidated statements of operations. Realized gains and losses and declines in value judged to be other than temporary on available-for-sale securities are also included in “Other income, net” in the consolidated statements of operations. The cost of securities sold is based upon the specific identification method. Accounts Receivable and Allowance for Credit Losses and Sales Returns Accounts receivable are recorded at the invoiced amount and are not interest bearing. We review at least quarterly, or when there are changes in credit risks, the likelihood of collection on our accounts receivable balances and provide an allowance for credit losses. We measure the expected credit losses on a collective (pool) basis when similar delinquency status exist. We evaluate receivables from U.S. customers with an emphasis on balances in excess of 90 86 Table of Contents 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. The reason for the difference in the evaluation of receivables between foreign and U.S. customers is that U.S. customers have historically made payments in a shorter period of time than foreign customers. 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 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, 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 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 We maintain a warranty reserve based upon our claims experience during the prior twelve months and any pending claims and returns of which we are aware. Warranty costs are accrued at the time revenue is recognized. As of December 31, 2024 and 2023, accrued product warranties totaled $ 451,000 and $ 703,000 , respectively. The increase in accrued product warranties is primarily attributable to increased claims for quality issues experienced by some of our customers. If actual warranty costs or pending new claims differ substantially from our estimates, revisions to the estimated warranty liability would be required, which could have a material impact on our financial condition and results of operations for future periods. Inventories Inventories are stated at the lower of cost (approximated by standard cost) or net realizable value. Cost is determined using the weighted average cost method. Our inventory consists of raw materials as well as finished goods and work-in-process that include material, labor and manufacturing overhead costs. We routinely evaluate the levels of our inventory in light of current market conditions in order to identify excess and obsolete inventory, and we provide a reserve for certain inventories to their estimated net realizable value based upon the age and quality of the product and the projections for sale of the completed products. When a reserve is recorded, a new lower cost basis for that inventory is established and subsequent changes in facts and circumstances do not result in the restoration or increase in the new cost basis. Property, Plant and Equipment Property, plant and equipment are stated at cost less accumulated depreciation computed using the straight-line method over the estimated economic lives of the assets, which vary from 1 to 39.5 years. Leasehold improvements are amortized using the straight-line method over the shorter of the estimated useful life or the term of the lease. We generally depreciate com puter , soft ware , office equipment , furniture and fixtures over 3 to 5 years , machinery and equipment over 1 to 20 years , automobiles over 5 to 10 years , leasehold and building improvements over 10 years , or the lease term if shorter, and buildings over 39.5 years. Repairs and maintenance costs are expensed as incurred. 87 Table of Contents Impairment of Long-Lived Assets We evaluate property, plant and equipment and intangible assets for impairment. When events and circumstances indicate that long-lived assets may be impaired, we compare the carrying value of the long-lived assets to the projection of future undiscounted cash flows attributable to these assets. In the event that the carrying value exceeds the future undiscounted cash flows, we record an impairment charge against income equal to the excess of the carrying value over the assets’ fair value. Fair values are determined based on quoted market values, discounted cash flows or internal and external appraisals, as applicable. We did not recognize any impairment charges of long-lived assets in 2024, 2023 and 2022. Impairment of Investments All available-for-sale debt securities are periodically reviewed for impairment. An investment is considered to be impaired when its fair value is less than its amortized cost basis and it is more likely than not that we will be required to sell the impaired security before recovery of its amortized cost basis. Factors considered in determining whether a loss is temporary include the magnitude of the decline in market value, the length of time the market value has been below cost (or adjusted cost), credit quality, and our ability and intent to hold the securities for a period of time sufficient to allow for any anticipated recovery in market value. We also invest in equity instruments of privately held companies in China for business and strategic purposes. Investments in our unconsolidated joint venture companies are classified as other assets and accounted for under either the equity or fair value method, depending on whether we have the ability to exercise significant influence over their operations or financial decisions. 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. 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. For the year ended December 31, 2023, one of our PRC joint ventures assessed one of its equity investments was fully impaired. 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 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 (“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. While we consolidate our majority-owned or significantly controlled joint ventures, we do not allocate any portion of overhead, interest and other income, interest expense or taxes to them. We therefore have determined that our joint venture operations do not constitute an operating segment. 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. 88 Table of Contents Stock-Based Compensation We have employee stock option plans, which are described more fully in Note 10-“Employee Benefit Plans and Stock-based Compensation”. We account for stock-based compensation in accordance with the provisions of ASC Topic 718, Compensation-Stock Compensation (“ASC 718”). We utilize the Black-Scholes option pricing model to estimate the grant date fair value of stock options, which requires the input of highly subjective assumptions, including estimating stock price volatility and expected term. Stock-based compensation cost is measured at each grant date, based on the fair value of the award, and is recognized as expense and as an increase in additional paid-in capital over the requisite service period of the award. Research and Development Research and development costs consist primarily of salaries, including stock-based compensation expense and related personnel costs, depreciation, materials and product testing which are expensed as incurred. Tangible assets acquired for research and development purposes are capitalized if they have alternative future use. ​ Advertising Costs Advertising costs, included in selling, general and administrative expenses, are expensed as incurred. Advertising costs for the years ended December 31, 2024, 2023 and 2022 were insignificant. Income Taxes We account for income taxes in accordance with ASC Topic 740, Income Taxes (“ASC 740”), which requires that deferred tax assets and liabilities be recognized using enacted tax rates for the effect of temporary differences between the book and tax bases of recorded assets and liabilities. ASC 740 also requires that deferred tax assets be reduced by a valuation allowance if it is more likely than not that a portion of the deferred tax asset will not be realized. The impact of ASC 740 is more fully described in Note 12. Comprehensive Income (loss) The components of other comprehensive income (loss) include unrealized gains and losses on marketable securities and foreign currency translation adjustments. Comprehensive income (loss) is presented in the consolidated statements of comprehensive income (loss). The balance of accumulated other comprehensive income (loss) is as follows (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ As of December 31, ​ 2024 ​ 2023 Accumulated other comprehensive loss: ​ ​ ​ ​ ​ ​ Unrealized loss on investments, net ​ $ — ​ $ ( 20 ) Cumulative translation adjustment ​ ( 9,514 ) ​ ​ ( 6,530 ) ​ ​ ( 9,514 ) ​ ​ ( 6,550 ) Less: Cumulative translation adjustment attributable to noncontrolling interests and redeemable noncontrolling interests ​ ​ ( 857 ) ​ ​ ( 551 ) Accumulated other comprehensive loss attributable to AXT, Inc. ​ $ ( 8,657 ) ​ $ ( 5,999 ) ​ Net Income (Loss) Per Share 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. 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. Potentially dilutive common shares consist of common shares issuable upon the exercise of stock options and vesting of restricted 89 Table of Contents 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 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. The amendments in this Update require that a public entity disclose significant segment expenses, profit or loss and assets, etc. for each reportable segment, on an annual and interim basis. 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 had an immaterial effect on our consolidated financial statements. In December 2023, FASB issued ASU 2023-09— Income Taxes (Topic 740): Improvements to Income Tax Disclosures , to help investors better understand an entity’s exposure to potential changes in jurisdictional tax legislation and the ensuing risks and opportunities. Furthermore, the Update improves to assess income tax information that affects cash flow forecasts and capital allocation decisions. The Update is effective for public business entities for annual periods beginning after December 15, 2024, on a prospective basis. Adoption of the new standard will have an immaterial effect on our consolidated financial statements. 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. ​ ​ 90 Table of Contents Note 2. 