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Case Status:    SETTLED
On or around 02/27/2008 (Date of order of final judgment)

Filing Date: October 15, 2004

As summarized by the Company’s FORM 10-Q for the quarterly period ended March 31, 2008, on April 5, 2005, the lead plaintiff filed a consolidated complaint, captioned as Morgan v. AXT, Inc. et al., No. C 04 4362 MJJ. The lawsuit complaint names AXT, Inc. and the Company’s former chief technology officer as defendants, and is brought on behalf of a class of all purchasers of the Company’s securities from February 6, 2001 through April 27, 2004. The complaint alleges that the Company announced financial results during this period that were false and misleading. No specific amount of damages is claimed. On September 23, 2005, the Court granted the Company’s motion to dismiss the complaint, with leave to amend. The lead plaintiff filed an amended complaint, which the Company had moved to dismiss. On April 24, 2007, the Company reached a settlement of this litigation. On February 27, 2008, the district court approved the settlement, and subsequently entered a judgment of dismissal.

According to the Stipulation of Settlement, the Settlement Fund consists of $2,575,000 in cash.

The original complaint charges AXT and the Company's CEO with violations of federal securities laws. Plaintiff claims defendants' omissions and material misrepresentations concerning AXT's operations and performance during the Class Period artificially inflated the Company's stock price, inflicting damages on investors. AXT manufactures semiconductor parts known as substrates for a variety of electronic products including wireless and fiber optic telecommunications, lasers, light emitting diodes and consumer electronics.

More specifically, the complaint alleges defendants knew or recklessly disregarded that their statements were materially false and misleading when made because AXT: (i) did not follow requirements for testing of products (and provision of testing data and information) relating to customer requirements; and, as a consequence of this conduct, (ii) failed to accrue adequate reserves; (iii) falsely stated its reported reserves, revenue and income; and (iv) issued false statements about the Company meeting customer requirements.

The complaint further alleges that on April 27, 2004, the Company disclosed that the "first quarter's financial review and verification process has been delayed due to an investigation by AXT's Audit Committee of certain product testing practices and policies." News of this investigation shocked the market, and the next day, April 28, 2004, AXT common stock dropped 13.64% on heavy trading. One day later, AXT stock plummeted even further, falling nearly 23% in one day, to close at $2.20 on April 29, 2004, on even heavier trading than the previous day. On May 24, 2004, AXT disclosed to the SEC that the investigation confirmed that, for an undisclosed period of years, AXT had "not followed requirements for testing of products and provision of testing data and information relating to customer requirements for certain shipments made over the past several years." The Company further disclosed that during first-quarter 2004, AXT increased its reserve for sales returns "related to our failure to follow certain testing requirements and provision of testing data and information to certain customers."

COMPANY INFORMATION:

Sector: Technology
Industry: Semiconductors
Headquarters: United States

SECURITIES INFORMATION:

Ticker Symbol: AXTI
Company Market: NASDAQ
Market Status: Public (Listed)

About the Company & Securities Data


"Company" information provides the industry and sector classification and headquarters state for the primary company-defendant in the litigation. In general, "Securities" information provides the ticker symbol, market, and market status for the underlying securities at issue in the litigation.

In most cases, the primary company-defendant actually issued the securities that are the subject of the litigation, and the securities information and company information relate to the same entity. In a small subset of cases, however, the primary company-defendant is not the issuer (for example, cases against third party brokers/dealers), and the securities information and company information do not relate to the same entity.
COURT: N.D. California
DOCKET #: 04-CV-04362
JUDGE: Hon. Martin J. Jenkins
DATE FILED: 10/15/2004
CLASS PERIOD START: 02/06/2001
CLASS PERIOD END: 04/27/2004
PLAINTIFF FIRMS NAMED IN COMPLAINT:
  1. Cohen Milstein Hausfeld & Toll PLLC (Seattle WA)
    701 Fifth Avenue, Suite 6860, Cohen Milstein Hausfeld & Toll PLLC (Seattle WA), WA 98014
    206.521.0080 206.521.0166 · lawinfo@cmht.com
  2. Glancy Binkow & Goldberg LLP (SF)
    455 Market Street, Suite 1810, Glancy Binkow & Goldberg LLP (SF), CA 94105
    415.972.81 415.972-816 · info@glancylaw.com
  3. Law Offices of Charles J. Piven, P.A.
    World Trade Center-Baltimore,401 East Pratt Suite 2525, Law Offices of Charles J. Piven, P.A., MD 21202
    410.332.0030 · pivenlaw@erols.com
  4. Miller Shea, P.C.
    1301 W Long Lake Rd, Ste 135, Miller Shea, P.C., MI 48098
    248.267.8200 248.267.8200 · info@millershea.com
  5. Schatz & Nobel, P.C.
    330 Main Street, Schatz & Nobel, P.C., CT 06106
    800.797.5499 860.493.6290 · sn06106@AOL.com
  6. Shepherd, Finkelman, Miller & Shah, LLC
    35 East State Street, Shepherd, Finkelman, Miller & Shah, LLC, PA 19063
    877.891.9880 · jshah@classactioncounsel.com
No Document Title Filing Date
COURT: N.D. California
DOCKET #: 04-CV-04362
JUDGE: Hon. Martin J. Jenkins
DATE FILED: 11/14/2005
CLASS PERIOD START: 02/06/2001
CLASS PERIOD END: 04/27/2004
PLAINTIFF FIRMS NAMED IN COMPLAINT:
  1. Law Offices of Charles J. Piven, P.A.
    World Trade Center-Baltimore,401 East Pratt Suite 2525, Law Offices of Charles J. Piven, P.A., MD 21202
    410.332.0030 · pivenlaw@erols.com
  2. Milberg Weiss & Bershad LLP (Los Angeles)
    One California Plaza. 300 S. Grand Avenue, Suite 3900, Milberg Weiss & Bershad LLP (Los Angeles), CA 90071
    213..617.1200 213..617.1975 ·
  3. Milberg Weiss Bershad & Schulman LLP
    355 South Grand Avenue, Suite 4170, Milberg Weiss Bershad & Schulman LLP , CA 90071
    213.617.9007 213.617.9185 · info@milbergweiss.com
  4. Milberg Weiss LLP (New York)
    One Pennsylvania Plaza, 49th Floor, Milberg Weiss LLP (New York), NY 10119
    212.594.5300 212.868.1229 · info@milbergweiss.com
No Document Title Filing Date