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Q1
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10-Q
2019-03-31
ACM RESEARCH, INC.
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Non-accelerated Filer
ACMR
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<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.25in">ACM Research, Inc. (“ACM”)
and its subsidiaries (collectively with ACM, the “Company”) develop, manufacture and sell single-wafer wet cleaning
equipment used to improve the manufacturing process and yield for advanced integrated chips. The Company markets and sells its
single-wafer wet-cleaning equipment, under the brand name “Ultra C,” based on the Company’s proprietary Space
Alternated Phase Shift (“SAPS”) and Timely Energized Bubble Oscillation (“TEBO”) technologies. These tools
are designed to remove random defects from a wafer surface efficiently, without damaging the wafer or its features, even at increasingly
advanced process nodes.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.25in">ACM was incorporated in
California in 1998, and it initially focused on developing tools for manufacturing process steps involving the integration of ultra
low-K materials and copper. The Company’s early efforts focused on stress-free copper-polishing technology, and it sold tools
based on that technology in the early 2000s.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.25in">In 2006 the Company established
its operational center in Shanghai in the People’s Republic of China (the “PRC”), where it operates through ACM’s
subsidiary ACM Research (Shanghai), Inc. (“ACM Shanghai”). ACM Shanghai was formed to help establish and build relationships
with integrated circuit manufacturers in the PRC, and the Company initially financed its Shanghai operations in part through sales
of non-controlling equity interests in ACM Shanghai.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.25in">In 2007 the Company began
to focus its development efforts on single-wafer wet-cleaning solutions for the front-end chip fabrication process. The Company
introduced its SAPS megasonic technology, which can be applied in wet wafer cleaning at numerous steps during the chip fabrication
process, in 2009. It introduced its TEBO technology, which can be applied at numerous steps during the fabrication of small node
two-dimensional conventional and three-dimensional patterned wafers, in March 2016. The Company has designed its equipment models
for SAPS and TEBO solutions using a modular configuration that enables it to create a wet-cleaning tool meeting the specific requirements
of a customer, while using pre-existing designs for chamber, electrical, chemical delivery and other modules. In August 2018, the
Company introduced its Ultra-C Tahoe wafer cleaning tool, which can deliver high cleaning performance with significantly less sulfuric
acid than typically consumed by conventional high-temperature single-wafer cleaning tools. The Company also offers a range of custom-made
equipment, including cleaners, coaters and developers, to back-end wafer assembly and packaging factories, principally in the PRC.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.25in">In 2011 ACM Shanghai formed
a wholly owned subsidiary in the PRC, ACM Research (Wuxi), Inc. (“ACM Wuxi”), to manage sales and service operations.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.25in">In November 2016 ACM redomesticated
from California to Delaware pursuant to a merger in which ACM Research, Inc., a California corporation, was merged into a newly
formed, wholly owned Delaware subsidiary, also named ACM Research, Inc.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.25in">In June 2017 ACM formed
a wholly owned subsidiary in Hong Kong, CleanChip Technologies Limited (“CleanChip”), to act on the Company’s
behalf in Asian markets outside the PRC by, for example, serving as a trading partner between ACM Shanghai and its customers, procuring
raw materials and components, performing sales and marketing activities, and making strategic investments.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.25in">In August 2017 ACM purchased
18.77% of ACM Shanghai’s equity interests held by Shanghai Science and Technology Venture Capital Co., Ltd. On November 8,
2017, ACM purchased the remaining 18.36% of ACM Shanghai’s equity interest held by third parties, Shanghai Pudong High-Tech
Investment Co., Ltd. (“PDHTI”) and Shanghai Zhangjiang Science & Technology Venture Capital Co., Ltd. (“ZSTVC”).
At December 31, 2017, ACM owned all of the outstanding equity interests of ACM Shanghai, and indirectly through ACM Shanghai, owned
all of the outstanding equity interests of ACM Wuxi.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.25in">On September 13, 2017,
ACM effectuated a 1-for-3 reverse stock split of Class A and Class B common stock. Unless otherwise indicated, all share numbers,
per share amount, share prices, exercise prices and conversion rates set forth in these notes and the accompanying condensed consolidated
financial statements have been adjusted retrospectively to reflect the reverse stock split.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.25in">In December 2017 ACM formed
a wholly owned subsidiary in the Republic of Korea, ACM Research Korea CO., LTD. (“ACM Korea”), to serve customers
based in Republic of Korea and perform sales, marketing, research and development activities for new products and solutions.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><u>Basis of Presentation and Principles of Consolidation</u></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.25in">The consolidated accounts
include ACM and its subsidiaries, ACM Shanghai, ACM Wuxi, CleanChip and ACM Korea. Subsidiaries are those entities in which ACM,
directly and indirectly, controls more than one half of the voting power. All significant intercompany transactions and balances
have been eliminated upon consolidation.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.25in">The accompanying condensed
consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted
in the United States of America (“GAAP”) for interim financial information and the rules and regulations of the SEC
for reporting on Form 10-Q. Accordingly, they do not include all the information and footnotes required by GAAP for complete financial
statements herein. The unaudited condensed consolidated financial statements herein should be read in conjunction with the historical
consolidated financial statements of the Company for the year ended December 31, 2018 included in the Company’s Annual Report
on Form 10-K for the year ended December 31, 2018.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.25in">The accompanying condensed
consolidated balance sheet as of March 31, 2019, the condensed consolidated statements of operations and comprehensive income (loss)
for the three months ended March 31, 2019 and 2018, and the condensed consolidated statements of cash flows for the three months
ended March 31, 2019 and 2018 are unaudited. In the opinion of management, the unaudited condensed consolidated financial statements
of the Company reflect all adjustments that are necessary for a fair presentation of the Company’s financial position and
results of operations. Such adjustments are of a normal recurring nature, unless otherwise noted. The balance sheet as of March
31, 2019 and the results of operations for the three months ended March 31, 2019 are not necessarily indicative of the results
to be expected for any future period.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><u>Use of Estimates</u></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.25in">The preparation of condensed
consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the
reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the balance sheet date and the
reported revenue and expenses during the reported period in the condensed consolidated financial statements and accompanying notes.
The Company’s significant accounting estimates and assumptions include, but are not limited to, those used for the valuation
and recognition of stock-based compensation arrangements and warrant liability, realization of deferred tax assets, assessment
for impairment of long-lived assets, allowance for doubtful accounts, inventory valuation for excess and obsolete inventories,
lower of cost and market value or net realizable value of inventories, depreciable lives of property and equipment, and useful
life of intangible assets. Management of the Company believes that the estimates, judgments and assumptions are reasonable, based
on information available at the time they are made. Actual results could differ materially from those estimates.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><u>Basic and Diluted Net Income (Loss) per Common
Share</u></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.25in">Basic and diluted net income
(loss) per common share is calculated as follows:</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%">
<tr style="vertical-align: bottom">
<td> </td>
<td style="border-bottom: black 1pt solid"> </td>
<td colspan="6" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>Three Months Ended March 31,</b></font></td>
<td style="border-bottom: black 1pt solid"> </td></tr>
<tr style="vertical-align: bottom">
<td> </td>
<td style="border-bottom: black 1pt solid"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>2019</b></font></td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>2018</b></font></td>
<td style="border-bottom: black 1pt solid"> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Numerator:</font></td>
<td> </td>
<td colspan="2" style="text-align: center"> </td>
<td> </td>
<td> </td>
<td colspan="2" style="text-align: center"> </td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td style="width: 75%"><font style="font-size: 8pt">       Net income (loss)</font></td>
<td style="width: 1%"> </td>
<td style="width: 1%"><font style="font-size: 8pt">$</font></td>
<td style="width: 9%; text-align: right"><font style="font-size: 8pt">1,857</font></td>
<td style="width: 1%"> </td>
<td style="width: 1%"> </td>
<td style="width: 1%"><font style="font-size: 8pt">$</font></td>
<td style="width: 9%; text-align: right"><font style="font-size: 8pt">(2,780</font></td>
<td style="width: 2%"><font style="font-size: 8pt">)</font></td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">       Denominator:</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Weighted average shares outstanding, basic</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">16,044,655</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">15,383,086</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">       Effect of dilutive securities</font></td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">2,180,662</font></td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">-</font></td>
<td style="border-bottom: black 1pt solid"> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">       Weighted average shares outstanding, diluted</font></td>
<td style="border-bottom: black 1pt double"> </td>
<td style="border-bottom: black 1pt double"> </td>
<td style="border-bottom: black 1pt double; text-align: right"><font style="font-size: 8pt">18,225,317</font></td>
<td style="border-bottom: black 1pt double"> </td>
<td style="border-bottom: black 1pt double"> </td>
<td style="border-bottom: black 1pt double"> </td>
<td style="border-bottom: black 1pt double; text-align: right"><font style="font-size: 8pt">15,383,086</font></td>
<td style="border-bottom: black 1pt double"> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Net income (loss) per common share:</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td style="text-indent: 0.25in"><font style="font-size: 8pt">Basic</font></td>
<td style="border-bottom: black 1pt double"> </td>
<td style="border-bottom: black 1pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1pt double; text-align: right"><font style="font-size: 8pt">0.12</font></td>
<td style="border-bottom: black 1pt double"> </td>
<td style="border-bottom: black 1pt double"> </td>
<td style="border-bottom: black 1pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1pt double; text-align: right"><font style="font-size: 8pt">(0.18</font></td>
<td style="border-bottom: black 1pt double"><font style="font-size: 8pt">)</font></td></tr>
<tr style="vertical-align: bottom">
<td style="text-indent: 0.25in"><font style="font-size: 8pt">Diluted</font></td>
<td style="border-bottom: black 1pt double"> </td>
<td style="border-bottom: black 1pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1pt double; text-align: right"><font style="font-size: 8pt">0.10</font></td>
<td style="border-bottom: black 1pt double"> </td>
<td style="border-bottom: black 1pt double"> </td>
<td style="border-bottom: black 1pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1pt double; text-align: right"><font style="font-size: 8pt">(0.18</font></td>
<td style="border-bottom: black 1pt double"><font style="font-size: 8pt">)</font></td></tr>
</table>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.25in">ACM has been authorized
to issue Class A and Class B common stock since redomesticating in Delaware in November 2016. The two classes of common stock are
substantially identical in all material respects, except for voting rights. Since ACM did not declare any dividends during the
three months ended March 31, 2019 and 2018, the net income (loss) per common share attributable to each class is the same under
the “two-class” method. As such, the two classes of common stock have been presented on a combined basis in the condensed
consolidated statements of operations and comprehensive income (loss) and in the above computation of net income (loss) per common
share.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.25in">Diluted net income (loss)
per common share reflects the potential dilution from securities that could share in ACM’s earnings. ACM’s potential
dilutive securities consist of convertible preferred stocks, warrants and stock options for the three months ended March 31, 2019
and 2018. Certain potential dilutive securities were excluded from the net income (loss) per share calculation because the impact
would be anti-dilutive.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><u>Recent Accounting Pronouncements</u></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.25in"><b><i>Recently Adopted
Accounting Pronouncements</i></b></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.25in">In February 2016, the Financial
Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2016-02, <i>Leases (Topic
842)</i> (“ASU 2016-02”). The amendments in ASU 2016-02 create Topic 842, <i>Leases</i>, and supersede the leases requirements
in Topic 840, <i>Leases</i>. Topic 842 specifies the accounting for leases. The objective of Topic 842 is to establish the principles
that lessees and lessors shall apply to report useful information to users of financial statements about the amount, timing, and
uncertainty of cash flows arising from a lease. The main difference between Topic 842 and Topic 840 is the recognition of lease
assets and lease liabilities for those leases classified as operating leases under Topic 840. Topic 842 retains a distinction between
finance leases and operating leases. The classification criteria for distinguishing between finance leases and operating leases
are substantially similar to the classification criteria for distinguishing between capital leases and operating leases in the
previous lease guidance. The result of retaining a distinction between finance leases and operating leases is that under the lessee
accounting model in Topic 842, the effect of leases in the statement of comprehensive income and the statement of cash flows is
largely unchanged from previous GAAP.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.25in">Effective January 1, 2019,
we adopted the ASU 2016-02, <i>Leases,</i> which requires the recognition of lease assets and these liabilities by leases for those
leases classified as an operating lease under previous guidance. The original guidance required application on a modified retrospective
basis with the earliest period presented. In August, 2018, the FASB issues ASU 2018-11, <i>Targeted Improvements to ASC 842</i>,
which included an option to not restate comparative periods in transition and elect to use the effective date of ASC 842, <i>Leases,</i>
as the date of initial application of transition which we elected. As a result of the adoption of ASC 842 on January 1, 2019, we
recorded both operating lease right-of-use (“ROU”) assets of $5,109 and lease liabilities of $5,109. The adoption of
ASC 842 had no impact on our profit or loss and cash flows for the three-month period ended March 31, 2019. In addition, we elected
the package of practical expedients permitted under the transition guidance within the new standard which allowed us to carry forward
the historical lease classification. Additional information and disclosures required by this new standard are contained in Note
8, ‘Operating lease right-of-use assets’.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.25in">In June 2018, the FASB
issued ASU No. 2018-07, <i>Compensation — Stock Compensation (Topic 718) — Improvements to Nonemployee Share-Based
Payment Accounting</i> (“ASU 2018-07”), which simplifies several aspects of the accounting for nonemployee share-based
payment transactions resulting from expanding the scope of Topic 718, Compensation-Stock Compensation, to include share-based payment
transactions for acquiring goods and services from nonemployees. Some of the areas for simplification apply only to nonpublic entities.