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, 2024 and 2023, our cash, restricted cash, cash equivalents and debt investments are classified as follows (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, 2024 ​ December 31, 2023 ​ ​ ​ Gross Gross ​ ​ ​ ​ Gross Gross ​ ​ ​ ​ Amortized ​ Unrealized ​ Unrealized ​ Fair ​ Amortized ​ Unrealized ​ Unrealized ​ Fair ​ Cost Gain (Loss) Value Cost Gain (Loss) Value Classified as: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Cash, restricted cash and cash equivalents ​ $ 33,811 ​ $ — ​ $ — ​ $ 33,811 ​ $ 50,114 ​ $ — ​ $ — ​ $ 50,114 ​ Investments (available-for-sale): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Certificates of deposit 1 ​ — ​ — ​ ​ — ​ — ​ 2,160 ​ — ​ ​ ( 20 ) ​ 2,140 ​ Total cash, restricted cash, cash equivalents and investments ​ $ 33,811 ​ $ — ​ $ — ​ $ 33,811 ​ $ 52,274 ​ $ — ​ $ ( 20 ) ​ $ 52,254 ​ Contractual maturities on investments: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Due within 1 year 2 ​ $ — ​ ​ ​ ​ ​ ​ ​ $ — ​ $ 2,160 ​ ​ ​ ​ ​ ​ ​ $ 2,140 ​ ​ ​ $ — ​ ​ ​ ​ ​ ​ ​ $ — ​ $ 2,160 ​ ​ ​ ​ ​ ​ ​ $ 2,140 ​ 1. Certificate of deposit with original maturities of less than three months. 2. Certificate of deposit with original maturities of more than three months. 3. Classified as “Short-term investments” in our consolidated balance sheets. 4. Classified as “Long-term investments” in our consolidated balance sheets. ​ We manage our debt investments as a single portfolio of highly marketable securities that is intended to be available to meet our current cash requirements. Certificates of deposit and corporate bonds are typically held until maturity. Historically, the gross unrealized losses related to our portfolio of available-for-sale debt securities were immaterial, and primarily due to normal market fluctuations and not due to increased credit risk or other valuation concerns. Gross unrealized losses on our available-for-sale debt securities as of December 31, 2023 was $ 20,000 , and historically, such gross unrealized losses have been temporary in nature and we believe that it is probable the principal and interest will be collected in accordance with the contractual terms. We review our debt investment portfolio at least quarterly, or when there are changes in credit risks or other potential valuation concerns, to identify and evaluate whether an allowance for credit losses or impairment would be necessary. Factors considered in determining whether a loss is temporary include the magnitude of the decline in market value, the length of time the market value has been below cost (or adjusted cost), credit quality, and our ability and intent to hold the securities for a period of time sufficient to allow for any anticipated recovery in market value. 91 Table of Contents 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, 2023 (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ In Loss Position ​ In Loss Position ​ Total In ​ ​ < 12 months ​ > 12 months ​ Loss Position ​ ​ Gross ​ Gross ​ Gross ​ ​ Fair ​ Unrealized ​ Fair ​ Unrealized ​ Fair ​ Unrealized As of December 31, 2023 ​ Value ​ (Loss) ​ Value ​ (Loss) ​ Value ​ (Loss) Investments: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Certificates of deposit ​ $ — ​ $ — ​ $ 2,140 ​ $ ( 20 ) ​ $ 2,140 ​ $ ( 20 ) ​ Total in loss position ​ $ — ​ $ — ​ $ 2,140 ​ $ ( 20 ) ​ $ 2,140 ​ $ ( 20 ) ​ ​ Investments in Privately Held Raw Material Companies We have made strategic investments in private companies located in China in order to gain access at a competitive cost to raw materials that are critical to our substrate business (see Note 6). 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, 2024 and 2023, there were three companies accounted for under the equity method, respectively. Fair Value Measurements We invest primarily in money market accounts, certificates of deposit, corporate bonds and notes, and government securities. ASC Topic 820, Fair Value Measurements and Disclosures (“ASC 820”), establishes three levels of inputs that may be used to measure fair value. Level 1 instrument valuations are obtained from real-time quotes for transactions in active exchange markets of the asset or identical assets. Level 2 instrument valuations are obtained from readily available, observable pricing sources for comparable instruments. Level 3 instrument valuations are obtained from unobservable inputs in which there is little or no market data, which require us to develop our own assumptions. On a recurring basis, we measure certain financial assets and liabilities at fair value, primarily consisting of our short-term and long-term debt investments. The type of instrument valued based on quoted market prices in active markets include our money market funds, which are generally classified within Level 1 of the fair value hierarchy. We classify our available-for-sale debt securities including certificates of deposit and corporate bonds as having Level 2 inputs. The valuation techniques used to measure the fair value of these financial instruments having Level 2 inputs were derived from bank statements, quoted market prices, broker or dealer statements or quotations, or alternative pricing sources with reasonable levels of price transparency. There were no changes in valuation techniques or related inputs in the year ended December 31, 2024. There have been no transfers between fair value measurement levels during the years ended December 31, 2024 and 2023. We place short-term foreign currency hedges that are intended to offset the potential cash exposure related to fluctuations in the exchange rate between the United States dollar and Japanese yen. We measure the fair value of these foreign currency hedges at each month end and quarter end using current exchange rates and in accordance with generally accepted accounting principles. At quarter end any foreign currency hedges not settled are netted in “Accrued liabilities” on the consolidated balance sheets and classified as Level 3 assets and liabilities. As of December 31, 2024, the net change in fair value from the placement of the hedge to settlement at each month end during the quarter had a de minimis impact to the consolidated results. 92 Table of Contents 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, 2023 (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Quoted Prices in ​ ​ ​ Significant ​ ​ ​ ​ ​ Active Markets of ​ Significant Other ​ Unobservable ​ ​ Balance as of ​ Identical Assets ​ Observable Inputs ​ Inputs ​ December 31, 2023 (Level 1) (Level 2) (Level 3) Assets: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Investments: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Certificates of deposit ​ $ 2,140 ​ $ — ​ $ 2,140 ​ $ — ​ Total ​ $ 2,140 ​ $ — ​ $ 2,140 ​ $ — ​ ​ Items Measured at Fair Value on a Nonrecurring Basis Certain assets that are subject to nonrecurring fair value measurements are not included in the table above. These assets include investments in privately held companies accounted for by equity and fair value method (See Note 6). For the year ended December 31, 2023, one of our PRC joint ventures assessed one of its equity investments was fully impaired. 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. We had no impairment charges for 2024 and 2022. Note 3. Inventories The components of inventory are summarized below (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, ​ December 31, ​ ​ 2024 2023 Inventories: ​ ​ ​ ​ ​ ​ ​ Raw materials ​ $ 31,743 ​ $ 32,910 ​ Work in process ​ 50,779 ​ 50,008 ​ Finished goods ​ 2,555 ​ 3,585 ​ ​ ​ $ 85,077 ​ $ 86,503 ​ ​ As of December 31, 2024 and 2023, carrying values of inventories were net of inventory reserves of $ 24.1 million and $ 21.9 million, respectively, for excess and obsolete inventory and $ 73,000 and $ 78,000 , respectively, for lower of cost or net realizable value reserves. Note 4. Related Party Transactions ChaoYang Tongmei purchases raw materials from one of PRC joint ventures, Donghai County Dongfang High Purity Electronic Materials Co., Ltd. (“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. In September 2021 and October 2021, our consolidated subsidiary, ChaoYang XinMei received funding from a minority investor of $ 0.9 million and $ 1.0 million, respectively. As of December 31, 2021, $ 1.9 million was included in short-term loan from noncontrolling interest in our consolidated balance sheets. In December 2021 and January 2022, the same subsidiary received funding from Tongmei of $ 1.4 million and $ 1.4 million, respectively. In January 2022, the China local government certified this additional funding in ChaoYang XinMei as an equity investment. As a result, noncontrolling interests increased $ 2.2 million and redeemable noncontrolling interests increased $ 0.2 million. 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 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. In April 2022 and May 2022, the minority investors invested $ 0.7 million and $ 0.6 million, respectively. As a result, noncontrolling interests increased $ 1.4 million and redeemable noncontrolling interests increased $ 0.1 million. 93 Table of Contents Tongmei’s ownership remained at 58.5 % after these equity investments. In July 2022, Tongmei and the minority investors further invested $ 0.8 million and $ 0.6 million in ChaoYang XinMei, respectively. This completed the investment obligations under the Capital Increase Agreement. As a result, noncontrolling interests increased $ 610,000 and redeemable noncontrolling interests increased $ 57,000 . Tongmei’s ownership remained at 58.5 % after the July 2022 equity investment. ​ In September 2022, our consolidated subsidiary, ChaoYang LiMei completed the sale of land and its attached buildings to our equity investment entity, ChaoYang KaiMei, for a total consideration of $ 1.5 million. In January 2023, ChaoYang KaiMei paid to ChaoYang LiMei $ 1.5 million. As of December 31, 2024, $ 0 million was included in “Prepaid expenses and other current assets” in our consolidated balance sheets. ​ Our Related Party Transactions Policy seeks to prohibit all conflicts of interest in transactions between related parties and us, unless they have been approved by our Board of Directors. 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 PRC joint ventures. See Note 6 for further details. Note 5. Property, Plant and Equipment, Net The components of our property, plant and equipment are summarized below (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, ​ December 31, ​ ​ ​ 2024 ​ 2023 ​ Property, plant and equipment: ​ ​ ​ ​ ​ ​ ​ Machinery and equipment, at cost ​ $ 67,917 ​ $ 65,918 ​ Less: accumulated depreciation and amortization ​ ​ ( 44,065 ) ​ ​ ( 42,112 ) ​ Building, at cost ​ ​ 137,420 ​ ​ 125,786 ​ Less: accumulated depreciation and amortization ​ ​ ( 26,310 ) ​ ​ ( 23,339 ) ​ Leasehold improvements, at cost ​ 7,575 ​ 7,596 ​ Less: accumulated depreciation and amortization ​ ​ ( 6,347 ) ​ ​ ( 5,984 ) ​ Construction in progress ​ 23,531 ​ 38,483 ​ ​ ​ $ 159,721 ​ $ 166,348 ​ ​ As of December 31, 2024, the balance of construction in progress was $ 23.5 million, of which $ 17.9 million was related to our buildings in our Dingxing and Kazuo locations, $ 1.4 million was for manufacturing equipment purchases not yet placed in service and $ 4.3 million was from our construction in progress for our other consolidated subsidiaries. As of December 31, 2023, the balance of construction in progress was $ 38.5 million, of which $ 31.2 million was related to our buildings in our Dingxing and Kazuo locations, $ 3.1 million was for manufacturing equipment purchases not yet placed in service and $ 4.2 million was from our construction in progress for our other consolidated subsidiaries. Depreciation and amortization expense was $ 9.0 million, $ 8.7 million and $ 8.1 million for the years ended December 31, 2024, 2023 and 2022, respectively. 