What changed in this filing

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Item 1A. Risk Factors

2025-03-03 compared with 2024-02-28 · 135 added, 156 removed, 803 unchanged (27% of the section changed)

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• it may be difficult for overseas regulators to conduct investigations or collect evidence within mainland China;

• substantially all of our assets are located outside of the United States and certain of our directors and officers reside outside of the United States, which may make it difficult for you to enforce your rights based on the U.S.

• substantially all of our assets are located outside of the United States which may make it difficult for you to enforce your rights based on the U.S.

federal securities laws;

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Export Administration Regulations (EAR), or controls introduced by other countries including Japan and the Netherlands, thereby impacting our ability to sell our tools to customers in these jurisdictions;

• our operations in mainland China and Korea subsidiaries, including the import of components, technology, and activities of U.S.

personnel therein, may be further impacted by the addition of ACM Shanghai, ACM Korea and related entities to the BIS Entity List;

Government has implemented an outbound investment review mechanism, which may prevent us from taking advantage of investment opportunities outside the United States that could otherwise be advantageous to our stockholders;

• changes in government trade policies that could limit the demand for our tools and increase the cost of our tools;

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• mainland China’s currency exchange control and government restrictions on investment repatriation may impact our ability to transfer funds outside of mainland China;

Risks Related to Our STAR Listing

Risks Related to the STAR Listing of ACM Shanghai

• our ability to implement our strategy to expand our mainland China operations;

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Risks Related to International Aspects of Our Business

If any mainland China central government authority were to determine that existing mainland China laws or regulations require that ACM Shanghai obtain the authority’s permission or approval to continue the listing of ACM Research’s Class A common stock in the United States or if those existing mainland China laws and regulations, or interpretations thereof, were to change to require such permission or approval, or if we inadvertently conclude that permissions or approvals are not required, ACM Shanghai may be unable to obtain the required permission or approval or may only be able to obtain such permission or approval on terms and conditions that impose material new restrictions and limitations on operation of ACM Shanghai, either of which could have a material adverse effect on our business, financial condition, results of operations, reputation and prospects and on the trading price of ACM Research Class A common stock, which could decline in value or become worthless.

interpretations thereof, were to change to require such permission or approval, or if we inadvertently conclude that permissions or approvals are not required, ACM Shanghai may be unable to obtain the required permission or approval or may only be able to obtain such permission or approval on terms and conditions that impose material new restrictions and limitations on operation of ACM Shanghai, either of which could have a material adverse effect on our business, financial condition, results of operations, reputation and prospects and on the trading price of ACM Research Class A common stock, which could decline in value or become worthless.

Mainland China central government authorities have taken steps to preclude, or significantly discourage, certain mainland China companies from listing on U.S.

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In addition, ACM Shanghai could face sanctions by the CSRC or other mainland China central government authorities or pressure from the mainland China government in various business matters for failure to obtain such permission or approval.

could have a material and adverse effect on our business, financial condition, results of operations, reputation and prospects, as well as the trading price of ACM Research Class A common stock, which could decline in value or become worthless.

Such potential sanctions or pressure may include fines and penalties on ACM Shanghai’s operations in mainland China, limitations on its operating privileges in mainland China, delays in or restrictions on the transfer of proceeds from a public offering of ACM Research securities in the United States to ACM Shanghai, restrictions on or prohibition of the payments or remittance of dividends by ACM Shanghai to ACM Research, or other actions that could have a material and adverse effect on our business, financial condition, results of operations, reputation and prospects, as well as the trading price of ACM Research Class A common stock, which could decline in value or become worthless.

Mainland China central government authorities may intervene in, or influence, ACM Shanghai’s mainland China-based operations at any time, and those authorities’ rules and regulations in mainland China can change quickly with little or no advance notice.

The business of ACM Shanghai is subject to complex laws and regulations in mainland China that can change quickly with little or no advance notice.

To date, beyond the COVID-19-related restrictions in 2022, we have not experienced such intervention or influence by mainland China central government authorities or a change in those authorities’ rules and regulations that have had a material impact of ACM Shanghai or ACM Research.

We have not experienced such intervention or influence by mainland China central government authorities or a change in those authorities’ rules and regulations that have had a material impact of ACM Shanghai or ACM Research.

We cannot assure you, however, that future changes in mainland China laws and regulations will not materially and adversely affect our mainland China-based operations.

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In the event mainland China central government authorities were to significantly revise or revamp the current scope and structure of intellectual property protection in mainland China, our ability to protect and enforce our intellectual property rights for our key proprietary technologies may be adversely impacted and competitors may be able to match our technologies and tools in order to compete with us.

• Title Defect in Leased Premises .

We conduct research and development, and service support operations at ACM Shanghai’s headquarters located in the Zhangjiang Hi Tech Park in Shanghai, which ACM Shanghai leases from Zhangjiang Group.

Zhangjiang Group has not obtained a certificate of property title for the premises, although it has represented to ACM Shanghai that it has the right to rent the premises to ACM Shanghai.

If any adjustment in local regional overall planning of Shanghai, or any other reason, results in the demolition of such premises, the premises could not continue to be leased to ACM Shanghai and the day-to-day production and operation of ACM Shanghai would be materially and adversely affected.

See Item 2, “Properties” of Part I of this report.

• COVID-19 Pandemic .

We conduct substantially all of our product development, manufacturing, support and services in mainland China, and those activities were directly impacted by COVID-19 and related restrictions on transportation and public appearances, including implementation by mainland China government authorities of “spot” and full-city quarantines in the city of Shanghai, where substantially all of our operations are located.

Furthermore, a number of our key customers have substantial operations based in operations areas of mainland China, including in the City of Shanghai, which required us to defer, in the first quarter of 2022, shipments of finished products to those customers.

A significant number of ACM Shanghai employees missed work in late 2022 and early 2023 for one or several weeks due to COVID-19 related illness following the relaxation of mainland China’s zero-COVID policies in December 2022.

• Data Security .

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The Data Security Law also provides for a national security review procedure for data activities that may affect national security and imposes export restrictions on certain data an information.

ACM Shanghai is not subject to the existing restrictions imposed by the Cyber Security Law or the Data Security Law, in part because its business operations do not involve the collection, processing or use of data

or information involving personal privacy or private information of customers.

In addition, ACM Shanghai is subject to oversight by the Cyberspace Administration of China, or the CAC, regarding data security.

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These laws and regulations, which include the Anti-Monopoly Law and the Rules of the Ministry of Commerce on Implementation of Security Review System of Mergers and Acquisitions of Domestic Enterprises by Foreign Investors, impose requirements that in some instances that MOFCOM be notified in advance of, for example, any change-of-control transaction in which a foreign investor takes control of a mainland China domestic enterprise.

In addition, such Rules specify that mergers and acquisitions by foreign investors that raise “national defense and security” concerns and mergers and acquisitions through which foreign investors may acquire de facto control over domestic enterprises that raise “national security” concerns are subject to strict review by MOFCOM.

