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--12-31
Q1
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ACM RESEARCH, INC.
0001680062
Smaller Reporting Company
ACMR
No
No
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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, under
the brand name “Ultra C,” lines of equipment 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"> </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"> </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"> </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. 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"> </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"> </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"> </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"> </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. (“SSTVC”).
On November 8, 2017, ACM purchased the remaining 18.36% of ACM Shanghai’s equity interest held by 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"> </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"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.25in">On November 2, 2017, the
Registration Statement on Form S-1 (File No. 333- 220451) for ACM’s initial public offering of Class A common stock (the
“IPO”) was declared effective by the U.S. Securities and Exchange Commission. Shares of Class A common stock began
trading on the Nasdaq Global Market on November 3, 2017, and the closing for the IPO was held on November 7, 2017.</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">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"> </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"> </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"> </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 Securities
and Exchange Commission (“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, 2017 included in our Annual Report on Form 10-K for the year ended December 31, 2017.</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">The accompanying condensed
consolidated balance sheet as of March 31, 2018, the condensed consolidated statements of operations and comprehensive loss for
the three months ended March 31, 2018 and 2017, and the condensed consolidated statements of cash flows for the three months ended
March 31, 2018 and 2017 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, 2018 and the results of operations for the three months ended March 31, 2018 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"> </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"> </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 revenues 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 Loss per Common Share</u></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">Basic and diluted net loss
per common share is calculated as follows:</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0"> </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="padding-bottom: 1.5pt"> </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="padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom">
<td> </td>
<td style="padding-bottom: 1.5pt"> </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="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>2017</b></font></td>
<td style="padding-bottom: 1.5pt"> </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%; text-indent: 0.25in"><font style="font-size: 8pt">Net loss </font></td>
<td style="width: 1%"> </td>
<td style="width: 1%"><font style="font-size: 8pt">$</font></td>
<td style="width: 9%; text-align: right"><font style="font-size: 8pt">(2,780</font></td>
<td style="width: 1%"><font style="font-size: 8pt">)</font></td>
<td style="width: 1%"> </td>
<td style="width: 1%"><font style="font-size: 8pt">$</font></td>
<td style="width: 9%; text-align: right"><font style="font-size: 8pt">(2,474</font></td>
<td style="width: 2%"><font style="font-size: 8pt">)</font></td></tr>
<tr style="vertical-align: bottom">
<td style="text-indent: 0.25in"><font style="font-size: 8pt">Net loss attributable to non-controlling interest </font></td>
<td style="padding-bottom: 1.5pt"> </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="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">(385</font></td>
<td style="padding-bottom: 1.5pt"><font style="font-size: 8pt">)</font></td></tr>
<tr style="vertical-align: bottom">
<td style="text-indent: 0.25in"><font style="font-size: 8pt">Net loss available to common stockholders, basic and diluted</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1pt double; text-align: right"><font style="font-size: 8pt">(2,780</font></td>
<td style="padding-bottom: 3pt"><font style="font-size: 8pt">)</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1pt double; text-align: right"><font style="font-size: 8pt">(2,089</font></td>
<td style="padding-bottom: 3pt"><font style="font-size: 8pt">)</font></td></tr>
<tr style="vertical-align: bottom">
<td style="text-indent: 0.25in"><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">15,383,086</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">4,817,745</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td style="text-indent: 0.25in"><font style="font-size: 8pt">Effect of dilutive securities </font></td>
<td style="padding-bottom: 1.5pt"> </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="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </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="padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom">
<td style="text-indent: 0.25in"><font style="font-size: 8pt">Weighted average shares outstanding, diluted </font></td>
<td style="padding-bottom: 3pt"> </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="padding-bottom: 3pt"> </td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1pt double"> </td>
<td style="border-bottom: black 1pt double; text-align: right"><font style="font-size: 8pt">4,817,745</font></td>
<td style="padding-bottom: 3pt"> </td></tr>
<tr style="vertical-align: bottom">
<td style="text-indent: 0.25in"><font style="font-size: 8pt">Net 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><font style="font-size: 8pt">Basic </font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1pt double; text-align: right"><font style="font-size: 8pt">(0.18</font></td>
<td style="padding-bottom: 3pt"><font style="font-size: 8pt">)</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1pt double; text-align: right"><font style="font-size: 8pt">(0.43</font></td>
<td style="padding-bottom: 3pt"><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="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1pt double; text-align: right"><font style="font-size: 8pt">(0.18</font></td>
<td style="padding-bottom: 3pt"><font style="font-size: 8pt">)</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1pt double; text-align: right"><font style="font-size: 8pt">(0.43</font></td>
<td style="padding-bottom: 3pt"><font style="font-size: 8pt">)</font></td></tr>
</table>
<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 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, 2018 and 2017, the net 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 consolidated statements of operations
and comprehensive income (loss) and in the above computation of net loss per common share.</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">Diluted net 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, stock options and warrants for the three months ended March 31, 2018 and 2017.
Certain potential dilutive securities were excluded from the net 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"> </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"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.25in">In May 2017, the <font style="background-color: white">Financial
Accounting Standards Board</font> (“FASB”) issued Accounting Standards Update (“ASU”) No. 2017-09, <i>Compensation—Stock
Compensation (Topic 718): Scope of Modification Accounting</i> (“ASU 2017-09”), which provides guidance on determining
which changes to the terms and conditions of share-based payment awards require an entity to apply modification accounting under
Topic 718. The amendments in this ASU are effective for all entities for annual periods, and interim periods within those annual
periods, beginning after December 15, 2017. Early adoption is permitted, including adoption in any interim period, for (1) public
business entities for reporting periods for which financial statements have not yet been issued and (2) all other entities
for reporting periods for which financial statements have not yet been made available for issuance. The amendments in this ASU
should be applied prospectively to an award modified on or after the adoption date. The adoption of ASU 2017-09 did not have a
material impact on the Company’s consolidated financial statements.</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">In February 2017, the FASB
issued ASU No. 2017-05, <i>Other Income—Gains and Losses from the Derecognition of Nonfinancial Assets (Subtopic 610-20):
Clarifying the Scope of Asset Derecognition Guidance and Accounting for Partial Sales of Nonfinancial Assets</i> (“ASU
2017-05”), which clarifies the scope of nonfinancial asset guidance in Subtopic 610-20. This ASU also clarifies that derecognition
of all businesses and nonprofit activities (except those related to conveyances of oil and gas mineral rights or contracts with
customers) should be accounted for in accordance with the derecognition and deconsolidation guidance in Subtopic 810-10. The amendments
in this ASU also provide guidance on the accounting for so-called “partial sales” of nonfinancial assets within the
scope of Subtopic 610-20 and contributions of nonfinancial assets to a joint venture or other noncontrolled investee. The amendments
in this ASU are effective for annual reporting reports beginning after December 15, 2017, including interim reporting periods within
that reporting period. The adoption of ASU 2017-05 did not have a material impact on the Company’s consolidated financial
statements.</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">In November 2016, the FASB
issued ASU No. 2016-18, <i>Statement of Cash Flows (Topic 230): Restricted Cash</i> (“ASU 2016-18”), which requires
that a statement of cash flows explain the change during the period in the total of cash, cash equivalents, and amounts generally
described as restricted cash or restricted cash equivalents. Therefore, amounts generally described as restricted cash and restricted
cash equivalents should be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total
amounts shown on the statement of cash flows. The amendments in this ASU do not provide a definition of restricted cash or restricted
cash equivalents. The amendments in this ASU are effective for public business entities for fiscal years beginning after December
15, 2017, and interim periods within those fiscal years. Early adoption is permitted, including adoption in an interim period.
The adoption of ASU 2016-18 did not have a material impact on the Company’s consolidated financial statements.</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">In August 2016, the FASB
issued ASU No. 2016-15, <i>Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments</i> (“ASU
2016-15”), which addresses the following cash flow issues: (1) debt prepayment or debt extinguishment costs; (2) settlement
of zero-coupon debt instruments or other debt instruments with coupon interest rates that are insignificant in relation to the
effective interest rate of the borrowing; (3) contingent consideration payments made after a business combination; (4) proceeds
from the settlement of insurance claims; (5) proceeds from the settlement of corporate-owned life insurance policies, including
bank-owned life insurance policies; (6) distributions received from equity method investees; (7) beneficial interests
in securitization transactions; and (8) separately identifiable cash flows and application of the predominance principle.
The amendments in this ASU are effective for public business entities for fiscal years beginning after December 15, 2017 and interim
periods within those fiscal years and are effective for all other entities for fiscal years beginning after December 15, 2018 and
interim periods within fiscal years beginning after December 15, 2019. Early adoption is permitted, including adoption in an interim
period. The adoption of ASU 2016-15 did not have material impact on the Company’s consolidated financial statements.</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">In January 2016, the FASB
issued ASU No. 2016-01, <i>“Financial Instruments – Overall (Subtopic 825-10): Recognition and Measurement of
Financial Assets and Financial Liabilities”</i> (“ASU 2016-01”). The amendments in this update require all
equity investments to be measured at fair value with changes in the fair value recognized through net income (other than those
accounted for under equity method of accounting or those that result in consolidation of the investee). The amendments in this
update also require an entity to present separately in other comprehensive income the portion of the total change in the fair value
of a liability resulting from a change in the instrument-specific credit risk when the entity has elected to measure the liability
at fair value in accordance with the fair value option for financial instruments. In addition, the amendments in this update eliminate
the requirement for to disclose the method(s) and significant assumptions used to estimate the fair value that is required to be
disclosed for financial instruments measured at amortized cost on the balance sheet for public entities. For public business entities,
the amendments in ASU 2016-01 are effective for fiscal years beginning after December 15, 2017, including interim periods within
those fiscal years. Except for the early application guidance discussed in ASU 2016-01, early adoption of the amendments in this
update is not permitted. The adoption of the ASU 2016-01 did not have a material impact on the Company’s consolidated financial
statements.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0"></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0 0 10pt; text-align: justify; text-indent: 0.25in">In May 2014, the
FASB issued ASU No. 2014-09, <i>Revenue from Contracts with Customers (Topic 606)</i> (“ASU 2014-09”), which
amended the existing accounting standards for revenue recognition. ASU 2014-09 establishes principles for recognizing revenue upon
the transfer of promised goods or services to customers, in an amount that reflects the expected consideration received in exchange
for those goods or services. ASU 2014-09 and its related clarifying ASUs are effective for annual reporting periods beginning
after December 15, 2017 and interim periods within those annual periods.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0 0 10pt; text-align: justify; text-indent: 0.25in">On January 1, 2018,
the Company adopted ASC Topic 606, <i>Revenue from Contracts with Customers</i> and all the related amendments (the “New
Revenue Standard”) to all contracts which were not completed as of January 1, 2018 using the modified retrospective method.
