📜 What This Document Is 📑

This document is a Prospectus Supplement for AXT Inc. 📑. Think of a prospectus like a detailed instruction manual for potential investors, explaining exactly what the company is selling, the terms of the deal, and all the risks involved.

Since this is an supplement, it updates and adds specific details (like the current share offering) to a larger, foundational document. In simple terms, AXT is issuing this to tell investors: "We are selling a big batch of our common stock, and here are all the rules you need to know before you invest."

👉 The key takeaway is that this document is a formal, legal announcement about the sale of securities, not a financial performance report.

🏢 What AXT Inc. Does 🔬

AXT is a global materials science company, meaning they work with materials at a technical level to build advanced components. They specialize in developing and producing high-performance compound and single element semiconductor substrates, which are commonly known as wafers.

Headquarters: Their principal corporate office is located in Fremont, California.
Manufacturing: Crucially, all of their products are manufactured exclusively in the People's Republic of China (PRC) by their local subsidiaries and joint ventures.
Structure: They are not a PRC operating company, and they do not conduct their operations in China using Variable Interest Entities (VIEs). They maintain a vertically integrated supply chain using three main methods:
- 1. Licensing Intellectual Property (IP) to their PRC subsidiaries and receiving royalty fees.
- 1. Using transfer pricing agreements to purchase raw materials and wafers from their PRC subsidiaries.
- 1. Receiving dividends from their PRC subsidiaries and joint ventures.

👉 Because they control their supply chain so tightly, they have established a robust, though complex, structure for moving cash across borders from China back to the U.S.

💰 The Common Stock Offering Details 💲

This entire prospectus supplement revolves around the planned public sale of common stock. The company is offering a massive amount of shares to raise capital for its operations.

Shares Offered: AXT is offering up to 8,560,311 shares of common stock.
Over-Allotment Option: The underwriters have a 30-day option to buy up to an additional 1,284,046 shares if needed, covering over-allotments.
Pricing: The underwriters propose offering the stock to the public at $64.25 per share.
The Money: The estimated proceeds, before expenses, to AXT are significant. They expect to receive $522,499,982.66, or potentially up to $600,874,940.39 if the underwriter exercises the full over-allotment option.

👉 This is a major capital raise. The funds generated will allow AXT to execute significant long-term plans, but the timing and total amount depend on the final sale of the shares.

🚀 Use of Proceeds and Strategy 💸

The proceeds from this stock sale are earmarked for strategic expansion, mainly focusing on the subsidiary, Tongmei.

Primary Use: AXT intends to use the net proceeds to financially support its subsidiary, Tongmei.
Key Goals for Funds: The money will be used to:
1. Increase Tongmei's production capacity for indium phosphide substrates for worldwide export.
2. Fund research and development (R&D) of new or improved products.
3. Cover general corporate purposes and working capital.

👉 By focusing the capital on Tongmei's capacity and R&D, AXT is signaling a primary strategic focus on expanding its physical manufacturing capability and product line in China.

👑 Corporate Structure & Financial Policies 🔄

AXT’s corporate setup is complex, particularly regarding dividends and preferred shares. This is a critical area for investors to understand.

Dividend Policy (Common Stock): AXT does not currently plan to pay dividends on its common stock and does not anticipate paying cash dividends in the foreseeable future. They intend to retain all available funds for business development and expansion.
Dividend Policy (Preferred Stock): However, the company does have an obligation regarding its Series A preferred stock.
- There are 883,000 shares of Series A preferred stock outstanding as of December 31, 2025.
- This stock has a 5.0% cumulative annual dividend rate.
- This means AXT cannot redeem or repurchase common stock unless all accrued dividends on the Series A preferred stock have been paid first.
Historical Dividends: The board has historically paid dividends on the preferred stock. In the years ending December 31, 2025, 2024, and 2023, the aggregate dividends paid to the Company (or an intermediate entity) by the PRC subsidiaries were approximately $0.9 million, $2.4 million, and $4.3 million, respectively.

👉 This reveals a major financial constraint: the preferred shareholders must be satisfied before common stockholders can receive any money back.

🏭 Export and Geopolitical Risk 🌍

The document highlights both AXT's recent operational successes and the significant geopolitical risks associated with its manufacturing base in China.

Export Milestones: On June 11, 2025, Tongmei received its initial export permits from the PRC Ministry of Commerce to resume shipping indium phosphide substrates to customers in Europe and Japan. They have also obtained permits for shipments to the UK and Canada.
U.S. Export Status: As of the date of the supplement, the export permits for substrates to the United States are in the final stages of review.
Key Operational Risk: The sale of their substrates outside of China requires an export permit from the Ministry of Commerce. The biggest risk is that obtaining these permits is "beyond our control," potentially due to "geopolitical uncertainties between the United States and the People’s Republic of China."

👉 The export permits are crucial for revenue recognition. Without them, AXT could face a "material adverse effect" on its operations.

⚠️ Significant Investment Risks ⚠️

As is standard for a prospectus, AXT details numerous high-level risks. These are not just boilerplate warnings—they are material to investment decisions.

Market Volatility: The stock price has fluctuated substantially. The company cautions investors that the market price may fluctuate dramatically and could decline rapidly, irrespective of any business developments.
Management Discretion: AXT warns that management has "broad discretion" over how the funds are spent and could spend the proceeds in ways that do not improve results or enhance stock value.
Legal & Operational Risks: Investors are subject to unique legal and operational risks associated with their corporate structure in China.
SMPC Status: AXT notes that they may continue to be a "smaller reporting company." While this gives them beneficial exemptions from certain disclosure requirements, it could also make comparing their financial statements with other public companies difficult.

📅 Underwriting and Key Dates 💼

The success and timeline of this offering rely on the underwriters and associated financial institutions.

Underwriters: The underwriters include Northland Capital Markets Co-Managers (Lead Bookrunner), Needham & Company, B. Riley Securities, Craig-Hallum, and Wedbush Securities.
Logistics: The shares are expected to be ready for delivery on or about April 22, 2026.
Timeline: The prospectus supplement date is April 21, 2026.
Required Review: Investors must rely on the comprehensive documentation, including the Annual Report on Form 10-K for the year ended December 31, 2025, which was filed on March 17, 2026.

✉️ Contact and Further Information 🌐

For anyone wanting to pursue an investment, the company provides clear details on who to call and what additional documents to review.

Attn: Investor Relations
Address: AXT, Inc., 4281 Technology Drive, Fremont, California 94538
Phone: (510) 438-4700

🧠 The Analogy 🏛️

Investing in AXT is like trying to buy a specialized, high-tech foreign component (the wafers) that is essential for the U.S. tech industry. The company (AXT) owns the blueprints and the global distribution network, but the actual factory (Tongmei) is located in a politically complex region (China). The money being raised in this stock offering is the cash needed to build a bigger, better factory. However, the whole process is managed by multiple financial gatekeepers (the underwriters), and the final product's ability to reach the customer is constantly subject to unpredictable customs regulations and trade policy changes.

🧩 Final Takeaway 📈

AXT is executing a major capital raise to expand its critical substrate manufacturing capacity in China. While the company has a sophisticated corporate structure, its future depends heavily on obtaining foreign export permits and managing the high legal, political, and stock market risks inherent in its international operations.

AXT offers common stock in major sale raising up to $600 million