94 Table of Contents Note 6. Investments in Privately Held Raw Material Companies We have made strategic investments in private companies located in China in order to gain access at a competitive cost to raw materials that are critical to our substrate business. These companies form part of our overall supply chain. The investments are summarized below (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Investment Balance as of ​ ​ ​ ​ ​ ​ ​ December 31, ​ December 31, ​ Accounting ​ Ownership * Company 2024 2023 Method Percentage ​ Nanjing JinMei Gallium Co., Ltd. ​ $ 592 ​ $ 592 Consolidated ** 85.5 % ChaoYang JinMei Gallium Co., Ltd. ​ ​ 1,820 ​ ​ 1,820 ​ Consolidated ​ ** 85.5 % Beijing BoYu Semiconductor Vessel Craftwork Technology Co., Ltd. ​ 1,346 ​ 1,346 Consolidated ** 85.5 % ChaoYang ShuoMei High Purity Semiconductor Materials Co., Ltd. ​ ​ 3,122 ​ ​ 3,122 ​ Consolidated ​ **** 75.0 % ChaoYang XinMei High Purity Semiconductor Materials Co., Ltd. ​ ​ 7,331 ​ ​ 7,331 ​ Consolidated *** 58.5 % ​ ​ $ 14,211 ​ $ 14,211 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Beijing JiYa Semiconductor Material Co., Ltd. ​ $ 4,867 ​ ​ 3,806 ​ Equity ​ 39 % Xiaoyi XingAn Gallium Co., Ltd. ​ ​ 5,304 ​ ​ 5,516 ​ Equity ​ ** 25 % ChaoYang KaiMei Quartz Co., Ltd. ​ ​ 3,895 ​ ​ 3,154 ​ Equity ​ ***** 40 % ​ ​ $ 14,066 ​ $ 12,476 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Emeishan Jia Mei High Purity Metals Co., Ltd. ​ 551 ​ 551 Fair value ****** 10 % ​ ​ $ 551 ​ $ 551 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ * 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. ​ ** In preparation for Tongmei’s application for a listing of shares in an IPO on the STAR Market, in late December 2020 we reorganized our entity structures in China. JinMei and BoYu and their subsidiaries, previously organized under AXT, Inc., were assigned to Tongmei and effectively merged with Tongmei although they retained their own respective legal entity status and are wholly owned subsidiaries of Tongmei. The 33 % minority interest stakeholders of BoYu converted their ownership to a 7.59 % minority interest in Tongmei. The 8.5 % minority interest stakeholders, employees of JinMei, converted their ownership to a 0.38 % minority interest in Tongmei. Further, a number of employees, key managers and contributors, purchased a 0.4 % minority interest in Tongmei. In 2020, the Investors transferred approximately $ 48.1 million of new capital to Tongmei. An additional investment of approximately $ 1.5 million of new capital was funded in early January 2021. 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 %. As of December 31, 2022, Tongmei’s noncontrolling interests and redeemable noncontrolling interests totaled approximately 14.5 %. AXT remains the controlling stakeholder of Tongmei and holds a majority of the Board of Director positions of Tongmei. ​ *** In February 2021, Tongmei signed a joint venture agreement with certain investors to fund ChaoYang XinMei. ​ **** In April 2022, ChaoYang JinMei signed a joint venture agreement with certain investor to fund a new company, ChaoYang ShuoMei. ​ ***** In April 2022, Tongmei signed a joint venture agreement with certain investors to fund a new company, ChaoYang KaiMei. ​ ****** In May 2023, we sold 15 % of our equity investments in Jia Mei to a third party. We now own 10 % of the equity ownership of Jia Mei and account for it under the fair value method. 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 95 Table of Contents 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 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. The gain from the sale and the subsequent remeasurement includes the following: ​ ​ ​ ​ ​ ​ ​ Amount ​ (in thousands) Fair value of the consideration received ​ $ 779 Foreign income tax withholding ​ ​ 48 Carrying value of 15 % of Emeishan Jia Mei High Purity Metals Co., Ltd. ​ ​ ( 252 ) Gain recognized on sale of 15 % of Emeishan Jia Mei High Purity Metals Co., Ltd. ​ $ 575 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Amount ​ ​ (in thousands) Fair value of the retained investment in Emeishan Jia Mei High Purity Metals Co., Ltd. ​ $ 551 Carrying value of retained noncontrolling investment ( 10 %) ​ ​ ( 168 ) Gain on retained noncontrolling investment due to remeasurement ( 10 %) ​ $ 383 ​ The Jia Mei investment is reviewed for other-than-temporary declines in value on a quarterly basis. We did not record any other-than-temporary impairment charges for Jia Mei investment during the twelve months ended December 31, 2023. ​ In November 2023, our 46 % equity ownership interest in Dongfang was sold to a third party for consideration valued at approximately $ 0.6 million, including raw materials, equipment, and vehicle. As a result, our equity ownership interest of Dongfang decreased from 46 % to 0 %. The loss resulting from the sale 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. The loss from the sale includes the following: ​ ​ ​ ​ ​ ​ ​ Amount ​ (in thousands) Fair value of the consideration received ​ $ 585 Carrying value of 46 % of Donghai County Dongfang High Purity Electronic Materials Co., Ltd. ​ ​ ( 1,710 ) Loss recognized on sale of 46 % of Donghai County Dongfang High Purity Electronic Materials Co., Ltd. ​ $ ( 1,125 ) ​ Although we have representation on the board of directors of each of the privately held raw material companies, the daily operations of each of these companies are managed by local management and not by us. Decisions concerning their respective short-term strategy and operations, ordinary course of business capital expenditures and sales of finished product, are made by local management with regular guidance and input from us. 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 96 Table of Contents 40 %, 39 %, 25 %, and 10 %, respectively. These minority investment entities are not considered variable interest entities because: ● all minority investment entities have sustainable businesses of their own; ● our voting power is proportionate to our ownership interests; ● we only recognize our respective share of the losses and/or residual returns generated by the companies if they occur; and ● we do not have controlling financial interest in, do not maintain operational or management control of, do not control the board of directors of, and are not required to provide additional investment or financial support to any of these companies. Occasionally, one of our PRC subsidiaries or PRC raw material joint ventures declares and pays a dividend. These dividends generally occur when the PRC joint venture declares a dividend for all of its shareholders. Dividends paid to the Company are subject to a 10% PRC withholding tax. The Company is required to obtain approval from the State Administration of Foreign Exchange (“SAFE”) to transfer funds in or out of the PRC. SAFE requires a valid agreement to approve the transfers, which are processed through a bank. Other than PRC foreign exchange restrictions, the Company is not subject to any PRC restrictions and limitations on its ability to distribute earnings from its businesses, including its PRC subsidiaries and PRC joint ventures, to the Company and its investors as well as the ability to settle amounts owed by the Company to its PRC subsidiaries and PRC joint ventures. 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, 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. In April 2023, Xiaoyi XingAn distributed a dividend of $ 1.8 million to us. 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. AXT’s minority investment entities are not consolidated and are accounted for under the equity method. The equity entities had the following summarized income information (in thousands) for the years ended December 31, 2024, 2023 and 2022, respectively: (The 2023 income information includes results of Jia Mei for Q1 and Q2.) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Our share for the ​ ​ ​ Year Ended ​ Year Ended ​ ​ ​ December 31, ​ December 31, ​ 2024 2023 ​ 2022 2024 2023 2022 Net revenue ​ $ 37,591 ​ $ 32,544 ​ $ 48,139 ​ $ 11,715 ​ $ 10,033 ​ $ 15,031 ​ Gross profit ​ 17,747 ​ 11,698 ​ 27,000 ​ 5,374 ​ 3,365 ​ 8,229 ​ Operating income ​ 13,780 ​ 10,115 ​ 24,987 ​ 3,889 ​ 2,724 ​ 7,532 ​ Net income ​ ​ 11,944 ​ ​ 8,681 ​ ​ 19,104 ​ ​ 3,439 ​ ​ 1,884 ​ ​ 5,957 ​ ​ 97 Table of Contents These minority investment entities that are not consolidated, but rather are accounted for under the equity method, had the following summarized balance sheet information (in thousands) as of December 31, 2024 and 2023, respectively: (The 2023 balance sheet information excludes Jia Mei.) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ As of December 31, ​ 2024 ​ 2023 Current assets ​ $ 34,858 $ 31,636 ​ Noncurrent assets ​ 20,975 ​ 19,751 ​ Current liabilities ​ 5,602 ​ 7,367 ​ Noncurrent liabilities ​ 6,165 ​ — ​ ​ Our portion of the income and losses, including impairment charges, from these minority investment entities that are not consolidated and are accounted for under the equity method was an income of $ 3.4 million, $ 1.9 million and $ 6.0 million for the years ended December 31, 2024, 2023 and 2022, respectively. Undistributed retained earnings relating to our investments in these minority investment entities amounted to $ 9.2 million and $ 8.1 million as of December 31, 2024 and 2023, respectively. Note 7. Balance Sheets Details Other Assets The components of other assets are summarized below (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ As of December 31, ​ 2024 2023 ​ Equity method investments ​ ​ $ 14,066 ​ $ 12,476 ​ Value added tax receivable, long term ​ ​ ​ 194 ​ ​ 1,291 ​ Other intangible assets ​ ​ ​ 1,710 ​ ​ 1,821 ​ Deferred tax assets ​ ​ ​ 1,418 ​ ​ 1,683 ​ Other assets ​ ​ ​ 1,454 ​ ​ 1,627 ​ ​ ​ ​ $ 18,842 ​ $ 18,898 ​ ​ Accrued Liabilities The components of accrued liabilities are summarized below (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ As of December 31, ​ ​ 2024 2023 Preferred stock dividends payable ​ $ 2,901 ​ $ 2,901 ​ Accrued compensation and related charges ​ ​ 2,832 ​ ​ 3,707 ​ Payable in connection with construction in progress ​ ​ 1,985 ​ ​ 7,249 ​ Advances from customers ​ ​ 1,590 ​ ​ 305 ​ Accrued professional services ​ ​ 1,460 ​ ​ 868 ​ Current portion of operating lease liabilities ​ ​ 536 ​ ​ 458 ​ Accrued product warranty ​ ​ 451 ​ ​ 703 ​ Other tax payable ​ ​ 399 ​ ​ 493 ​ Other personnel-related costs ​ ​ 256 ​ ​ 286 ​ Accrued income taxes ​ ​ 127 ​ ​ — ​ Accrual for sales returns ​ ​ 28 ​ ​ 39 ​ Other accrued liabilities ​ ​ 1,991 ​ ​ 2,010 ​ ​ ​ $ 14,556 ​ $ 19,019 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 98 Table of Contents Note 8. 