The Company does not have open contracts that may result any changes on the revenues applying the New Revenue Standard.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0 0 10pt; text-align: justify; text-indent: 0.25in">The Company derives
revenue principally from the sale of single-wafer wet cleaning equipment. Revenue from contracts with customers is recognized using
the following five steps pursuant to the New Revenue Standard:</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 38.85pt; text-align: justify; text-indent: -21pt"><font style="font-size: 8pt">1.</font><font style="font: 7pt Times New Roman, Times, Serif">         
</font><font style="font-size: 8pt">Identify the contract(s) with a customer;</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 38.85pt; text-align: justify; text-indent: -21pt"><font style="font-size: 8pt">2.</font><font style="font: 7pt Times New Roman, Times, Serif">         
</font><font style="font-size: 8pt">Identify the performance obligations in the contract;</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 38.85pt; text-align: justify; text-indent: -21pt"><font style="font-size: 8pt">3.</font><font style="font: 7pt Times New Roman, Times, Serif">         
</font><font style="font-size: 8pt">Determine the transaction price;</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 38.85pt; text-align: justify; text-indent: -21pt"><font style="font-size: 8pt">4.</font><font style="font: 7pt Times New Roman, Times, Serif">          </font><font style="font-size: 8pt">Allocate
the transaction price to the performance obligations in the contract; and </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 38.85pt; text-align: justify; text-indent: -21pt"><font style="font-size: 8pt">5.</font><font style="font: 7pt Times New Roman, Times, Serif">         
</font><font style="font-size: 8pt">Recognize revenue when (or as) the entity satisfies a performance obligation.</font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0 0 10pt; text-align: justify; text-indent: 0.25in">A contract contains
a promise (or promises) to transfer goods or services to a customer. A performance obligation is a promise (or a group of promises)
that is distinct. The transaction price is the amount of consideration a company expects to be entitled from a customer in exchange
for providing the goods or services.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0 0 10pt; text-align: justify; text-indent: 0.25in">The unit of account
for revenue recognition is a performance obligation (a good or service).  A contract may contain one or more performance
obligations.  Performance obligations are accounted for separately if they are distinct. A good or service is distinct
if the customer can benefit from the good or service either on its own or together with other resources that are readily available
to the customer, and the good or service is distinct in the context of the contract. Otherwise performance obligations are combined
with other promised goods or services until the Company identifies a bundle of goods or services that is distinct. Promises in
contracts which do not result in the transfer of a good or service are not performance obligations, as well as those promises that
are administrative in nature, or are immaterial in the context of the contract. The Company has addressed whether various goods
and services promised to the customer represent distinct performance obligations. The Company applied the guidance of ASC Topic
606-10-25-16 through 18 in order to verify which promises should be assessed for classification as distinct performance obligations.
The Company’s contracts with customers include more than one performance obligation, for instance, the delivery of an equipment
generally includes the promise to install the equipment in the customer’s facility. The Company’s performance obligations
in a sale of equipment generally include production, delivery, installation, together with the provision of warranty.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0 0 10pt; text-align: justify; text-indent: 0.25in">The transaction
price is allocated to all the separate performance obligations in an arrangement. It reflects the amount of consideration to which
the Company expects to be entitled in exchange for transferring goods or services, which may include an estimate of variable consideration
to the extent that it is probable of not being subject to significant reversals in the future based on the Company’s experience
with similar arrangements. The transaction price excludes amounts collected on behalf of third parties, such as sales taxes. This
is done on a relative selling price basis using standalone selling prices (“SSP”).  The SSP represents the
price at which the Company would sell that good or service on a standalone basis at the inception of the contract. Given the requirement
for establishing SSP for all performance obligations, if SSP is directly observable through standalone sales, then such sales should
be considered in the establishment of SSP for the performance obligation. All of the Company’s products were sold in stand-alone
arrangement, the Company does not have observable SSPs for most performance obligations as they are not regularly sold on a standalone
basis. Production, delivery, installation, together with provision of warranty, as a single unite of accounting.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0 0 10pt; text-align: justify; text-indent: 0.25in">Revenue
is recognized when the Company satisfies each performance obligation by transferring control of the promised goods or
services to the customer. Goods or services can transfer at a point in time (upon the acceptance of the products or upon the
arrival at the destination as stipulated in the shipment terms) in a sale arrangement. In general, the Company recognize
revenue when a tool has been demonstrated to meet the customer’s predetermined specifications and is accepted by the
customer. If terms of the sales provide for a lapsing customer acceptance period, the Company recognizes revenue as of the earlier
of the expiration of the lapsing acceptance period and customer acceptance. In the following circumstances, however, the Company
recognizes revenue upon shipment or delivery, when legal title to the tool is passed to a customer as follows:</p>
<table cellpadding="0" cellspacing="0" style="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 10pt"><tr style="vertical-align: top">
<td style="width: 18pt"></td><td style="width: 21pt"><font style="font: 8pt Wingdings">l</font></td><td style="text-align: justify"><font style="font-size: 8pt">When the customer has previously accepted the same tool with the same
specifications and when the Company can objectively demonstrate that the tool meets all of the required acceptance criteria;</font></td></tr></table>
<table cellpadding="0" cellspacing="0" style="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 10pt"><tr style="vertical-align: top">
<td style="width: 18pt"></td><td style="width: 21pt"><font style="font: 8pt Wingdings">l</font></td><td style="text-align: justify"><font style="font-size: 8pt">When the sales contract or purchase order contains no acceptance agreement
or no lapsing acceptance provision and when the Company can objectively demonstrate that the tool meets all of the required acceptance;</font></td></tr></table>
<table cellpadding="0" cellspacing="0" style="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 10pt"><tr style="vertical-align: top">
<td style="width: 18pt"></td><td style="width: 21pt"><font style="font: 8pt Wingdings">l</font></td><td style="text-align: justify"><font style="font-size: 8pt">When the customer withholds acceptance due to issues unrelated to
product performance, in which case revenue is recognized when the system is performing as intended and meets predetermined specifications;
or</font></td></tr></table>
<table cellpadding="0" cellspacing="0" style="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 10pt"><tr style="vertical-align: top">
<td style="width: 18pt"></td><td style="width: 21pt"><font style="font: 8pt Wingdings">l</font></td><td style="text-align: justify"><font style="font-size: 8pt">The company’s sales arrangements don’t include a general
right of return.</font></td></tr></table>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0 0 10pt; text-align: justify; text-indent: 0.25in">The Company offers
post-warranty period services, which consist principally of the installation and replacement of parts and small-scale
modifications to the equipment. The related revenue and costs of revenue are recognized when parts have been delivered and
installed, risk of loss has passed to the customer, and collection is probable. The Company does not expect revenue from extended
maintenance service contracts to represent a material portion of its revenue in the future.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0 0 10pt; text-align: justify; text-indent: 0.25in">As such, the Company
has concluded that its revenue recognition under the adoption of ASC Topic 606 will remain the same as previously reported and
will not have material impacts to its condensed consolidated financial statements.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0 0 10pt; text-align: justify; text-indent: 0.25in">The Company
incurs costs related to the acquisition of its contract with customers in the form of sales commissions. Sales commissions
are paid to third party representatives and distributors.  Contractual agreements with these parties outline
commissions structures and rates to be paid.  Generally speaking, the contracts are all individual procurement
decisions by the customers and are not for significant periods of time, nor do they include renewal provisions. As such, all
contracts have an economic life of significantly less than a year. Accordingly, the Company expenses sales commissions when
incurred in accordance with the practical expedient in ASC Topic 606 when the underlying contract asset is less than one
year. These costs are recorded within sales and marketing expenses.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0 0 10pt; text-align: justify; text-indent: 0.25in">Generally, all
contracts have expected durations of one year or less. Accordingly, the Company applies the practical expedient allowed in ASC Topic
606 and does not disclose information about remaining performance obligations that have original expected durations of one year
or less.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0 0 10pt; text-align: justify; text-indent: 0.25in">The Company
does not incur any costs to fulfill the contracts with customers that are not already reported in compliance with
another applicable standard (for example, inventory or plant, property and equipment).<b><i> </i></b></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"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.25in">In February 2018, the FASB
issued ASU No. 2018-02, <i>Income Statement—Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects
from Accumulated Other Comprehensive Income</i> (“ASU 2018-02”), which provides financial statement preparers with
an option to reclassify stranded tax effects within accumulated other comprehensive income to retained earnings in each period
in which the effect of the change in the U.S. federal corporate income tax rate in the Tax Cuts and Jobs Act (or portion thereof)
is recorded. The amendments in this ASU are effective for all entities for fiscal years beginning after December 15, 2018, and
interim periods within those fiscal years. Early adoption of ASU 2018-02 is permitted, including adoption in any interim period
for the public business entities for reporting periods for which financial statements have not yet been issued. The amendments
in this ASU should be applied either in the period of adoption or retrospectively to each period (or periods) in which the effect
of the change in the U.S. federal corporate income tax rate in the Tax Cuts and Jobs Act is recognized. The Company is evaluating
the impact of the adoption of ASU No. 2018-02 on its consolidated financial statements.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.25in"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.25in">In July 2017, the FASB
issued ASU No. 2017-11, <i>Earnings Per Share (Topic 260); Distinguishing Liabilities from Equity (Topic 480); Derivatives and
Hedging (Topic 815): (Part I) Accounting for Certain Financial Instruments with Down Round Features, (Part II) Replacement
of the Indefinite Deferral for Mandatorily Redeemable Financial Instruments of Certain Nonpublic Entities and Certain Mandatorily
Redeemable Noncontrolling Interests with a Scope Exception</i> (“ASU 2017-11”), which addresses the complexity
of accounting for certain financial instruments with down round features. Down round features are features of certain equity-linked
instruments (or embedded features) that result in the strike price being reduced on the basis of the pricing of future equity offerings.