In addition, such Rules specify that mergers and acquisitions

by foreign investors that raise “national defense and security” concerns and mergers and acquisitions through which foreign investors may acquire de facto control over domestic enterprises that raise “national security” concerns are subject to strict review by MOFCOM.

In February 2021, the Anti-Monopoly Committee of the State Council published the Anti-Monopoly Guidelines for the Internet Platform Economy Sector, which stipulate that any concentration of undertakings involving VIEs is subject to anti-monopoly review.

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The imposition of tariffs by the U.S.

and mainland China governments and the surrounding economic uncertainty may negatively impact the semiconductor industry, including by reducing the demand of fabricators for capital

equipment such as our tools.

and mainland China governments and the surrounding economic uncertainty may negatively impact the semiconductor industry, including by reducing the demand of fabricators for capital equipment such as our tools.

Further changes in trade policy, tariffs, additional taxes, restrictions on exports or other trade barriers, or restrictions on supplies, equipment, and raw materials including rare earth minerals, may limit the ability of our customers to manufacture or sell semiconductors or to make the manufacture or sale of semiconductors more expensive and less profitable, which could lead those customers to fabricate fewer semiconductors and to invest less in capital equipment such as our tools.

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The mainland China central government may determine to exert additional control over offerings conducted overseas or foreign investment in mainland China-based issuers, which could result in a material change in operations of ACM Shanghai and cause significant declines in the value of ACM Research Class A common stock, or make them worthless.

The mainland China central government may determine to exert additional control over securities offerings conducted overseas and/or foreign investment in mainland China-based issuers, which could result in a material adverse change in operations of ACM Shanghai and cause the value of ACM Research Class A common stock to significantly decline or become worthless.

become worthless.

See also “— If any mainland China central government authority were to determine that existing mainland China laws or regulations require that ACM Shanghai obtain the authority’s permission or approval to continue the listing of ACM Research’s Class A common stock in the United States or if those existing mainland China laws and regulations, or interpretations thereof, were to change to require such permission or approval, ACM Shanghai may be unable to obtain the required permission or approval or may only be able to obtain such permission or approval on terms and conditions that impose material new restrictions and limitations on operation of ACM Shanghai, either of which could have a material adverse effect on our business, financial condition, results of operations, reputation and prospects and on the trading price of ACM Research Class A common stock, which could decline in value or become worthless ” above.

We could be adversely affected if we are unable to comply with legislation and regulations regarding improved access to audit and other information and audit inspections of accounting firms, including registered public accounting firms, such as our prior and current audit firms, operating in mainland China.

We were one of the companies named in the SEC’s “Conclusive list of issuers identified under the HFCAA.” BDO China had been our independent registered public accounting firm in recent years, including for the year ended December 31, 2021, and was not inspected by the PCAOB.

The HFCA Act, which became law in December 2020, includes requirements for the SEC to identify issuers whose audit work is performed by auditors that the PCAOB is unable to inspect or investigate completely because of a restriction imposed by a non-U.S.

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jurisdiction.

The HFCA Act also requires that, to the extent that the PCAOB has been unable to inspect an issuer’s auditor for two consecutive years, the SEC shall prohibit the issuer’s securities registered in the United States from being traded on any national securities exchange or over-the-counter market in the United States.

• On March 24, 2021, the SEC adopted interim final amendments to implement congressionally mandated submission and disclosure required of the HFCA Act, and on December 2, 2021, the SEC adopted final amendments to finalize rules implementing the submission and disclosures in the HFCA Act.

These final amendments apply to registrants that the SEC identifies as having filed an Annual Report on Form 10-K (or certain other forms) with an audit report issued by a registered public accounting firm that is located in a foreign jurisdiction and that the PCAOB has determined it is unable to inspect or investigate completely because of a position taken by any non-U.S.

Any such identified registrant will be required to submit documentation to the SEC establishing that it is not owned or controlled by a governmental entity in that foreign jurisdiction and will also require disclosure in the registrant’s annual report regarding the audit arrangements of, and governmental influence on, such a registrant.

• Furthermore, on June 22, 2021, the U.S.

Senate passed the Accelerating Holding Foreign Companies Accountable Act, which was enacted under the Consolidated Appropriations Act, 2023, on December 29, 2022, as further described below, and which amended the HFCA Act to require the SEC to prohibit an issuer’s securities from trading on any national securities exchange or over-the-counter market in the United States if the PCAOB has been unable to inspect an issuer’s auditor for two, rather than three, consecutive years.

On September 22, 2021, the PCAOB adopted a final rule implementing the HFCA Act, which provides a framework for the PCAOB to use when determining, as contemplated under the HFCA Act, whether the PCAOB is unable to inspect or investigate completely registered public accounting firms located in a foreign jurisdiction because of a position taken by one or more authorities in any non-U.S.

jurisdiction.

• On December 16, 2021, the PCAOB designated China and Hong Kong as jurisdictions where the PCAOB was not allowed to conduct full and complete audit inspections and identified firms registered in such jurisdictions, including BDO China.

Pursuant to each annual determination by the PCAOB, the SEC will, on an annual basis, identify issuers that have used non-inspected audit firms.

• On March 8, 2022, the SEC published its first “Provisional list of issuers identified under the HFCAA.” Our company was identified on the SEC’s provisional list after we filed our Annual Report on Form 10-K for the year ended December 31, 2021, which included an audit report issued by BDO China.

• On March 30, 2022, our company was transferred to the SEC’s “Conclusive list of issuers identified under the HFCAA.”

• On August 26, 2022, the PCAOB signed a Statement of Protocol, or SOP, Agreement with the CSRC and China’s Ministry of Finance.

The SOP, together with two protocol agreements governing inspections and investigation, establishes a specific, accountable framework to make possible complete inspections and investigations by the PCAOB of audit firms based in China and Hong Kong, as required under U.S.

Pursuant to the fact sheet with respect to the SOP disclosed by the SEC, the PCAOB has sole discretion to select the audit firms, engagements and potential violations that it inspects or investigates and has the ability to transfer information to the SEC in the normal course.

PCAOB inspectors and investigators can view all audit documentation without redaction, and the PCAOB can retain any audit information it reviews as needed to support the findings of its inspections and investigations.

In addition, the SOP allows the PCAOB to interview and take testimony of personnel associated with the audits that the PCAOB inspects or investigates.

• On December 15, 2022, the PCAOB announced that it was able to secure complete access to inspect and investigate PCAOB-registered public accounting firms headquartered in mainland China and Hong Kong in 2022 and vacated its previous December 16, 2021 determination to the contrary.

However, whether the PCAOB will continue to be able to satisfactorily conduct inspections of PCAOB-registered public accounting firms headquartered in mainland China and Hong Kong is subject to uncertainty and depends on a number of factors out of our, and our auditor’s, control.

Mainland China authorities will need to ensure that the PCAOB continues to have full access for inspections and investigations in 2023 and beyond.

Each year, the PCAOB will determine whether it can inspect and investigate completely audit firms in mainland China and Hong Kong, among other jurisdictions.