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 “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): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Loan Interest ​ ​ ​ ​ ​ December 31, ​ December 31, Subsidiary Bank ​ Detail Rate ​ Start Date ​ Due Date ​ 2024 ​ 2023 Tongmei Bank of China (1) $ 1,848 3.5 % January-23 ​ January-24 $ - $ 1,795 ​ ​ ​ 2,184 2.8 % March-23 ​ March-24 ​ - ​ 2,118 ​ ​ ​ 376 2.7 % September-23 ​ September-24 ​ - ​ 386 ​ ​ ​ 876 3.5 % November-23 ​ November-24 ​ - ​ 876 ​ ​ ​ 1,003 3.5 % November-23 ​ November-24 ​ - ​ 1,003 ​ Bank of China (2) ​ 2,911 3.5 % January-23 ​ January-24 ​ - ​ 2,825 ​ Bank of China (5) ​ 1,426 2.4 % September-24 ​ September-25 ​ 1,370 ​ - ​ ​ ​ 1,370 2.4 % November-24 ​ November-25 ​ 1,370 ​ - ​ ​ ​ 685 2.7 % November-24 ​ November-25 ​ 685 ​ - ​ Bank of Communications (1) ​ 1,455 3.3 % January-23 ​ January-24 ​ - ​ 1,414 ​ ​ ​ 1,380 3.8 % May-23 ​ May-24 ​ - ​ 1,414 ​ ​ ​ 1,373 3.8 % July-23 ​ May-24 ​ - ​ 1,414 ​ ​ ​ 1,376 3.0 % May-24 ​ May-25 ​ 1,370 ​ - ​ ​ ​ 2,480 3.0 % June-24 ​ May-25 ​ 2,466 ​ - ​ China Merchants Bank (1) ​ 4,367 3.7 % January-23 ​ January-24 ​ - ​ 4,235 ​ ​ ​ 1,386 3.5 % January-24 ​ January-25 ​ 1,370 ​ - ​ ​ ​ 692 3.5 % February-24 ​ February-25 ​ 685 ​ - ​ ​ ​ 692 3.5 % April-24 ​ April-25 ​ 685 ​ - ​ Bank of Beijing (3) ​ 2,290 4.2 % January-23 ​ January-24 ​ - ​ 2,220 ​ ​ ​ 3,541 3.2 % June-23 ​ May-24 ​ - ​ 3,626 ​ ​ ​ 1,380 3.2 % June-23 ​ February-24 ​ - ​ 1,414 ​ ​ ​ 1,414 3.0 % December-23 ​ December-24 ​ - ​ 1,414 ​ ​ ​ 3,600 3.0 % March-24 ​ February-25 ​ 3,565 ​ - ​ ​ ​ 3,580 3.0 % June-24 ​ June-25 ​ 3,565 ​ - ​ Industrial Bank (1) ​ 2,757 4.3 % June-23 ​ June-24 ​ - ​ 2,825 ​ ​ ​ 2,744 4.3 % July-23 ​ July-24 ​ - ​ 2,825 ​ ​ ​ 2,744 4.3 % September-23 ​ September-24 ​ - ​ 2,825 ​ ​ ​ 2,851 3.9 % September-24 ​ September-25 ​ 2,740 ​ - ​ ​ ​ 2,679 3.9 % October-24 ​ October-25 ​ 2,679 ​ - ​ ​ ​ 1,440 3.2 % November-24 ​ November-25 ​ 1,440 ​ - ​ NingBo Bank (1) ​ 2,744 4.2 % August-23 ​ September-24 ​ - ​ 2,820 ​ ​ ​ 1,271 4.3 % November-23 ​ November-24 ​ - ​ 1,271 ​ ​ ​ 2,825 4.3 % December-23 ​ December-24 ​ - ​ 2,825 ​ ​ ​ 1,647 4.3 % January-24 ​ January-25 ​ 1,630 ​ - ​ ​ ​ 1,258 4.3 % May-24 ​ March-25 ​ 1,255 ​ - ​ ​ ​ 1,822 3.9 % November-24 ​ November-25 ​ 1,822 ​ - ​ ​ ​ 550 3.9 % December-24 ​ December-25 ​ 550 ​ - ​ Industrial and Commercial Bank of China (1) ​ 2,744 3.3 % September-23 ​ September-24 ​ - ​ 2,825 ​ ​ ​ 2,851 3.3 % September-24 ​ September-25 ​ 2,740 ​ - ​ NanJing Bank (1) ​ 2,752 3.8 % October-23 ​ October-24 ​ - ​ 2,752 ​ China Citic Bank (1) ​ 2,752 2.9 % June-24 ​ June-25 ​ 2,740 ​ - ​ ​ ​ 2,851 2.9 % July-24 ​ July-25 ​ 2,740 ​ - ​ ​ ​ 1,426 2.9 % September-24 ​ September-25 ​ 1,370 ​ - ​ Agricultural Bank of China (1) ​ 1,235 2.6 % November-24 ​ November-25 ​ 1,235 ​ - ​ ​ ​ 137 2.6 % December-24 ​ December-25 ​ 137 ​ - BoYu Industrial and Commercial Bank of China (4) ​ 1,414 2.7 % December-23 ​ December-24 ​ - ​ 1,414 ​ Industrial and Commercial Bank of China (1) ​ 1,426 2.8 % September-24 ​ September-25 ​ 1,370 ​ - ​ Bank of China (1) ​ 1,204 2.4 % January-23 ​ January-24 ​ - ​ 849 ​ ​ ​ 1,145 2.3 % September-24 ​ September-25 ​ 1,096 ​ - ​ ​ ​ 274 2.4 % December-24 ​ December-25 ​ 274 ​ - ​ NingBo Bank (1) ​ 1,414 3.3 % November-23 ​ May-24 ​ - ​ 1,414 ​ Industrial Bank (1) ​ 688 3.6 % September-23 ​ September-24 ​ - ​ 708 ​ ​ ​ 1,370 2.7 % November-24 ​ November-25 ​ 1,370 ​ - ​ Bank of Communications (1) ​ 1,414 3.0 % November-23 ​ May-24 ​ - ​ 1,414 ​ ​ ​ 274 3.0 % May-24 ​ May-25 ​ 274 ​ - ​ NanJing Bank (1) ​ 1,370 2.8 % December-24 ​ December-25 ​ 1,370 ​ - ​ Loan Balance ​ ​ ​ ​ ​ ​ ​ $ 45,963 $ 52,921 99 Table of Contents Collateral for the above bank loans and line of credit (1) Not collateralized. (2) ChaoYang LiMei time deposit. (3) AXT time deposit. (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 ​ 2025 $ 1,301 2026 ​ 1,301 2027 ​ 959 2028 ​ 1,233 2029 ​ 2,347 ​ 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. ​ Note 9. Stockholders’ Equity and Stock Repurchase Program Stockholders’ Equity The 883,000 shares of $ 0.001 par value Series A preferred stock issued and outstanding as of December 31, 2024 and 2023, valued at $ 3,532,000 are non-voting and non-convertible preferred stock with a 5.0 % cumulative annual dividend rate payable when declared by the Board of Directors and $ 4 per share liquidation preference over common stock, and must be paid before any distribution is made to common stockholders. These preferred shares were issued to Lyte Optronics, Inc. stockholders in connection with the completion of our acquisition of Lyte Optronics, Inc. on May 28, 1999. 100 Table of Contents Changes in AXT, Inc.’s ownership interests in consolidated subsidiaries The effects of changes in the Company’s ownership interests in its less than 100% owned subsidiaries on the Company’s equity are as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ As of December 31, ​ 2024 ​ 2023 Net loss attributable to AXT, Inc. ​ $ ( 11,624 ) $ ( 17,881 ) Decrease in additional paid-in capital for: ​ ​ ​ ​ Investment in subsidiary with noncontrolling interest ​ — ​ ( 308 ) Change from net loss attributable to AXT, Inc., net of transfers to noncontrolling interests ​ $ ( 11,624 ) ​ $ ( 18,189 ) ​ Stock Repurchase Program On October 27, 2014, our Board of Directors approved a stock repurchase program pursuant to which we may repurchase up to $ 5.0 million of our outstanding common stock. These repurchases can be made from time to time in the open market and are funded from our existing cash balances and cash generated from operations. During 2015, we repurchased approximately 908,000 shares at an average price of $ 2.52 per share for a total purchase price of approximately $ 2.3 million under the stock repurchase program. No shares were repurchased during 2024, 2023 and 2022 under this program. As of December 31, 2024, approximately $ 2.7 million remained available for future repurchases under this program. By the terms of the Series A preferred stock, so long as any shares of Series A preferred stock are outstanding, neither the Company nor any subsidiary of the Company shall redeem, repurchase or otherwise acquire any shares of common stock, unless all accrued dividends on the Series A preferred stock have been paid. During 2013 and 2015, we repurchased shares of our outstanding common stock. As of December 31, 2015, the Series A preferred stock had cumulative dividends of $ 2.9 million and we included this amount in “Accrued liabilities” in our consolidated balance sheets . In 2024, 2023 and 2022, we did no t repurchase any of our outstanding common stock. If we are required to pay the cumulative dividends on the Series A preferred stock, our cash and cash equivalents would be reduced. We account for the cumulative year-to-date dividends on the Series A preferred stock when calculating our earnings per share. Note 10. Employee Benefit Plans and Stock-based Compensation Stock Option Plans and Equity Incentive Plans In May 2007, our stockholders approved our 2007 Equity Incentive Plan (the “2007 Plan”), which provides for the grant of incentive and non-qualified stock options to our employees, consultants and directors. The 2007 Plan is a restatement of the 1997 Stock Option Plan which expired in 2007. The 1,928,994 share reserve of the 1997 Stock Option Plan became the reserve of the 2007 Plan, together with 1,300,000 additional shares approved for issuance under the 2007 Plan. 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. Stock options and stock appreciation rights awarded under the 2007 Plan may not be repriced without stockholder approval. Stock options and stock appreciation rights may not be granted below fair market value. Stock options or stock appreciation rights generally shall not be fully vested over a period of less than three years from the date of grant and cannot be exercised more than 10 years from the date of grant. Restricted stock, restricted stock units, and performance awards generally shall not vest faster than over a three-year period (or a twelve-month period if vesting is based on a performance measure). In December 2008, the 2007 Plan was amended to comply with the applicable requirements under Section 409A of the Internal Revenue Code. In May 2015, our stockholders approved our 2015 Equity Incentive Plan (the “2015 Plan”). The 2015 Plan is a replacement of the 2007 Plan. 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 101 Table of Contents 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. In May 2024, our stockholders approved 3,600,000 of additional shares for issuance under the 2015 Plan. Awards that may be made under the 2015 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 2015 Plan may not be repriced without stockholder approval. Stock options and stock appreciation rights may not be granted below fair market value. Stock options or stock appreciation rights generally shall not be fully vested over a period of less than four years from the date of grant and cannot be exercised more than 10 years from the date of grant. Restricted stock, restricted stock units, and performance awards generally shall not vest faster than over a three-year period (or a twelve-month period if vesting is based on a performance measure). However, options granted to consultants and restricted stock awards granted to independent board members typically vest in one year and the 2015 Plan does allow for similar vesting to employees. As of December 31, 2024, approximately 3.7 million shares were available for grant under the 2015 Plan. Stock Options The following table summarizes the stock option transactions for each of the years ended December 31, 2022, 2023 and 2024 (in thousands, except per share data): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Weighted- ​ ​ ​ ​ ​ ​ ​ ​ average ​ ​ ​ ​ ​ ​ Weighted- ​ Remaining ​ ​ ​ ​ ​ Number of ​ average ​ Contractual ​ Aggregate ​ ​ Options ​ Exercise ​ Life ​ Intrinsic Stock Options Outstanding Price (in years) Value ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Balance as of January 1, 2022 1,378 ​ $ 4.83 5.60 ​ $ 5,573 ​ Granted — ​ — ​ ​ ​ ​ ​ ​ Exercised ( 172 ) ​ 3.02 ​ ​ ​ ​ ​ ​ Canceled and expired — ​ — ​ ​ ​ ​ ​ ​ Balance as of December 31, 2022 1,206 ​ $ 5.09 5.08 ​ $ 630 ​ Granted — ​ — ​ ​ ​ ​ ​ ​ Exercised ( 4 ) ​ 2.30 ​ ​ ​ ​ ​ ​ Canceled and expired ( 4 ) ​ 4.12 ​ ​ ​ ​ ​ ​ Balance as of December 31, 2023 ​ 1,198 ​ $ 5.10 4.09 ​ $ 14 ​ Granted — ​ — ​ ​ ​ ​ ​ ​ Exercised ( 12 ) ​ ​ 2.24 ​ ​ ​ ​ ​ ​ Canceled and expired ( 11 ) ​ ​ 2.47 ​ ​ ​ ​ ​ ​ Balance