Current accounting guidance creates cost and complexity for entities that issue financial instruments (such as warrants and convertible
instruments) with down round features that require fair value measurement of the entire instrument or conversion option. For public
business entities, the amendments in Part I of this Update are effective for fiscal years, and interim periods within those fiscal
years, beginning after December 15, 2018. For all other entities, the amendments in Part I of this Update are effective for fiscal
years beginning after December 15, 2019, and interim periods within fiscal years beginning after December 15, 2020. The Company
is evaluating the impact of the adoption of ASU 2017-11 on its consolidated financial statements.</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">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. The new guidance does not amend the optional qualitative assessment
of goodwill impairment. A business entity that is a U.S. Securities and Exchange Commission filer must adopt the amendments in
this ASU 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. The Company is evaluating
the impact of the adoption of ASU 2017-04 on its consolidated financial statements. </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">In February 2016, the FASB
issued ASU No. 2016-02, <i>Leases (Topic 842)</i>  (“ASU 2016-02”). The amendments in this update 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 leases 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. The amendments in ASU No. 2016-02 are effective
for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years for public business
entities. Early application of the amendments in ASU No. 2016-02 is permitted. The Company is evaluating the impact of the adoption
of ASU 2016-02 on its consolidated financial statements.</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">At March 31, 2018 and December
31, 2017, accounts receivable consisted of the following:</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0"> </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="padding-bottom: 1.5pt"> </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>2018</b></p></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </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>2017</b></p></td>
<td style="padding-bottom: 1.5pt"> </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">$</font></td>
<td style="width: 9%; text-align: right"><font style="font-size: 8pt">27,793</font></td>
<td style="width: 1%"> </td>
<td style="width: 1%"> </td>
<td style="width: 1%"><font style="font-size: 8pt">$</font></td>
<td style="width: 9%; text-align: right"><font style="font-size: 8pt">26,762</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="padding-bottom: 1.5pt"> </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="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </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="padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Total </font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1pt double; text-align: right"><font style="font-size: 8pt">27,793</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1pt double; text-align: right"><font style="font-size: 8pt">26,762</font></td>
<td style="padding-bottom: 3pt"> </td></tr>
</table>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.25in"> </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, 2018 and December 31, 2017. At March 31, 2018,
$3,130 of accounts receivable were pledged as collateral for borrowings from financial institutions.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.25in">At March 31, 2018 and December
31, 2017, inventory consisted of the following: </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0"> </p>
<table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%">
<tr style="vertical-align: bottom">
<td> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1pt solid">
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>March 31,</b></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>2018</b></p></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1pt solid">
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>December 31,</b></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>2017</b></p></td>
<td style="padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom">
<td style="width: 76%"><font style="font-size: 8pt">Raw materials </font></td>
<td style="width: 1%"> </td>
<td style="width: 1%"><font style="font-size: 8pt">$</font></td>
<td style="width: 9%; text-align: right"><font style="font-size: 8pt">8,937</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">6,181</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">5,496</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">4,328</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Finished goods </font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">5,432</font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">4,879</font></td>
<td style="padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom">
<td style="text-indent: 9pt"><font style="font-size: 8pt">Total inventory, gross </font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">19,865</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">15,388</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Inventory reserve </font></td>
<td style="padding-bottom: 1.5pt"> </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="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </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="padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Total inventory, net </font></td>
<td style="padding-bottom: 3pt"> </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">19,865</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1pt double; text-align: right"><font style="font-size: 8pt">15,388</font></td>
<td style="padding-bottom: 3pt"> </td></tr>
</table>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.25in">At March 31, 2018 and December
31, 2017, the Company did not have an inventory reserve and no inventory was pledged as collateral for borrowings from financial
institutions.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.25in">At March 31, 2018 and December
31, 2017, property, plant and equipment consisted of the following:</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0"> </p>
<table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%">
<tr style="vertical-align: bottom">
<td> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1pt solid">
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>March 31,</b></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>2018</b></p></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1pt solid">
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>December 31,</b></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>2017</b></p></td>
<td style="padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom">
<td style="width: 76%"><font style="font-size: 8pt">Manufacturing equipment</font></td>
<td style="width: 1%"> </td>
<td style="width: 1%"><font style="font-size: 8pt">$</font></td>
<td style="width: 9%; text-align: right"><font style="font-size: 8pt">10,038</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">9,660</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">493</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">463</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">211</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">203</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Leasehold improvement</font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">289</font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">277</font></td>
<td style="padding-bottom: 1.5pt"> </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">11,031</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">10,603</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">(8,673</font></td>
<td><font style="font-size: 8pt">)</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">(8,263</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="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">373</font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </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="padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Total property, plant and equipment, net</font></td>
<td style="padding-bottom: 3pt"> </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">2,731</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="padding-bottom: 3pt"> </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">2,340</font></td>
<td style="padding-bottom: 3pt"> </td></tr>
</table>
<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">Depreciation expense was
$85 and $52 for the three months ended March 31, 2018 and 2017, respectively.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0"><b> </b></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.25in">At March 31, 2018 and December
31, 2017, short-term borrowings consisted of the following:</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.25in"> </p>
<table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%">
<tr style="vertical-align: bottom">
<td> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>March 31, 2018</b></font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>December 31, 2017</b></font></td>
<td style="padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom">
<td style="width: 76%; padding-right: 10.5pt; text-align: justify"><font style="font-size: 8pt">Line of credit up to RMB 30
million from Bank of China Pudong Branch, due on March 5, 2018 with annual interest rate of 5.69%, secured by certain of the
Company’s intellectual property and fully repaid on March 5, 2018</font></td>
<td style="width: 1%"> </td>
<td style="width: 1%"><font style="font-size: 8pt">$</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">2,219</font></td>
<td style="width: 1%"> </td></tr>
<tr style="vertical-align: bottom">
<td style="padding-right: 10.5pt; text-align: justify"><font style="font-size: 8pt">Line of credit up to RMB 30 million
from Bank of China Pudong Branch, due on September 11, 2018 with annual interest rate of 5.69%, 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">1,590</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">─</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td style="padding-right: 10.5pt; text-align: justify"><font style="font-size: 8pt">Line of credit up to RMB 30 million
from Bank of China Pudong Branch, due on September 24, 2018 with annual interest rate of 5.69%, 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">1,590</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">─</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td style="padding-right: 10.5pt; text-align: justify"><font style="font-size: 8pt">Line of credit up to RMB 25 million
from Bank of Shanghai Pudong Branch, due on various dates in October 2018 with an annual interest rate of 5.66%, guaranteed
by the Company’s CEO</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">2,194</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">2,111</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td style="padding-right: 10.5pt; text-align: justify"><font style="font-size: 8pt">Line of credit up to RMB 25 million
from Bank of Shanghai Pudong Branch, due on November 20, 2018 with an annual interest rate of 5.66%, guaranteed by the
Company’s CEO</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">1,027</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">─</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td style="padding-right: 10.5pt; text-align: justify"><font style="font-size: 8pt">Line of credit up to RMB 5 million
from Shanghai Rural Commercial Bank, due on November 21, 2018 with an annual interest rate of 5.44%, guaranteed by the
Company’s CEO</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">795</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">765</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td style="padding-right: 10.5pt; text-align: justify"><font style="font-size: 8pt">Line of credit up to RMB 10 million
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 secured by a pledge on accounts receivable (note 3)</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">1,590</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">─</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td style="padding-right: 10.5pt; text-align: justify"><font style="font-size: 8pt">Line of credit up to RMB 10 million
from Bank of Communications, due on December 28, 2018 with an annual interest rate of 5.66%</font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">1,590</font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </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="padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom">
<td style="padding-right: 10.5pt; text-align: justify"><font style="font-size: 8pt">Total </font></td>
<td style="padding-bottom: 3pt"> </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">10,376</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="padding-bottom: 3pt"> </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">5,095</font></td>
<td style="padding-bottom: 3pt"> </td></tr>
</table>
<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">For the three months ended
March 31, 2018 and 2017, interest expense related to short-term borrowings amounted to $103 and $78, respectively.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.25in">At March 31, 2018 and December
31, 2017, other payable and accrued expenses consisted of the following:</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.25in"> </p>
<table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%">
<tr style="vertical-align: bottom">
<td> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1pt solid">
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>March 31,</b></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>2018</b></p></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1pt solid">
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>December 31,</b></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>2017</b></p></td>
<td style="padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom">
<td style="width: 76%; padding-left: 9pt; text-indent: -9pt"><font style="font-size: 8pt">Lease expenses and payable for leasehold improvement due to a related party (note 11)</font></td>
<td style="width: 1%"> </td>
<td style="width: 1%"><font style="font-size: 8pt">$</font></td>
<td style="width: 9%; text-align: right"><font style="font-size: 8pt">2,248</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">2,024</font></td>
<td style="width: 1%"> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Commissions </font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">928</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">836</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">979</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">839</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">227</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">745</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">196</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">60</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">1,038</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">684</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Others </font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">926</font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">849</font></td>
<td style="padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Total </font></td>
<td style="padding-bottom: 3pt"> </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">6,542</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="padding-bottom: 3pt"> </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">6,037</font></td>
<td style="padding-bottom: 3pt"> </td></tr>
</table>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0"><b> </b></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"> </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; text-indent: 0.25in"> </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 the warrant was conditional 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; text-indent: 0.25in"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0 0 10pt; 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.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.25in"> </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, 2018, and December 31, 2017, other long-term liabilities consisted of the following unearned
government subsidies:</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0"> </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="padding-bottom: 1.5pt"> </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>2018</b></p></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </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>2017</b></p></td>
<td style="padding-bottom: 1.5pt"> </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">1,977</font></td>
<td style="width: 1%"> </td>
<td style="width: 1%"> </td>
<td style="width: 1%"><font style="font-size: 8pt">$</font></td>
<td style="width: 9%; text-align: right"><font style="font-size: 8pt">1,952</font></td>
<td style="width: 1%"> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Subsidies to Electro Copper Plating project, commenced in 2014</font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">4,204</font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">4,265</font></td>
<td style="padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom">
<td style="text-indent: 9pt"><font style="font-size: 8pt">Total </font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1pt double; text-align: right"><font style="font-size: 8pt">6,181</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="padding-bottom: 3pt"> </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">6,217</font></td>
<td style="padding-bottom: 3pt"> </td></tr>
</table>
<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">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.