ASU 2018-07 specifies that Topic 718 applies to all share-based payment transactions in which a grantor acquires goods or services
to be used or consumed in a grantor’s own operations by issuing share-based payment awards. ASU 2018-07 also clarify that
Topic 718 does not apply to share-based payments used to effectively provide (1) financing to the issuer or (2) awards granted
in conjunction with selling goods or services to customers as part of a contract accounted for under the New Revenue Standard.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.25in">Effective January 1, 2019, we adopted ASU 2018-07
and it did not have a material impact on our condensed consolidated financial statements.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.25in"><b><i>Recent Accounting
Pronouncements Not Yet Adopted</i></b></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.25in">In August 2018, the FASB issued ASU No. 2018-13,
<i>Fair Value Measurement (Topic 820)</i> (“ASU 2018-13”), which eliminates, adds and modifies certain disclosure requirements
for fair value measurements. The modified standard eliminates the requirement to disclose changes in unrealized gains and losses
included in earnings for recurring Level 3 fair value measurements and requires changes in unrealized gains and losses be included
in other comprehensive income for recurring Level 3 fair value measurements of instruments. The standard also requires the disclosure
of the range and weighted average used to develop significant unobservable inputs and how weighted average is calculate for recurring
and nonrecurring Level 3 fair value measurements. The amendment is effective for fiscal years beginning after December 15, 2019
and interim periods within that fiscal year with early adoption permitted. We are currently evaluating the impact of the adoption
of ASU 2018-13 on our consolidated financial statements.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.25in">In January 2017, the FASB
issued ASU No. 2017-04, <i>Intangibles—Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment</i> (“ASU
2017-04”), which removes Step 2 from the goodwill impairment test. An entity will apply a one-step quantitative test and
record the amount of goodwill impairment as the excess of a reporting unit’s carrying amount over its fair value, not to
exceed the total amount of goodwill allocated to the reporting unit. ASU 2017-04 does not amend the optional qualitative assessment
of goodwill impairment. A business entity that is an SEC filer must adopt the amendments in ASU 2017-04 for its annual or any interim
goodwill impairment test in fiscal years beginning after December 15, 2019. Early adoption is permitted for interim or annual goodwill
impairment tests performed on testing dates after January 1, 2017. We are currently evaluating the impact of the adoption of ASU
2017-04 on our consolidated financial statements.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.25in">In June 2016, the FASB
issued ASU 2016-13, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. ASU
2016-13 replaced the incurred loss impairment methodology under current GAAP with a methodology that reflects expected credit losses
and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. ASU 2016-13
requires use of a forward-looking expected credit loss model for accounts receivables, loans, and other financial instruments.
ASU 2016-13 is effective for fiscal years beginning after December 15, 2019, with early adoption permitted. Adoption of the standard
requires using a modified retrospective approach through a cumulative-effect adjustment to retained earnings as of the effective
date to align existing credit loss methodology with the new standard. We will adopt ASU 2016-13 effective January 1, 2020. We are
currently evaluating the impact of this standard on our consolidated financial statements, including accounting policies, processes,
and systems, but do not expect the standard will have a material impact on our consolidated financial statements.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.25in">At March 31, 2019 and December
31, 2018, accounts receivable consisted of the following:</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%">
<tr style="vertical-align: bottom">
<td> </td>
<td> </td>
<td colspan="2" style="text-align: center"><font style="font-size: 8pt"><b>March 31,</b></font></td>
<td> </td>
<td> </td>
<td colspan="2" style="text-align: center"><font style="font-size: 8pt"><b>December 31,</b></font></td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td> </td>
<td style="border-bottom: black 1pt solid"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>2019</b></font></td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>2018</b></font></td>
<td style="border-bottom: black 1pt solid"> </td></tr>
<tr style="vertical-align: bottom">
<td style="width: 76%"><font style="font-size: 8pt">Accounts receivable</font></td>
<td style="width: 1%"> </td>
<td style="width: 1%"><font style="font-size: 8pt">$</font></td>
<td style="width: 9%; text-align: right"><font style="font-size: 8pt">25,070</font></td>
<td style="width: 1%"> </td>
<td style="width: 1%"> </td>
<td style="width: 1%"><font style="font-size: 8pt">$</font></td>
<td style="width: 9%; text-align: right"><font style="font-size: 8pt">24,608</font></td>
<td style="width: 1%"> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Less: Allowance for doubtful accounts</font></td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">-</font></td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">-</font></td>
<td style="border-bottom: black 1pt solid"> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Total</font></td>
<td style="border-bottom: black 1pt double"> </td>
<td style="border-bottom: black 1pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1pt double; text-align: right"><font style="font-size: 8pt">25,070</font></td>
<td style="border-bottom: black 1pt double"> </td>
<td style="border-bottom: black 1pt double"> </td>
<td style="border-bottom: black 1pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1pt double; text-align: right"><font style="font-size: 8pt">24,608</font></td>
<td style="border-bottom: black 1pt double"> </td></tr>
</table>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.25in">The Company reviews accounts
receivable on a periodic basis and makes general and specific allowances when there is doubt as to the collectability of individual
balances. No allowance for doubtful accounts was considered necessary at March 31, 2019 or December 31, 2018. At March 31, 2019
and December 31, 2018, accounts receivable of $0 and $1,457, respectively, were pledged as collateral for borrowings from financial
institutions.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.25in">At March 31, 2019 and December
31, 2018, inventory consisted of the following:</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%">
<tr style="vertical-align: bottom">
<td> </td>
<td style="border-bottom: black 1pt solid"> </td>
<td colspan="2" style="border-bottom: black 1pt solid">
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>March 31,</b></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>2019</b></p></td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid"> </td>
<td colspan="2" style="border-bottom: black 1pt solid">
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>December 31,</b></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>2018</b></p></td>
<td style="border-bottom: black 1pt solid"> </td></tr>
<tr style="vertical-align: bottom">
<td style="width: 76%"><font style="font-size: 8pt">Raw materials</font></td>
<td style="width: 1%"> </td>
<td style="width: 1%"><font style="font-size: 8pt">$</font></td>
<td style="width: 9%; text-align: right"><font style="font-size: 8pt">13,285</font></td>
<td style="width: 1%"> </td>
<td style="width: 1%"> </td>
<td style="width: 1%"><font style="font-size: 8pt">$</font></td>
<td style="width: 9%; text-align: right"><font style="font-size: 8pt">12,646</font></td>
<td style="width: 1%"> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Work in process</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">15,981</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">9,631</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Finished goods</font></td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">12,987</font></td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">16,487</font></td>
<td style="border-bottom: black 1pt solid"> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">    Total inventory, gross</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">42,253</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">38,764</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Inventory reserve</font></td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">-</font></td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">-</font></td>
<td style="border-bottom: black 1pt solid"> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Total inventory, net</font></td>
<td style="border-bottom: black 1pt double"> </td>
<td style="border-bottom: black 1pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1pt double; text-align: right"><font style="font-size: 8pt">42,253</font></td>
<td style="border-bottom: black 1pt double"> </td>
<td style="border-bottom: black 1pt double"> </td>
<td style="border-bottom: black 1pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1pt double; text-align: right"><font style="font-size: 8pt">38,764</font></td>
<td style="border-bottom: black 1pt double"> </td></tr>
</table>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.25in">At March 31, 2019 and December
31, 2018, the Company did not have an inventory reserve and no inventory was pledged as collateral for borrowings from financial
institutions. System shipments of first-tools to an existing or prospective customer, for which ownership does not transfer until
customer acceptance, are classified as finished goods inventory and carried at cost until ownership is transferred.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.25in">At March 31, 2019 and December
31, 2018, property, plant and equipment consisted of the following:</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%">
<tr style="vertical-align: bottom">
<td> </td>
<td> </td>
<td colspan="2" style="text-align: center"><font style="font-size: 8pt"><b>March 31,</b></font></td>
<td> </td>
<td> </td>
<td colspan="2" style="text-align: center"><font style="font-size: 8pt"><b>December 31,</b></font></td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td> </td>
<td style="border-bottom: black 1pt solid"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>2019</b></font></td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>2018</b></font></td>
<td style="border-bottom: black 1pt solid"> </td></tr>
<tr style="vertical-align: bottom">
<td style="width: 76%"><font style="font-size: 8pt">Manufacturing equipment</font></td>
<td style="width: 1%"> </td>
<td style="width: 1%"><font style="font-size: 8pt">$</font></td>
<td style="width: 9%; text-align: right"><font style="font-size: 8pt">9,894</font></td>
<td style="width: 1%"> </td>
<td style="width: 1%"> </td>
<td style="width: 1%"><font style="font-size: 8pt">$</font></td>
<td style="width: 9%; text-align: right"><font style="font-size: 8pt">9,703</font></td>
<td style="width: 1%"> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Office equipment</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">549</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">512</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Transportation equipment</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">129</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">184</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Leasehold improvement</font></td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">1,444</font></td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">1,379</font></td>
<td style="border-bottom: black 1pt solid"> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Total cost</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">12,016</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">11,778</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Less: Total accumulated depreciation</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">(8,377</font></td>
<td><font style="font-size: 8pt">)</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">(8,102</font></td>
<td><font style="font-size: 8pt">)</font></td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Construction in progress</font></td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">80</font></td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">32</font></td>
<td style="border-bottom: black 1pt solid"> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Total property, plant and equipment, net</font></td>
<td style="border-bottom: black 1pt double"> </td>
<td style="border-bottom: black 1pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1pt double; text-align: right"><font style="font-size: 8pt">3,719</font></td>
<td style="border-bottom: black 1pt double"> </td>
<td style="border-bottom: black 1pt double"> </td>
<td style="border-bottom: black 1pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1pt double; text-align: right"><font style="font-size: 8pt">3,708</font></td>
<td style="border-bottom: black 1pt double"> </td></tr>
</table>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.25in">Depreciation expense was
$175 and $85 for the three months ended March 31, 2019 and 2018, respectively.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.25in">At March 31, 2019 and December
31, 2018, short-term borrowings consisted of the following:</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%">
<tr style="vertical-align: bottom">
<td> </td>
<td style="border-bottom: black 1pt solid"> </td>
<td colspan="2" style="border-bottom: black 1pt solid">
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>March 31,</b></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>2019</b></p></td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid"> </td>
<td colspan="2" style="border-bottom: black 1pt solid">
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>December 31,</b></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>2018</b></p></td>
<td style="border-bottom: black 1pt solid"> </td></tr>
<tr style="vertical-align: bottom">
<td style="width: 76%; text-align: justify"><font style="font-size: 8pt">Line of credit up to RMB 50,000 from Bank of Shanghai
Pudong Branch, due on April 17, 2019 with an annual interest rate of 4.99%, guaranteed by the Company’s CEO and fully
repaid on March 27, 2019<font style="font-family: Times New Roman, Times, Serif">.</font></font></td>
<td style="width: 1%"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 1%"><font style="font: 8pt Times New Roman, Times, Serif">$ </font></td>
<td style="width: 9%; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">-</font></td>
<td style="width: 1%"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 1%"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 1%"><font style="font: 8pt Times New Roman, Times, Serif">$</font> </td>
<td style="width: 9%; text-align: right"><font style="font-size: 8pt">3,133</font></td>
<td style="width: 1%"> </td></tr>
<tr style="vertical-align: bottom">
<td style="text-align: justify"><font style="font-size: 8pt">Line of credit up to RMB 50,000 from Bank of Shanghai Pudong
Branch, due on February 14, 2019 with an annual interest rate of 5.15%, guaranteed by the Company’s CEO and fully
repaid on February 14, 2019.</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">-</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">485</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td style="text-align: justify"><font style="font-size: 8pt">Line of credit up to RMB 50,000 from Bank of Shanghai Pudong
Branch, due on January 23, 2020 with an annual interest rate of 5.22%, guaranteed by the Company’s CEO and Cleanchip
Technologies Limited.</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">668</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td style="text-align: justify"><font style="font-size: 8pt">Line of credit up to RMB 30,000 from Bank of China Pudong
Branch, due on June 06, 2019 with annual interest rate of 5.22%, secured by certain of the Company’s intellectual
property and the Company’s CEO.</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">2,228</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">2,186</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td style="text-align: justify"><font style="font-size: 8pt">Line of credit up to RMB 30,000 from Bank of China Pudong
Branch, due on June 13, 2019 with annual interest rate of 5.22%, secured by certain of the Company’s intellectual
