ACM’s stock-based compensation consists of employee and non-employee awards issued under its 1998 Stock Option Plan and its 2016 Omnibus Incentive Plan. The vesting condition may consist of a service period condition 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 a service period based condition and/or performance condition is estimated at the date of grant using the Black-Scholes option pricing model. The fair value of the stock options granted with a market based condition is estimated at the date of grant using the Monte Carlo simulation model.


	Number of Option Shares	Weighted Average Grant Date Fair Value		Weighted Average Exercise Price		Weighted Average Remaining Contractual Term
Outstanding at December 31, 2022	9,211,641	$	3.58	$	8.24	6.36 years
Granted	2,202,000	10.34		13.87
Exercised	(680,319)	0.89		2.24
Forfeited/cancelled	(44,560)	10.65		21.76
Outstanding at September 30, 2023	10,688,762	$	5.15	$	9.59	6.36 years
Vested and exercisable at September 30, 2023	6,356,350

As of September 30, 2023 and December 31, 2022, $30,703 and $16,009, respectively, of total unrecognized employee stock-based compensation expense, net of estimated forfeitures, related to employee stock-based awards for ACM were expected to be recognized over a weighted-average period of 3.90 years and 4.04 years, respectively. Total recognized compensation cost may be adjusted for future changes in estimated forfeitures.

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 with following assumptions:


	Nine Months Ended September 30, 2023	Years ended December 31, 2022
Fair value of share of common stock (1)	$11.85-$13.89	$16.83-$25.45
Expected term in years(2)	5.50-6.25	5.50-6.25
Volatility(3)	84.95%-86.45%	49.43%-50.87%
Risk-free interest rate(4)	4.16%-4.17%	1.7%-3.04%

(2)Expected term of share options is based on the average of the vesting period and the contractual term for each grant according to ASC 718, Compensation – Stock Compensation.

(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.


	Number of Option Shares	Weighted Average Grant Date Fair Value		Weighted Average Exercise Price		Weighted Average Remaining Contractual Term
Outstanding at December 31, 2022	1,483,658	$	0.38	$	1.15	3.68 years
Exercised	(239,129)	0.24		0.56
Forfeited/cancelled	(10,957)	0.22		0.50
Outstanding at September 30, 2023	1,233,572	$	0.41	$	1.27	2.85 years
Vested and exercisable at September 30, 2023	1,226,072

As of September 30, 2023 and December 31, 2022, $21 and $55, 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 0.45 years and 1.20 years, respectively. Total recognized compensation cost may be adjusted for future changes in estimated forfeitures.

In January 2020, ACM Shanghai adopted a 2019 Stock Option Incentive Plan (the “2019 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 following table summarizes the stock option activities of the ACM Shanghai 2019 Subsidiary Stock Option Plan during the nine months ended September 30, 2023:


	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, 2022	5,377,500	$	0.23	$	1.93	1.76 years
Exercise	(2,150,309)	$	0.20	$	1.85
Forfeited/cancelled	(92,308)	$	0.22	$	1.85
Outstanding at September 30, 2023	3,134,883	$	0.23	$	1.90	1.10 years
Vested and exercisable at September 30, 2023	492,308

As of September 30, 2023 and December 31, 2022, $38 and $160, respectively, of total unrecognized employee stock-based compensation expense, net of estimated forfeitures, related to ACM Shanghai 2019 stock-based awards were expected to be recognized over a weighted-average period of 0.75 years and 0.25 years, respectively. Total recognized compensation cost may be adjusted for future changes in estimated forfeitures.

In June 2023, ACM Shanghai adopted a 2023 Stock Option Incentive Plan ( the "2023 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 vesting conditions consist of service periods conditions and performance conditions related to certain sales and research and development progress targets determined by the Board of Directors of ACM Shanghai.

The following table summarizes the ACM Shanghai 2023 Subsidiary Stock Option Plan’s stock option activities during the nine months ended September 30, 2023:


	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, 2022	-	$	—	$	—	0.00 years
Granted	10,648,500	$	9.24	$	7.10
Outstanding at September 30, 2023	10,648,500	$	9.24	$	7.10	3.34 years
Vested and exercisable at September 30, 2023	-

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 with following assumptions:


			Nine Months Ended September 30, 2023
Fair value of share of common stock (1)			RMB 105.27
Expected term in years (2)			1.5.-4.5
Volatility (3)			60.00%-60.60%
Risk-free interest rate (4)			1.50%-2.75%

(2) Expected term of share options is based on the average of the vesting period and the contractual term for each grant according to ASC 718.

(4) Risk-free interest rate is based on the yields of RMB deposit in mainland China with maturities similar to the expected term of the share options in effect at the time of grant.

As of September 30, 2023 and December 31, 2022, $90,197 and $0, respectively, 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 2.34 years and nil years, respectively. Total recognized compensation cost may be adjusted for future changes in estimated forfeitures.

The following table summarizes the components of stock-based compensation expense included in the consolidated statements of operations and comprehensive income (loss):


	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Stock-based compensation expense:
Cost of revenue	$	588	$	130	$	838	$	383
Sales and marketing expense	2,543		349		3,405		1,277
Research and development expense	3,421		666		4,831		1,733
General and administrative expense	4,029		748		5,592		1,843
	$	10,581	$	1,893	$	14,666	$	5,236


	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Stock-based compensation expense by type:
Employee stock option plan	$	2,352	$	1,798	$	6,345	$	4,943
Non-employee stock option plan	12		12		35		35
2019 and 2023 Subsidiary stock option plan	8,217		83		8,286		258
	$	10,581	$	1,893	$	14,666	$	5,236