as of December 31, 2024 1,175 ​ $ 5.16 3.16 ​ $ — ​ Options exercisable as of December 31, 2024 1,175 ​ $ 5.16 3.16 ​ $ — ​ ​ 102 Table of Contents The options outstanding and exercisable as of December 31, 2024 were in the following exercise price ranges (in thousands, except per share data): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Options Vested and ​ ​ ​ ​ ​ ​ Options Outstanding as of ​ Exercisable as of ​ ​ ​ ​ ​ ​ December 31, 2024 ​ December 31, 2024 ​ ​ ​ ​ ​ ​ ​ ​ ​ Weighted ‑ average ​ ​ ​ Range of ​ ​ ​ Weighted ‑ average Remaining ​ ​ ​ Weighted ‑ Average Exercise Price ​ Shares ​ Exercise Price Contractual Life ​ Shares ​ Exercise Price $ 2.18 - $ 2.18 ​ 53 ​ $ 2.18 0.84 53 ​ $ 2.18 ​ $ 2.56 - $ 2.56 ​ 11 ​ $ 2.56 1.01 11 ​ $ 2.56 ​ $ 3.06 - $ 3.06 ​ 330 ​ $ 3.06 4.85 330 ​ $ 3.06 ​ $ 5.21 - $ 5.21 ​ 352 ​ $ 5.21 1.82 352 ​ $ 5.21 ​ $ 5.77 - $ 5.77 ​ 245 ​ $ 5.77 3.85 245 ​ $ 5.77 ​ $ 7.95 - $ 7.95 ​ 60 ​ $ 7.95 2.08 60 ​ $ 7.95 ​ $ 9.50 - $ 9.50 ​ 124 ​ $ 9.50 2.82 124 ​ $ 9.50 ​ ​ ​ ​ ​ ​ ​ 1,175 ​ $ 5.16 3.16 1,175 ​ $ 5.16 ​ ​ 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, 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 . We did not capitalize any stock-based compensation to inventory as of December 31, 2024 and 2023, as the amount was insignificant. Restricted Stock Awards A summary of activity related to restricted stock awards for the years ended December 31, 2022, 2023 and 2024 is presented below (in thousands, except per share data): ​ ​ ​ ​ ​ ​ ​ ​ ​ Weighted-Average ​ ​ ​ ​ Grant Date Stock Awards Shares Share Value Non-vested as of January 1, 2022 875 ​ $ 6.26 ​ Granted 513 ​ $ 4.67 ​ Vested ( 387 ) ​ $ 6.01 ​ Forfeited ( 17 ) ​ $ 5.34 ​ Non-vested as of December 31, 2022 984 ​ $ 5.55 ​ Granted 692 ​ $ 2.20 ​ Vested ( 446 ) ​ $ 5.25 ​ Forfeited ( 10 ) ​ $ 6.37 ​ Non-vested as of December 31, 2023 ​ 1,220 ​ $ 3.75 ​ Granted 811 ​ $ 2.40 ​ Vested ( 485 ) ​ $ 4.39 ​ Forfeited ​ ( 5 ) ​ $ 2.99 ​ Non-vested as of December 31, 2024 1,541 ​ $ 2.84 ​ ​ Total fair value of stock awards vested during the years ended December 31, 2024, 2023 and 2022 was $ 2.1 million, $ 2.3 million and $ 2.3 million, respectively. As of December 31, 2024, we had $ 3.8 million of unrecognized compensation expense related to restricted stock awards, which will be recognized over the weighted average period of 1.5 years. 103 Table of Contents At-Risk, Performance Shares ​ In February 2021 and 2022 and March 2023, the Company issued at-risk, performance shares classified as equity awards. Expense is recognized quarterly on a straight-line method over the requisite service period, based on the probability of achieving the specified financial performance metric, with changes in expectations recognized as an adjustment to earnings in the period of change. Compensation cost is not recognized for at-risk, performance shares that do not vest because service or performance conditions are not satisfied and any previously recognized compensation cost is reversed. At-risk, performance shares are eligible to receive dividend equivalents under the Company's 2015 Equity Incentive Plan (the “Plan”), as determined by the Board of Directors. The Company will recognize forfeitures as they occur. ​ The Company's at-risk, performance shares are classified as equity and contain performance and service conditions that must be satisfied for an employee to receive the shares. The financial performance metric for the at-risk, performance shares issued in February 2021 is based upon year-end 2020 actual results as compared to the Company’s year-end actual results in 2021. The financial performance metric for the at-risk, performance shares issued in February 2022 is based upon year-end 2021 actual results as compared to the Company’s year-end actual results in 2022. The financial performance metrics for the at-risk, performance shares issued in March 2023 are based upon the Company’s year-end actual results in 2023. The financial performance metric for the at-risk, performance shares issued in February 2024 is based upon the Company’s year-end actual results in 2024. All performance shares, if earned, are still subject to annual vesting over a four-year period, except that no shares are vested on the first anniversary because the performance measurement is based on year-end results for the year 2021, 2022 and 2023, respectively. ​ The fair value of the at-risk, performance shares is determined based on the closing price of the Company’s common stock on the first day after the public issuance of the Company’s earnings release for the most recent fiscal quarter, following the Compensation Committee and Board of Directors approval, which is considered the grant date. The fair value per share of the at-risk, performance shares classified as equity awards granted in February 2021 and 2022 and March 2023 was $ 15.37 , $ 7.83 and $ 3.71 , respectively. ​ On February 17, 2021, the Compensation Committee recommended, and the Board approved, the grant to Dr. Morris Young, our Chief Executive Officer, of 113,130 at-risk, performance shares under the Plan. On February 17, 2021, the Compensation Committee approved the grant to Gary Fischer, our Chief Financial Officer and Corporate Secretary, of 38,475 at-risk, performance shares under the Plan. On March 14, 2022, the Compensation Committee met and certified that the year-over-year annual revenue growth rate achieved for fiscal year 2021, expressed as a percentage, was 44 %. Therefore, all of the at-risk performance shares became eligible to vest. ​ On February 15, 2022, the Compensation Committee recommended, and the Board approved, the grant to Dr. Morris Young of 114,320 at-risk, performance shares under the Plan. On February 15, 2022, the Compensation Committee approved the grant to Gary Fischer of 32,100 at-risk, performance shares under the Plan. If the performance financial metric is less than 50 % achieved these shares are forfeited. If the performance financial metric is between 50 % and 200 % achieved, then a corresponding pro rata portion of the 114,320 shares issued to Dr. Young would be eligible to vest and a corresponding pro rata portion of the 32,100 shares issued to Mr. Fischer would be eligible to vest. Any shares that are not eligible to vest are forfeited. If the target financial metric exceeds 200 %, then the maximum number of at-risk performance shares that would be eligible to vest is 114,320 for Dr. Young and 32,100 for Mr. Fischer. On February 14, 2023, the Compensation Committee met and certified the year-over-year annual revenue growth rate achieved for fiscal year 2022, expressed as a percentage, was 2.7 %. Therefore, none of the at-risk performance shares became eligible to vest. ​ On March 15, 2023, the Compensation Committee recommended, and the Board approved, the grant to Dr. Morris Young of 223,590 at-risk, performance shares under the Plan. On March 15, 2023, the Compensation Committee approved the grant to Gary Fischer of 77,600 at-risk, performance shares under the Plan. If the minimum financial metric for fiscal year 2023 is achieved, then based upon a performance formula, a corresponding portion of the 223,590 shares issued to Dr. Young would be eligible to vest and a corresponding portion of the 77,600 shares issued to Mr. Fischer would be eligible to vest. If the target financial metric is exceeded and an additional financial metric for fiscal year 2023 is achieved, then additional shares above the target number of shares are earned based on such performance formula and the maximum number of additional shares earned is capped at 100 % of the target. If the minimum financial metric for fiscal year 2023 104 Table of Contents is not achieved, then these awards are forfeited. On February 20, 2024, the Compensation Committee met and certified that the minimum revenue metric for fiscal year 2023 was not achieved. Therefore, none of the at-risk performance shares became eligible to vest. ​ On February 20, 2024, the Compensation Committee recommended, and the Board approved, the grant to Dr. Morris Young of 223,590 at-risk, performance shares under the Plan. On February 20, 2024, the Compensation Committee approved the grant to Gary Fischer of 77,600 at-risk, performance shares under the Plan. If the minimum financial metric for fiscal year 2024 is achieved, then based upon a performance formula, a corresponding portion of the 223,590 shares issued to Dr. Young would be eligible to vest and a corresponding portion of the 77,600 shares issued to Mr. Fischer would be eligible to vest. If the target financial metric is exceeded, then additional shares above the target number of shares are earned based on such performance formula and the maximum number of additional shares earned is capped at 100 % of the target. 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): ​ ​ ​ ​ ​ ​ ​ ​ Weighted-Average ​ ​ ​ ​ Grant Date Stock Awards Shares Share Value Non-vested as of January 1, 2023 76 * $ 15.37 Granted 13 ​ $ 3.71 Vested ( 38 ) ​ $ 15.37 Forfeited ( 13 ) ​ $ 3.71 Non-vested as of December 31, 2023 ​ 38 ​ $ 15.37 Granted 301 ** $ 2.28 Vested ( 38 ) ​ $ 15.37 Forfeited ​ — ​ $ — Non-vested as of December 31, 2024 301 ​ $ 2.28 *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. Common Stock The following number of shares of common stock were reserved and available for future issuance as of December 31, 2024 (in thousands, except per share data): ​ ​ ​ ​ Options outstanding 1,175 ​ Restricted stock awards outstanding 1,842 ​ Stock available for future grant: 2015 Equity Incentive Plan 3,733 ​ Total 6,750 ​ ​ 105 Table of Contents Stock-based Compensation We recorded $ 3.1 million, $ 3.5 million and $ 4.0 million of stock-based compensation in our consolidated statements of operations for the years ended December 31, 2024, 2023 and 2022, respectively. The following table summarizes compensation costs related to our stock-based compensation awards (in thousands, except per share data): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended ​ ​ ​ December 31, ​ ​ 2024 2023 ​ 2022 Cost of revenue ​ $ 322 ​ $ 414 ​ $ 379 ​ Selling, general and administrative ​ 2,295 ​ 2,502 ​ 2,947 ​ Research and development ​ 480 ​ 624 ​ 680 ​ Net effect on net loss ​ $ 3,097 ​ $ 3,540 ​ $ 4,006 ​ Shares used in computing basic net income (loss) per share ​ 43,154 ​ 42,643 ​ 42,104 ​ Shares used in computing diluted net income (loss) per share ​ 43,154 ​ 42,643 ​ 42,715 ​ Effect on basic net income (loss) per share ​ $ 0.07 ​ $ 0.08 ​ $ 0.10 ​ Effect on diluted net income (loss) per share ​ $ 0.07 ​ $ 0.08 ​ $ 0.09 ​ ​ We estimate the fair value of stock options using a Black-Scholes option pricing model. There were no stock options granted during 2024, 2023 and 2022. The expected term for stock options is based on the observed historical option exercise behavior and post-vesting forfeitures of options by our employees, and