property and the Company’s CEO.</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">2,228</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">2,186</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td style="text-align: justify"><font style="font-size: 8pt">Line of credit up to RMB 10,000 from Shanghai Rural Commercial
Bank, due on January 23, 2019 with an annual interest rate of 5.44%, guaranteed by the Company’s CEO and pledged by
accounts receivable, and fully repaid on January 23, 2019.</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">-</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">1,457</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td style="text-align: justify"><font style="font-size: 8pt">Line of credit up to RMB 20,000 from Shanghai Rural Commercial
Bank, due on February 21, 2020 with an annual interest rate of 5.66%, guaranteed by the Company’s CEO and pledged by
accounts receivable.</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">1,485</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td style="text-align: justify"><font style="font-size: 8pt">Line of credit up to RMB 20,000 from Bank of Communications, due
on January 18, 2020 with an annual interest rate of 5.66%.</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">1,485</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td style="text-align: justify"><font style="font-size: 8pt">Line of credit up to RMB 20,000 from Bank of Communications, due
on January 22, 2020 with an annual interest rate of 5.66%.</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">743</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td style="text-align: justify"><font style="font-size: 8pt">Line of credit up to RMB 20,000 from Bank of Communications, due
on February 14, 2020 with an annual interest rate of 5.66%.</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">742</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td style="text-align: justify"><font style="font-size: 8pt">Line of credit up to RMB 50,000 from China Everbright Bank, due
on March 25, 2020 with an annual interest rate of 4.94%, guaranteed by the Company’s CEO.</font></td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">3,250</font></td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid; text-align: right"> </td>
<td style="border-bottom: black 1pt solid"> </td></tr>
<tr style="vertical-align: bottom">
<td style="text-align: justify"><font style="font-size: 8pt">Total</font></td>
<td style="border-bottom: black 1pt double"> </td>
<td style="border-bottom: black 1pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1pt double; text-align: right"><font style="font-size: 8pt">12,829</font></td>
<td style="border-bottom: black 1pt double"> </td>
<td style="border-bottom: black 1pt double"> </td>
<td style="border-bottom: black 1pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1pt double; text-align: right"><font style="font-size: 8pt">9,447</font></td>
<td style="border-bottom: black 1pt double"> </td></tr>
</table>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.25in">Interest expense related
to short-term borrowings amounted to $139 and $103 for the three months ended March 31, 2019 and 2018, respectively.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.25in">At March 31, 2019 and December
31, 2018, other payable and accrued expenses consisted of the following:</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%">
<tr style="vertical-align: bottom">
<td> </td>
<td style="border-bottom: black 1pt solid"> </td>
<td colspan="2" style="border-bottom: black 1pt solid">
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>March 31,</b></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>2019</b></p></td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid"> </td>
<td colspan="2" style="border-bottom: black 1pt solid">
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>December 31,</b></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>2018</b></p></td>
<td style="border-bottom: black 1pt solid"> </td></tr>
<tr style="vertical-align: bottom">
<td style="width: 76%"><font style="font-size: 8pt">Lease expenses and payable for leasehold improvement due to a related party (note 11)</font></td>
<td style="width: 1%"> </td>
<td style="width: 1%"><font style="font-size: 8pt">$</font></td>
<td style="width: 9%; text-align: right"><font style="font-size: 8pt">-</font></td>
<td style="width: 1%"> </td>
<td style="width: 1%"> </td>
<td style="width: 1%"><font style="font-size: 8pt">$</font></td>
<td style="width: 9%; text-align: right"><font style="font-size: 8pt">53</font></td>
<td style="width: 1%"> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Accrued commissions</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">2,663</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">2,931</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Accrued warranty</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">2,017</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">1,710</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Accrued payroll</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">1,240</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">626</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Accrued professional fees</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">139</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">64</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Accrued machine testing fees</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">2,978</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">3,076</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Others</font></td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">2,797</font></td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">1,950</font></td>
<td style="border-bottom: black 1pt solid"> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Total</font></td>
<td style="border-bottom: black 1pt double"> </td>
<td style="border-bottom: black 1pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1pt double; text-align: right"><font style="font-size: 8pt">11,834</font></td>
<td style="border-bottom: black 1pt double"> </td>
<td style="border-bottom: black 1pt double"> </td>
<td style="border-bottom: black 1pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1pt double; text-align: right"><font style="font-size: 8pt">10,410</font></td>
<td style="border-bottom: black 1pt double"> </td></tr>
</table>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="font: 8pt Times New Roman, Times, Serif">We
lease space under non-cancelable operating leases for several office and manufacturing locations. These leases do not have significant
rent escalation holidays, concessions, leasehold improvement incentives, or other build-out clauses. Further, the leases do not
contain contingent rent provisions.</font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="font: 8pt Times New Roman, Times, Serif">Most
leases include one or more options to renew. The exercise of lease renewal options is typically at our sole discretion; therefore,
the majority of renewals to extend the lease terms are not included in our right-of–use assets and lease liabilities as
they are not reasonably certain of exercise. We regularly evaluate the renewal options and when they are reasonably certain of
exercise, we include the renewal period in our lease term.</font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="font: 8pt Times New Roman, Times, Serif">As
most of our leases do not provide an implicit rate, we use our incremental borrowing rate based on the information available at
the lease commencement date in determining the present value of the lease payments. We have a centrally managed treasury function;
therefore, based on the applicable lease terms and the current economic environment, we apply a portfolio approach for determining
the incremental borrowing rate.</font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="font: 8pt Times New Roman, Times, Serif">The
components of our lease expense are as follows:</font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif"> </font></p>
<table cellspacing="0" cellpadding="0" style="font: 8pt Times New Roman, Times, Serif; width: 100%">
<tr style="vertical-align: bottom; font: 8pt Times New Roman, Times, Serif">
<td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: black 1pt solid; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td colspan="2" style="border-bottom: black 1pt solid; font: 8pt Times New Roman, Times, Serif"><p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif"><b>March
31,</b></font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif"><b>2019</b></font></p></td>
<td style="border-bottom: black 1pt solid; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="vertical-align: bottom; font: 8pt Times New Roman, Times, Serif">
<td style="width: 88%; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">Operating
lease cost</font></td>
<td style="width: 1%; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 1%; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">$</font></td>
<td style="width: 9%; text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">437</font></td>
<td style="width: 1%; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="vertical-align: bottom; font: 8pt Times New Roman, Times, Serif">
<td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">Short-term
lease cost</font></td>
<td style="border-bottom: black 1pt solid; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: black 1pt solid; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: black 1pt solid; font: 8pt Times New Roman, Times, Serif; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">18</font></td>
<td style="border-bottom: black 1pt solid; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="vertical-align: bottom; font: 8pt Times New Roman, Times, Serif">
<td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">Lease
cost</font></td>
<td style="border-bottom: black 1pt double; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: black 1pt double; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">$</font></td>
<td style="border-bottom: black 1pt double; font: 8pt Times New Roman, Times, Serif; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">455</font></td>
<td style="border-bottom: black 1pt double; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td></tr>
</table>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><font style="font: 8pt Times New Roman, Times, Serif">Supplemental
cash flow information related to our operating leases was as follows for the period ended March 31, 2019: </font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0"><font style="font: 8pt Times New Roman, Times, Serif"> </font></p>
<table cellspacing="0" cellpadding="0" style="font: 8pt Times New Roman, Times, Serif; width: 100%">
<tr style="vertical-align: bottom; font: 8pt Times New Roman, Times, Serif">
<td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: black 1pt solid; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td colspan="2" style="border-bottom: black 1pt solid; font: 8pt Times New Roman, Times, Serif; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif"><b> Three
months ended March 31, 2019</b></font></td>
<td style="border-bottom: black 1pt solid; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="vertical-align: bottom; font: 8pt Times New Roman, Times, Serif">
<td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> Cash
paid for amounts included in the measurement of lease liabilities:</font></td>
<td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td colspan="2" style="text-align: center; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="vertical-align: bottom; font: 8pt Times New Roman, Times, Serif">
<td style="width: 88%; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> 
Operating cash outflow from operating leases</font></td>
<td style="width: 1%; border-bottom: black 1pt solid; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 1%; border-bottom: black 1pt solid; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 9%; border-bottom: black 1pt solid; font: 8pt Times New Roman, Times, Serif; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">455</font></td>
<td style="width: 1%; border-bottom: black 1pt solid; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td></tr>
</table>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="font: 8pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="font: 8pt Times New Roman, Times, Serif">Maturities
of our lease liabilities for all operating leases are as follows as of March 31, 2019:</font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="font: 8pt Times New Roman, Times, Serif"> </font></p>
<table cellspacing="0" cellpadding="0" style="font: 8pt Times New Roman, Times, Serif; width: 100%">
<tr style="vertical-align: bottom; font: 8pt Times New Roman, Times, Serif">
<td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: black 1pt solid; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td colspan="2" style="border-bottom: black 1pt solid; font: 8pt Times New Roman, Times, Serif"><p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif"><b>March
31,</b></font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif"><b>2019</b></font></p></td>
<td style="border-bottom: black 1pt solid; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="vertical-align: bottom; font: 8pt Times New Roman, Times, Serif">
<td style="width: 88%; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">2019</font></td>
<td style="width: 1%; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 1%; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">$</font></td>
<td style="width: 9%; text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">1,057</font></td>
<td style="width: 1%; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="vertical-align: bottom; font: 8pt Times New Roman, Times, Serif">
<td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">2020</font></td>
<td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">1,424</font></td>
<td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="vertical-align: bottom; font: 8pt Times New Roman, Times, Serif">
<td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">2021</font></td>
<td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">1,456</font></td>
<td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="vertical-align: bottom; font: 8pt Times New Roman, Times, Serif">
<td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">2022</font></td>
<td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">1,494</font></td>
<td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="vertical-align: bottom; font: 8pt Times New Roman, Times, Serif">
<td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">2023</font></td>
<td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">53</font></td>
<td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="vertical-align: bottom; font: 8pt Times New Roman, Times, Serif">
<td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">2024</font></td>
<td style="border-bottom: black 1pt solid; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: black 1pt solid; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: black 1pt solid; font: 8pt Times New Roman, Times, Serif; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">13</font></td>
<td style="border-bottom: black 1pt solid; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="vertical-align: bottom; font: 8pt Times New Roman, Times, Serif">
<td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">Total
lease payments</font></td>
<td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">5,497</font></td>
<td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="vertical-align: bottom; font: 8pt Times New Roman, Times, Serif">
<td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">Less:
Interest</font></td>
<td style="border-bottom: black 1pt solid; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: black 1pt solid; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: black 1pt solid; font: 8pt Times New Roman, Times, Serif; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">(710</font></td>
<td style="border-bottom: black 1pt solid; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">)</font></td></tr>
<tr style="vertical-align: bottom; font: 8pt Times New Roman, Times, Serif">
<td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">Present
value of lease liabilities</font></td>
<td style="border-bottom: black 1pt double; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: black 1pt double; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">$</font></td>
<td style="border-bottom: black 1pt double; font: 8pt Times New Roman, Times, Serif; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">4,787</font></td>
<td style="border-bottom: black 1pt double; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td></tr>
</table>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0"><font style="font: 8pt Times New Roman, Times, Serif">The