If mainland China authorities do not allow the PCAOB complete access for inspections and investigations for two consecutive years, the SEC would prohibit trading in the securities of issuers engaging those audit firms, as required under the HFCA Act.

• On December 29, 2022, the Consolidated Appropriations Act, 2023, was signed into law by U.S.

President Biden, which, among other things, amended the HFCA Act to reduce the number of consecutive non-inspection years that would trigger the trading prohibition under the HFCA Act from three years to two years (originally such threshold under the HFCA Act was three consecutive years), and so that any foreign jurisdiction could be the reason why the PCAOB does not have complete access to inspect or investigate a company’s public accounting firm (originally the HFCA Act only applied if the PCAOB’s ability to inspect or investigate was due to a position taken by an authority in the jurisdiction where the relevant public accounting firm was located).

Per current regulations, if ACM Research were to appear for two consecutive years on the “Conclusive list of issuers identified under the HFCAA”, the value of our securities may significantly decline or become worthless, and our securities would be prohibited from trading and may eventually be delisted.

Under current regulations, the HFCA Act also requires that, to the extent that the PCAOB has been unable to inspect an issuer’s auditor for two consecutive years, the SEC shall prohibit the issuer’s securities registered in the United States from being traded on any national securities exchange or over-the-counter market in the United States.

On March 30, 2022, we were transferred to the SEC’s “Conclusive list of issuers identified under the HFCA Act” (the “Conclusive List”) because the PCAOB determined that it was unable to inspect or investigate completely BDO China Shu Lun Pan Certified Public Accountants (“BDO China”), our independent registered public accounting firm for the fiscal year ended December 31, 2021.

The determinations announced by the PCAOB were vacated by the PCAOB on December 15, 2022, and BDO China is no longer our independent registered public accounting firm.

Our current independent registered public accounting firm, E&Y, is a PCAOB-registered firm that is headquartered in mainland China;

however, we do not believe ACM Research will appear on the Conclusive List for a second consecutive time due to the determinations of the PCAOB being vacated.

However, if we were to appear for two consecutive years on the Conclusive List, the value of our securities may significantly decline or become worthless, and our securities would be prohibited from trading and may eventually be delisted.

It also remains unclear what further actions the SEC, the PCAOB or Nasdaq may take to address these issues and what impact those actions will have on U.S.

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Any such actions could materially affect our operations and stock price, including by resulting in our being de-listed from Nasdaq or being required to engage a new audit firm, which would require significant expense and management time.

On June 30, 2022, and June 15, 2023, stockholders of ACM Research ratified the appointment of Armanino LLP as our independent auditor for the years ended December 31, 2022 and 2023, respectively.

Armanino LLP was neither headquartered in mainland China or Hong Kong nor was it subject to the determinations announced by the PCAOB on December 16, 2021, which determinations were vacated by the PCAOB on December 15, 2022.

On July 21, 2023, we were informed by Armanino that Armanino would resign as our independent auditor effective as of the earlier of (a) the date we engaged a new independent registered public accounting firm or (b) the filing of our Quarterly Report on Form 10-Q for the fiscal quarter ended September 30, 2023.

In light of Armanino’s determination, on September 14, 2023, the Audit Committee completed a competitive selection process to select and appoint a new accounting firm to serve as our independent registered public accounting firm commencing with the audit of our financial statements for the fiscal year ending December 31, 2023.

As a result of this process, the Audit Committee approved the engagement of E&Y as our independent registered public accounting firm for the fiscal year ending December 31, 2023.

The engagement of E&Y became effective on September 20, 2023.

E&Y is a PCAOB-registered firm that is headquartered in mainland China;

however, we do not believe ACM Research will appear on the “Conclusive list of issuers identified under the HFCAA” for a second consecutive time, as the determinations announced by the PCAOB on December 16, 2021 were vacated by the PCAOB on December 15, 2022.

It may be difficult for overseas regulators to conduct investigations or collect evidence within mainland China.

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While detailed interpretation of or implementing rules under Article 177 have yet to be promulgated, the inability for an overseas securities regulator to directly conduct investigation or evidence collection activities within mainland China may further increase difficulties faced by you in protecting your interests.

Because substantially all of our assets are located outside of the United States and certain of our directors and officers reside outside of the United States, it may be difficult for you to enforce your rights based on the U.S.

federal securities laws against such assets or officers and directors or to enforce a judgment of a United States court against assets or officers and directors in mainland China.

While ACM Research is a Delaware corporation, certain of our officers and directors are nonresidents of the United States, and certain of our assets are located in mainland China, and the operations of ACM Shanghai are conducted in mainland China.

Because substantially all of our assets are located outside of the United States and certain of our officers reside outside of the United States, it may be difficult for you to enforce your rights based on the U.S.

federal securities laws against such assets or officers or to enforce a judgment of a United States court against assets or officers in mainland China.

While ACM Research is a Delaware corporation, certain of our officers are nonresidents of the United States, and certain of our assets are located in mainland China, and the operations of ACM Shanghai are conducted in mainland China.

It may, therefore, not be possible to effect service of process on such persons in the United States, and it may be difficult to enforce any judgments rendered against them or any of our assets that are located overseas.

Moreover, there is doubt whether courts in mainland China would enforce (a) judgments of United States courts against ACM Shanghai, our directors or officers based on the civil liability provisions of the securities laws of the United States or any state, or (b) in original actions brought in mainland China, liabilities against us or any nonresidents based upon the securities laws of the United States or any state.

Moreover, there is doubt whether courts in mainland China would enforce (a) judgments of United States courts against ACM Shanghai, our officers based on the civil liability provisions of the securities laws of the United States or any state, or (b) in original actions brought in mainland China, liabilities against us or any nonresidents based upon the securities laws of the United States or any state.

We conduct substantially all of our operations outside the United States and face risks associated with conducting business in foreign markets.

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We are subject to a number of risks associated with our international business activities, including:

• imposition of, or adverse changes in, foreign laws or regulatory requirements, such as work stoppages and travel restrictions imposed in connection with the COVID-19 pandemic;

• the need to comply with the import laws and regulations of various foreign jurisdictions, including a range of U.S.

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Any prolonged slowdown in mainland China, United States or global economy may have a negative impact on our business, results of operations and financial condition.

Market reactions to the global outbreak of COVID-19 have negatively affected the world’s financial markets since March 2020, and a continuation of those reactions may cause a potential slowdown of the local, regional and global economy.

Financial and other markets in the United States and worldwide have experienced significant volatility reflecting uncertainty over, among other things, (a) the long-term effects of the expansionary monetary and fiscal policies adopted by the central banks and financial authorities of some of the world’s leading economies, including the United States and mainland China, (b) unrest in Ukraine, the Middle East and Africa, and (c) the rising level of inflation in major industrial countries, including the United States, and worries that efforts to curb inflation may result in an economic recession.

inflation may result in an economic recession.

General inflation, including rising energy prices, interest rates and wages, could adversely impact our business by increasing our operating and borrowing costs as well as limiting the amount of capital available for customers to purchase our products.