Undistributed earnings attributable to ACM’s equity method investment represented $1 of the consolidated retained earnings
at March 31, 2018.</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">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. During the three months ended March 31, 2018 and 2017, ACM purchased materials from Ninebell amounting to $970
and $840, respectively. As of March 31, 2018 and December 31, 2017, accounts payable due to Ninebell was $350 and $2,118,
respectively.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 27pt"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 27pt">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. As of March 31, 2018, ACM Shanghai was leasing the property on a month-to-month basis. On April 26, 2018, ACM Shanghai renewed
the operating lease, effective as of January 1, 2018 and continuing through December 31, 2022. During the first year, monthly payments
are RMB 366, effective January 1, 2018. The required security deposit is RMB 1,077. During the three months ended March 31, 2018
and 2017, the Company incurred leasing expenses under the lease agreement of $172 and $159, respectively. As of March 31, 2018
and December 31, 2017, payables to Zhangjiang Group for lease expenses and leasehold improvements recorded as other payables and
accrued expenses amounted to $2,248 and $2,024, respectively (note 7).</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">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 8).</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"><font style="font: 8pt Times New Roman, Times, Serif">ACM
entered into a two-year lease agreement in March 2015 for office and warehouse space of approximately 3,000 square feet for its
headquarters in Fremont, California, at a rate of $2 per month. On March 22, 2017, ACM amended the lease agreement to extend the
term through March 31, 2019 and increase the base rent to $3 per month.</font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0"><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"><font style="font: 8pt Times New Roman, Times, Serif">ACM
Shanghai entered into an operating lease agreement with Zhangjiang Group (a related party, see note 11) in 2007 for manufacturing
and office space of approximately 63,510 square feet in Shanghai, China. The lease with Zhangjiang Group expired on December 31,
2017 and as of March 31, 2018, ACM Shanghai was leasing 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 will pay a monthly rental fee of approximately RMB366.</font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0"><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"></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0 0 8pt 0pt; text-indent: 20pt"><font style="font: 8pt Times New Roman, Times, Serif">ACM
Wuxi leases office space in Wuxi, PRC. The lease for ACM Wuxi’s office space was renewed on April 1, 2018 with a two-year
term expiring on March 31, 2020. The monthly rental fee is RMB50.</font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.25in"></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.25in"></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0 0 8pt; text-indent: 20pt"><font style="font: 8pt Times New Roman, Times, Serif">On
December 5, 2017 ACM Korea entered into a lease for its office space with a two- year term expiring on December 4, 2019. The monthly
rental fee is KRW1,200. On February 5, 2018, ACM Korea entered into a lease for its R&D facility with two-year term expiring
on February 18, 2020. The monthly rental fee is KRW1,800.</font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.25in"></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.25in"><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"><font style="font: 8pt Times New Roman, Times, Serif">Future
minimum lease payments under non-cancelable lease agreements as of March 31, 2018 and December 31, 2017 were as follows:</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="padding-bottom: 1.5pt; 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>2018</b></font></p></td>
<td style="padding-bottom: 1.5pt; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="padding-bottom: 1.5pt; 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>December
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>2017</b></font></p></td>
<td style="padding-bottom: 1.5pt; 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: 76%; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">2018 </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">766</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: 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">50</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">2019 </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">739</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="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">22</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">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">716</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="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">─</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">716</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="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">─</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="padding-bottom: 1.5pt; 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">716</font></td>
<td style="padding-bottom: 1.5pt; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="padding-bottom: 1.5pt; 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">─</font></td>
<td style="padding-bottom: 1.5pt; 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 </font></td>
<td style="padding-bottom: 3pt; 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">3,654</font></td>
<td style="padding-bottom: 3pt; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="padding-bottom: 3pt; 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">72</font></td>
<td style="padding-bottom: 3pt; 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"><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"><font style="font: 8pt Times New Roman, Times, Serif">Rent
expense was $495 and $315 for the three months ended March 31, 2018 and 2017, respectively.</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-align: justify"><font style="font: 8pt Times New Roman, Times, Serif"><b> </b></font></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 if 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"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.25in">In August 2017 ACM entered
into a securities purchase agreement with PDHTI and its subsidiary Pudong Science and Technology (Cayman) Co., Ltd. (“PST”),
in which ACM agreed to bid, in an auction process mandated by PRC regulations, to purchase PDHTI’s 10.78% equity interest
in ACM Shanghai and to sell shares of Class A common stock to PST. On September 8, 2017, ACM issued 1,119,576 shares of Class A
common stock to PST for a purchase price of $7.50 per share, representing an aggregate purchase price of $8,397.</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">In August 2017 ACM entered
into a securities purchase agreement with ZSTVC and its subsidiary Zhangjiang AJ Company Limited (“ZJAJ”), in which
ACM agreed to bid, in an auction process mandated by PRC regulations, to purchase ZSTVC’s 7.58% equity interest in ACM Shanghai
and to sell shares of Class A common stock to ZJAJ. On September 8, 2017, ACM issued 787,098 shares of Class A common stock to
ZJAJ for a purchase price of $7.50 per share, or an aggregate purchase price of $5,903.</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">In September 2017 ACM issued
133,334 shares of Class A common stock to Ninebell for a purchase price of $7.50 per share, or an aggregate purchase price of $1,000
(note 10).</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">In November 2017 ACM issued
2,233,000 shares of Class A common stock and received net proceeds of $11,664 from the IPO and concurrently ACM issued an additional
1,333,334 shares of Class A common stock in a private placement for net proceeds of $7,053.</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">Upon the completion of
the IPO on November 2, 2017, the Company issued a five-year warrant (the “Underwriter's Warrant”) to Roth Capital Partners,
LLC, the lead underwriter of the IPO, for the purchase of up to 80,000 shares of Class A common stock at an exercise price of $6.16
per share. The Underwriter’s Warrant was immediately exercisable and expires on November 1, 2022. The Underwriter's Warrant
is equity classified and its fair value was $137 at the IPO closing date, using the Black Scholes model with the following assumptions:
volatility of 28.26%, a dividend rate of 0%, and a risk-free discount rate of 2%.</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">In September 2017 ACM issued
133,334 shares of Class A common stock to Ninebell for a purchase price of $7.50 per share, or an aggregate purchase price of $1,000
(note 10).</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">At various dates during
2017, ACM issued 472,889 shares of Class A common stock for options exercised by certain employee and non-employees. At various
dates during the three months ended March 31, 2018, ACM issued 57,222 shares of Class A common stock for options exercised by certain
employee and non-employees.</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">On March 30, 2018, SMC
exercised its warrant (note 8) and purchased 397,502 shares of Class A common stock.</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">At March 31, 2018 and December
31, 2017, the number of shares of Class A common stock issued and outstanding was 13,390,270 and 12,935,546, respectively. At March
31, 2018 and December 31, 2017, the number of shares of Class B common stock issued and outstanding was 2,409,738.</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’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.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b><i> </i></b></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"> </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, 2018:</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0"> </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="padding-bottom: 1.5pt"> </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>Number of</b></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>Option Shares</b></p></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </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>Weighted</b></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>Average Grant</b></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>Date Fair Value</b></p></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </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>Weighted</b></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>Average Exercise</b></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>Price</b></p></td>
<td style="padding-bottom: 1.5pt"> </td>
<td>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>Weighted Average</b></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>Remaining</b></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>Contractual Term</b></p></td></tr>
<tr style="vertical-align: bottom">
<td style="width: 52%"><font style="font-size: 8pt">Outstanding at December 31, 2017</font></td>
<td style="width: 1%"> </td>
<td style="width: 1%"> </td>
<td style="width: 9%; text-align: right"><font style="font-size: 8pt">2,045,616</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">0.66</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">2.46</font></td>
<td style="width: 1%"> </td>
<td style="width: 12%; text-align: right"><font style="font-size: 8pt">7.57 years</font></td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Granted </font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">500,000</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">2.26</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">5.31</font></td>
<td> </td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Exercised </font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">(57,222</font></td>
<td><font style="font-size: 8pt">)</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">0.47</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">1.09</font></td>
<td> </td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Expired </font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">(2,575</font></td>
<td><font style="font-size: 8pt">)</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">0.55</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">3.00</font></td>
<td> </td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Forfeited </font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">(72,192</font></td>
<td><font style="font-size: 8pt">)</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">0.54</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">3.00</font></td>
<td> </td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Outstanding at March 31, 2018 </font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">2,413,627</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">1.00</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">3.06</font></td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">7.86 years</font></td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Vested and exercisable at March 31, 2018</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">1,120,598</font></td>
<td> </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>
<td> </td></tr>
</table>
<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"><font style="background-color: white">The
Company recognized employee stock-based compensation expense of $93 and $61 during the three months ended March 31, 2018 and 2017,
respectively. As of March 31, 2018 and December 31, 2017, $1,597 and $1,690 respectively, of total unrecognized employee stock-based
compensation expense, net of estimated forfeitures, related to stock-based awards were expected to be recognized over a weighted-average
period of 2.05 years and 1.77 years, respectively. Total recognized compensation cost may be adjusted for future changes in estimated
forfeitures.</font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.25in"><font style="background-color: white">The
fair value of each option granted to an employee during the three months ended March 31, 2018 was estimated on the grant date using
the Black-Scholes valuation model with the following assumptions. No options were granted to employees during the three months
ended March 31, 2018.</font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0"> </p>
<table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%">
<tr style="vertical-align: bottom">
<td> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1pt solid">
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>March 31,</b></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>2018</b></p></td>
<td style="padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom">
<td style="width: 88%"><font style="font-size: 8pt">Fair value of common share(1) </font></td>
<td style="width: 1%"> </td>
<td style="width: 1%"><font style="font-size: 8pt">$</font></td>
<td style="width: 9%; text-align: right"><font style="font-size: 8pt">5.31</font></td>
<td style="width: 1%"> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Expected term in years(2) </font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">6.25</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Volatility(3) </font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">39.14</font></td>
<td><font style="font-size: 8pt">%</font></td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Risk-free interest rate(4) </font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">2.55</font></td>
<td><font style="font-size: 8pt">%</font></td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Expected dividend(5) </font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">0.00</font></td>
<td><font style="font-size: 8pt">%</font></td></tr>
</table>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0"> </p>
<table cellpadding="0" style="width: 100%; font: 12pt Times New Roman, Times, Serif">
<tr>
<td style="vertical-align: top; width: 24px"><font style="font-size: 8pt">(1)</font></td>
<td style="text-align: justify"><font style="font-size: 8pt; background-color: white">Common stock price was market close price at grant date of January 25, 2018.</font></td></tr>
</table>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0"> </p>
<table cellpadding="0" style="width: 100%; font: 12pt Times New Roman, Times, Serif">
<tr>
<td style="vertical-align: top; width: 24px"><font style="font-size: 8pt">(2)</font></td>