weighted average remaining lease terms and discount rates for all of our operating leases were as follows as of March 31, 2019:</font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif"> </font></p>
<table cellspacing="0" cellpadding="0" style="font: 8pt Times New Roman, Times, Serif; width: 100%">
<tr style="vertical-align: bottom; font: 8pt Times New Roman, Times, Serif">
<td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">Remaining
lease term and discount rate:</font></td>
<td style="border-bottom: black 1pt solid; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td colspan="2" style="border-bottom: black 1pt solid; font: 8pt Times New Roman, Times, Serif"><p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif"><b>March
31,</b></font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif"><b>2019</b></font></p></td>
<td style="border-bottom: black 1pt solid; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="vertical-align: bottom; font: 8pt Times New Roman, Times, Serif">
<td style="width: 88%; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">Weighted
average remaining lease term (years)</font></td>
<td style="width: 1%; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 1%; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 9%; text-align: right; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">3.80</font></td>
<td style="width: 1%; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="vertical-align: bottom; font: 8pt Times New Roman, Times, Serif">
<td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">Weighted
average discount rate</font></td>
<td style="border-bottom: black 1pt solid; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: black 1pt solid; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: black 1pt solid; font: 8pt Times New Roman, Times, Serif; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">5.43</font></td>
<td style="border-bottom: black 1pt solid; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">%</font></td></tr>
</table>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.25in">Other long-term liabilities
represent government subsidies received from PRC governmental authorities for development and commercialization of certain technology
but not yet recognized. As of March 31, 2019, and December 31, 2018, other long-term liabilities consisted of the following unearned
government subsidies:</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%">
<tr style="vertical-align: bottom">
<td> </td>
<td style="border-bottom: black 1pt solid"> </td>
<td colspan="2" style="border-bottom: black 1pt solid">
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>March 31,</b></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>2019</b></p></td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid"> </td>
<td colspan="2" style="border-bottom: black 1pt solid">
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>December 31,</b></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>2018</b></p></td>
<td style="border-bottom: black 1pt solid"> </td></tr>
<tr style="vertical-align: bottom">
<td style="width: 76%"><font style="font-size: 8pt">Subsidies to Stress Free Polishing project, commenced in 2008 and 2017</font></td>
<td style="width: 1%"> </td>
<td style="width: 1%"><font style="font-size: 8pt">$</font></td>
<td style="width: 9%; text-align: right"><font style="font-size: 8pt">1,449</font></td>
<td style="width: 1%"> </td>
<td style="width: 1%"> </td>
<td style="width: 1%"><font style="font-size: 8pt">$</font></td>
<td style="width: 9%; text-align: right"><font style="font-size: 8pt">1,483</font></td>
<td style="width: 1%"> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Subsidies to Electro Copper Plating project, commenced in 2014</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">1,598</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">2,860</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Subsidies to Polytetrafluoroethylene, commenced in 2018</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">171</font></td>
<td> </td>
<td> </td>
<td><font style="font-size: 8pt"></font></td>
<td style="text-align: right"><font style="font-size: 8pt">178</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Other</font></td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">78</font></td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">62</font></td>
<td style="border-bottom: black 1pt solid"> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Total</font></td>
<td style="border-bottom: black 1pt double"> </td>
<td style="border-bottom: black 1pt double"><font style="font: 8pt Times New Roman, Times, Serif">$</font> </td>
<td style="border-bottom: black 1pt double; text-align: right"><font style="font-size: 8pt">3,296</font></td>
<td style="border-bottom: black 1pt double"> </td>
<td style="border-bottom: black 1pt double"> </td>
<td style="border-bottom: black 1pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1pt double; text-align: right"><font style="font-size: 8pt">4,583</font></td>
<td style="border-bottom: black 1pt double"> </td></tr>
</table>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.25in">On September 6, 2017, ACM
and Ninebell Co., Ltd. (“Ninebell”), a Korean company that is one of the Company’s principal materials suppliers,
entered into an ordinary share purchase agreement, effective as of September 11, 2017, pursuant to which Ninebell issued to ACM
ordinary shares representing 20% of Ninebell’s post-closing equity for a purchase price of $1,200, and a common stock purchase
agreement, effective as of September 11, 2017, pursuant to which ACM issued 133,334 shares of Class A common stock to Ninebell
for a purchase price of $1,000 at $7.50 per share. The investment in Ninebell is accounted for under the equity method.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.25in">On August 18, 2017, ACM
and Ninebell, its equity method investment affiliate (note 10), entered into a loan agreement pursuant to which ACM made an interest-free
loan of $946 to Ninebell, payable in 180 days or automatically extended another 180 days if in default. The loan was secured by
a pledge of Ninebell’s accounts receivable due from ACM and all money that Ninebell received from ACM. Ninebell repaid the
loan in March 2018. ACM purchased materials from Ninebell amounting to $2,320 and $970 during the three months ended March 31,
2019 and 2018. As of March 31, 2019 and December 31, 2018, accounts payable due to Ninebell were $1,476 and $1,477, respectively,
and prepaid to Ninebell for material purchases were $871 and $572, respectively.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.25in">In 2007 ACM Shanghai entered
into an operating lease agreement with Shanghai Zhangjiang Group Co., Ltd. (“Zhangjiang Group”) to lease manufacturing
and office space located in Shanghai, China. An affiliate of Zhangjiang Group holds 787,098 shares of Class A common stock that
it acquired in September 2017 for $5,903. Pursuant to the lease agreement, Zhangjiang Group provided $771 to ACM Shanghai for leasehold
improvements. In September 2016 the lease agreement was amended to modify payment terms and extend the lease through December 31,
2017. From January 1 to April 25, 2018, ACM Shanghai leased the property on a month-to-month basis. On April 26, 2018, ACM Shanghai
entered into a renewed lease with Zhangjiang Group for the period from January 1, 2018 through December 31, 2022. Under the lease,
ACM Shanghai would pay a monthly rental fee of approximately RMB 366 (equivalent to $55). The required security deposit is RMB
1,077 (equivalent to $163). The Company incurred leasing expenses under the lease agreement of $150 and $172 during the three months
ended March 31, 2019 and 2018, respectively. As of March 31, 2019 and December 31, 2018, payables to Zhangjiang Group for lease
expenses and leasehold improvements recorded as other payables and accrued expenses amounted to $0 and $53, respectively (note
7).</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.25in">On December 9, 2016, ACM
Shanghai received the SMC Investment from SMC for potential investment pursuant to terms to be subsequently negotiated (note 8).
SMC is a limited partnership incorporated in the PRC, whose partners consist of employees of ACM Shanghai. On March 14, 2017, ACM,
ACM Shanghai and SMC entered into a securities purchase agreement (the “SMC Agreement”) pursuant to which, in exchange
for the SMC Investment, ACM issued to SMC a warrant exercisable, for cash or on a cashless basis, to purchase, at any time on or
before May 17, 2023, all, but not less than all, of 397,502 shares of Class A common stock at a price of $7.50 per share, for a
total exercise price of $2,981. On March 30, 2018, SMC exercised the warrant and purchased 397,502 shares of Class A common stock
(note 12).</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.25in">On December 9, 2016, Shengxin
(Shanghai) Management Consulting Limited Partnership (“SMC”), a related party (note 11), delivered RMB 20,124 (approximately
$2,981 as of the close of business on such date) in cash (the “SMC Investment”) to ACM Shanghai for potential investment
pursuant to terms to be subsequently negotiated</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.25in">On March 14, 2017, ACM,
ACM Shanghai and SMC entered into a securities purchase agreement (the “SMC Agreement”) pursuant to which, in exchange
for the SMC Investment, ACM issued to SMC a warrant exercisable, for cash or on a cashless basis, to purchase, at any time on or
before May 17, 2023, all, but not less than all, of 397,502 shares of Class A common stock at a price of $7.50 per share.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.25in">The warrant issued to SMC,
while outstanding as of December 31, 2017, was classified as a liability as it was conditionally puttable in accordance with FASB
ASC 480, <i>Distinguishing Liabilities from Equity</i>. The fair value of the warrant was adjusted for changes in fair value at
each reporting period but could not be lower than the proceeds of the SMC Investment. The corresponding non-cash gain or loss of
the changes in fair value was recorded in earnings. The methodology used to value the warrant was the Black-Scholes valuation model.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.25in">On March 30, 2018, ACM
entered into a warrant exercise agreement with ACM Shanghai and SMC pursuant to which SMC exercised its warrant in full by issuing
to ACM a senior secured promissory note in the principal amount of approximately $3,000. ACM then transferred the SMC note to ACM
Shanghai in exchange for an intercompany promissory note of ACM Shanghai in the principal amount of approximately $3,000. Each
of the two notes bears interest at a rate of 3.01% per annum and matures on August 17, 2023. As security for its performance of
its obligations under its note, SMC granted to ACM Shanghai a security interest in the 397,502 shares of Class A common stock issued
to SMC upon its exercise of the warrant. Upon the issuance of 397,502 shares of Class A common stock to SMC, the senior secured
promissory note issued to AMC by SMC was offset against the SMC investment.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.25in">ACM is authorized to issue
100,000,000 shares of Class A common stock and 7,303,533 shares of Class B common stock, each with a par value of $0.0001. Each
share of Class A common stock is entitled to one vote, and each share of Class B common stock is entitled to twenty votes and is
convertible at any time into one share of Class A common stock. Shares of Class A common stock and Class B common stock are treated
equally, identically and ratably with respect to any dividends declared by the Board of Directors unless the Board of Directors
declares different dividends to the Class A common stock and Class B common stock by getting approval from a majority of common
stock holders.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.25in">At December 31, 2017, the number of shares of
Class A common stock issued and outstanding was 12,935,546. At December 31, 2017, the number of shares of Class B common stock
issued and outstanding was 2,409,738, respectively.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.25in">On March 30, 2018, SMC
exercised its warrant (note 12) and purchased 397,502 shares of Class A common stock.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.25in">At March 31, 2018, the
number of shares of Class A common stock issued and outstanding was 13,390,270. At March 31, 2018, the number of shares of Class
B common stock issued and outstanding was 2,409,738. During the three months ended March 31, 2018, no share of Class B common stock
was converted into Class A common stock.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.25in">At December 31, 2018, the
number of shares of Class A common stock issued and outstanding was 14,110,315. At December 31, 2018, the number of shares of Class
B common stock issued and outstanding was 1,898,423. During the three months ended March 31, 2019, the Company issued 66,375 shares
of Class A common stock, respectively, upon options exercises by certain employees and non-employees. During the three months ended
March 31, 2019, no shares of Class B common stock were converted into Class A common stock.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.25in">At March 31, 2019, the
number of shares of Class A common stock issued and outstanding was 14,176,790. At March 31, 2019, the number of shares of Class
B common stock issued and outstanding was 1,898,423.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.25in">ACM’s stock-based
compensation awards consisting of employee and non-employee awards were issued under the 1998 Stock Option Plan and 2016 Omnibus
Incentive Plan and as standalone options.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b><i>Employee Awards</i></b></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.25in">The following table summarizes
the Company’s employee share option activities during the three months ended March 31, 2019:</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%">
<tr style="vertical-align: bottom">
<td> </td>
<td style="border-bottom: black 1pt solid"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>Number of Option Share</b></font></td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>Weighted Average Grant Date Fair Value</b></font></td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>Weighted Average Exercise Price</b></font></td>
<td style="border-bottom: black 1pt solid"> </td>
<td>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: center; border-bottom: black 0.75pt solid"><b>Weighted
Average Remaining Contractual Term</b></p></td></tr>
<tr style="vertical-align: bottom">
<td style="width: 49%"><font style="font-size: 8pt">Out<font style="font-family: Times New Roman, Times, Serif">standing at December 31, 2018</font></font></td>
<td style="width: 1%"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 1%"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 9%; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">2,503,405</font></td>
<td style="width: 1%"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 1%"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 1%"><font style="font: 8pt Times New Roman, Times, Serif">$ </font></td>
<td style="width: 9%; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">0.91</font></td>
<td style="width: 1%"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 1%"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 1%"><font style="font: 8pt Times New Roman, Times, Serif">$ </font></td>
<td style="width: 9%; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">4.09</font></td>
<td style="width: 1%"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 15%; text-align: center; text-indent: 9pt"><font style="font: 8pt Times New Roman, Times, Serif">7.30
years</font></td></tr>
<tr style="vertical-align: bottom">
<td><font style="font: 8pt Times New Roman, Times, Serif">Granted</font></td>
<td><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">-</font></td>
<td><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">-</font></td>
<td><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">-</font></td>
<td><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: center"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="vertical-align: bottom">
<td><font style="font: 8pt Times New Roman, Times, Serif">Exercised</font></td>
<td><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">(11,375</font></td>
<td><font style="font: 8pt Times New Roman, Times, Serif">)</font></td>
<td><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">0.65</font></td>
<td><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">1.68</font></td>
<td><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: center"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="vertical-align: bottom">
<td><font style="font: 8pt Times New Roman, Times, Serif">Expired</font></td>
<td><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">(628</font></td>