the contractual term, the vesting period and the expected term of the outstanding options. Expected volatility is based on the historical volatility of our common stock. The dividend yield of zero is based on the fact that we have never paid cash dividends and have no present intention to pay cash dividends. The risk-free interest rates are taken from the Daily Federal Yield Curve Rates as of the grant dates as published by the Federal Reserve and represent the yields on actively traded Treasury securities for terms equal to the expected term of the options. Retirement Savings Plan We have a 401(k) Savings Plan (“Savings Plan”) which qualifies as a thrift plan under Section 401(k) of the Internal Revenue Code. All full-time U.S. employees are eligible to participate in the Savings Plan after 90 days from the date of hire. Employees may elect to reduce their current compensation by up to the statutory prescribed annual limit and have the amount of such reduction contributed to the 401(k) Plan. We provide matching to employee contributions up to 4 % of the employees’ base pay if employees contribute at least 6 % of their base pay. If the contribution rate is less than 6 % of the base pay, the matching percentage is prorated. Our contributions to the Savings Plan were $ 188,000 , $ 186,000 and $ 191,000 for the years ended December 31, 2024, 2023 and 2022, respectively. Note 11. Guarantees Indemnification Agreements We have entered into indemnification agreements with our directors and officers that require us to indemnify our directors and officers against liabilities that may arise by reason of their status or service as directors or officers, other than liabilities arising from willful misconduct of a culpable nature; to advance their expenses incurred as a result of any proceeding against them as to which they could be indemnified; and to obtain directors’ and officers’ insurance if available on reasonable terms, which we currently have in place. Product Warranty We provide warranties for our products for a specific period of time, generally twelve months , against material defects. We provide for the estimated future costs of warranty obligations in cost of sales when the related revenue is recognized. The accrued warranty costs represent the best estimate at the time of sale of the total costs that we expect to 106 Table of Contents incur to repair or replace product parts that fail while still under warranty. The amount of accrued estimated warranty costs are primarily based on historical experience as to product failures as well as current information on repair costs. On a quarterly basis, we review the accrued balances and update the historical warranty cost trends. The following table reflects the change in our warranty accrual which is included in “Accrued liabilities” on the consolidated balance sheets, during 2024 and 2023 (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended ​ ​ December 31, ​ 2024 2023 Beginning accrued product warranty ​ $ 703 ​ $ 669 ​ Accruals for warranties issued ​ 353 ​ 794 ​ Adjustments related to pre-existing warranties including expirations and changes in estimates ​ ( 22 ) ​ ( 159 ) ​ Cost of warranty repair ​ ( 583 ) ​ ( 601 ) ​ Ending accrued product warranty ​ $ 451 ​ $ 703 ​ ​ ​ ​ Note 12. Income Taxes 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): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ 2024 2023 2022 Current: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Federal ​ $ 3 ​ $ ( 317 ) ​ $ 848 ​ State ​ 18 ​ 41 ​ 34 ​ Foreign ​ 910 ​ ( 62 ) ​ 918 ​ Total current ​ 931 ​ ( 338 ) ​ 1,800 ​ Deferred: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Federal ​ 144 ​ ( 9 ) ​ ( 591 ) ​ State ​ ​ 6 ​ ​ ( 7 ) ​ ​ ( 4 ) ​ Foreign ​ 53 ​ 514 ​ 980 ​ Total deferred ​ 203 ​ 498 ​ 385 ​ Total provision for income taxes ​ $ 1,134 ​ $ 160 ​ $ 2,185 ​ ​ A reconciliation of the effective income tax rates and the U.S. statutory federal income tax rate is summarized below: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ 2024 2023 2022 Statutory federal income tax rate 21.0 % 21.0 % 21.0 % State income taxes, net of federal tax benefits ( 0.2 ) ​ 1.6 ​ 0.1 ​ Valuation allowance ( 32.3 ) ​ ( 25.7 ) ​ ( 19.3 ) ​ Stock-based compensation ( 2.4 ) ​ ( 1.7 ) ​ 0.7 ​ Foreign tax rate differential ​ ( 1.5 ) ​ 6.1 ​ ( 2.6 ) ​ Foreign tax incentives ​ 1.9 ​ 0.1 ​ ( 3.5 ) ​ Foreign income inclusion ​ — ​ — ​ 18.9 ​ Tax effect in equity method loss or gain from unconsolidated affiliates ​ 2.8 ​ 0.4 ​ ( 3.0 ) ​ Other ​ 0.1 ​ ( 2.6 ) ​ ( 1.8 ) ​ Effective tax rate ( 10.6 ) % ( 0.8 ) % 10.5 % ​ 107 Table of Contents Deferred tax assets and liabilities are summarized below (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ As of December 31, ​ 2024 2023 Deferred tax assets: ​ ​ ​ ​ ​ ​ ​ Net operating loss carryforwards ​ $ 17,220 ​ $ 14,362 ​ Accruals, reserves and other ​ 4,542 ​ 4,349 ​ Credit carryforwards ​ 207 ​ 206 ​ Operating lease liability ​ 268 ​ 325 ​ Gross deferred tax assets ​ ​ 22,237 ​ ​ 19,242 ​ Valuation allowance ​ ( 20,722 ) ​ ( 17,462 ) ​ Total deferred tax assets ​ 1,515 ​ 1,780 ​ Deferred tax liabilities: ​ ​ ​ ​ ​ Operating lease right-of-use assets ​ ( 261 ) ​ ( 323 ) ​ Total net deferred tax assets (included in other assets) ​ $ 1,254 ​ $ 1,457 ​ ​ As of December 31, 2024 we have federal net operating loss (“NOL”) carryforwards of approximately $ 46.4 million, which will begin to expire in 2025. We have California net operating loss carryforwards of approximately $ 108,000 as of December 31, 2024. The deferred tax assets valuation allowance as of December 31, 2024 is attributed to U.S. federal, and state deferred tax assets, which result primarily from future deductible accruals, reserves, NOL carryforwards, and tax credit carryforwards. We believe that, based on a number of factors, the available objective evidence creates sufficient uncertainty regarding the realizability of the deferred tax assets such that a full valuation allowance has been recorded. 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 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. Our subsidiaries in China have qualified for a preferential 15 % tax rate that is available for High and New Technology Enterprises (“HTE”). 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 $ 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. The preferential tax rate that we enjoy could be modified or discontinued altogether at any time, which could materially and adversely affect our financial condition and results of operations. Our subsidiaries in China also qualify for reduction in their taxable income in China for research and development (“R&D”) expenditures. Government pre-approval is required to claim R&D tax benefits. Any R&D claim is then submitted with the annual corporate income tax for the taxing authorities’ approval. Historically, we didn’t record such benefit until we received the tax refund from the Chinese government. Beginning in 2019, we record the tax benefit in the year it incurs the cost rather than in the year the tax benefit is received. This will better align the costs with the tax benefit. Our consolidated subsidiaries in China have enjoyed various tax holidays since 2000. Benefits under the tax holidays vary by jurisdiction. Utilization of the NOL and R&D credit carryforwards may be subject to a substantial annual limitation due to ownership changes that might have occurred previously or that could occur in the future, as provided by Section 382 of the Internal Revenue Code of 1986 (“Section 382”), as well as similar state provisions. Ownership changes may limit the amount of NOL and tax credit carryforwards that can be utilized to offset future taxable income and tax, respectively. In general, an ownership change, as defined by Section 382, results from transactions increasing the ownership of certain shareholders or public groups in the stock of a corporation by more than 50 percentage points over a three-year period. 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 108 Table of Contents 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. 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. Thus, there would be no net impact to the consolidated balance sheets or statements of operations if an adjustment were required. During fiscal year 2024 and 2023, the amount of gross unrecognized tax benefits was $ 1.1 million as of December 31, 2024 and 2023. The Company recognizes interest and penalties related to uncertain tax positions as part of the provision for income taxes. To date, such interest and penalties have not been material. All of the unrecognized tax benefit would impact the effective tax rate in future periods if recognized. We comply with the laws, regulations, and filing requirements of all jurisdictions in which we conduct business. We regularly engage in discussions and negotiations with tax authorities regarding tax matters in various jurisdictions. We file income tax returns in the U.S. federal, various states and foreign jurisdictions. Currently, there is no tax audit in any of the jurisdictions and we do not expect there will be any significant change to this. On August 9, 2022, Congress passed the Creating Helpful Incentives to Produce Semiconductors (CHIPS) Act to strengthen domestic semiconductor manufacturing, design and research, fortify the economy and national security, and reinforce America’s chip supply chains. The CHIPS Act provides for a new 25% advanced manufacturing investment credit for investments in semiconductor manufacturing and for the manufacture of certain equipment required in the semiconductor manufacturing process. Since the Company has all its manufacturing in China, the Company will not qualify for the investment credit. 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. The new law imposes a 1% excise tax on corporate buybacks, and a 15% minimum tax on the adjust financial statement income (AFSI) for corporations with average annual AFSI over a three-tax year period in excess of $1 billion. The Company does not anticipate the IRA to have a material impact on its financial statements. Note 13. Net Income (Loss) per Share 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. 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. Potentially dilutive common shares consist of common shares issuable upon the exercise of stock options. Potentially dilutive common shares are excluded in net loss periods, as their effect would be anti-dilutive. 