<td style="text-align: justify"><font style="font-size: 8pt">Expected term of share options is based on the average of the vesting period and the contractual term for each grant, in accordance with Staff Accounting Bulletin 110.</font></td></tr>
</table>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0"> </p>
<table cellpadding="0" style="width: 100%; font: 12pt Times New Roman, Times, Serif">
<tr>
<td style="vertical-align: top; width: 24px"><font style="font-size: 8pt">(3)</font></td>
<td style="text-align: justify"><font style="font-size: 8pt">Volatility is calculated based on the historical volatility of comparable companies in the period equal to the expected term of each grant.</font></td></tr>
</table>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0"> </p>
<table cellpadding="0" style="width: 100%; font: 12pt Times New Roman, Times, Serif">
<tr>
<td style="vertical-align: top; width: 24px"><font style="font-size: 8pt">(4)</font></td>
<td style="text-align: justify"><font style="font-size: 8pt">Risk-free interest rate is based on the yields of U.S. Treasury securities with maturities similar to the expected term of the share options in effect at the time of grant.</font></td></tr>
</table>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0"> </p>
<table cellpadding="0" style="width: 100%; font: 12pt Times New Roman, Times, Serif">
<tr>
<td style="vertical-align: top; width: 24px"><font style="font-size: 8pt">(5)</font></td>
<td style="text-align: justify"><font style="font-size: 8pt">Expected dividend is assumed to be 0% as ACM has no history or expectation of paying a dividend on its common stock.</font></td></tr>
</table>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0"><b><i> </i></b></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"> </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, 2018:</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0"> </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="padding-bottom: 1.5pt"> </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>Number of</b></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>Option Shares</b></p></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </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>Weighted</b></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>Average Grant</b></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>Date Fair Value</b></p></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </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>Weighted</b></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>Average Exercise</b></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>Price</b></p></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </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>Weighted Average</b></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>Remaining</b></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>Contractual Term</b></p></td>
<td style="padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Outstanding at December 31, 2017</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">1,326,676</font></td>
<td> </td>
<td> </td>
<td><font style="font-size: 8pt">$</font></td>
<td style="text-align: right"><font style="font-size: 8pt">0.78</font></td>
<td> </td>
<td> </td>
<td><font style="font-size: 8pt">$</font></td>
<td style="text-align: right"><font style="font-size: 8pt">2.52</font></td>
<td> </td>
<td> </td>
<td colspan="2" style="text-align: right"><font style="font-size: 8pt">7.54 years</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td style="width: 52%"><font style="font-size: 8pt">Granted </font></td>
<td style="width: 1%"> </td>
<td style="width: 1%"> </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%"> </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%"> </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%"> </td>
<td style="width: 9%; text-align: right"><font style="font-size: 8pt">─</font></td>
<td style="width: 1%"> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Exercised </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">─</font></td>
<td> </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">─</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Expired </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">─</font></td>
<td> </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">─</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Forfeited </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">─</font></td>
<td> </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">─</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Outstanding at March 31, 2018 </font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">1,326,676</font></td>
<td> </td>
<td> </td>
<td><font style="font-size: 8pt">$</font></td>
<td style="text-align: right"><font style="font-size: 8pt">0.75</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">2.52</font></td>
<td> </td>
<td> </td>
<td colspan="2" style="text-align: right"><font style="font-size: 8pt">7.29 years</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Vested and exercisable at March 31, 2018</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">841,329</font></td>
<td> </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>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </td></tr>
</table>
<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"><font style="background-color: white">The
Company recognized non-employee stock-based compensation expense of $2,083 and $774 during the three months ended March 31, 2018
and 2017, respectively.</font></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"><font style="background-color: white">The
fair value of each option granted to a non-employee during the three months ended March 31, 2018 was calculated by application
of the Black-Scholes valuation model with the following assumptions. No options were granted to any non-employee during the three
months ended March 31, 2018.</font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0"> </p>
<table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%">
<tr>
<td style="width: 87%"> </td>
<td style="width: 13%; 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>2018</b></p></td></tr>
<tr>
<td><font style="font-size: 8pt">Fair value of common share(1) </font></td>
<td style="text-align: center"><font style="font-size: 8pt">$12.30</font></td></tr>
<tr>
<td><font style="font-size: 8pt">Expected term in years(2) </font></td>
<td style="text-align: center"><font style="font-size: 8pt">3.33-5.36</font></td></tr>
<tr>
<td><font style="font-size: 8pt">Volatility(3) </font></td>
<td style="text-align: center"><font style="font-size: 8pt">45.48%</font></td></tr>
<tr>
<td><font style="font-size: 8pt">Risk-free interest rate(4) </font></td>
<td style="text-align: center"><font style="font-size: 8pt">2.39%-2.56%</font></td></tr>
<tr>
<td><font style="font-size: 8pt">Expected dividend(5) </font></td>
<td style="text-align: center"><font style="font-size: 8pt">0.00%</font></td></tr>
</table>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0"> </p>
<table cellpadding="0" style="width: 100%; font: 12pt Times New Roman, Times, Serif">
<tr>
<td style="vertical-align: top; width: 24px"><font style="font-size: 8pt">(2)</font></td>
<td style="text-align: justify"><font style="font-size: 8pt; background-color: white">Common stock price was market close price at March 31, 2018.</font></td></tr>
</table>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0"> </p>
<table cellpadding="0" style="width: 100%; font: 12pt Times New Roman, Times, Serif">
<tr>
<td style="vertical-align: top; width: 24px"><font style="font-size: 8pt">(3)</font></td>
<td style="text-align: justify"><font style="font-size: 8pt">Expected term of share options is based on the average of the vesting period and the contractual term for each grant, in accordance with Staff Accounting Bulletin 110.</font></td></tr>
</table>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0"> </p>
<table cellpadding="0" style="width: 100%; font: 12pt Times New Roman, Times, Serif">
<tr>
<td style="vertical-align: top; width: 24px"><font style="font-size: 8pt">(4)</font></td>
<td style="text-align: justify"><font style="font-size: 8pt">Volatility is calculated based on the historical volatility of comparable companies in the period equal to the expected term of each grant.</font></td></tr>
</table>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0"> </p>
<table cellpadding="0" style="width: 100%; font: 12pt Times New Roman, Times, Serif">
<tr>
<td style="vertical-align: top; width: 24px"><font style="font-size: 8pt">(5)</font></td>
<td style="text-align: justify"><font style="font-size: 8pt">Risk-free interest rate is based on the yields of U.S. Treasury securities with maturities similar to the expected term of the share options in effect at the time of grant.</font></td></tr>
</table>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0"> </p>
<table cellpadding="0" style="width: 100%; font: 12pt Times New Roman, Times, Serif">
<tr>
<td style="vertical-align: top; width: 24px"><font style="font-size: 8pt">(6)</font></td>
<td style="text-align: justify"><font style="font-size: 8pt">Expected dividend is assumed to be 0% as ACM has no history or expectation of paying a dividend on its common stock.</font></td></tr>
</table>
<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">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"> </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 losses and
U.S. pre-tax loss for the three months ended March 31, 2018, 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; text-indent: 0.25in"> </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 US, 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, 2018
and December 31, 2017.</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">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"> </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 a tax provision of $22 and $781 for the three months ended March 31, 2018 and 2017, respectively.</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">As of March 31, 2018, 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, 2018.</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: 27pt">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, 2009 through December 31, 2017.
To the extent the Company has 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.
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. As the Company collects and prepares necessary data, and interprets the Tax Act and any additional
guidance issued by the U.S. Treasury Department, the U.S. Internal Revenue Service and other standard-setting bodies, the Company
may make adjustments to the provisional amounts. Those adjustments may materially affect the Company’s provision for income
taxes and effective tax rate in the period in which the adjustments are made. There were no adjustments made in the three months
ended March 31, 2018. The accounting for the tax effects of the Tax Act will be completed later in 2018.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0"><b> </b></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"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.25in">The Company did not have
any capital commitments during the reported periods.</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">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.</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">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"> </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 Securities
and Exchange Commission (“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, 2017 included in our Annual Report on Form 10-K for the year ended December 31, 2017.</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">The accompanying condensed
consolidated balance sheet as of March 31, 2018, the condensed consolidated statements of operations and comprehensive loss for
the three months ended March 31, 2018 and 2017, and the condensed consolidated statements of cash flows for the three months ended
March 31, 2018 and 2017 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, 2018 and the results of operations for the three months ended March 31, 2018 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"> </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 revenues 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; text-indent: 0.25in">Basic and diluted net loss
per common share is calculated as follows:</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0"> </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="padding-bottom: 1.5pt"> </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="padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom">
<td> </td>
<td style="padding-bottom: 1.5pt"> </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="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>2017</b></font></td>
<td style="padding-bottom: 1.5pt"> </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%; text-indent: 0.25in"><font style="font-size: 8pt">Net 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">(2,780</font></td>
<td style="width: 1%"><font style="font-size: 8pt">)</font></td>
<td style="width: 1%"> </td>
<td style="width: 1%"><font style="font-size: 8pt">$</font></td>
<td style="width: 9%; text-align: right"><font style="font-size: 8pt">(2,474</font></td>
<td style="width: 2%"><font style="font-size: 8pt">)</font></td></tr>
<tr style="vertical-align: bottom">
<td style="text-indent: 0.25in"><font style="font-size: 8pt">Net loss attributable to non-controlling interest </font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">─</font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">(385</font></td>
<td style="padding-bottom: 1.5pt"><font style="font-size: 8pt">)</font></td></tr>
<tr style="vertical-align: bottom">
<td style="text-indent: 0.25in"><font style="font-size: 8pt">Net loss available to common stockholders, basic and diluted</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1pt double; text-align: right"><font style="font-size: 8pt">(2,780</font></td>
<td style="padding-bottom: 3pt"><font style="font-size: 8pt">)</font></td>
<td style="padding-bottom: 3pt"> </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">(2,089</font></td>
<td style="padding-bottom: 3pt"><font style="font-size: 8pt">)</font></td></tr>
<tr style="vertical-align: bottom">
<td style="text-indent: 0.25in"><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">15,383,086</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">4,817,745</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td style="text-indent: 0.25in"><font style="font-size: 8pt">Effect of dilutive securities </font></td>
<td style="padding-bottom: 1.5pt"> </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="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </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="padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom">
<td style="text-indent: 0.25in"><font style="font-size: 8pt">Weighted average shares outstanding, diluted </font></td>
<td style="padding-bottom: 3pt"> </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="padding-bottom: 3pt"> </td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1pt double"> </td>
<td style="border-bottom: black 1pt double; text-align: right"><font style="font-size: 8pt">4,817,745</font></td>
<td style="padding-bottom: 3pt"> </td></tr>
<tr style="vertical-align: bottom">
<td style="text-indent: 0.25in"><font style="font-size: 8pt">Net 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><font style="font-size: 8pt">Basic </font></td>
<td style="padding-bottom: 3pt"> </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="padding-bottom: 3pt"><font style="font-size: 8pt">)</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1pt double; text-align: right"><font style="font-size: 8pt">(0.43</font></td>
<td style="padding-bottom: 3pt"><font style="font-size: 8pt">)</font></td></tr>
<tr style="vertical-align: bottom">
<td style="text-indent: 0.25in"><font style="font-size: 8pt">Diluted </font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1pt double; text-align: right"><font style="font-size: 8pt">(0.18</font></td>
<td style="padding-bottom: 3pt"><font style="font-size: 8pt">)</font></td>
<td style="padding-bottom: 3pt"> </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">(0.43</font></td>
<td style="padding-bottom: 3pt"><font style="font-size: 8pt">)</font></td></tr>
</table>
<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 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, 2018 and 2017, the net 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 consolidated statements of operations
and comprehensive income (loss) and in the above computation of net loss per common share.</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">Diluted net 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, stock options and warrants for the three months ended March 31, 2018 and 2017.