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As a result, it is unlikely that funds raised or generated by ACM Shanghai will be readily distributable to ACM Research.

If we succeed in raising additional funds through the issuance of equity or convertible securities, then the issuance could result in substantial dilution to existing stockholders.

If we succeed in raising additional funds through the issuance of equity or convertible securit ies, then the issuance could result in substantial dilution to existing stockholders.

Furthermore, the holders of these new securities or debt may have rights, preferences and privileges senior to those of the holders of Class A common stock.

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Our quarterly revenue and other operating results have varied in the past and are likely to continue to vary significantly from quarter to quarter.

Accordingly, you should not rely upon our past quarterly financial results as indicators of future performance.

Accordingly, you should not rely upon our past quarterly financial results as indicators of future

Any variations in our quarter-to-quarter performance may cause our stock price to fluctuate.

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The chip industry has historically been cyclic and is characterized by wide fluctuations in product supply and demand.

From time to time, this industry has experienced significant downturns, often in connection with, or in anticipation of, maturing product and technology cycles, excess inventories and declines in general economic conditions.

From time to time, this industry has experienced significant downturns, often in connection with, or in anticipation of,

maturing product and technology cycles, excess inventories and declines in general economic conditions.

This cyclicality could cause our operating results to decline dramatically from one period to the next.

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If we are unable to control our expenses adequately in response to lower revenue from our customers, our operating results will suffer and we could experience operating losses.

For example, certain industry analysts, such as Gartner, forecast a decline for global WFE investments in 2024 as further described in “Item 1.

We canno t reasonably estimate the duration or impact of such a downturn, and it could have a material adverse effect on our business and the value of our Class A common stock.

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The chip manufacturing industry is highly concentrated, and we derive most of our revenue from a limited number of customers.

A total of three customers accounted for 45.5% of our revenue in 2023, three customers accounted for 43.8% of our revenue in 2022, and two customers accounted for 48.9% of our revenue in 2021.

A total of four customers accounted for 52.2% of our revenue in 2024, three customers accounted for 45.5%% of our revenue in 2023, and three customers accounted for 43.8% of our revenue in 2022.

As a consequence of the concentrated nature of our customer base, our revenue and results of operations may fluctuate from quarter to quarter and are difficult to estimate, and any cancellation of orders or any acceleration or delay in anticipated product purchases or the acceptance of shipped products by our larger customers could materially affect our revenue and results of operations in any quarterly period.

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Our success will depend on industry chip manufacturers adopting our SAPS, TEBO, Tahoe, ECP, furnace and other technologies.

To date our strategy for commercializing our tools has been to place them with selected industry leaders in the manufacturing of memory and logic chips, the two largest chip categories, to enable those leading manufacturers to evaluate our technologies, and then leverage our reputation to gain broader market acceptance.

evaluate our technologies, and then leverage our reputation to gain broader market acceptance.

In order for these industry leaders to adopt our tools, we need to establish our credibility by demonstrating the differentiated, innovative nature of our SAPS, TEBO, Tahoe, ECP, furnace and other technologies.

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We expect to spend a significant amount of time and resources identifying new product markets in addition to the market for cleaning solutions and in developing new products for entry into these markets.

Product development requires

significant investments in engineering hours, third-party development costs, prototypes and sample materials, as well as sales and marketing expenses, which will not be recouped if the product launch is unsuccessful.

Product development requires significant investments in engineering hours, third-party development costs, prototypes and sample materials, as well as sales and marketing expenses, which will not be recouped if the product launch is unsuccessful.

We may fail to predict the needs of other markets accurately or develop new, innovative technologies to address those needs.

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In accordance with industry practice, our sales are on a purchase order basis, which we seek to obtain three to four months in advance of the expected product delivery date.

Until a purchase order is received, we do not have a binding purchase commitment.

Until a purchase order is received, we do not have a binding purchase

Our customers to date have provided us with non-binding one- to two-year forecasts of their anticipated demands, but those forecasts can be changed at any time, without any required notice to us.

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If we do not accurately predict the amount and timing of a customer’s future purchases, we risk expending time and resources on producing a customized tool that is not purchased by a particular customer, which may result in excess or unwanted inventory, or we may be unable to fulfill an order on the schedule required by a purchase order, which would result in foregone sales.

Customers may place purchase orders that exceed forecasted amounts, which could result in delays

in our delivery time and harm our reputation.

Customers may place purchase orders that exceed forecasted amounts, which could result in delays in our delivery time and harm our reputation.

In the future a customer may decide not to purchase our tools at all, may purchase fewer tools than it did in the past or may otherwise alter its purchasing patterns, and the impact of any such actions may be intensified given our dependence on a small number of large customers.

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Conversely, if we underestimate demand for our tools or if our manufacturing partners fail to supply components we require at the time we need them, we may experience inventory shortages.

Such shortages might delay production or

shipments to customers and may cause us to lose sales.

Such shortages might delay production or shipments to customers and may cause us to lose sales.

These shortages may also harm our credibility, diminish the loyalty of our channel partners or customers.

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Our product warranty requires us to provide labor and parts necessary to repair defects.

As of December 31, 2023, we had accrued $9.8 million in liability contingency for potential warranty claims.

As of December 31, 2024, we had

accrued $12.7 million in liability contingency for potential warranty claims.

Warranty claims substantially in excess of our expectations, or significant unexpected costs associated with warranty claims, could harm our reputation and could cause customers to decline to place new or additional orders, which could have a material adverse effect on our business, results of operations and financial condition.

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Our tools are complex and require components and subassemblies having a high degree of reliability, accuracy and performance.

We rely on third parties to manufacture most of the subassemblies and supply most of the components used

in our tools.

We rely on third parties to manufacture most of the subassemblies and supply most of the components used in our tools.

Accordingly, we cannot directly control our delivery schedules and quality assurance.

This reliance on third parties and lack of control could result in shortages or quality assurance problems.

In addition, supply chain constraints have intensified due to a variety of factors, including the ongoing COVID-19 pandemic and the June 2022 truck driver strike in Korea, where certain of our operations and customers are located.

See also “—Our supply chain may be materially adversely impacted due to global events, including continuing COVID-19 outbreaks, transportation delays and the armed conflict in Ukraine.” These issues and our ability to manage increased demand could delay shipments of our tools, increase our testing or production costs or lead to costly failure claims.

See also “—Our supply chain may be materially adversely impacted due to global events, including public health issues, transportation delays, and the armed conflict in Ukraine.” These issues and our ability to manage increased demand could delay shipments of our tools, increase our testing or production costs or lead to costly failure claims.

We do not have long-term supply contracts with some of our suppliers, and those suppliers are not obligated to perform services or supply products to us for any specific period, in any specific quantities or at any specific price, except as may be provided in a particular purchase order.

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In addition, any increase in costs due to our suppliers increasing the price they charge us for subassemblies and components or arising from our need to replace our current suppliers that we are unable to pass on to our customers could negatively affect our operating results.