<td><font style="font: 8pt Times New Roman, Times, Serif">)</font></td>
<td><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">0.55</font></td>
<td><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">3.00</font></td>
<td><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: center"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="vertical-align: bottom">
<td><font style="font: 8pt Times New Roman, Times, Serif">Forfeited</font></td>
<td><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">-</font></td>
<td><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">-</font></td>
<td><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">-</font></td>
<td><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: center"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="vertical-align: bottom">
<td><font style="font: 8pt Times New Roman, Times, Serif">Outstanding at March 31, 2019</font></td>
<td><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">2,491,402</font></td>
<td><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 8pt Times New Roman, Times, Serif">$ </font></td>
<td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">1.53</font></td>
<td><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 8pt Times New Roman, Times, Serif">$ </font></td>
<td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">4.10</font></td>
<td><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: center"><font style="font: 8pt Times New Roman, Times, Serif">7.06 years</font></td></tr>
<tr style="vertical-align: bottom">
<td><font style="font: 8pt Times New Roman, Times, Serif">Vested and exercisable at March
31, 2019</font></td>
<td><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">1,544,974</font></td>
<td><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: center"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td></tr>
</table>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">  </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.5in"><font style="background-color: white">During
the three months ended March 31, 2019 and 2018, the Company recognized employee stock-based compensation expense of $221 and $93,
respectively. As of March 31, 2019 and December 31, 2018, $2,203 and $2,424, respectively, of total unrecognized employee stock-based
compensation expense, net of estimated forfeitures, related to stock-based awards were expected to be recognized over a weighted-average
period of 1.41 years and 1.62 years, respectively. Total recognized compensation cost may be adjusted for future changes in estimated
forfeitures.</font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="background-color: white">No options
were granted to employees during the three months ended March 31, 2019.</font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0"><b><i>Non-employee Awards</i></b></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.25in">The following table summarizes
the Company’s non-employee share option activities during the three months ended March 31, 2019:</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%">
<tr style="vertical-align: bottom">
<td> </td>
<td style="border-bottom: black 1pt solid"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>Number of Option Shares</b></font></td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>Weighted Average Grant Date Fair Value</b></font></td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>Weighted Average Exercise Price</b></font></td>
<td style="border-bottom: black 1pt solid"> </td>
<td>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: center; border-bottom: black 0.75pt solid"><b>Weighted
Average Remaining Contractual Term</b></p></td></tr>
<tr style="vertical-align: bottom">
<td style="width: 49%"><font style="font-size: 8pt">Outstanding at Dec<font style="font-family: Times New Roman, Times, Serif">ember 31, 2018</font></font></td>
<td style="width: 1%"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 1%"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 9%; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">1,212,374</font></td>
<td style="width: 1%"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 1%"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 1%"><font style="font: 8pt Times New Roman, Times, Serif">$ </font></td>
<td style="width: 9%; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">0.78</font></td>
<td style="width: 1%"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 1%"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 1%"><font style="font: 8pt Times New Roman, Times, Serif">$ </font></td>
<td style="width: 9%; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">2.57</font></td>
<td style="width: 1%"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 15%; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif"> 6.66 years</font></td></tr>
<tr style="vertical-align: bottom">
<td><font style="font: 8pt Times New Roman, Times, Serif">Granted</font></td>
<td><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">-</font></td>
<td><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">-</font></td>
<td><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">-</font></td>
<td><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: center"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="vertical-align: bottom">
<td><font style="font: 8pt Times New Roman, Times, Serif">Exercised</font></td>
<td><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">(55,000</font></td>
<td><font style="font: 8pt Times New Roman, Times, Serif">)</font></td>
<td><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">0.32</font></td>
<td><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">0.75</font></td>
<td><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: center"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="vertical-align: bottom">
<td><font style="font: 8pt Times New Roman, Times, Serif">Expired</font></td>
<td><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">-</font></td>
<td><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">-</font></td>
<td><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">-</font></td>
<td><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: center"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="vertical-align: bottom">
<td><font style="font: 8pt Times New Roman, Times, Serif">Forfeited</font></td>
<td><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">-</font></td>
<td><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">-</font></td>
<td><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">-</font></td>
<td><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: center"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="vertical-align: bottom">
<td><font style="font: 8pt Times New Roman, Times, Serif">Outstanding at March 31, 2019</font></td>
<td><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">1,157,374</font></td>
<td><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 8pt Times New Roman, Times, Serif">$</font></td>
<td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">0.78</font></td>
<td><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 8pt Times New Roman, Times, Serif">$ </font></td>
<td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">2.57</font></td>
<td><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: center"><font style="font: 8pt Times New Roman, Times, Serif"> 6.66 years</font></td></tr>
<tr style="vertical-align: bottom">
<td><font style="font: 8pt Times New Roman, Times, Serif">Vested and exercisable at March
31, 2019</font></td>
<td><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">950,237</font></td>
<td><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: center"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td></tr>
</table>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.25in">We adopted ASU 2018-07 on January 1, 2019 and
the stock-based compensation expense for grants before the adoption of ASU 2018-07 is based on the grant date fair value as of
December 31, 2018, which was the last business day before we adopted ASU 2018-07, for all nonemployee awards that have not vested
as of December 31, 2018. Furthermore, for future awards, compensation expense is based on the market value of the shares at the
grant date. Refer to "Note 2 - Summary of Significant Accounting Policies" for further discussion on our adoption of ASU
2018-07.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.25in"><font style="background-color: white">During
the three months ended March 31, 2019 and 2018,</font> the Company recognized stock-based compensation expense of $523 and $<font style="background-color: white">2,083</font>
for the three months ended March 31, 2019 and 2018, respectively, related to share option vesting. <font style="background-color: white">As
of March 31, 2019 and December 31, 2018, $1,190 and $1,713, respectively, of total unrecognized non-employee stock-based compensation
expense, net of estimated forfeitures, related to stock-based awards were expected to be recognized over a weighted-average period
of 1.37 years and 1.31 years, respectively. Total recognized compensation cost may be adjusted for future changes in estimated
forfeitures.</font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.25in">Income taxes are accounted for under the asset
and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences
between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating
loss and tax credit carry-forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply
to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect of a change
in tax rates on deferred tax assets and liabilities is recognized in income in the period during which such rates are enacted.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.25in">The Company considers all
available evidence to determine whether it is more likely than not that some portion or all of the deferred tax assets will be
realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the
periods in which those temporary differences become realizable. Management considers the scheduled reversal of deferred tax liabilities
(including the impact of available carryback and carry-forward periods), and projected taxable income in assessing the realizability
of deferred tax assets. In making such judgments, significant weight is given to evidence that can be objectively verified. Based
on all available evidence, in particular the Company’s three-year historical cumulative losses, recent operating results
and U.S. pre-tax loss for the three months ended March 31, 2019, the Company recorded a valuation allowance against its U.S. net
deferred tax assets. In order to fully realize the U.S. deferred tax assets, the Company will need to generate sufficient taxable
income in future periods before the expiration of the deferred tax assets governed by the tax code.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.25in">In each period since inception,
the Company has recorded a valuation allowance for the full amount of net deferred tax assets in the United States, as the realization
of deferred tax assets is uncertain. ACM Shanghai has shown a three-year historical cumulative profit and has projections of future
income. As a result, the Company maintained a partial consolidated valuation allowance for the three months ended March
31, 2019.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.25in">The Company accounts for
uncertain tax positions in accordance with the authoritative guidance on income taxes under which the Company may only recognize
or continue to recognize tax positions that meet a "more likely than not" threshold. The Company recognizes accrued interest
and penalties related to unrecognized tax benefits as a component of the provision for income taxes.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.25in">The Company’s effective
tax rate differs from statutory rates of 21% for U.S. federal income tax purposes and 15% to 25% for Chinese income tax purposes
due to the effects of the valuation allowance and certain permanent differences from book-tax differences. As a result, the Company
recorded income tax expense of $119 and $22 during the three months ended March 31, 2019 and 2018, respectively.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.25in">As of March 31, 2019, the
Company's total unrecognized tax benefits were approximately $44, which would not affect the effective tax rate if recognized.
The Company will recognize interest and penalties, when they occur, related to uncertain tax provisions as a component of tax expense.
No interest or penalties were recognized for the three months ended March 31, 2019. </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.25in">The Company files income
tax returns in the United States, and state and foreign jurisdictions. The federal, state and foreign income tax returns are under
the statute of limitations subject to tax examinations for the tax years ended December 31, 1999 through December 31, 2017. This
is due to the Company’s tax attribute carry-forwards, the tax years in which the attribute was generated may still be adjusted
upon examination by the U.S. Internal Revenue Service, state or foreign tax authorities to the extent utilized in a future period.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.25in">The Tax Cuts and Jobs Act
(the "Tax Act"), enacted on December 22, 2017, introduced significant changes to U.S. income tax law. Effective January
1, 2018, the Tax Act reduced the U.S. statutory tax rate from 35% to 21% and created new taxes on certain foreign-sourced earnings
and certain intercompany payments. Due to the timing of the enactment and the complexity involved in applying the provisions of
the Tax Act, the Company made reasonable estimates of the effects and recorded provisional amounts in its financial statements
as of December 31, 2017. There were no adjustments made in the three months ended March 31, 2019. The accounting for the tax effects
of the Tax Act was completed in 2018.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.25in">The Company leases offices
under non-cancelable operating lease agreements. See note 12 for future minimum lease payments under non-cancelable operating lease
agreements with initial terms of one year or more.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.25in">As of March 31, 2019, the
Company did not have any capital commitments.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.25in">From time to time the Company
is subject to legal proceedings, including claims in the ordinary course of business and claims with respect to patent infringements.
As of March 31, 2019, the Company did not have any legal proceedings.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.25in">The consolidated accounts
include ACM and its subsidiaries, ACM Shanghai, ACM Wuxi, CleanChip and ACM Korea. Subsidiaries are those entities in which ACM,
directly and indirectly, controls more than one half of the voting power. All significant intercompany transactions and balances
have been eliminated upon consolidation.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.25in">The accompanying condensed
consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted
in the United States of America (“GAAP”) for interim financial information and the rules and regulations of the SEC
for reporting on Form 10-Q. Accordingly, they do not include all the information and footnotes required by GAAP for complete financial
statements herein. The unaudited condensed consolidated financial statements herein should be read in conjunction with the historical
consolidated financial statements of the Company for the year ended December 31, 2018 included in the Company’s Annual Report
on Form 10-K for the year ended December 31, 2018.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.25in">The accompanying condensed
consolidated balance sheet as of March 31, 2019, the condensed consolidated statements of operations and comprehensive income (loss)
for the three months ended March 31, 2019 and 2018, and the condensed consolidated statements of cash flows for the three months
ended March 31, 2019 and 2018 are unaudited. In the opinion of management, the unaudited condensed consolidated financial statements
of the Company reflect all adjustments that are necessary for a fair presentation of the Company’s financial position and
results of operations. Such adjustments are of a normal recurring nature, unless otherwise noted. The balance sheet as of March
31, 2019 and the results of operations for the three months ended March 31, 2019 are not necessarily indicative of the results
to be expected for any future period.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.25in">The preparation of condensed
consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the
reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the balance sheet date and the
reported revenue and expenses during the reported period in the condensed consolidated financial statements and accompanying notes.