Certain potential dilutive securities were excluded from the net 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>
<table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%">
<tr style="vertical-align: bottom">
<td> </td>
<td style="padding-bottom: 1.5pt"> </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="padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom">
<td> </td>
<td style="padding-bottom: 1.5pt"> </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="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>2017</b></font></td>
<td style="padding-bottom: 1.5pt"> </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%; text-indent: 0.25in"><font style="font-size: 8pt">Net 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">(2,780</font></td>
<td style="width: 1%"><font style="font-size: 8pt">)</font></td>
<td style="width: 1%"> </td>
<td style="width: 1%"><font style="font-size: 8pt">$</font></td>
<td style="width: 9%; text-align: right"><font style="font-size: 8pt">(2,474</font></td>
<td style="width: 2%"><font style="font-size: 8pt">)</font></td></tr>
<tr style="vertical-align: bottom">
<td style="text-indent: 0.25in"><font style="font-size: 8pt">Net loss attributable to non-controlling interest </font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">─</font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">(385</font></td>
<td style="padding-bottom: 1.5pt"><font style="font-size: 8pt">)</font></td></tr>
<tr style="vertical-align: bottom">
<td style="text-indent: 0.25in"><font style="font-size: 8pt">Net loss available to common stockholders, basic and diluted</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1pt double; text-align: right"><font style="font-size: 8pt">(2,780</font></td>
<td style="padding-bottom: 3pt"><font style="font-size: 8pt">)</font></td>
<td style="padding-bottom: 3pt"> </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">(2,089</font></td>
<td style="padding-bottom: 3pt"><font style="font-size: 8pt">)</font></td></tr>
<tr style="vertical-align: bottom">
<td style="text-indent: 0.25in"><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">15,383,086</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">4,817,745</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td style="text-indent: 0.25in"><font style="font-size: 8pt">Effect of dilutive securities </font></td>
<td style="padding-bottom: 1.5pt"> </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="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </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="padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom">
<td style="text-indent: 0.25in"><font style="font-size: 8pt">Weighted average shares outstanding, diluted </font></td>
<td style="padding-bottom: 3pt"> </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="padding-bottom: 3pt"> </td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1pt double"> </td>
<td style="border-bottom: black 1pt double; text-align: right"><font style="font-size: 8pt">4,817,745</font></td>
<td style="padding-bottom: 3pt"> </td></tr>
<tr style="vertical-align: bottom">
<td style="text-indent: 0.25in"><font style="font-size: 8pt">Net 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><font style="font-size: 8pt">Basic </font></td>
<td style="padding-bottom: 3pt"> </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="padding-bottom: 3pt"><font style="font-size: 8pt">)</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1pt double; text-align: right"><font style="font-size: 8pt">(0.43</font></td>
<td style="padding-bottom: 3pt"><font style="font-size: 8pt">)</font></td></tr>
<tr style="vertical-align: bottom">
<td style="text-indent: 0.25in"><font style="font-size: 8pt">Diluted </font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1pt double; text-align: right"><font style="font-size: 8pt">(0.18</font></td>
<td style="padding-bottom: 3pt"><font style="font-size: 8pt">)</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1pt double; text-align: right"><font style="font-size: 8pt">(0.43</font></td>
<td style="padding-bottom: 3pt"><font style="font-size: 8pt">)</font></td></tr>
</table>
<table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%">
<tr style="vertical-align: bottom">
<td> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1pt solid">
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>March 31,</b></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>2018</b></p></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1pt solid">
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>December 31,</b></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>2017</b></p></td>
<td style="padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom">
<td style="width: 76%"><font style="font-size: 8pt">Accounts receivable </font></td>
<td style="width: 1%"> </td>
<td style="width: 1%"><font style="font-size: 8pt">$</font></td>
<td style="width: 9%; text-align: right"><font style="font-size: 8pt">27,793</font></td>
<td style="width: 1%"> </td>
<td style="width: 1%"> </td>
<td style="width: 1%"><font style="font-size: 8pt">$</font></td>
<td style="width: 9%; text-align: right"><font style="font-size: 8pt">26,762</font></td>
<td style="width: 1%"> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Less: Allowance for doubtful accounts </font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">─</font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">─</font></td>
<td style="padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Total </font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1pt double; text-align: right"><font style="font-size: 8pt">27,793</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1pt double; text-align: right"><font style="font-size: 8pt">26,762</font></td>
<td style="padding-bottom: 3pt"> </td></tr>
</table>
<table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%">
<tr style="vertical-align: bottom">
<td> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1pt solid">
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>March 31,</b></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>2018</b></p></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1pt solid">
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>December 31,</b></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>2017</b></p></td>
<td style="padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom">
<td style="width: 76%"><font style="font-size: 8pt">Raw materials </font></td>
<td style="width: 1%"> </td>
<td style="width: 1%"><font style="font-size: 8pt">$</font></td>
<td style="width: 9%; text-align: right"><font style="font-size: 8pt">8,937</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">6,181</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">5,496</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">4,328</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Finished goods </font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">5,432</font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">4,879</font></td>
<td style="padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom">
<td style="text-indent: 9pt"><font style="font-size: 8pt">Total inventory, gross </font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">19,865</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">15,388</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Inventory reserve </font></td>
<td style="padding-bottom: 1.5pt"> </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="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </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="padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Total inventory, net </font></td>
<td style="padding-bottom: 3pt"> </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">19,865</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1pt double; text-align: right"><font style="font-size: 8pt">15,388</font></td>
<td style="padding-bottom: 3pt"> </td></tr>
</table>
<table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%">
<tr style="vertical-align: bottom">
<td> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1pt solid">
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>March 31,</b></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>2018</b></p></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1pt solid">
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>December 31,</b></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>2017</b></p></td>
<td style="padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom">
<td style="width: 76%"><font style="font-size: 8pt">Manufacturing equipment</font></td>
<td style="width: 1%"> </td>
<td style="width: 1%"><font style="font-size: 8pt">$</font></td>
<td style="width: 9%; text-align: right"><font style="font-size: 8pt">10,038</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">9,660</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">493</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">463</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">211</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">203</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Leasehold improvement</font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">289</font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">277</font></td>
<td style="padding-bottom: 1.5pt"> </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">11,031</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">10,603</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">(8,673</font></td>
<td><font style="font-size: 8pt">)</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">(8,263</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="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">373</font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </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="padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Total property, plant and equipment, net</font></td>
<td style="padding-bottom: 3pt"> </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">2,731</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1pt double; text-align: right"><font style="font-size: 8pt">2,340</font></td>
<td style="padding-bottom: 3pt"> </td></tr>
</table>
<table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%">
<tr style="vertical-align: bottom">
<td> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1pt solid">
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>March 31,</b></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>2018</b></p></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1pt solid">
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>December 31,</b></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>2017</b></p></td>
<td style="padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom">
<td style="width: 76%; padding-left: 9pt; text-indent: -9pt"><font style="font-size: 8pt">Lease expenses and payable for leasehold improvement due to a related party (note 11)</font></td>
<td style="width: 1%"> </td>
<td style="width: 1%"><font style="font-size: 8pt">$</font></td>
<td style="width: 9%; text-align: right"><font style="font-size: 8pt">2,248</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">2,024</font></td>
<td style="width: 1%"> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Commissions </font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">928</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">836</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">979</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">839</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">227</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">745</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">196</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">60</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">1,038</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">684</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Others </font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">926</font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">849</font></td>
<td style="padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Total </font></td>
<td style="padding-bottom: 3pt"> </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">6,542</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1pt double; text-align: right"><font style="font-size: 8pt">6,037</font></td>
<td style="padding-bottom: 3pt"> </td></tr>
</table>
<table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%">
<tr style="vertical-align: bottom">
<td> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1pt solid">
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>March 31,</b></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>2018</b></p></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1pt solid">
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>December 31,</b></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>2017</b></p></td>
<td style="padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom">
<td style="width: 76%"><font style="font-size: 8pt">Subsidies to Stress Free Polishing project, commenced in 2008 and 2017</font></td>
<td style="width: 1%"> </td>
<td style="width: 1%"><font style="font-size: 8pt">$</font></td>
<td style="width: 9%; text-align: right"><font style="font-size: 8pt">1,977</font></td>
<td style="width: 1%"> </td>
<td style="width: 1%"> </td>
<td style="width: 1%"><font style="font-size: 8pt">$</font></td>
<td style="width: 9%; text-align: right"><font style="font-size: 8pt">1,952</font></td>
<td style="width: 1%"> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Subsidies to Electro Copper Plating project, commenced in 2014</font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">4,204</font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">4,265</font></td>
<td style="padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom">
<td style="text-indent: 9pt"><font style="font-size: 8pt">Total </font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1pt double; text-align: right"><font style="font-size: 8pt">6,181</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1pt double; text-align: right"><font style="font-size: 8pt">6,217</font></td>
<td style="padding-bottom: 3pt"> </td></tr>
</table>
<table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%">
<tr style="vertical-align: bottom">
<td> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1pt solid">
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>March 31,</b></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>2018</b></p></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1pt solid">
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>December 31,</b></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>2017</b></p></td>
<td style="padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom">
<td style="width: 76%"><font style="font-size: 8pt">2018 </font></td>
<td style="width: 1%"> </td>
<td style="width: 1%"><font style="font-size: 8pt">$</font></td>
<td style="width: 9%; text-align: right"><font style="font-size: 8pt">766</font></td>
<td style="width: 1%"> </td>
<td style="width: 1%"> </td>
<td style="width: 1%"><font style="font-size: 8pt">$</font></td>
<td style="width: 9%; text-align: right"><font style="font-size: 8pt">50</font></td>
<td style="width: 1%"> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">2019 </font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">739</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">22</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">2020 </font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">716</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">─</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">2021 </font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">716</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">─</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">2022 </font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">716</font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">─</font></td>
<td style="padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Total </font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="border-bottom: black 1pt double"><font style="font-size: 8pt">$</font></td>
<td style="border-bottom: black 1pt double; text-align: right"><font style="font-size: 8pt">3,654</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="padding-bottom: 3pt"> </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">72</font></td>
<td style="padding-bottom: 3pt"> </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="padding-bottom: 1.5pt"> </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>Number of</b></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>Option Shares</b></p></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </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>Weighted</b></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>Average Grant</b></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>Date Fair Value</b></p></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </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>Weighted</b></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>Average Exercise</b></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>Price</b></p></td>
<td style="padding-bottom: 1.5pt"> </td>
<td>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>Weighted Average</b></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>Remaining</b></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>Contractual Term</b></p></td></tr>
<tr style="vertical-align: bottom">
<td style="width: 52%"><font style="font-size: 8pt">Outstanding at December 31, 2017</font></td>
<td style="width: 1%"> </td>
<td style="width: 1%"> </td>
<td style="width: 9%; text-align: right"><font style="font-size: 8pt">2,045,616</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">0.66</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">2.46</font></td>
<td style="width: 1%"> </td>
<td style="width: 12%; text-align: right"><font style="font-size: 8pt">7.57 years</font></td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Granted </font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">500,000</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">2.26</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">5.31</font></td>
<td> </td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Exercised </font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">(57,222</font></td>
<td><font style="font-size: 8pt">)</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">0.47</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">1.09</font></td>
