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STOCK-BASED COMPENSATION

12 Months Ended

Dec. 31, 2021

NOTE 20 – STOCK-BASED COMPENSATION

In January 2020 ACM Shanghai adopted a 2019 Stock Option Incentive Plan (the “Subsidiary Stock Option Plan”) that provides for, among other incentives, the granting to officers, directors, employees of options to purchase shares of ACM Shanghai’s common stock. The fair value of the stock options granted is estimated at the date of grant based on the Black-Scholes option pricing model using assumptions generally consistent with those used for ACM’s stock options. Because ACM Shanghai shares did not begin trading until November 2021, the expected volatility is estimated with reference to the average historical volatility of a group of publicly traded companies that are believed to have similar characteristics to ACM Shanghai.

ACM’s stock-based compensation consists of employee and non-employee awards issued under the 1998 Stock Option Plan and the 2016 Omnibus Incentive Plan and as standalone options. ACM granted stock options to employees under the 2016 Omnibus Incentive Plan during the years ended December 31, 2021, 2020 and 2019. The vesting condition may consist of service period determined by the Board of Directors for a grant, or certain performance conditions determined by the Board of Directors for a grant. The fair value of the stock options granted with service period based condition is estimated at the date of grant using the Black-Scholes option pricing model. The fair value of the stock options granted with market based condition is estimated at the date of grant using the Monte Carlo simulation model.

The following table summarizes the components of stock-based compensation expense included in the consolidated statements of operations:

	Year Ended December 31,
	2021		2020		2019
Stock-Based Compensation Expense:
Cost of revenue	$	397	$	175	$	250
Sales and marketing expense		1,802		1,199		328
Research and development expense		1,115		763		1,093
General and administrative expense		1,803		3,491		1,901
	$	5,117	$	5,628	$	3,572

	Year Ended December 31,
	2021		2020		2019
Stock-based compensation expense by type:
Employee stock purchase plan	$	4,674	$	4,900	$	2,265
Non-employee stock purchase plan		94		396		1,307
Subsidiary option grants		349		332		-
	$	5,117	$	5,628	$	3,572

The fair value of options granted to employees with a service period based condition is estimated on the grant date using the Black-Scholes valuation model with the following assumptions:

	Year Ended December 31,
	2021			2020			2019
Fair value of common share(1)	$	38.38-51.07		$	22.07-85.27		$	13.64-16.81
Expected term in years(2)		6.25			5.50-6.25			6.25
Volatility(3)		48.53-49.47	%		42.17%-48.15	%		39.91%-40.35	%
Risk-free interest rate(4)		1.00%-1.44	%		0.44%-0.82	%		1.69%-2.46	%
Expected dividend(5)		0	%		0	%		0	%

(1)

Fair value of Class A common stock value was the closing market price of the Class A common stock on the grant date.

(2)

Expected term of share options is based on the average of the vesting period and the contractual term for each grant according to Staff Accounting Bulletin 110.

(3)

Volatility is calculated based on the historical volatility of the stock of companies comparable to ACM in the period equal to the expected term of each grant.

(4)

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.

(5)

Expected dividend is assumed to be 0% as ACM has no history or expectation of paying a dividend on its common stock.

During the year ended December 31, 2021, no option was granted to employee with market based condition. During the year ended December 31, 2020, the fair value of option granted to an employee with market based condition was estimated on the grant date using the Monte Carlo simulation model with the following assumptions:

	Year Ended December 31,
	2020
Fair value of common share(1)	$	22.07
Expected term in years(2)		9.20 - 9.80
Volatility(3)		45.10	%
Risk-free interest rate(4)		2.68	%
Expected dividend(5)		0	%

(1)

Fair value of Class A common stock value was the closing market price of the Class A common stock on the grant date.

(2)

Expected term of share options is based on the average of the vesting period and the contractual term for each grant according to Staff Accounting Bulletin 110.

(3)

Volatility is calculated based on the historical volatility of the stock of companies comparable to ACM in the period equal to the expected term of each grant.

(4)

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.

(5)

Expected dividend is assumed to be 0%, as ACM has no history or expectation of paying a dividend on its common stock.