Our supply chain may be materially adversely impacted due to global events, including continuing COVID‑19 outbreaks, transportation delays and the armed conflict in Ukraine.

Our supply chain may be materially adversely impacted due to global events, including any new COVID‑19 outbreaks or other public health issues, transportation delays, and the armed conflict in Ukraine.

We rely upon the facilities of our global suppliers with operations in mainland China, Japan, Taiwan and the United States to support our business.

We source the substantial majority of our components from Asia, and as a result, our supply chain can be adversely affected by a variety of global events, including COVID-19 restrictions, transportation delays, including those related to the June 2022 truck driver strike in Korea resulting from escalated fuel prices, and the armed conflict in Ukraine.

As a result of these types of global events and resulting governmental and business reactions, our suppliers may not have the materials, capacity, or capability to supply our components according to our schedule and specifications.

We source the substantial majority of our components from Asia, and as a result, our supply chain can be adversely affected by a variety of global events, including transportation delays, including those related to the June 2022 truck driver strike in Korea resulting from escalated fuel prices, and the armed conflict in Ukraine.

Further, our subsidiaries ACM Shanghai and ACM Korea were recently added to the BIS Entity List, which prohibit any party worldwide from furnishing hardware, software, or technology that are subject to U.S.

export controls jurisdiction to ACM Shanghai or ACM Korea and could adversely impact our supply chain.

See “—Regulatory Risks—Our operations in mainland China and Korea, including the import of components, technology, and activities of U.S.

personnel therein, may be further impacted by the addition of ACM Shanghai, ACM Korea and related entities to the BIS Entity List.”

As a result of these types of global events and resulting governmental regulations and business reactions, our suppliers may not have the materials, capacity, or capability to supply our components according to our schedule and specifications.

Further, there may be logistics issues, including our ability and our supply chain’s ability to quickly ramp up production, labor issues and transportation demands that may cause further delays.

Supply chain constraints have intensified due to COVID-19 and other factors, and may further intensify due to other global events, contributing to existing global shortages coupled with increased demand in the supply of semiconductors.

Supply chain constraints have intensified, which may further intensify due to other global events and government regulations, contributing to existing global shortages coupled with increased demand in the supply of semiconductors.

The unavailability of any component or supplier could result in production delays, underutilized facilities, and loss of access to critical raw materials and parts for producing and supporting our tools, and could impact our ongoing capacity expansion and our ability to fulfill our product delivery obligations.

If our suppliers’ operations are curtailed, we may need to seek alternate sources of supply, which may be more expensive.

Alternate sources may not be available or may result in delays in shipments to us from our supply chain and subsequently to our customers, each of which would affect our results of operations.

If our suppliers’ operations are curtailed, we may need to seek alternate sources of supply, which may be more expensive and may not be available to us at all due to government regulations.

Alternate sources may not be available or

may result in delays in shipments to us from our supply chain and subsequently to our customers, each of which would affect our results of operations.

These types of disruptions and governmental restrictions may also result in the inability of our customers to obtain materials necessary for their full production, which could also result in reduced demand for our products.

While disruptions and governmental restrictions, as well as related general limitations on movement around the world, are expected to be temporary, the duration of the production and supply chain disruption, and related financial impact, cannot be estimated at this time.

Should the production and distribution closures continue for an extended period of time, the impact on our supply chain could have a material adverse effect on our results of operations and cash flows.

While certain disruptions and governmental restrictions, as well as related general limitations on movement around the world, may be temporary, the duration of the production and supply chain disruption, and related financial impact, cannot be estimated at this time.

Should these distributions and restrictions continue for an extended period of time, the impact on our supply chain could have a material adverse effect on our results of operations and cash flows.

Business disruptions could also negatively affect the sources and availability of components and materials that are essential to the operation of our business.

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Certain components and subassemblies of our tools have only been purchased from our current suppliers to date and changing the source of those components and subassemblies may result in disruptions during the transition process and entail significant delay and expense.

Product Systems, Inc., or ProSys, as the sole supplier of megasonic transducers, a key subassembly used in our single-wafer cleaning equipment;

Ninebell Co., Ltd., or Ninebell, as the principal supplier of robotic delivery system subassemblies used in our single-wafer cleaning equipment;

and Advanced Electric Co.

Inc., as a key supplier of valves used in our single-wafer cleaning equipment.

An adverse change to our relationship with any of these suppliers would disrupt our production of single-wafer cleaning equipment and could cause substantial harm to our business.

Product Systems, Inc., or ProSys, as the sole supplier of megasonic transducers, a key subassembly used in our semiconductor capital equipment;

Ninebell Co., Ltd., or Ninebell, as the principal supplier of robotic delivery system subassemblies used in our semiconductor capital equipment;

Advanced Electric Co.

Inc., as a key supplier of valves used in our semiconductor capital equipment;

and certain companies from other countries which supply components and subsystems used in our semiconductor capital equipment.

An adverse change to our relationship with any of these suppliers, including a delay or the inability to export the components to mainland China, could disrupt our production of our semiconductor capital equipment and could cause substantial harm to our business.

With some of these suppliers, we do not have long-term agreements and instead purchase components and subassemblies through a purchase order process.

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Moreover, some of our suppliers may experience financial difficulties that could prevent them from supplying us with components or subassemblies used in the design and manufacture of our products.

In addition, our suppliers, including our sole supplier ProSys, may experience manufacturing delays or shut downs due to circumstances beyond their control, such as labor issues, political unrest or natural disasters.

In addition, our suppliers, including our sole supplier ProSys, may experience manufacturing delays or shutdowns due to circumstances beyond their control, such as labor issues, political unrest or natural disasters.

Any supply deficiencies could materially and adversely affect our ability to fulfill customer orders and our results of operations.

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We will seek to continue to expand our operations in the future, including by adding new offices, locations and employees.

Managing our growth has placed and could continue to place a significant strain on our management, other personnel and our infrastructure.

Managing our growth has placed and could continue to place a significant strain on our management, other

personnel and our infrastructure.

If we are unable to manage our growth effectively, we may not be able to take advantage of market opportunities, develop new products, enhance our technological capabilities, satisfy customer requirements, respond to competitive pressures or otherwise execute our business plan.

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We will need to continue to scale and adapt our operational, financial and management controls, as well as our reporting systems and procedures, at both ACM Research and ACM Shanghai.

The continued expansion of our infrastructure will

require us to commit substantial financial, operational and management resources before our revenue increases and without any assurances that our revenue will increase.

The continued expansion of our infrastructure will require us to commit substantial financial, operational and management resources before our revenue increases and without any assurances that our revenue will increase.

We are highly dependent on our Chief Executive Officer and President and other senior management and key employees.

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and state net operating loss carryforwards may be limited under applicable tax laws.

As of December 31, 2023, we had net operating loss carryforward amounts, or NOLs, of $3.3 million for U.S.

As of December 31 , 2024, we had certain net operating loss carryforward amounts, or NOLs, of $2 million for U.S.

federal income tax purposes and $0.9 million for U.S.

state income tax purposes.

s tate income tax purposes (note 18).