<td> </td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Expired </font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">(2,575</font></td>
<td><font style="font-size: 8pt">)</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">0.55</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">3.00</font></td>
<td> </td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Forfeited </font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">(72,192</font></td>
<td><font style="font-size: 8pt">)</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">0.54</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">3.00</font></td>
<td> </td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Outstanding at March 31, 2018 </font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">2,413,627</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">1.00</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">3.06</font></td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">7.86 years</font></td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Vested and exercisable at March 31, 2018</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">1,120,598</font></td>
<td> </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>
<td> </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="padding-bottom: 1.5pt"> </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>Number of</b></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>Option Shares</b></p></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </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>Weighted</b></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>Average Grant</b></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>Date Fair Value</b></p></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </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>Weighted</b></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>Average Exercise</b></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>Price</b></p></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </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>Weighted Average</b></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>Remaining</b></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>Contractual Term</b></p></td>
<td style="padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Outstanding at December 31, 2017</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">1,326,676</font></td>
<td> </td>
<td> </td>
<td><font style="font-size: 8pt">$</font></td>
<td style="text-align: right"><font style="font-size: 8pt">0.78</font></td>
<td> </td>
<td> </td>
<td><font style="font-size: 8pt">$</font></td>
<td style="text-align: right"><font style="font-size: 8pt">2.52</font></td>
<td> </td>
<td> </td>
<td colspan="2" style="text-align: right"><font style="font-size: 8pt">7.54 years</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td style="width: 52%"><font style="font-size: 8pt">Granted </font></td>
<td style="width: 1%"> </td>
<td style="width: 1%"> </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%"> </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%"> </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%"> </td>
<td style="width: 9%; text-align: right"><font style="font-size: 8pt">─</font></td>
<td style="width: 1%"> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Exercised </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">─</font></td>
<td> </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">─</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Expired </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">─</font></td>
<td> </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">─</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Forfeited </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">─</font></td>
<td> </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">─</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Outstanding at March 31, 2018 </font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">1,326,676</font></td>
<td> </td>
<td> </td>
<td><font style="font-size: 8pt">$</font></td>
<td style="text-align: right"><font style="font-size: 8pt">0.75</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">2.52</font></td>
<td> </td>
<td> </td>
<td colspan="2" style="text-align: right"><font style="font-size: 8pt">7.29 years</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Vested and exercisable at March 31, 2018</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">841,329</font></td>
<td> </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>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td> </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="padding-bottom: 1.5pt"> </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>2018</b></p></td>
<td style="padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom">
<td style="width: 88%"><font style="font-size: 8pt">Fair value of common share(1) </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">5.31</font></td>
<td style="width: 1%"> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Expected term in years(2) </font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">6.25</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Volatility(3) </font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">39.14</font></td>
<td><font style="font-size: 8pt">%</font></td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Risk-free interest rate(4) </font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">2.55</font></td>
<td><font style="font-size: 8pt">%</font></td></tr>
<tr style="vertical-align: bottom">
<td><font style="font-size: 8pt">Expected dividend(5) </font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">0.00</font></td>
<td><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>
<td style="width: 87%"> </td>
<td style="width: 13%; 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>2018</b></p></td></tr>
<tr>
<td><font style="font-size: 8pt">Fair value of common share(1) </font></td>
<td style="text-align: center"><font style="font-size: 8pt">$12.30</font></td></tr>
<tr>
<td><font style="font-size: 8pt">Expected term in years(2) </font></td>
<td style="text-align: center"><font style="font-size: 8pt">3.33-5.36</font></td></tr>
<tr>
<td><font style="font-size: 8pt">Volatility(3) </font></td>
<td style="text-align: center"><font style="font-size: 8pt">45.48%</font></td></tr>
<tr>
<td><font style="font-size: 8pt">Risk-free interest rate(4) </font></td>
<td style="text-align: center"><font style="font-size: 8pt">2.39%-2.56%</font></td></tr>
<tr>
<td><font style="font-size: 8pt">Expected dividend(5) </font></td>
<td style="text-align: center"><font style="font-size: 8pt">0.00%</font></td></tr>
</table>
-2780000
-2089000
0
0
27793000
26762000
3130000
8937000
6181000
5496000
4328000
5432000
4879000
19865000
15388000
0
0
0
0
11031000
289000
493000
211000
10038000
10603000
9660000
463000
203000
277000
8673000
8263000
373000
0
85000
52000
103000
78000
926000
849000
1038000
684000
196000
60000
227000
745000
979000
839000
928000
836000
2248000
2024000
1000
.21
44000
.25
.15
766000
50000
739000
22000
716000
0
716000
0
716000
0
3654000
72000
495000
315000
57222
0
57222
2413627
1326676
2045616
1326676
500000
0
2575
0
72192
0
1120598
841329
0.54
.00
0.55
.00
0.47
.00
2.26
.00
1.00
0.75
0.66
0.78
3.06
2.52
2.46
2.52
5.31
.00
1.09
.00
3.00
.00
3.00
.00
P7Y10M10D
P7Y3M14D
5.31
12.30
P6Y3M
P3Y3M29D
P5Y4M10D
.3914
.4548
.0255
.0239
.0256
.0000
.0000
93000
2083000
61000
774000
1597000
1690000
P2Y18D
P1Y9M7D
970000
840000
350000
2118000
172000
159000
2248000
2024000
<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"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.25in">In May 2017, the <font style="background-color: white">Financial
Accounting Standards Board</font> (“FASB”) issued Accounting Standards Update (“ASU”) No. 2017-09, <i>Compensation—Stock
Compensation (Topic 718): Scope of Modification Accounting</i> (“ASU 2017-09”), which provides guidance on determining
which changes to the terms and conditions of share-based payment awards require an entity to apply modification accounting under
Topic 718. The amendments in this ASU are effective for all entities for annual periods, and interim periods within those annual
periods, beginning after December 15, 2017. Early adoption is permitted, including adoption in any interim period, for (1) public
business entities for reporting periods for which financial statements have not yet been issued and (2) all other entities
for reporting periods for which financial statements have not yet been made available for issuance. The amendments in this ASU
should be applied prospectively to an award modified on or after the adoption date. The adoption of ASU 2017-09 did not have a
material impact on the Company’s consolidated financial statements.</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">In February 2017, the FASB
issued ASU No. 2017-05, <i>Other Income—Gains and Losses from the Derecognition of Nonfinancial Assets (Subtopic 610-20):
Clarifying the Scope of Asset Derecognition Guidance and Accounting for Partial Sales of Nonfinancial Assets</i> (“ASU
2017-05”), which clarifies the scope of nonfinancial asset guidance in Subtopic 610-20. This ASU also clarifies that derecognition
of all businesses and nonprofit activities (except those related to conveyances of oil and gas mineral rights or contracts with
customers) should be accounted for in accordance with the derecognition and deconsolidation guidance in Subtopic 810-10. The amendments
in this ASU also provide guidance on the accounting for so-called “partial sales” of nonfinancial assets within the
scope of Subtopic 610-20 and contributions of nonfinancial assets to a joint venture or other noncontrolled investee. The amendments
in this ASU are effective for annual reporting reports beginning after December 15, 2017, including interim reporting periods within
that reporting period. The adoption of ASU 2017-05 did not have a material impact on the Company’s consolidated financial
statements.</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">In November 2016, the FASB
issued ASU No. 2016-18, <i>Statement of Cash Flows (Topic 230): Restricted Cash</i> (“ASU 2016-18”), which requires
that a statement of cash flows explain the change during the period in the total of cash, cash equivalents, and amounts generally
described as restricted cash or restricted cash equivalents. Therefore, amounts generally described as restricted cash and restricted
cash equivalents should be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total
amounts shown on the statement of cash flows. The amendments in this ASU do not provide a definition of restricted cash or restricted
cash equivalents. The amendments in this ASU are effective for public business entities for fiscal years beginning after December
15, 2017, and interim periods within those fiscal years. Early adoption is permitted, including adoption in an interim period.
The adoption of ASU 2016-18 did not have a material impact on the Company’s consolidated financial statements.</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">In August 2016, the FASB
issued ASU No. 2016-15, <i>Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments</i> (“ASU
2016-15”), which addresses the following cash flow issues: (1) debt prepayment or debt extinguishment costs; (2) settlement
of zero-coupon debt instruments or other debt instruments with coupon interest rates that are insignificant in relation to the
effective interest rate of the borrowing; (3) contingent consideration payments made after a business combination; (4) proceeds
from the settlement of insurance claims; (5) proceeds from the settlement of corporate-owned life insurance policies, including
bank-owned life insurance policies; (6) distributions received from equity method investees; (7) beneficial interests
in securitization transactions; and (8) separately identifiable cash flows and application of the predominance principle.
The amendments in this ASU are effective for public business entities for fiscal years beginning after December 15, 2017 and interim
periods within those fiscal years and are effective for all other entities for fiscal years beginning after December 15, 2018 and
interim periods within fiscal years beginning after December 15, 2019. Early adoption is permitted, including adoption in an interim
period. The adoption of ASU 2016-15 did not have material impact on the Company’s consolidated financial statements.</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">In January 2016, the FASB
issued ASU No. 2016-01, <i>“Financial Instruments – Overall (Subtopic 825-10): Recognition and Measurement of
Financial Assets and Financial Liabilities”</i> (“ASU 2016-01”). The amendments in this update require all
equity investments to be measured at fair value with changes in the fair value recognized through net income (other than those
accounted for under equity method of accounting or those that result in consolidation of the investee). The amendments in this
update also require an entity to present separately in other comprehensive income the portion of the total change in the fair value
of a liability resulting from a change in the instrument-specific credit risk when the entity has elected to measure the liability
at fair value in accordance with the fair value option for financial instruments. In addition, the amendments in this update eliminate
the requirement for to disclose the method(s) and significant assumptions used to estimate the fair value that is required to be
disclosed for financial instruments measured at amortized cost on the balance sheet for public entities. For public business entities,
the amendments in ASU 2016-01 are effective for fiscal years beginning after December 15, 2017, including interim periods within
those fiscal years. Except for the early application guidance discussed in ASU 2016-01, early adoption of the amendments in this
update is not permitted. The adoption of the ASU 2016-01 did not have a material impact on the Company’s consolidated financial
statements.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0"></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0 0 10pt; text-align: justify; text-indent: 0.25in">In May 2014, the
FASB issued ASU No. 2014-09, <i>Revenue from Contracts with Customers (Topic 606)</i> (“ASU 2014-09”), which
amended the existing accounting standards for revenue recognition. ASU 2014-09 establishes principles for recognizing revenue upon
the transfer of promised goods or services to customers, in an amount that reflects the expected consideration received in exchange
for those goods or services. ASU 2014-09 and its related clarifying ASUs are effective for annual reporting periods beginning
after December 15, 2017 and interim periods within those annual periods.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0 0 10pt; text-align: justify; text-indent: 0.25in">On January 1, 2018,
the Company adopted ASC Topic 606, <i>Revenue from Contracts with Customers</i> and all the related amendments (the “New
Revenue Standard”) to all contracts which were not completed as of January 1, 2018 using the modified retrospective method.
The Company does not have open contracts that may result any changes on the revenues applying the New Revenue Standard.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0 0 10pt; text-align: justify; text-indent: 0.25in">The Company derives
revenue principally from the sale of single-wafer wet cleaning equipment. Revenue from contracts with customers is recognized using
the following five steps pursuant to the New Revenue Standard:</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 38.85pt; text-align: justify; text-indent: -21pt"><font style="font-size: 8pt">1.</font><font style="font: 7pt Times New Roman, Times, Serif">         
</font><font style="font-size: 8pt">Identify the contract(s) with a customer;</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 38.85pt; text-align: justify; text-indent: -21pt"><font style="font-size: 8pt">2.</font><font style="font: 7pt Times New Roman, Times, Serif">         
</font><font style="font-size: 8pt">Identify the performance obligations in the contract;</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 38.85pt; text-align: justify; text-indent: -21pt"><font style="font-size: 8pt">3.</font><font style="font: 7pt Times New Roman, Times, Serif">         
</font><font style="font-size: 8pt">Determine the transaction price;</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 38.85pt; text-align: justify; text-indent: -21pt"><font style="font-size: 8pt">4.</font><font style="font: 7pt Times New Roman, Times, Serif">          </font><font style="font-size: 8pt">Allocate
the transaction price to the performance obligations in the contract; and </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt 38.85pt; text-align: justify; text-indent: -21pt"><font style="font-size: 8pt">5.</font><font style="font: 7pt Times New Roman, Times, Serif">         
</font><font style="font-size: 8pt">Recognize revenue when (or as) the entity satisfies a performance obligation.</font></p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0 0 10pt; text-align: justify; text-indent: 0.25in">A contract contains
a promise (or promises) to transfer goods or services to a customer. A performance obligation is a promise (or a group of promises)
that is distinct. The transaction price is the amount of consideration a company expects to be entitled from a customer in exchange
for providing the goods or services.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0 0 10pt; text-align: justify; text-indent: 0.25in">The unit of account
for revenue recognition is a performance obligation (a good or service).  A contract may contain one or more performance
obligations.  Performance obligations are accounted for separately if they are distinct. A good or service is distinct
if the customer can benefit from the good or service either on its own or together with other resources that are readily available
to the customer, and the good or service is distinct in the context of the contract. Otherwise performance obligations are combined
with other promised goods or services until the Company identifies a bundle of goods or services that is distinct. Promises in
contracts which do not result in the transfer of a good or service are not performance obligations, as well as those promises that
are administrative in nature, or are immaterial in the context of the contract. The Company has addressed whether various goods
and services promised to the customer represent distinct performance obligations. The Company applied the guidance of ASC Topic
606-10-25-16 through 18 in order to verify which promises should be assessed for classification as distinct performance obligations.