The Company’s significant accounting estimates and assumptions include, but are not limited to, those used for the valuation
and recognition of stock-based compensation arrangements and warrant liability, realization of deferred tax assets, assessment
for impairment of long-lived assets, allowance for doubtful accounts, inventory valuation for excess and obsolete inventories,
lower of cost and market value or net realizable value of inventories, depreciable lives of property and equipment, and useful
life of intangible assets. Management of the Company believes that the estimates, judgments and assumptions are reasonable, based
on information available at the time they are made. Actual results could differ materially from those estimates.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.25in">Basic and diluted net income
(loss) per common share is calculated as follows:</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%">
<tr style="vertical-align: bottom">
<td> </td>
<td style="border-bottom: black 1pt solid"> </td>
<td colspan="6" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>Three Months Ended March 31,</b></font></td>
<td style="border-bottom: black 1pt solid"> </td></tr>
<tr style="vertical-align: bottom">
<td> </td>
<td style="border-bottom: black 1pt solid"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>2019</b></font></td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>2018</b></font></td>
<td style="border-bottom: black 1pt solid"> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Numerator:</font></td>
<td> </td>
<td colspan="2" style="text-align: center"> </td>
<td> </td>
<td> </td>
<td colspan="2" style="text-align: center"> </td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td style="width: 75%"><font style="font-size: 8pt">       Net income (loss)</font></td>
<td style="width: 1%"> </td>
<td style="width: 1%"><font style="font-size: 8pt">$</font></td>
<td style="width: 9%; text-align: right"><font style="font-size: 8pt">1,857</font></td>
<td style="width: 1%"> </td>
<td style="width: 1%"> </td>
<td style="width: 1%"><font style="font-size: 8pt">$</font></td>
<td style="width: 9%; text-align: right"><font style="font-size: 8pt">(2,780</font></td>
<td style="width: 2%"><font style="font-size: 8pt">)</font></td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">       Denominator:</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Weighted average shares outstanding, basic</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">16,044,655</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">15,383,086</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">       Effect of dilutive securities</font></td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">2,180,662</font></td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">-</font></td>
<td style="border-bottom: black 1pt solid"> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">       Weighted average shares outstanding, diluted</font></td>
<td style="border-bottom: black 1pt double"> </td>
<td style="border-bottom: black 1pt double"> </td>
<td style="border-bottom: black 1pt double; text-align: right"><font style="font-size: 8pt">18,225,317</font></td>
<td style="border-bottom: black 1pt double"> </td>
<td style="border-bottom: black 1pt double"> </td>
<td style="border-bottom: black 1pt double"> </td>
<td style="border-bottom: black 1pt double; text-align: right"><font style="font-size: 8pt">15,383,086</font></td>
<td style="border-bottom: black 1pt double"> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Net income (loss) per common share:</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td style="text-indent: 0.25in"><font style="font-size: 8pt">Basic</font></td>
<td style="border-bottom: black 1pt double"> </td>
<td style="border-bottom: black 1pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1pt double; text-align: right"><font style="font-size: 8pt">0.12</font></td>
<td style="border-bottom: black 1pt double"> </td>
<td style="border-bottom: black 1pt double"> </td>
<td style="border-bottom: black 1pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1pt double; text-align: right"><font style="font-size: 8pt">(0.18</font></td>
<td style="border-bottom: black 1pt double"><font style="font-size: 8pt">)</font></td></tr>
<tr style="vertical-align: bottom">
<td style="text-indent: 0.25in"><font style="font-size: 8pt">Diluted</font></td>
<td style="border-bottom: black 1pt double"> </td>
<td style="border-bottom: black 1pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1pt double; text-align: right"><font style="font-size: 8pt">0.10</font></td>
<td style="border-bottom: black 1pt double"> </td>
<td style="border-bottom: black 1pt double"> </td>
<td style="border-bottom: black 1pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1pt double; text-align: right"><font style="font-size: 8pt">(0.18</font></td>
<td style="border-bottom: black 1pt double"><font style="font-size: 8pt">)</font></td></tr>
</table>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.25in">ACM has been authorized
to issue Class A and Class B common stock since redomesticating in Delaware in November 2016. The two classes of common stock are
substantially identical in all material respects, except for voting rights. Since ACM did not declare any dividends during the
three months ended March 31, 2019 and 2018, the net income (loss) per common share attributable to each class is the same under
the “two-class” method. As such, the two classes of common stock have been presented on a combined basis in the condensed
consolidated statements of operations and comprehensive income (loss) and in the above computation of net income (loss) per common
share.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.25in">Diluted net income (loss)
per common share reflects the potential dilution from securities that could share in ACM’s earnings. ACM’s potential
dilutive securities consist of convertible preferred stocks, warrants and stock options for the three months ended March 31, 2019
and 2018. Certain potential dilutive securities were excluded from the net income (loss) per share calculation because the impact
would be anti-dilutive.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.25in"><b><i>Recently Adopted
Accounting Pronouncements</i></b></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.25in">In February 2016, the Financial
Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2016-02, <i>Leases (Topic
842)</i> (“ASU 2016-02”). The amendments in ASU 2016-02 create Topic 842, <i>Leases</i>, and supersede the leases requirements
in Topic 840, <i>Leases</i>. Topic 842 specifies the accounting for leases. The objective of Topic 842 is to establish the principles
that lessees and lessors shall apply to report useful information to users of financial statements about the amount, timing, and
uncertainty of cash flows arising from a lease. The main difference between Topic 842 and Topic 840 is the recognition of lease
assets and lease liabilities for those leases classified as operating leases under Topic 840. Topic 842 retains a distinction between
finance leases and operating leases. The classification criteria for distinguishing between finance leases and operating leases
are substantially similar to the classification criteria for distinguishing between capital leases and operating leases in the
previous lease guidance. The result of retaining a distinction between finance leases and operating leases is that under the lessee
accounting model in Topic 842, the effect of leases in the statement of comprehensive income and the statement of cash flows is
largely unchanged from previous GAAP.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.25in">Effective January 1, 2019,
we adopted the ASU 2016-02, <i>Leases,</i> which requires the recognition of lease assets and these liabilities by leases for those
leases classified as an operating lease under previous guidance. The original guidance required application on a modified retrospective
basis with the earliest period presented. In August, 2018, the FASB issues ASU 2018-11, <i>Targeted Improvements to ASC 842</i>,
which included an option to not restate comparative periods in transition and elect to use the effective date of ASC 842, <i>Leases,</i>
as the date of initial application of transition which we elected. As a result of the adoption of ASC 842 on January 1, 2019, we
recorded both operating lease right-of-use (“ROU”) assets of $5,109 and lease liabilities of $5,109. The adoption of
ASC 842 had no impact on our profit or loss and cash flows for the three-month period ended March 31, 2019. In addition, we elected
the package of practical expedients permitted under the transition guidance within the new standard which allowed us to carry forward
the historical lease classification. Additional information and disclosures required by this new standard are contained in Note
8, ‘Operating lease right-of-use assets’.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.25in">In June 2018, the FASB
issued ASU No. 2018-07, <i>Compensation — Stock Compensation (Topic 718) — Improvements to Nonemployee Share-Based
Payment Accounting</i> (“ASU 2018-07”), which simplifies several aspects of the accounting for nonemployee share-based
payment transactions resulting from expanding the scope of Topic 718, Compensation-Stock Compensation, to include share-based payment
transactions for acquiring goods and services from nonemployees. Some of the areas for simplification apply only to nonpublic entities.
ASU 2018-07 specifies that Topic 718 applies to all share-based payment transactions in which a grantor acquires goods or services
to be used or consumed in a grantor’s own operations by issuing share-based payment awards. ASU 2018-07 also clarify that
Topic 718 does not apply to share-based payments used to effectively provide (1) financing to the issuer or (2) awards granted
in conjunction with selling goods or services to customers as part of a contract accounted for under the New Revenue Standard.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.25in">Effective January 1, 2019, we adopted ASU 2018-07
and it did not have a material impact on our condensed consolidated financial statements.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.25in"><b><i>Recent Accounting
Pronouncements Not Yet Adopted</i></b></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.25in">In August 2018, the FASB issued ASU No. 2018-13,
<i>Fair Value Measurement (Topic 820)</i> (“ASU 2018-13”), which eliminates, adds and modifies certain disclosure requirements
for fair value measurements. The modified standard eliminates the requirement to disclose changes in unrealized gains and losses
included in earnings for recurring Level 3 fair value measurements and requires changes in unrealized gains and losses be included
in other comprehensive income for recurring Level 3 fair value measurements of instruments. The standard also requires the disclosure
of the range and weighted average used to develop significant unobservable inputs and how weighted average is calculate for recurring
and nonrecurring Level 3 fair value measurements. The amendment is effective for fiscal years beginning after December 15, 2019
and interim periods within that fiscal year with early adoption permitted. We are currently evaluating the impact of the adoption
of ASU 2018-13 on our consolidated financial statements.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.25in">In January 2017, the FASB
issued ASU No. 2017-04, <i>Intangibles—Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment</i> (“ASU
2017-04”), which removes Step 2 from the goodwill impairment test. An entity will apply a one-step quantitative test and
record the amount of goodwill impairment as the excess of a reporting unit’s carrying amount over its fair value, not to
exceed the total amount of goodwill allocated to the reporting unit. ASU 2017-04 does not amend the optional qualitative assessment
of goodwill impairment. A business entity that is an SEC filer must adopt the amendments in ASU 2017-04 for its annual or any interim
goodwill impairment test in fiscal years beginning after December 15, 2019. Early adoption is permitted for interim or annual goodwill
impairment tests performed on testing dates after January 1, 2017. We are currently evaluating the impact of the adoption of ASU
2017-04 on our consolidated financial statements.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.25in">In June 2016, the FASB
issued ASU 2016-13, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. ASU
2016-13 replaced the incurred loss impairment methodology under current GAAP with a methodology that reflects expected credit losses
and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. ASU 2016-13
requires use of a forward-looking expected credit loss model for accounts receivables, loans, and other financial instruments.
ASU 2016-13 is effective for fiscal years beginning after December 15, 2019, with early adoption permitted. Adoption of the standard
requires using a modified retrospective approach through a cumulative-effect adjustment to retained earnings as of the effective
date to align existing credit loss methodology with the new standard. We will adopt ASU 2016-13 effective January 1, 2020. We are
currently evaluating the impact of this standard on our consolidated financial statements, including accounting policies, processes,
and systems, but do not expect the standard will have a material impact on our consolidated financial statements.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%">
<tr style="vertical-align: bottom">
<td> </td>
<td style="border-bottom: black 1pt solid"> </td>
<td colspan="6" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>Three Months Ended March 31,</b></font></td>
<td style="border-bottom: black 1pt solid"> </td></tr>
<tr style="vertical-align: bottom">
<td> </td>
<td style="border-bottom: black 1pt solid"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>2019</b></font></td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>2018</b></font></td>
<td style="border-bottom: black 1pt solid"> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Numerator:</font></td>
<td> </td>
<td colspan="2" style="text-align: center"> </td>
<td> </td>
<td> </td>
<td colspan="2" style="text-align: center"> </td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td style="width: 75%"><font style="font-size: 8pt">       Net income (loss)</font></td>
<td style="width: 1%"> </td>
<td style="width: 1%"><font style="font-size: 8pt">$</font></td>
<td style="width: 9%; text-align: right"><font style="font-size: 8pt">1,857</font></td>
<td style="width: 1%"> </td>
<td style="width: 1%"> </td>
<td style="width: 1%"><font style="font-size: 8pt">$</font></td>
<td style="width: 9%; text-align: right"><font style="font-size: 8pt">(2,780</font></td>
<td style="width: 2%"><font style="font-size: 8pt">)</font></td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">       Denominator:</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Weighted average shares outstanding, basic</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">16,044,655</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">15,383,086</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">       Effect of dilutive securities</font></td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">2,180,662</font></td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">-</font></td>
<td style="border-bottom: black 1pt solid"> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">       Weighted average shares outstanding, diluted</font></td>
<td style="border-bottom: black 1pt double"> </td>
<td style="border-bottom: black 1pt double"> </td>
<td style="border-bottom: black 1pt double; text-align: right"><font style="font-size: 8pt">18,225,317</font></td>
<td style="border-bottom: black 1pt double"> </td>
<td style="border-bottom: black 1pt double"> </td>
<td style="border-bottom: black 1pt double"> </td>
<td style="border-bottom: black 1pt double; text-align: right"><font style="font-size: 8pt">15,383,086</font></td>
<td style="border-bottom: black 1pt double"> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Net income (loss) per common share:</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td style="text-indent: 0.25in"><font style="font-size: 8pt">Basic</font></td>
<td style="border-bottom: black 1pt double"> </td>
<td style="border-bottom: black 1pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1pt double; text-align: right"><font style="font-size: 8pt">0.12</font></td>
<td style="border-bottom: black 1pt double"> </td>
<td style="border-bottom: black 1pt double"> </td>
<td style="border-bottom: black 1pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1pt double; text-align: right"><font style="font-size: 8pt">(0.18</font></td>
<td style="border-bottom: black 1pt double"><font style="font-size: 8pt">)</font></td></tr>
<tr style="vertical-align: bottom">
<td style="text-indent: 0.25in"><font style="font-size: 8pt">Diluted</font></td>
<td style="border-bottom: black 1pt double"> </td>
<td style="border-bottom: black 1pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1pt double; text-align: right"><font style="font-size: 8pt">0.10</font></td>
<td style="border-bottom: black 1pt double"> </td>
<td style="border-bottom: black 1pt double"> </td>
<td style="border-bottom: black 1pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1pt double; text-align: right"><font style="font-size: 8pt">(0.18</font></td>
<td style="border-bottom: black 1pt double"><font style="font-size: 8pt">)</font></td></tr>
</table>
<table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%">
<tr style="vertical-align: bottom">
<td> </td>
<td> </td>
<td colspan="2" style="text-align: center"><font style="font-size: 8pt"><b>March 31,</b></font></td>
<td> </td>
<td> </td>
<td colspan="2" style="text-align: center"><font style="font-size: 8pt"><b>December 31,</b></font></td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td> </td>