As of December 31, 2023, we had NOLs, of $3.3 million for U.S.

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state income tax purposes.

The federal and state NOLs will expire at various dates in the future.

Utilization of these NOLs could be subject to a substantial annual limitation if the ownership change limitations under U.S.

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Future changes in our stock ownership, some of which are outside of our control, could result in an ownership change.

Regulatory changes, such as suspensions on the use of NOLs, or other unforeseen reasons, may cause our existing NOLs to expire or otherwise become unavailable to offset future income tax liabilities.

Regulatory changes, such as suspensions on the use of NOLs, or other unforeseen reasons, may

cause our existing NOLs to expire or otherwise become unavailable to offset future income tax liabilities.

Additionally, U.S.

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We may also make investments in certain key suppliers to align our interests with such suppliers.

If we seek acquisitions, we

may not be able to identify suitable acquisition candidates at prices we consider appropriate.

If we seek acquisitions, we may not be able to identify suitable acquisition candidates at prices we consider appropriate.

We cannot readily predict the timing or size of our future acquisitions, or the success of any future acquisitions.

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These negotiations could result in significant diversion of management time, as well as substantial out-of-pocket costs, any of which could have a material adverse effect on our business, operating results and financial condition.

Future declines in the semiconductor industry, and the overall world economic conditions on which the industry is significantly dependent, could have a material adverse impact on our results of operations and financial condition.

Declines in the semiconductor industry, or the overall world economic conditions on which the industry is significantly dependent, could have a material adverse impact on our results of operations and financial condition.

Our business depends on the capital equipment expenditures of chip manufacturers, which in turn depend on the current and anticipated market demand for integrated circuits.

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In October 2023, BIS further expanded export controls on semiconductors, semiconductor manufacturing items and items for use in manufacturing designated types of semiconductor manufacturing equipment, including through new licensing requirements covering a broader variety of items, and an expansion in the geographical scope of the controls.

ACM Shanghai has determined that several of its customers have mainland China-based facilities that meet the restricted criteria set out in the October 2022 and October 2023 rules, and has also determined that several of its products, and/or components for its products, may meet the parameters of export control classification numbers, or ECCNs, affected by the restrictions.

ACM and ACM Shanghai have implemented modifications to their existing business policies and practices in response to the October 2022 and October 2023 restrictions, including by imposing limitations on the activities of their U.S.

There were further export control restrictions imposed in 2024.

BIS expanded export controls to limit distribution of high-performance ICs by restricting sales through customer allocations and imposing caps on specific countries.

ACM Shanghai has determined that several of its customers have mainland China-based facilities that meet the restricted criteria set out in the enhanced export control rules described above, and has also determined that several of its products, and/or components for its products, may meet the parameters of export control classification numbers, or ECCNs, affected by the restrictions.

ACM and ACM Shanghai have implemented modifications to their existing business policies and

practices in response to these enhanced export restrictions, including by imposing limitations on the activities of their U.S.

persons and undertaking measures in connection with their supply chains more broadly to comply with the new regulations.

ACM Shanghai is continuing to assess the impact of the October 2023 changes, together with the October 2022 rules, and will continually adjust or modify its policies and practices as required to comply with these or other related updates.

ACM Shanghai is continuing to assess the impact of these export control restrictions, and will continually adjust or modify its policies and practices as required to comply with these or other related updates.

Based on our ongoing review, we believe these regulations may directly impact ACM Shanghai’s ability to meet its future production plans, or indirectly impact the spending plans of ACM Shanghai’s customer base.

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export controls from outside the United States to support tool shipments to such facilities, or to be embedded into tools defined by affected ECCNs.

We believe that as a result of the October 2022 and October 2023 restrictions, several ACM Shanghai customers have significantly reduced production and related capital spending at facilities meeting the restricted advanced node capabilities.

We believe that as a result of the export control restrictions, several ACM Shanghai customers have significantly reduced production and related capital spending at facilities meeting the restricted advanced node capabilities.

In addition, ACM Shanghai has experienced challenges as the companies in its supply chain adapt their policies to the new regulations.

These factors had an adverse impact on ACM Shanghai’s shipments and sales in the twelve months ended

December 31, 2023.

We anticipate these factors will continue to have an adverse impact on ACM Shanghai’s shipments and sales in future periods, including as a result of any impacts from the October 2023 revisions.

These factors had an adverse impact on ACM Shanghai’s shipments and sales in the twelve months ended December 31, 2023.

We anticipate these factors will continue to have an adverse impact on ACM Shanghai’s shipments and sales in future periods.

Alongside these new restrictions, BIS has also continued to designate additional China entities, many involved in the semiconductor manufacturing industry, on restricted party lists under the EAR, such as the Entity List and the Unverified List.

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From that point on, the export of certain advanced semiconductor manufacturing equipment, as specified in the Annex to the Regulation, is now subject to a national export license authorization requirement by the Dutch Central Import and Export Service.

Efforts to further tighten semiconductor-related export controls have continued in 2024.

In December 2024, the Government of the Netherlands implemented supplemental export controls on certain emerging technology items including sensitive goods, software, and technology related to the semiconductor sector.

As a result of the new restrictions, the ability of ACM Shanghai to acquire such parts from Japan and the Netherlands to fulfill customer requirements, and the ability of ACM Shanghai’s customers in mainland China to scale their production, could be further negatively impacted by these additional controls.

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government, Japan and the Netherlands or the effects of any future governmental actions by the U.S., Japan, the Netherlands or other countries that may impact our relationships with our mainland China-based customers, any of which could have a long-term adverse effect on our business, operating results and financial condition.

Effective on December 2, 2024, the U.S.

Department of Commerce’s Bureau of Industry and Security (“BIS”) promulgated a final rule naming a number of companies to the BIS Entity List (the "BIS Entity List").

Among the 140 companies added to the BIS Entity List were two subsidiaries of ACM Research, ACM Shanghai, located in the People’s Republic of China, and ACM Korea, a direct subsidiary of ACM Shanghai, which is located in the Republic of Korea, and other related entities.

In general terms, the new BIS Entity List designations prohibit any party worldwide from furnishing hardware, software, or technologies that are subject to U.S.

export controls jurisdiction to ACM Shanghai or ACM Korea.

See “Item 1A.

Risk Factors—Regulatory Risks—Our operations in mainland China and Korea, including the import of components, technology, and activities of U.S.

personnel therein, may be further impacted by the addition of ACM Shanghai, ACM Korea and related entities to the BIS Entity List” of this report for more information.

Changes in government trade policies could limit the demand for our tools and increase the cost of our tools.

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government characterized as unfair trade practices.

The mainland China

government responded to each of these rounds of U.S.

The mainland China government responded to each of these rounds of U.S.

tariff changes by imposing new or higher tariffs on specified products imported from the United States.

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and mainland China officials.

More recently, in late 2023 and early 2024, U.S.