The Company’s contracts with customers include more than one performance obligation, for instance, the delivery of an equipment
generally includes the promise to install the equipment in the customer’s facility. The Company’s performance obligations
in a sale of equipment generally include production, delivery, installation, together with the provision of warranty.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0 0 10pt; text-align: justify; text-indent: 0.25in">The transaction
price is allocated to all the separate performance obligations in an arrangement. It reflects the amount of consideration to which
the Company expects to be entitled in exchange for transferring goods or services, which may include an estimate of variable consideration
to the extent that it is probable of not being subject to significant reversals in the future based on the Company’s experience
with similar arrangements. The transaction price excludes amounts collected on behalf of third parties, such as sales taxes. This
is done on a relative selling price basis using standalone selling prices (“SSP”).  The SSP represents the
price at which the Company would sell that good or service on a standalone basis at the inception of the contract. Given the requirement
for establishing SSP for all performance obligations, if SSP is directly observable through standalone sales, then such sales should
be considered in the establishment of SSP for the performance obligation. All of the Company’s products were sold in stand-alone
arrangement, the Company does not have observable SSPs for most performance obligations as they are not regularly sold on a standalone
basis. Production, delivery, installation, together with provision of warranty, as a single unite of accounting.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0 0 10pt; text-align: justify; text-indent: 0.25in">Revenue
is recognized when the Company satisfies each performance obligation by transferring control of the promised goods or
services to the customer. Goods or services can transfer at a point in time (upon the acceptance of the products or upon the
arrival at the destination as stipulated in the shipment terms) in a sale arrangement. In general, the Company recognize
revenue when a tool has been demonstrated to meet the customer’s predetermined specifications and is accepted by the
customer. If terms of the sales provide for a lapsing customer acceptance period, the Company recognizes revenue as of the earlier
of the expiration of the lapsing acceptance period and customer acceptance. In the following circumstances, however, the Company
recognizes revenue upon shipment or delivery, when legal title to the tool is passed to a customer as follows:</p>
<table cellpadding="0" cellspacing="0" style="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 10pt"><tr style="vertical-align: top">
<td style="width: 18pt"></td><td style="width: 21pt"><font style="font: 8pt Wingdings">l</font></td><td style="text-align: justify"><font style="font-size: 8pt">When the customer has previously accepted the same tool with the same
specifications and when the Company can objectively demonstrate that the tool meets all of the required acceptance criteria;</font></td></tr></table>
<table cellpadding="0" cellspacing="0" style="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 10pt"><tr style="vertical-align: top">
<td style="width: 18pt"></td><td style="width: 21pt"><font style="font: 8pt Wingdings">l</font></td><td style="text-align: justify"><font style="font-size: 8pt">When the sales contract or purchase order contains no acceptance agreement
or no lapsing acceptance provision and when the Company can objectively demonstrate that the tool meets all of the required acceptance;</font></td></tr></table>
<table cellpadding="0" cellspacing="0" style="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 10pt"><tr style="vertical-align: top">
<td style="width: 18pt"></td><td style="width: 21pt"><font style="font: 8pt Wingdings">l</font></td><td style="text-align: justify"><font style="font-size: 8pt">When the customer withholds acceptance due to issues unrelated to
product performance, in which case revenue is recognized when the system is performing as intended and meets predetermined specifications;
or</font></td></tr></table>
<table cellpadding="0" cellspacing="0" style="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 10pt"><tr style="vertical-align: top">
<td style="width: 18pt"></td><td style="width: 21pt"><font style="font: 8pt Wingdings">l</font></td><td style="text-align: justify"><font style="font-size: 8pt">The company’s sales arrangements don’t include a general
right of return.</font></td></tr></table>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0 0 10pt; text-align: justify; text-indent: 0.25in">The Company offers
post-warranty period services, which consist principally of the installation and replacement of parts and small-scale
modifications to the equipment. The related revenue and costs of revenue are recognized when parts have been delivered and
installed, risk of loss has passed to the customer, and collection is probable. The Company does not expect revenue from extended
maintenance service contracts to represent a material portion of its revenue in the future.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0 0 10pt; text-align: justify; text-indent: 0.25in">As such, the Company
has concluded that its revenue recognition under the adoption of ASC Topic 606 will remain the same as previously reported and
will not have material impacts to its condensed consolidated financial statements.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0 0 10pt; text-align: justify; text-indent: 0.25in">The Company
incurs costs related to the acquisition of its contract with customers in the form of sales commissions. Sales commissions
are paid to third party representatives and distributors.  Contractual agreements with these parties outline
commissions structures and rates to be paid.  Generally speaking, the contracts are all individual procurement
decisions by the customers and are not for significant periods of time, nor do they include renewal provisions. As such, all
contracts have an economic life of significantly less than a year. Accordingly, the Company expenses sales commissions when
incurred in accordance with the practical expedient in ASC Topic 606 when the underlying contract asset is less than one
year. These costs are recorded within sales and marketing expenses.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0 0 10pt; text-align: justify; text-indent: 0.25in">Generally, all
contracts have expected durations of one year or less. Accordingly, the Company applies the practical expedient allowed in ASC Topic
606 and does not disclose information about remaining performance obligations that have original expected durations of one year
or less.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0 0 10pt; text-align: justify; text-indent: 0.25in">The Company does
not incur any costs to fulfill the contracts with customers that are not already reported in compliance with another applicable
standard (for example, inventory or plant, property and equipment).<b><i> </i></b></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"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.25in">In February 2018, the FASB
issued ASU No. 2018-02, <i>Income Statement—Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects
from Accumulated Other Comprehensive Income</i> (“ASU 2018-02”), which provides financial statement preparers with
an option to reclassify stranded tax effects within accumulated other comprehensive income to retained earnings in each period
in which the effect of the change in the U.S. federal corporate income tax rate in the Tax Cuts and Jobs Act (or portion thereof)
is recorded. The amendments in this ASU are effective for all entities for fiscal years beginning after December 15, 2018, and
interim periods within those fiscal years. Early adoption of ASU 2018-02 is permitted, including adoption in any interim period
for the public business entities for reporting periods for which financial statements have not yet been issued. The amendments
in this ASU should be applied either in the period of adoption or retrospectively to each period (or periods) in which the effect
of the change in the U.S. federal corporate income tax rate in the Tax Cuts and Jobs Act is recognized. The Company is evaluating
the impact of the adoption of ASU No. 2018-02 on its consolidated financial statements.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.25in"> </p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify; text-indent: 0.25in">In July 2017, the FASB
issued ASU No. 2017-11, <i>Earnings Per Share (Topic 260); Distinguishing Liabilities from Equity (Topic 480); Derivatives and
Hedging (Topic 815): (Part I) Accounting for Certain Financial Instruments with Down Round Features, (Part II) Replacement
of the Indefinite Deferral for Mandatorily Redeemable Financial Instruments of Certain Nonpublic Entities and Certain Mandatorily
Redeemable Noncontrolling Interests with a Scope Exception</i> (“ASU 2017-11”), which addresses the complexity
of accounting for certain financial instruments with down round features. Down round features are features of certain equity-linked
instruments (or embedded features) that result in the strike price being reduced on the basis of the pricing of future equity offerings.
Current accounting guidance creates cost and complexity for entities that issue financial instruments (such as warrants and convertible
instruments) with down round features that require fair value measurement of the entire instrument or conversion option. For public
business entities, the amendments in Part I of this Update are effective for fiscal years, and interim periods within those fiscal
years, beginning after December 15, 2018. For all other entities, the amendments in Part I of this Update are effective for fiscal
years beginning after December 15, 2019, and interim periods within fiscal years beginning after December 15, 2020. The Company
is evaluating the impact of the adoption of ASU 2017-11 on its consolidated financial statements.</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">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. The new guidance does not amend the optional qualitative assessment
of goodwill impairment. A business entity that is a U.S. Securities and Exchange Commission filer must adopt the amendments in
this ASU 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. The Company is evaluating
the impact of the adoption of ASU 2017-04 on its consolidated financial statements. </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">In February 2016, the FASB
issued ASU No. 2016-02, <i>Leases (Topic 842)</i>  (“ASU 2016-02”). The amendments in this update 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 leases 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. The amendments in ASU No. 2016-02 are effective
for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years for public business
entities. Early application of the amendments in ASU No. 2016-02 is permitted. The Company is evaluating the impact of the adoption
of ASU 2016-02 on its consolidated financial statements.</p>
<p style="font: 8pt Times New Roman, Times, Serif; margin: 0"> </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="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>March 31, 2018</b></font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt"><b>December 31, 2017</b></font></td>
<td style="padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom">
<td style="width: 76%; padding-right: 10.5pt; text-align: justify"><font style="font-size: 8pt">Line of credit up to RMB 30
million from Bank of China Pudong Branch, due on March 5, 2018 with annual interest rate of 5.69%, secured by certain of the
Company’s intellectual property and fully repaid on March 5, 2018</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">2,219</font></td>
<td style="width: 1%"> </td></tr>
<tr style="vertical-align: bottom">
<td style="padding-right: 10.5pt; text-align: justify"><font style="font-size: 8pt">Line of credit up to RMB 30 million
from Bank of China Pudong Branch, due on September 11, 2018 with annual interest rate of 5.69%, 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">1,590</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">─</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td style="padding-right: 10.5pt; text-align: justify"><font style="font-size: 8pt">Line of credit up to RMB 30 million
from Bank of China Pudong Branch, due on September 24, 2018 with annual interest rate of 5.69%, 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">1,590</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">─</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td style="padding-right: 10.5pt; text-align: justify"><font style="font-size: 8pt">Line of credit up to RMB 25 million
from Bank of Shanghai Pudong Branch, due on various dates in October 2018 with an annual interest rate of 5.66%, guaranteed
by the Company’s CEO</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">2,194</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">2,111</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td style="padding-right: 10.5pt; text-align: justify"><font style="font-size: 8pt">Line of credit up to RMB 25 million
from Bank of Shanghai Pudong Branch, due on November 20, 2018 with an annual interest rate of 5.66%, guaranteed by the
Company’s CEO</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">1,027</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">─</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td style="padding-right: 10.5pt; text-align: justify"><font style="font-size: 8pt">Line of credit up to RMB 5 million
from Shanghai Rural Commercial Bank, due on November 21, 2018 with an annual interest rate of 5.44%, guaranteed by the
Company’s CEO</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">795</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">765</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td style="padding-right: 10.5pt; text-align: justify"><font style="font-size: 8pt">Line of credit up to RMB 10 million
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 secured by a pledge on accounts receivable (note 3)</font></td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">1,590</font></td>
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"><font style="font-size: 8pt">─</font></td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td style="padding-right: 10.5pt; text-align: justify"><font style="font-size: 8pt">Line of credit up to RMB 10 million
from Bank of Communications, due on December 28, 2018 with an annual interest rate of 5.66%</font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: black 1pt solid"> </td>
<td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">1,590</font></td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt"> </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="padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom">
<td style="padding-right: 10.5pt; text-align: justify"><font style="font-size: 8pt">Total </font></td>
<td style="padding-bottom: 3pt"> </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">10,376</font></td>
<td style="padding-bottom: 3pt"> </td>
<td style="padding-bottom: 3pt"> </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">5,095</font></td>
<td style="padding-bottom: 3pt"> </td></tr>
</table>