<td style="border-bottom: black 1pt solid"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>2019</b></font></td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>2018</b></font></td>
<td style="border-bottom: black 1pt solid"> </td></tr>
<tr style="vertical-align: bottom">
<td style="width: 76%"><font style="font-size: 8pt">Accounts receivable</font></td>
<td style="width: 1%"> </td>
<td style="width: 1%"><font style="font-size: 8pt">$</font></td>
<td style="width: 9%; text-align: right"><font style="font-size: 8pt">25,070</font></td>
<td style="width: 1%"> </td>
<td style="width: 1%"> </td>
<td style="width: 1%"><font style="font-size: 8pt">$</font></td>
<td style="width: 9%; text-align: right"><font style="font-size: 8pt">24,608</font></td>
<td style="width: 1%"> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Less: Allowance for doubtful accounts</font></td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">-</font></td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">-</font></td>
<td style="border-bottom: black 1pt solid"> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Total</font></td>
<td style="border-bottom: black 1pt double"> </td>
<td style="border-bottom: black 1pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1pt double; text-align: right"><font style="font-size: 8pt">25,070</font></td>
<td style="border-bottom: black 1pt double"> </td>
<td style="border-bottom: black 1pt double"> </td>
<td style="border-bottom: black 1pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1pt double; text-align: right"><font style="font-size: 8pt">24,608</font></td>
<td style="border-bottom: black 1pt double"> </td></tr>
</table>
<table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%">
<tr style="vertical-align: bottom">
<td> </td>
<td style="border-bottom: black 1pt solid"> </td>
<td colspan="2" style="border-bottom: black 1pt solid">
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>March 31,</b></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>2019</b></p></td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid"> </td>
<td colspan="2" style="border-bottom: black 1pt solid">
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>December 31,</b></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>2018</b></p></td>
<td style="border-bottom: black 1pt solid"> </td></tr>
<tr style="vertical-align: bottom">
<td style="width: 76%"><font style="font-size: 8pt">Raw materials</font></td>
<td style="width: 1%"> </td>
<td style="width: 1%"><font style="font-size: 8pt">$</font></td>
<td style="width: 9%; text-align: right"><font style="font-size: 8pt">13,285</font></td>
<td style="width: 1%"> </td>
<td style="width: 1%"> </td>
<td style="width: 1%"><font style="font-size: 8pt">$</font></td>
<td style="width: 9%; text-align: right"><font style="font-size: 8pt">12,646</font></td>
<td style="width: 1%"> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Work in process</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">15,981</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">9,631</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Finished goods</font></td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">12,987</font></td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">16,487</font></td>
<td style="border-bottom: black 1pt solid"> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">    Total inventory, gross</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">42,253</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">38,764</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Inventory reserve</font></td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">-</font></td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">-</font></td>
<td style="border-bottom: black 1pt solid"> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Total inventory, net</font></td>
<td style="border-bottom: black 1pt double"> </td>
<td style="border-bottom: black 1pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1pt double; text-align: right"><font style="font-size: 8pt">42,253</font></td>
<td style="border-bottom: black 1pt double"> </td>
<td style="border-bottom: black 1pt double"> </td>
<td style="border-bottom: black 1pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1pt double; text-align: right"><font style="font-size: 8pt">38,764</font></td>
<td style="border-bottom: black 1pt double"> </td></tr>
</table>
<table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%">
<tr style="vertical-align: bottom">
<td> </td>
<td> </td>
<td colspan="2" style="text-align: center"><font style="font-size: 8pt"><b>March 31,</b></font></td>
<td> </td>
<td> </td>
<td colspan="2" style="text-align: center"><font style="font-size: 8pt"><b>December 31,</b></font></td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td> </td>
<td style="border-bottom: black 1pt solid"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>2019</b></font></td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>2018</b></font></td>
<td style="border-bottom: black 1pt solid"> </td></tr>
<tr style="vertical-align: bottom">
<td style="width: 76%"><font style="font-size: 8pt">Manufacturing equipment</font></td>
<td style="width: 1%"> </td>
<td style="width: 1%"><font style="font-size: 8pt">$</font></td>
<td style="width: 9%; text-align: right"><font style="font-size: 8pt">9,894</font></td>
<td style="width: 1%"> </td>
<td style="width: 1%"> </td>
<td style="width: 1%"><font style="font-size: 8pt">$</font></td>
<td style="width: 9%; text-align: right"><font style="font-size: 8pt">9,703</font></td>
<td style="width: 1%"> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Office equipment</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">549</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">512</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Transportation equipment</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">129</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">184</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Leasehold improvement</font></td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">1,444</font></td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">1,379</font></td>
<td style="border-bottom: black 1pt solid"> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Total cost</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">12,016</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">11,778</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Less: Total accumulated depreciation</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">(8,377</font></td>
<td><font style="font-size: 8pt">)</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">(8,102</font></td>
<td><font style="font-size: 8pt">)</font></td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Construction in progress</font></td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">80</font></td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">32</font></td>
<td style="border-bottom: black 1pt solid"> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Total property, plant and equipment, net</font></td>
<td style="border-bottom: black 1pt double"> </td>
<td style="border-bottom: black 1pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1pt double; text-align: right"><font style="font-size: 8pt">3,719</font></td>
<td style="border-bottom: black 1pt double"> </td>
<td style="border-bottom: black 1pt double"> </td>
<td style="border-bottom: black 1pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1pt double; text-align: right"><font style="font-size: 8pt">3,708</font></td>
<td style="border-bottom: black 1pt double"> </td></tr>
</table>
<table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%">
<tr style="vertical-align: bottom">
<td> </td>
<td style="border-bottom: black 1pt solid"> </td>
<td colspan="2" style="border-bottom: black 1pt solid">
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>March 31,</b></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>2019</b></p></td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid"> </td>
<td colspan="2" style="border-bottom: black 1pt solid">
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>December 31,</b></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>2018</b></p></td>
<td style="border-bottom: black 1pt solid"> </td></tr>
<tr style="vertical-align: bottom">
<td style="width: 76%"><font style="font-size: 8pt">Lease expenses and payable for leasehold improvement due to a related party (note 11)</font></td>
<td style="width: 1%"> </td>
<td style="width: 1%"><font style="font-size: 8pt">$</font></td>
<td style="width: 9%; text-align: right"><font style="font-size: 8pt">-</font></td>
<td style="width: 1%"> </td>
<td style="width: 1%"> </td>
<td style="width: 1%"><font style="font-size: 8pt">$</font></td>
<td style="width: 9%; text-align: right"><font style="font-size: 8pt">53</font></td>
<td style="width: 1%"> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Accrued commissions</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">2,663</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">2,931</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Accrued warranty</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">2,017</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">1,710</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Accrued payroll</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">1,240</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">626</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Accrued professional fees</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">139</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">64</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Accrued machine testing fees</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">2,978</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">3,076</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Others</font></td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">2,797</font></td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">1,950</font></td>
<td style="border-bottom: black 1pt solid"> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Total</font></td>
<td style="border-bottom: black 1pt double"> </td>
<td style="border-bottom: black 1pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1pt double; text-align: right"><font style="font-size: 8pt">11,834</font></td>
<td style="border-bottom: black 1pt double"> </td>
<td style="border-bottom: black 1pt double"> </td>
<td style="border-bottom: black 1pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1pt double; text-align: right"><font style="font-size: 8pt">10,410</font></td>
<td style="border-bottom: black 1pt double"> </td></tr>
</table>
<table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%">
<tr style="vertical-align: bottom">
<td> </td>
<td style="border-bottom: black 1pt solid"> </td>
<td colspan="2" style="border-bottom: black 1pt solid">
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>March 31,</b></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>2019</b></p></td>
<td style="border-bottom: black 1pt solid"> </td></tr>
<tr style="vertical-align: bottom">
<td style="width: 88%"><font style="font-size: 8pt">Operating lease cost</font></td>
<td style="width: 1%"> </td>
<td style="width: 1%"><font style="font-size: 8pt">$</font></td>
<td style="width: 9%; text-align: right"><font style="font-size: 8pt">437</font></td>
<td style="width: 1%"> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Short-term lease cost</font></td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">18</font></td>
<td style="border-bottom: black 1pt solid"> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Lease cost</font></td>
<td style="border-bottom: black 1pt double"> </td>
<td style="border-bottom: black 1pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1pt double; text-align: right"><font style="font-size: 8pt">455</font></td>
<td style="border-bottom: black 1pt double"> </td></tr>
</table>
<table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%">
<tr style="vertical-align: bottom">
<td> </td>
<td style="border-bottom: black 1pt solid"> </td>
<td colspan="2" style="border-bottom: black 1pt solid">
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>March 31,</b></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>2019</b></p></td>
<td style="border-bottom: black 1pt solid"> </td></tr>
<tr style="vertical-align: bottom">
<td style="width: 88%"><font style="font-size: 8pt">2019</font></td>
<td style="width: 1%"> </td>
<td style="width: 1%"><font style="font-size: 8pt">$</font></td>
<td style="width: 9%; text-align: right"><font style="font-size: 8pt">1,057</font></td>
<td style="width: 1%"> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">2020</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">1,424</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">2021</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">1,456</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">2022</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">1,494</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">2023</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">53</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">2024</font></td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">13</font></td>
<td style="border-bottom: black 1pt solid"> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Total lease payments</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">5,497</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Less: Interest</font></td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">(710</font></td>
<td style="border-bottom: black 1pt solid"><font style="font-size: 8pt">)</font></td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Present value of lease liabilities</font></td>
<td style="border-bottom: black 1pt double"> </td>
<td style="border-bottom: black 1pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1pt double; text-align: right"><font style="font-size: 8pt">4,787</font></td>
<td style="border-bottom: black 1pt double"> </td></tr>
</table>
2180662
0
25070000
24608000
0
1457000
0
0
42253000
38764000
12987000
16487000
15981000
9631000
13285000
12646000
0
0
12016000
1444000
549000
129000
9894000
11778000
9703000
512000
184000
1379000
8377000
8102000
80000
32000
175000
85000
139000
103000
2797000
1950000
2978000
3076000
139000
64000
1240000
626000
2017000
1710000
2663000
2931000
0
53000
437000
18000
455000
455000
1057000
1424000
1456000
1494000
53000
13000
5497000
710000
4787000
P3Y9M18D
.0543
2320000
970000
1479000
1477000
871000
572000
150000
172000
0
53000
2491402
1157374
2503405
1212374
0
0
628
0
0
0
1544974
950237
1.53
.78
.91
.78
.00
.00
.65
.32
.55
.00
.00
.00
4.10
2.57
4.09
2.57
.00
.00
1.68
.75
3.00
.00
.00
.00
P7Y22D
P6Y7M28D
221000
523000
933000
2083000
2203000
1190000
2424000
1713000
P1Y4M28D
P1Y4M13D
P1Y7M13D
P1Y3M22D
.21
.25
.15
44000
0
<table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%">
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Remaining lease term and discount rate:</font></td>
<td style="border-bottom: black 1pt solid"> </td>
<td colspan="2" style="border-bottom: black 1pt solid">
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>March 31,</b></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>2019</b></p></td>
<td style="border-bottom: black 1pt solid"> </td></tr>
<tr style="vertical-align: bottom">
<td style="width: 88%"><font style="font-size: 8pt">Weighted average remaining lease term (years)</font></td>
<td style="width: 1%"> </td>
<td style="width: 1%"> </td>
<td style="width: 9%; text-align: right"><font style="font-size: 8pt">3.80</font></td>
<td style="width: 1%"> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Weighted average discount rate</font></td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">5.43</font></td>
<td style="border-bottom: black 1pt solid"><font style="font-size: 8pt">%</font></td></tr>
</table>
<table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%">
<tr style="vertical-align: bottom">
<td> </td>
<td style="border-bottom: black 1pt solid"> </td>
<td colspan="2" style="border-bottom: black 1pt solid">
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>March 31,</b></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>2019</b></p></td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid"> </td>
<td colspan="2" style="border-bottom: black 1pt solid">
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>December 31,</b></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>2018</b></p></td>
<td style="border-bottom: black 1pt solid"> </td></tr>
<tr style="vertical-align: bottom">
<td style="width: 76%"><font style="font-size: 8pt">Subsidies to Stress Free Polishing project, commenced in 2008 and 2017</font></td>
<td style="width: 1%"> </td>
<td style="width: 1%"><font style="font-size: 8pt">$</font></td>
<td style="width: 9%; text-align: right"><font style="font-size: 8pt">1,449</font></td>
<td style="width: 1%"> </td>
<td style="width: 1%"> </td>
<td style="width: 1%"><font style="font-size: 8pt">$</font></td>
<td style="width: 9%; text-align: right"><font style="font-size: 8pt">1,483</font></td>
<td style="width: 1%"> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Subsidies to Electro Copper Plating project, commenced in 2014</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">1,598</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">2,860</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Subsidies to Polytetrafluoroethylene, commenced in 2018</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">171</font></td>
<td> </td>
<td> </td>
<td><font style="font-size: 8pt"></font></td>
<td style="text-align: right"><font style="font-size: 8pt">178</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Other</font></td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">78</font></td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">62</font></td>
<td style="border-bottom: black 1pt solid"> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Total</font></td>