109 Table of Contents A reconciliation of the numerators and denominators of the basic and diluted net income per share calculations is as follows (in thousands, except per share data): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year ended ​ ​ ​ December 31, ​ ​ 2024 2023 2022 Numerator: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net income (loss) attributable to AXT, Inc. ​ $ ( 11,624 ) ​ $ ( 17,881 ) ​ $ 15,811 ​ Less: Preferred stock dividends ​ ( 177 ) ​ ( 177 ) ​ ( 177 ) ​ Net income (loss) available to common stockholders ​ $ ( 11,801 ) ​ $ ( 18,058 ) ​ $ 15,634 ​ Denominator: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Denominator for basic net income (loss) per share - weighted-average common shares ​ 43,154 ​ 42,643 ​ 42,104 ​ Effect of dilutive securities: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Common stock options ​ — ​ — ​ 333 ​ Restricted stock awards ​ — ​ — ​ 278 ​ Denominator for dilutive net income (loss) per common shares ​ 43,154 ​ 42,643 ​ 42,715 ​ Net income (loss) attributable to AXT, Inc. per common share: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Basic ​ $ ( 0.27 ) ​ $ ( 0.42 ) ​ $ 0.37 ​ Diluted ​ $ ( 0.27 ) ​ $ ( 0.42 ) ​ $ 0.37 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Options excluded from diluted net income (loss) per share as the impact is anti-dilutive ​ 1,175 ​ 1,198 ​ 220 ​ Restricted stock excluded from diluted net income (loss) per share as the impact is anti-dilutive ​ 1,842 ​ 1,258 ​ 291 ​ ​ ​ ​ Note 14. Segment Information and Foreign Operations Segment Information 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. 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. 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. No additional disaggregated expense categories are presented beyond those already disclosed in the primary financial statements. 110 Table of Contents Product Information The following table represents revenue amounts (in thousands) by product type: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended ​ ​ ​ December 31, ​ ​ 2024 2023 2022 ​ Product Type: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Substrates $ 67,748 ​ $ 47,466 ​ $ 111,094 ​ ​ Raw materials and others 31,613 ​ 28,329 ​ 30,024 ​ ​ Total $ 99,361 ​ $ 75,795 ​ $ 141,118 ​ ​ Geographical Information The following table represents revenue amounts (in thousands) reported for products shipped to customers in the corresponding geographic region: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended ​ ​ ​ December 31, ​ ​ 2024 2023 2022 ​ Geographical region: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ China $ 56,119 ​ $ 39,778 ​ $ 55,414 ​ ​ Taiwan ​ 14,098 ​ ​ 8,651 ​ ​ 28,780 ​ ​ Japan ​ 4,979 ​ ​ 4,641 ​ ​ 11,724 ​ ​ Asia Pacific (excluding China, Taiwan and Japan) ​ 2,818 ​ ​ 3,814 ​ ​ 4,188 ​ ​ Europe (primarily Germany) ​ 13,766 ​ ​ 12,315 ​ ​ 20,592 ​ ​ North America (primarily the United States) 7,581 ​ 6,596 ​ 20,420 ​ ​ Total $ 99,361 ​ $ 75,795 ​ $ 141,118 ​ ​ Long-lived assets consist primarily of property, plant and equipment, and operating lease right-of-use assets are attributed to the geographic location in which they are located. Long-lived assets, net of depreciation, by geographic region were as follows (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ As of December 31, ​ ​ 2024 2023 Long-lived assets by geographic region, net of depreciation: ​ ​ ​ ​ ​ ​ ​ North America ​ $ 1,353 ​ $ 1,631 ​ China ​ 160,847 ​ 167,516 ​ ​ ​ $ 162,200 ​ $ 169,147 ​ ​ ​ ​ Note 15. Other income (expense), net The components of other income (expense), net are summarized below (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended ​ ​ December 31, ​ ​ 2024 2023 2022 Foreign exchange gain (loss) ​ $ 91 ​ $ 169 ​ $ 1,573 Income from local China government subsidy ​ ​ 2,239 ​ ​ 2,557 ​ ​ 1,710 Other income (expense) ​ ​ ( 283 ) ​ ​ ( 547 ) ​ ​ 204 ​ ​ $ 2,047 ​ $ 2,179 ​ $ 3,487 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 111 Table of Contents Note 16. Commitments and Contingencies Legal Proceedings From time to time we may be involved in judicial or administrative proceedings concerning matters arising in the ordinary course of business. 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. 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. Leases 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. Under the terms of the facility lease agreement, in May 2020, we were granted an extension to the term of the lease for an additional three years . Furthermore, in September 2023, we entered into another agreement to extend the lease for an additional five years , commencing December 2023. 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 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. 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. ​ Leases are classified as either finance leases or operating leases. A lease is classified as a finance lease if any one of the following criteria are met: the lease transfers ownership of the asset by the end of the lease term, the lease contains an option to purchase the asset that is reasonably certain to be exercised, the lease term is for a major part of the remaining useful life of the asset or the present value of the lease payments equals or exceeds substantially all of the fair value of the asset. A lease is classified as an operating lease if it does not meet any one of these criteria. All of our leases 112 Table of Contents 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. ​ For all leases at the lease commencement date, a right-of-use asset and a lease liability are recognized. The right-of-use asset represents the right to use the leased asset for the lease term. The lease liability represents the present value of the lease payments under the lease. ​ The right-of-use asset is initially measured at cost, which primarily comprises the initial amount of the lease liability, plus any initial direct costs incurred, consisting mainly of brokerage commissions, less any lease incentives received. All right-of-use assets are reviewed for impairment. The lease liability is initially measured at the present value of the lease payments, discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, our secured incremental borrowing rate for the same term as the underlying lease. ​ Lease payments included in the measurement of the lease liability comprise the following: the fixed noncancelable lease payments, payments for optional renewal periods where it is reasonably certain the renewal period will be exercised, and payments for early termination options unless it is reasonably certain the lease will not be terminated early. ​ Lease expense for operating leases consists of the lease payments plus any initial direct costs, primarily brokerage commissions, and is recognized on a straight-line basis over the lease term. ​ We have elected not to recognize right-of-use assets and lease liabilities for short-term leases that have a term of 12 months or less. The effect of short-term leases on our right-of-use asset and lease liability was not material. ​ As of December 31, 2024, the maturities of our operating lease liabilities (excluding short-term leases) are as follows (in thousands): ​ ​ ​ Maturity of Lease Liabilities ​ 2025 $ 630 2026 ​ 653 2027 ​ 670 2028 ​ 651 2029 ​ 191 Thereafter ​ - Total minimum lease payments ​ 2,795 Less: Interest ​ ( 282 ) Present value of lease obligations ​ 2,513 Less: Current portion, included in accrued liabilities ​ ( 536 ) Long-term portion of lease obligations $ 1,977 ​ The weighted average remaining lease term and the weighted-average discount rate for our operating leases are as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, ​ December 31, ​ ​ ​ 2024 ​ 2023 ​ Weighted-average remaining lease term (years) ​ 4.27 ​ 5.22 ​ Weighted-average discount rate ​ 5.02 % 5.14 % ​ 113 Table of Contents Supplemental cash flow information related to leases where we are the lessee is as follows (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended ​ ​ ​ December 31, ​ ​ ​ 2024 ​ 2023 ​ Cash paid for amounts included in the measurement of lease liabilities: ​ ​ ​ ​ ​ ​ ​ Operating cash flows from operating leases ​ $ 603 ​ $ 578 ​ ​ The components of lease expense are as follows (in thousands) within our consolidated statements of operations: ​ ​ ​ ​ ​ ​ ​ Year Ended ​ December 31, ​ 2024 ​ 2023 Operating lease $ 615 ​ $ 548 Short-term lease expense ​ 170 ​ ​ 143 Total $ 785 ​ $ 691 ​ Royalty Agreement In 2020, we and a competitor entered into a cross license and covenant agreement (the “Cross License Agreement”), which has a term that began on January 1, 2020 and expires on December 31, 2029. The Cross License Agreement is a fixed-cost cross license and not a variable-cost cross license that is based on revenue or units. Under the Cross License Agreement, we are obligated to make annual payments over a 10-year period. For the years ended December 31, 2024 and 2023, the royalty expense under the Cross License Agreement was not considered material to our consolidated financial statements. ​ ​ ​ Land Purchase and Investment Agreement We have established a wafer process production line in Dingxing, China. In addition to a land rights and building purchase agreement that we entered into with a private real estate development company to acquire our new manufacturing facility, we also entered into a cooperation agreement with the Dingxing local government. In addition to pledging its full support and cooperation, the Dingxing local government will issue certain credits or rebates to us as we achieve certain milestones. We, in turn, agreed to hire local workers over time, pay taxes when due and eventually demonstrate a total investment of approximately $ 90 million in value, assets and capital. The investment will include cash paid for the land and buildings, cash on deposit in our name at local banks, the gross value of new and used equipment (including future equipment that might be used for indium phosphide and germanium substrates production), the deemed value for our customer list or the end user of our substrates, for example, the end users of 3-D sensing VCSELs (vertical cavity surface emitting lasers), a deemed value for employment of local citizens, a deemed value for our proprietary process technology, other intellectual property, other intangibles and additional items of value. There is no timeline or deadline by which this must be accomplished, rather it is a good faith covenant entered into between AXT and the Dingxing local government. Further, there is no specific penalty contemplated if either party breaches the agreement. However, the agreement does state that each party has a right to seek from the other party compensation for losses. Under certain conditions, the Dingxing local government may purchase the land and building at the appraised value. We believe that such cooperation agreements are normal, customary and usual in China and that the future valuation is flexible. We have a similar agreement with the city of Kazuo, China, although on a smaller scale. The total investment targeted by AXT in Kazuo is approximately $ 15 million in value, assets and capital. In addition, BoYu has a similar agreement with the city of Kazuo. The total investment targeted by BoYu in Kazuo is approximately $ 8 million in value, assets and capital. ​ 114 Table of Contents Note 17. Unaudited Quarterly Consolidated Financial Data Not applicable. ​ ​ ​ ​ ​ Note 18. Redeemable Noncontrolling Interests As discussed in Note 1, during the quarter ended December 31, 2020, Tongmei entered into the Capital Investment Agreements with Investors that invested approximately $ 48.1 million in the form of redeemable noncontrolling interests representing 7.06 % of the outstanding shares of Tongmei. An additional investment of approximately $ 1.5 million of new capital was funded in early January 2021. 