More recently, in February 2025, U.S.

officials have suggested potentially targeting Chinese origin legacy semiconductors with additional tariffs.

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To the extent that any capital investment or other assistance from the mainland China government is not provided to us, it could be used to promote the products and technologies of our competitors, which could adversely affect our business, operating results and financial condition.

Changes in political and economic policies with respect to mainland China may make it difficult for us to realize the benefit of our investments.

On November 12, 2020, then-U.S.

President Trump issued an executive order, or the Order, establishing a new sanctions program designed to prohibit U.S.

persons from entering into transactions in certain publicly traded securities, as well as derivatives and securities designed to provide investment exposure to such securities, of any “Communist Chinese military company,” or CCMC, as designated by the U.S.

Department of Defense, or DOD, or the U.S.

Secretary of the Treasury.

Continued ownership of such securities by U.S.

persons would be prohibited after a one-year divestment period from the time of designation of the issuer.

A number of mainland China issuers have been designated under this program and more could be added.

On December 3, 2020, SMIC was designated as a CCMC by the DOD, which was subsequently removed as of June 3, 2021.

If SMIC had remained on the list at December 3, 2021, ACM Shanghai’s continued possession of SMIC securities could have subjected ACM Shanghai and ACM Research to penalties.

Certain implementation matters related to the scope of, and compliance with, the Order have not yet been resolved, and the ultimate application and enforcement of the Order may change due to, among other things, a change in the U.S.

Presidential administration.

In addition, SMIC may be designated as a CCMC in the future, or we may seek to conduct business transactions with entities on the CCMC list in the future.

Although the Order does not prohibit commercial relations with CCMC companies other than the securities transactions noted above, certain other export restrictions have been imposed under the Export Administration Regulations on some CCMC companies.

These and any similar future U.S.

government restrictions on our suppliers or customers may adversely affect our business operations in mainland China, overall company results or our financial condition.

Mainland China’s currency exchange control and government restrictions on investment repatriation may impact our ability to transfer funds outside of mainland China, which could materially and adversely affect our ability to grow, make investments or acquisitions that could benefit our business, otherwise fund and conduct our business, or pay dividends on our common stock.

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Certain of our stockholders may be non-U.S.

investors, and in the aggregate, may comprise a substantial portion of our net asset value, which may increase the risks of such limitations being imposed in connection with investments pursued or made by us.

investors, and in the aggregate, may comprise a substantial portion of our net asset value, which may increase the risks of such limitations being imposed

in connection with investments pursued or made by us.

Legislative and regulatory changes, including changes to agency practice, in the future may negatively impact our ability to realize value from certain existing and future investments, including by limiting exit opportunities or causing us to favor buyers that we believe are less likely to require CFIUS review, even in circumstances where other buyers may offer better terms or more consideration.

Government is reportedly considering an outbound investment review mechanism, which may prevent us from taking advantage of investment opportunities outside the United States that could otherwise be advantageous to our stockholders.

Government is reportedly considering imposing an outbound investment review mechanism similar to CFIUS that would review foreign investments made from the United States.

It is not yet clear what form the mechanism would take, but reports suggest it could come quickly in the form of an Executive Order, or could be passed as part of legislation from Congress.

In the event that such a review mechanism is implemented, it is possible that certain of our investments may require review or notification to the U.S.

Government, and could be subject to mitigation or other restrictions.

If implemented, similar to CFIUS reviews, there can be no assurances that we will be able to maintain or proceed with investments on terms acceptable to us.

Such a mechanism could negatively impact our ability to realize value from certain existing and future investments, including by limiting exit opportunities or causing us to favor buyers that we believe are lower risk for the possible outbound investment reviews, even in circumstances where other buyers may offer better terms or more consideration.

Furthermore, because the requirements have not yet been established, the range or extent of possible effects that could flow from such a measure cannot be determined with any degree of certainty at this time.

It is possible that the outbound investment review mechanism could adversely affect our business, financial condition, and operating results.

On November 15, 2024, the Office of Investment Security of the U.S.

Department of the Treasury published in the Federal Register a final rule to implement President Biden’s August 2023 Executive Order on Addressing United States Investments in Certain National Security Technologies and Products in Countries of Concern (the EO).

The EO provided for the establishment of a new and targeted national security regulatory framework directed at controlling outbound investment from the United States in certain sensitive industry sectors in the People’s Republic of China (PRC) and the Special Administrative Regions of Hong Kong and Macau (collectively, China).

This final rule went into effect January 2, 2025.

As implemented by the final rule, the new framework would impose notification requirements and prohibitions on specified investments by U.S.

persons in the semiconductor and microelectronics sector, quantum information technologies, and artificial intelligence (AI) systems.

Within the semiconductor and microelectronics sector, prohibited investments will include certain covered investments in electronic design automation software;

certain fabrication and advanced packaging tools;

the design, fabrication, or packaging of certain advanced integrated circuits, and supercomputers.

Notifiable investments will include any covered investments related to the design, fabrication, or packaging of integrated circuits not otherwise covered by the prohibition.

Given the breadth of the notification requirement as applicable within the semiconductor industry, we will likely be subject to increased regulatory burden to engage in certain investments in the PRC.

Such a mechanism could negatively impact our ability to realize value from certain existing and future investments, including by limiting exit opportunities or causing us to favor buyers that may avoid complex notification requirements, even in circumstances where other buyers may offer better terms or more consideration.

There can be no assurances that we will be able to maintain or proceed with investments on terms acceptable to us.

It is possible that the outbound investment reporting requirements and prohibitions could adversely affect our business, financial condition, and operating results.

Our operations in mainland China and Korea, including the import of components, technology, and activities of U.S.

personnel therein, may be further impacted by the addition of ACM Shanghai, ACM Korea and related entities to the BIS Entity List.

On December 2, 2024, the U.S.

BIS imposed additional controls on exports to, and transfers within, the People’s Republic of China PRC relating to advanced integrated circuit products, certain IC manufacturing equipment and technology, and supercomputers associated with artificial intelligence (AI) and advanced computing.

In coordination with the new regulations, among other updates, ACM Shanghai and its operating subsidiaries in China and Korea, were added to the Entity List published by BIS.

Neither ACM, nor its direct subsidiaries outside of mainland China, were added to the Entity List.

The new regulations will make it difficult, if not impossible, for ACM Shanghai and ACM Korea to obtain any U.S.-sourced components, or components from other countries that may choose to follow the U.S.

restrictions.

Although we believe the impact to our supply chain, and the ability of ACM Shanghai and ACM Korea to produce tools in mainland China can be managed without a significant interruption of our business, it will require the transition of certain components to be qualified at our customers to maintain consistent quality standards.

The potential impact on sales to our customers will also depend on the effect of the new regulations on their own spending plans.

We do not anticipate an impact to the ability to sell, deliver and service products to our global customers outside of mainland China.

We believe the new regulations prohibit the export or reexport of Items to companies on the Entity List without a BIS license, but do not inhibit the ability of companies on the Entity List to sell, deliver, and service their products to global customers.