<td style="border-bottom: black 1pt double"> </td>
<td style="border-bottom: black 1pt double"><font style="font: 8pt Times New Roman, Times, Serif">$</font> </td>
<td style="border-bottom: black 1pt double; text-align: right"><font style="font-size: 8pt">3,296</font></td>
<td style="border-bottom: black 1pt double"> </td>
<td style="border-bottom: black 1pt double"> </td>
<td style="border-bottom: black 1pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1pt double; text-align: right"><font style="font-size: 8pt">4,583</font></td>
<td style="border-bottom: black 1pt double"> </td></tr>
</table>
<table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%">
<tr style="vertical-align: bottom">
<td> </td>
<td style="border-bottom: black 1pt solid"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>Number of Option Share</b></font></td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>Weighted Average Grant Date Fair Value</b></font></td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>Weighted Average Exercise Price</b></font></td>
<td style="border-bottom: black 1pt solid"> </td>
<td>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: center; border-bottom: black 0.75pt solid"><b>Weighted
Average Remaining Contractual Term</b></p></td></tr>
<tr style="vertical-align: bottom">
<td style="width: 49%"><font style="font-size: 8pt">Out<font style="font-family: Times New Roman, Times, Serif">standing at December 31, 2018</font></font></td>
<td style="width: 1%"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 1%"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 9%; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">2,503,405</font></td>
<td style="width: 1%"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 1%"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 1%"><font style="font: 8pt Times New Roman, Times, Serif">$ </font></td>
<td style="width: 9%; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">0.91</font></td>
<td style="width: 1%"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 1%"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 1%"><font style="font: 8pt Times New Roman, Times, Serif">$ </font></td>
<td style="width: 9%; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">4.09</font></td>
<td style="width: 1%"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 15%; text-align: center; text-indent: 9pt"><font style="font: 8pt Times New Roman, Times, Serif">7.30
years</font></td></tr>
<tr style="vertical-align: bottom">
<td><font style="font: 8pt Times New Roman, Times, Serif">Granted</font></td>
<td><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">-</font></td>
<td><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">-</font></td>
<td><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">-</font></td>
<td><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: center"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="vertical-align: bottom">
<td><font style="font: 8pt Times New Roman, Times, Serif">Exercised</font></td>
<td><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">(11,375</font></td>
<td><font style="font: 8pt Times New Roman, Times, Serif">)</font></td>
<td><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">0.65</font></td>
<td><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">1.68</font></td>
<td><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: center"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="vertical-align: bottom">
<td><font style="font: 8pt Times New Roman, Times, Serif">Expired</font></td>
<td><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">(628</font></td>
<td><font style="font: 8pt Times New Roman, Times, Serif">)</font></td>
<td><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">0.55</font></td>
<td><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">3.00</font></td>
<td><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: center"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="vertical-align: bottom">
<td><font style="font: 8pt Times New Roman, Times, Serif">Forfeited</font></td>
<td><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">-</font></td>
<td><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">-</font></td>
<td><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">-</font></td>
<td><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: center"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="vertical-align: bottom">
<td><font style="font: 8pt Times New Roman, Times, Serif">Outstanding at March 31, 2019</font></td>
<td><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">2,491,402</font></td>
<td><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 8pt Times New Roman, Times, Serif">$ </font></td>
<td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">1.53</font></td>
<td><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 8pt Times New Roman, Times, Serif">$ </font></td>
<td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">4.10</font></td>
<td><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: center"><font style="font: 8pt Times New Roman, Times, Serif">7.06 years</font></td></tr>
<tr style="vertical-align: bottom">
<td><font style="font: 8pt Times New Roman, Times, Serif">Vested and exercisable at March
31, 2019</font></td>
<td><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">1,544,974</font></td>
<td><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: center"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td></tr>
</table>
<table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%">
<tr style="vertical-align: bottom">
<td> </td>
<td style="border-bottom: black 1pt solid"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>Number of Option Shares</b></font></td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>Weighted Average Grant Date Fair Value</b></font></td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>Weighted Average Exercise Price</b></font></td>
<td style="border-bottom: black 1pt solid"> </td>
<td>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: center; border-bottom: black 0.75pt solid"><b>Weighted
Average Remaining Contractual Term</b></p></td></tr>
<tr style="vertical-align: bottom">
<td style="width: 49%"><font style="font-size: 8pt">Outstanding at Dec<font style="font-family: Times New Roman, Times, Serif">ember 31, 2018</font></font></td>
<td style="width: 1%"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 1%"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 9%; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">1,212,374</font></td>
<td style="width: 1%"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 1%"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 1%"><font style="font: 8pt Times New Roman, Times, Serif">$ </font></td>
<td style="width: 9%; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">0.78</font></td>
<td style="width: 1%"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 1%"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 1%"><font style="font: 8pt Times New Roman, Times, Serif">$ </font></td>
<td style="width: 9%; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">2.57</font></td>
<td style="width: 1%"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 15%; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif"> 6.66 years</font></td></tr>
<tr style="vertical-align: bottom">
<td><font style="font: 8pt Times New Roman, Times, Serif">Granted</font></td>
<td><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">-</font></td>
<td><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">-</font></td>
<td><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">-</font></td>
<td><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: center"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="vertical-align: bottom">
<td><font style="font: 8pt Times New Roman, Times, Serif">Exercised</font></td>
<td><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">(55,000</font></td>
<td><font style="font: 8pt Times New Roman, Times, Serif">)</font></td>
<td><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">0.32</font></td>
<td><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">0.75</font></td>
<td><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: center"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="vertical-align: bottom">
<td><font style="font: 8pt Times New Roman, Times, Serif">Expired</font></td>
<td><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">-</font></td>
<td><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">-</font></td>
<td><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">-</font></td>
<td><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: center"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="vertical-align: bottom">
<td><font style="font: 8pt Times New Roman, Times, Serif">Forfeited</font></td>
<td><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">-</font></td>
<td><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">-</font></td>
<td><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">-</font></td>
<td><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: center"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="vertical-align: bottom">
<td><font style="font: 8pt Times New Roman, Times, Serif">Outstanding at March 31, 2019</font></td>
<td><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">1,157,374</font></td>
<td><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 8pt Times New Roman, Times, Serif">$</font></td>
<td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">0.78</font></td>
<td><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 8pt Times New Roman, Times, Serif">$ </font></td>
<td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">2.57</font></td>
<td><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: center"><font style="font: 8pt Times New Roman, Times, Serif"> 6.66 years</font></td></tr>
<tr style="vertical-align: bottom">
<td><font style="font: 8pt Times New Roman, Times, Serif">Vested and exercisable at March
31, 2019</font></td>
<td><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">950,237</font></td>
<td><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: right"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="text-align: center"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td></tr>
</table>
<table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%">
<tr style="vertical-align: bottom">
<td> </td>
<td style="border-bottom: black 1pt solid"> </td>
<td colspan="2" style="border-bottom: black 1pt solid">
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>March 31,</b></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>2019</b></p></td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid"> </td>
<td colspan="2" style="border-bottom: black 1pt solid">
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>December 31,</b></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>2018</b></p></td>
<td style="border-bottom: black 1pt solid"> </td></tr>
<tr style="vertical-align: bottom">
<td style="width: 76%; text-align: justify"><font style="font-size: 8pt">Line of credit up to RMB 50,000 from Bank of Shanghai
Pudong Branch, due on April 17, 2019 with an annual interest rate of 4.99%, guaranteed by the Company’s CEO and fully
repaid on March 27, 2019<font style="font-family: Times New Roman, Times, Serif">.</font></font></td>
<td style="width: 1%"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 1%"><font style="font: 8pt Times New Roman, Times, Serif">$ </font></td>
<td style="width: 9%; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">-</font></td>
<td style="width: 1%"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 1%"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 1%"><font style="font: 8pt Times New Roman, Times, Serif">$</font> </td>
<td style="width: 9%; text-align: right"><font style="font-size: 8pt">3,133</font></td>
<td style="width: 1%"> </td></tr>
<tr style="vertical-align: bottom">
<td style="text-align: justify"><font style="font-size: 8pt">Line of credit up to RMB 50,000 from Bank of Shanghai Pudong
Branch, due on February 14, 2019 with an annual interest rate of 5.15%, guaranteed by the Company’s CEO and fully
repaid on February 14, 2019.</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">-</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">485</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td style="text-align: justify"><font style="font-size: 8pt">Line of credit up to RMB 50,000 from Bank of Shanghai Pudong
Branch, due on January 23, 2020 with an annual interest rate of 5.22%, guaranteed by the Company’s CEO and Cleanchip
Technologies Limited.</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">668</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td style="text-align: justify"><font style="font-size: 8pt">Line of credit up to RMB 30,000 from Bank of China Pudong
Branch, due on June 06, 2019 with annual interest rate of 5.22%, secured by certain of the Company’s intellectual
property and the Company’s CEO.</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">2,228</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">2,186</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td style="text-align: justify"><font style="font-size: 8pt">Line of credit up to RMB 30,000 from Bank of China Pudong
Branch, due on June 13, 2019 with annual interest rate of 5.22%, secured by certain of the Company’s intellectual
property and the Company’s CEO.</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">2,228</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">2,186</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td style="text-align: justify"><font style="font-size: 8pt">Line of credit up to RMB 10,000 from Shanghai Rural Commercial
Bank, due on January 23, 2019 with an annual interest rate of 5.44%, guaranteed by the Company’s CEO and pledged by
accounts receivable, and fully repaid on January 23, 2019.</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">-</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">1,457</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td style="text-align: justify"><font style="font-size: 8pt">Line of credit up to RMB 20,000 from Shanghai Rural Commercial
Bank, due on February 21, 2020 with an annual interest rate of 5.66%, guaranteed by the Company’s CEO and pledged by
accounts receivable.</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">1,485</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td style="text-align: justify"><font style="font-size: 8pt">Line of credit up to RMB 20,000 from Bank of Communications, due
on January 18, 2020 with an annual interest rate of 5.66%.</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">1,485</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td style="text-align: justify"><font style="font-size: 8pt">Line of credit up to RMB 20,000 from Bank of Communications, due
on January 22, 2020 with an annual interest rate of 5.66%.</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">743</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td style="text-align: justify"><font style="font-size: 8pt">Line of credit up to RMB 20,000 from Bank of Communications, due
on February 14, 2020 with an annual interest rate of 5.66%.</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">742</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td style="text-align: justify"><font style="font-size: 8pt">Line of credit up to RMB 50,000 from China Everbright Bank, due
on March 25, 2020 with an annual interest rate of 4.94%, guaranteed by the Company’s CEO.</font></td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">3,250</font></td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid; text-align: right"> </td>
<td style="border-bottom: black 1pt solid"> </td></tr>
<tr style="vertical-align: bottom">
<td style="text-align: justify"><font style="font-size: 8pt">Total</font></td>
<td style="border-bottom: black 1pt double"> </td>
<td style="border-bottom: black 1pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1pt double; text-align: right"><font style="font-size: 8pt">12,829</font></td>
<td style="border-bottom: black 1pt double"> </td>
<td style="border-bottom: black 1pt double"> </td>
<td style="border-bottom: black 1pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1pt double; text-align: right"><font style="font-size: 8pt">9,447</font></td>
<td style="border-bottom: black 1pt double"> </td></tr>
</table>
<table cellspacing="0" cellpadding="0" style="font: 8pt Times New Roman, Times, Serif; width: 100%">
<tr style="vertical-align: bottom; font: 8pt Times New Roman, Times, Serif">
<td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"></font></td>
<td style="border-bottom: black 1pt solid; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td colspan="2" style="border-bottom: black 1pt solid; font: 8pt Times New Roman, Times, Serif; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif"><b> Three
months ended March 31, 2019</b></font></td>
<td style="border-bottom: black 1pt solid; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="vertical-align: bottom; font: 8pt Times New Roman, Times, Serif">
<td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> Cash
paid for amounts included in the measurement of lease liabilities:</font></td>
<td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td colspan="2" style="text-align: center; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="vertical-align: bottom; font: 8pt Times New Roman, Times, Serif">
<td style="width: 88%; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> 
Operating cash outflow from operating leases</font></td>
<td style="width: 1%; border-bottom: black 1pt solid; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 1%; border-bottom: black 1pt solid; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 9%; border-bottom: black 1pt solid; font: 8pt Times New Roman, Times, Serif; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">455</font></td>
<td style="width: 1%; border-bottom: black 1pt solid; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td></tr>
</table>
455