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 entire approximately $ 49 million investment on January 25, 2021, at which time the Investors owned a redeemable noncontrolling interest in Tongmei of 7.28 %. The initial carrying amount of the redeemable noncontrolling interest was recorded at fair value on the date of issuance of Tongmei’s common stock, net of issuance costs and presented in temporary equity on the consolidated balance sheets. This classification is due to the existence of certain contingencies that could result in potential redemption at the fixed purchase price as described below. We currently do not believe that this is probable thus no amortization of the issuance costs has been recorded. 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, subject to the foreign exchange rate variable at time of redemption. Tongmei submitted its IPO application to the Shanghai Stock Exchange in December 2021 and it was formally accepted for review on January 10, 2022. The Shanghai Stock Exchange approved the IPO application on July 12, 2022. On August 1, 2022, the CSRC accepted for review Tongmei’s IPO application. 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 hopes to accomplish this goal in the coming months. The listing of Tongmei on the STAR Market will not change the status of AXT as a U.S. public company. The components of the change in redeemable noncontrolling interests for the years ended December 31, 2024 and 2023 are presented in the following table (in thousands): ​ ​ ​ Balance as of January 1, 2023 $ 44,846 Investment in subsidiary with redeemable noncontrolling interest ​ 155 Equity issuance costs incurred ​ ( 880 ) Stock-based compensation attributable to redeemable noncontrolling interests ​ 52 Net income attributable to redeemable noncontrolling interests ​ ( 920 ) Effect of foreign currency translation on redeemable noncontrolling interests ​ ( 1,260 ) Effect of foreign currency translation attributable to redeemable noncontrolling interests ​ ( 330 ) Balance as of December 31, 2023 ​ 41,663 Equity issuance costs incurred ​ ( 992 ) Stock-based compensation attributable to redeemable noncontrolling interests ​ 34 Net loss attributable to redeemable noncontrolling interests ​ ( 509 ) Effect of foreign currency translation on redeemable noncontrolling interests ​ ( 1,311 ) Effect of foreign currency translation attributable to redeemable noncontrolling interests ​ ( 308 ) Balance as of December 31, 2024 $ 38,577 115 Table of Contents ​ ​ Note 19. Subsequent Events 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 . Item 16. Form 10-K Summary Not applicable. ​ 116 Table of Contents AXT, Inc. EXHIBITS TO FORM 10-K ANNUAL REPORT For the Year Ended December 31, 2024 ​ ​ ​ Exhibit Number Description 3.1(1) ​ Restated Certificate of Incorporation 3.2(2) ​ Certificate of Amendment of Certificate of Incorporation 3.3(3) ​ Certificate of Amendment to the Restated Certificate of Incorporation 3.4(4) ​ Certificate of Designation, Preferences and Rights of Series A Preferred Stock (which is incorporated herein by reference to Exhibit 2.1 to the registrant’s form 8-K dated May 28, 1999). 3.5(5) ​ Second Amended and Restated By Laws 3.6(6) ​ Amended and Restated Section 5.1 of Article V of the Second Amended and Restated Bylaws of AXT, Inc. 3.7(7) ​ Certificate of Amendment to By Laws 4.1 ​ Description of Securities 10.1(8)* ​ Form of Indemnification Agreement for directors and officers 10.2(9)* ​ 2007 Equity Incentive Plan (amended December 8, 2008) 10.3(10)* ​ Forms of agreements under the 2007 Equity Incentive Plan 10.4(11)* ​ Amended and Restated Employment Offer Letter between the Company and Dr. Morris S. Young dated December 4, 2012 10.5(12)* ​ Employment Letter Agreement between the Company and Mr. Gary L. Fischer 10.6(13)* ​ 2015 Equity Incentive Plan, as amended 10.7(14)* ​ Executive Incentive Plan 10.8 ​ Form of Capital Increase Agreement between Beijing Tongmei Xtal Technologies Co., Ltd. and certain investors 10.8(a) ​ Schedule identifying agreements substantially identical to the form of Capital Increase Agreement filed as Exhibit 10.11 hereto 10.9 ​ Form of First Supplemental Agreement between Beijing Tongmei Xtal Technology Co., Ltd. and certain investors 10.9(a) ​ Schedule identifying agreements substantially identical to the form of First Supplemental Agreement filed as Exhibit 10.12 hereto 10.10 ​ Form of Second Supplemental Agreement between Beijing Tongmei Xtal Technology Co., Ltd. and certain investors 10.10(a) ​ Schedule identifying agreements substantially identical to the form of Second Supplemental Agreement filed as Exhibit 10.13 hereto 10.11 ​ Letter of Commitment on Share Lock-up 10.12 ​ Letter of Commitment on the Shareholding Intention and Share Reduction Intention 10.13 ​ Letter of Commitment on Plan for Stabilizing Tongmei’s Stock Price within Three Years upon the Listing and the Restraint Measures 10.14 ​ Letter of Commitment on Share Repurchase for Fraudulent Listing 10.15 ​ Letter of Commitment on No False Records, Misleading Statements or Major Omissions in the Prospectus 10.16 ​ Letter of Commitment on Filling the Diluted Spot Return 10.17 ​ Letter of Commitment on Restraint Measures for Nonperformance of the Commitments 10.18 ​ Letter of Commitment on Avoiding Horizontal Competition 10.19 ​ Letter of Commitment on Regulating and Reducing Related Party Transactions 117 Table of Contents 10.20 ​ Letter of Commitment on Avoiding Illegal Guarantees 10.21 ​ Statement and Letter of Commitment 10.22 ​ Special Commitment Letter for Disclosure of Shareholders’ Information and Verification of Retired Personnel of CSRC 12.1 ​ Computation of Ratio of Earnings to Fixed Charges 19.1 ​ Insider Trading Policy 21.1 ​ List of Subsidiaries 23.1 ​ Consent of BPM LLP, Independent Registered Public Accounting Firm 24.1 ​ Power of Attorney (see signature page) 31.1 ​ Certification by principal executive officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 31.2 ​ Certification by principal financial officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 32.1 † ​ 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 32.2 † ​ Certification by Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 97.1* ​ Compensation Recovery Policy 101.INS ​ Inline XBRL Instance. 101.SCH ​ Inline XBRL Taxonomy Extension Schema. 101.CAL ​ Inline XBRL Taxonomy Extension Calculation Linkbase. 101.DEF ​ Inline XBRL Taxonomy Extension Definition Linkbase. 101.LAB ​ Inline XBRL Taxonomy Extension Label Linkbase. 101.PRE 104 ​ Inline XBRL Taxonomy Extension Presentation Linkbase. Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101) ​ ​ (1) Incorporated by reference to exhibit 3.1 to registrant’s Form 10-K filed with the SEC on March 31, 1999. (2) Incorporated by reference to exhibit 3.1 to registrant’s Form 10-Q filed with the SEC on August 14, 2000. (3) Incorporated by reference to exhibit 3.4 to registrant’s Form 10-Q filed with SEC on August 5, 2004. (4) Incorporated by reference to exhibit 3.1 to registrant’s Form 8-K filed with the SEC on June 14, 1999. (5) Incorporated by reference to exhibit 3.4 to registrant’s Form 8-K filed with the SEC on May 30, 2001. (6) Incorporated by reference to exhibit 99.2 to registrant’s Form 8-K filed with the SEC on August 1, 2007. (7) Incorporated by reference to exhibit 3.1 to registrant’s Form 8-K filed with the SEC on October 26, 2010. (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 10.31 to registrant’s Form 10-K filed with the SEC on March 31, 2009. (10) Incorporated by reference to exhibit 10.20 to registrant’s Form 10-K filed with the SEC on March 22, 2010. (11) Incorporated by reference to exhibit 10.1 to registrant’s Form 8-K filed with the SEC on December 4, 2012. (12) Incorporated by reference to exhibit 10.1 to registrant’s Form 8-K filed with the SEC on August 12, 2014. (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. ​ * Management contract or compensatory plan. † The certifications attached as Exhibits 32.1 and 32.2 that accompany this Annual Report on Form 10-K are deemed furnished and not filed with the Securities and Exchange Commission and are not to be incorporated by reference into any filing of AXT, Inc. under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, whether made before or after the date of this Annual Report on Form 10-K, irrespective of any general incorporation language contained in such filing. ​ 118 Table of Contents SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereto duly authorized. ​ ​ ​ ​ AXT, Inc. ​ ​ ​ By: /s/ GARY L. FISCHER ​ ​ Chief Financial Officer and Corporate Secretary (Principal Financial Officer) ​ Date: March 14, 2025 POWER OF ATTORNEY KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below hereby constitutes and appoints Morris S. Young and Gary L. Fischer, and each of them, his true and lawful attorney-in-fact and agent, with full power of substitution, each with power to act alone, to sign and execute on behalf of the undersigned any and all amendments to this Report on Form 10-K, and to perform any acts necessary in order to file the same, with all exhibits thereto and other documents in connection therewith with the Securities and Exchange Commission, granting unto said attorney-in-fact and agent full power and authority to do and perform each and every act and thing requested and necessary to be done in connection therewith, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorney-in-fact and agent, or their or his or her substitutes, shall do or cause to be done by virtue hereof. Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. ​ ​ ​ ​ ​ Signature Title Date ​ ​ ​ ​ ​ /s/ MORRIS S. YOUNG ​ Chief Executive Officer and Chairman of the Board of Directors ​ March 14, 2025 Morris S. Young ​ (Principal Executive Officer) ​ ​ ​ ​ ​ ​ ​ /s/ GARY L. FISCHER ​ Chief Financial Officer and Corporate Secretary ​ March 14, 2025 Gary L. Fischer ​ (Principal Financial Officer and Principal Accounting Officer) ​ ​ ​ ​ ​ ​ ​ /s/ JESSE CHEN ​ Lead Independent Director ​ March 14, 2025 Jesse Chen ​ ​ ​ ​ ​ ​ ​ ​ ​ /s/ DAVID C. CHANG ​ Director ​ March 14, 2025 David C. Chang ​ ​ ​ ​ ​ ​ ​ ​ ​ /s/ Christine Russell ​ Director ​ March 14, 2025 Christine Russell ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 119