We are subject to government regulation, including import, export, economic sanctions, and anti-corruption laws and regulations, that may limit our sales opportunities, expose us to liability and increase our costs.

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Our exposure for violating these laws and regulations increases as our international presence expands and as we increase sales and operations in foreign jurisdictions.

Risks Related to Our STAR Listing

Risks Related to the STAR Listing of ACM Shanghai

We may not achieve the results contemplated by our business strategy and our strategy for growth in mainland China may not result in increases in the price of Class A common stock.

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ACM Shanghai may not spend or invest those proceeds in a manner that results in our operating success or with which ACM Research stockholders agree.

price of the Class A common stock, and we cannot assure you that the success of ACM Shanghai will have an attendant positive effect on the price of the Class A common stock.

Our failure to successfully leverage the completion of the STAR Listing and the STAR IPO, and any future financings by ACM Shanghai, to expand our mainland China business could result in a decrease in the price of the Class A common stock, and we cannot assure you that the success of ACM Shanghai will have an attendant positive effect on the price of the Class A common stock.

Mainland China companies are critical to the global semiconductor industry, and our current business is substantially concentrated in the mainland China market.

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Substantially all of our intellectual property has been developed in mainland China and is owned by ACM Shanghai.

As we expand our global operations through operating subsidiaries outside of mainland China, those operating subsidiaries may need to license intellectual property from ACM Shanghai in order to operate, and there can be no assurance that conflicts of interest will not preclude those operating subsidiaries from licensing the required intellectual property from ACM Shanghai on reasonable terms or at all.

expand our global operations through operating subsidiaries outside of mainland China, those operating subsidiaries may need to license intellectual property from ACM Shanghai in order to operate, and there can be no assurance that conflicts of interest will not preclude those operating subsidiaries from licensing the required intellectual property from ACM Shanghai on reasonable terms or at all.

ACM Research retains majority ownership of ACM Shanghai since the STAR IPO, but ACM Shanghai is managed by a separate board of directors and officers and those directors and officers will owe fiduciary duties to the various stakeholders of ACM Shanghai, including shareholders other than ACM Research.

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Even issued patents may later be found unenforceable or may be modified or revoked in proceedings instituted by third parties before various patent offices or in courts.

The degree of future protection for our intellectual property is uncertain.

of future protection for our intellectual property is uncertain.

Only limited protection may be available and may not adequately protect our rights or permit us to gain or keep any competitive advantage.

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In addition, any future patent litigation, interference or other administrative proceedings will result in additional expense and distraction of our personnel.

our competitors are larger than we are and have substantially greater resources, and they therefore are likely to be able to sustain the costs of complex patent litigation longer than we could.

Most of our competitors are larger than we are and have substantially greater resources, and they therefore are likely to be able to sustain the costs of complex patent litigation longer than we could.

An adverse outcome in such litigation or proceedings may expose us to loss of our proprietary position.

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The significant majority of our intellectual property has been developed in mainland China and is owned by ACM Shanghai.

Implementation and enforcement of intellectual property-related laws in mainland China has historically been lacking due primarily to ambiguities in mainland China intellectual property law.

Implementation and enforcement of intellectual property-related laws in mainland China has historically been

lacking due primarily to ambiguities in mainland China intellectual property law.

Accordingly, protection of intellectual property and proprietary rights in mainland China may not be as effective as in the United States or other countries.

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Computer programmers may attempt to penetrate our network security, or that of our website, and misappropriate our proprietary information or cause interruptions of our service.

Because the techniques used by such computer programmers to access or sabotage networks change frequently and may not be recognized until launched against a target, we may be unable to anticipate these techniques.

Because the techniques used by such computer programmers to access or sabotage networks change frequently and may

not be recognized until launched against a target, we may be unable to anticipate these techniques.

We have also outsourced a number of our business functions to third-party contractors, including our manufacturers, and our business operations also depend, in part, on the success of our contractors’ own cybersecurity measures.

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Class B common stock has twenty votes per share and Class A common stock has one vote per share.

As of February 23, 2024, stockholders who hold shares of Class B common stock, who consist principally of our executive officers,

employees, directors and their respective affiliates, collectively he ld 64.2% of the voting power of our outstanding capital stock.

Because of the twenty-to-one voting ratio between Class B and Class A common stock, holders of Class B common stock collectively will continue to control a majority of the combined voting power of Class A common stock and therefore be able to control all matters submitted to our stockholders for approval so long as the shares of Class B common stock represent at least 4.8% of all outstanding shares of Class A and Class B common stock.

As of February 24, 2025, stockholders who hold shares of Class B common stock, who consist principally of our executive officers, employees, directors and their respective affiliates, collectively held 64.2% of the voting power of our outstanding capital stock.

Because of the twenty-to-one voting ratio between Class B and Class A common stock, h olders of Class B common stock collectively will continue to control a majority of the combined voting power of Class A common stock and therefore be able to control all matters submitted to our stockholders for approval so long as the shares of Class B common stock represent at least 4.8% of all outstanding shares of Class A and Class B common stock.

This concentrated control will limit or preclude your ability to influence corporate matters for the foreseeable future.

This concentrated control could also discourage a potential investor from acquiring Class A common stock due to the limited voting power of such stock relative to the Class B common stock and might harm the market price of Class A common stock.

Because of the market capitalization achieved by Class A common stock during October 2020, our charter no longer contemplates circumstances in which all of the shares of Class B common stock will mandatorily convert into Class A common stock.

Instead, all of the Class B common stock generally will convert into Class A common stock only upon the election of the holders of a majority of the then-outstanding shares of Class B common stock, and specific shares of Class B common stock will convert into Class A common stock upon future transfers by the holders of those shares.

Because of the market capitalization achieved by Class A common stock during October 2020, the trigger included in our charter pursuant to which all of the shares of Class B common stock must convert into Class A common stock no longer applies.

Instead, all of the Class B com mon stock generally will convert into Class A common stock only upon the election of the holders of a majority of the then-outstanding shares of Class B common stock, and specific shares of Class B common stock will convert into Class A common stock upon future transfers by the holders of those shares.

The potential conversion of Class B common stock to Class A common stock will have the effect, over time, of increasing the relative voting power of those holders of Class B common stock who retain their shares in the long term.

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A short seller hopes to profit from a decline in the value of the securities between the sale of the borrowed securities and the purchase of the replacement shares, as the short seller expects to pay less in that purchase than it received in the sale.

negative market momentum, which may permit them to obtain profits for themselves as a result of selling the securities short.

As it is in the short seller’s interest for the price of the stock to decline, some short sellers publish, or arrange for the publication of, opinions or characterizations regarding the relevant issuer, its business prospects and similar matters calculated to or which may create negative market momentum, which may permit them to obtain profits for themselves as a result of selling the securities short.

The use of the Internet, social media, and blogging have allowed short sellers to publicly attack a company’s credibility, strategy and veracity by means of so-called “research reports” that mimic the type of investment analysis performed by legitimate securities research analysts.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1A. Risk Factors