Revenues for the fourth quarter of 1999 were $21.8 million. Net income

for the fourth quarter of 1999 was $1.6 million, or $.08 per share on

approximately 19.7 million shares outstanding. All per share amounts are

computed on a diluted basis.

The company has restated results for the first three quarters of 1999.

During the course of preparing the annual financial statements, AXT learned

that certain expenses of Lyte Optronics for the period from Jan. 1, 1999 to

May 28, 1999 were understated by approximately $4 million, net of income

taxes. The company acquired Lyte Optronics on May 28, 1999, in a transaction

accounted for as a pooling of interests. Certain shares issued by the company

to acquire Lyte Optronics will be returned to the company by the selling

shareholders as a result of the understatement of expenses. In addition,

certain expenses of Lyte Optronics for the quarter ended Sept. 30, 1999 were

understated by approximately $1.2 million, net of income taxes.

Restated net revenues for fiscal 1999 were $81.5 million. Restated net

income for 1999 was $ 3.5 million, or $.18 per share on approximately

19.8 million shares outstanding, before taking into account acquisition costs

of $2.8 million and the extraordinary loss of $500,000 associated with the

acquisition of Lyte Optronics. All per share amounts are computed on a

diluted basis.

The company also reported that it is cooperating with Cal-OSHA in an

investigation regarding higher than permissible levels of potentially

hazardous materials in certain areas of the AXT facility in Fremont, Calif.

The company has put in place engineering, administrative and personal

protective equipment programs to address this issue. The AXT facility is in

full operation, and the company is pleased to report that no accidents or

injuries resulted from this matter. Although civil and criminal charges can

be imposed by Cal-OSHA, the current focus of the investigation is on civil

enforcement.

The company further reported that it has begun shipping its blue light

emitting diode (LED) product in pilot quantities. The new 470 nm aluminum

indium gallium nitride (AlInGaN)-based high brightness blue LED has

approximately 1.5 milliwatt power output at 20 milliamps. This product is

used in applications such as full color video display signs, back lighting for

LCD displays in cell phones and automobile instrument panels and white light

LED illumination. The new blue LED product builds upon the company’s current

offering of aluminum indium gallium.