Employee Awards

The following table summarizes the Company’s employee share option activities during the years ended December 31, 2019, 2020 and 2021:

	Number of Option Share			Weighted Average Grant Date Fair Value		Weighted Average Exercise Price		Weighted Average Remaining Contractual Term
Outstanding at December 31, 2018		2,503,405		$	0.91	$	4.09	7.30 years
Granted		656,000			6.29		16.21
Exercised		(106,768	)		0.60		2.09
Expired		(2,757	)		3.34		8.16
Forfeited/cancelled		(55,817	)		2.38		6.23
Outstanding at December 31, 2019		2,994,063			2.59		6.77	7.05 years
Granted		786,399			12.17		29.17
Exercised		(547,189	)		1.34		3.78
Forfeited/cancelled		(41,862	)		4.80		12.65
Outstanding at December 31, 2020		3,191,411			5.13		12.73	7.13 years
Granted		140,400			48.16		106.15
Exercised		(477,058	)		2.46		6.30
Forfeited/cancelled		(54,004	)		24.97		57.10
Outstanding at December 31, 2021		2,800,749		$	7.36	$	17.65	6.53 years
Vested and exercisable at December 31, 2021		1,922,180

As of December 31, 2021 and 2020, $9,544 and $8,733, respectively, of total unrecognized employee stock-based compensation expense, net of estimated forfeitures, related to stock-based awards for ACM were expected to be recognized over a weighted-average period of 1.61 years and 1.89 years, respectively. Total recognized compensation cost may be adjusted for future changes in estimated forfeitures.

Non-employee Awards

The following table summarizes the Company’s non-employee share option activities during the years ended December 31, 2019, 2020 and 2021:

	Number of Option Shares			Weighted Average Grant Date Fair Value		Weighted Average Exercise Price		Weighted Average Remaining Contractual Term
Outstanding at December 31, 2018		1,212,374		$	0.78	$	2.57	6.66 years
Granted		-			-		-
Exercised		(88,529	)		0.45		1.06
Expired		-			-		-
Forfeited/cancelled		(22,232	)		0.55		3.00
Outstanding at December 31, 2019		1,101,613			0.82		2.69	5.85 years
Granted		20,000			10.29		25.60
Exercised		(285,315	)		0.88		3.17
Expired		-			-		-
Forfeited/cancelled		(260	)		0.30		0.75
Outstanding at December 31, 2020		836,038			1.02		3.07	4.92 years
Granted		-			-		-
Exercised		(146,543	)		1.12		3.83
Expired		-			-		-
Forfeited/cancelled		(489	)		0.34		0.84
Outstanding at December 31, 2021		689,006		$	1.00	$	2.91	3.98 years
Vested and exercisable at December 31, 2021		677,756

As of December 31, 2021 and 2020, $102 and $195, respectively, of total unrecognized non-employee stock-based compensation expense, net of estimated forfeitures, related to stock-based awards were expected to be recognized over a weighted-average period of 0.06 years and 0.09 years, respectively. Total recognized compensation cost may be adjusted for future changes in estimated forfeitures.

ACM Shanghai Option Grants

The following table summarizes the ACM Shanghai employee stock option activities during the years ended December 31, 2021 and 2020:

	Number of Option Shares in ACM Shanghai			Weighted Average Grant Date Fair Value		Weighted Average Exercise Price		Weighted Average Remaining Contractual Term
Outstanding at December 31, 2019		-		$	-	$	-	-
Granted		5,869,808			0.23		1.89
Exercised		-			-		-
Expired		-			-		-
Forfeited/cancelled		(446,154	)		0.23		1.89
Outstanding at December 31, 2020		5,423,654		$	0.23	$	1.89	3.50 years
Granted		-			-		-
Exercised		-			-		-
Expired		-			-		-
Forfeited/cancelled		(46,154	)		0.24		2.04
Outstanding at December 31, 2021		5,377,500		$	0.24	$	2.04	2.50 years
Vested and exercisable at December 31, 2021		-

During the year ended December 31, 2021 and 2020, the Company recognized stock-based compensation expense of $349 and $332, related to stock option grants of ACM Shanghai. As of December 31, 2021 and 2020, $525 and $822 of total unrecognized non-employee stock-based compensation expense, net of estimated forfeitures, related to ACM Shanghai stock-based awards were expected to be recognized over a weighted-average period of 1.5 and 2.5 years. Total recognized compensation cost may be adjusted for future changes in estimated forfeitures.