NOTE 14 – REDEEMABLE NON-CONTROLLING INTERESTS

As discussed in note 1, during the quarter ended September 30, 2019, ACM Shanghai issued to the Investors equity in the form of redeemable non-controlling interests, representing 4.2% of the outstanding shares of ACM Shanghai. Two of the Investors are entities owned by certain employees of ACM Shanghai (the “Employee Entities”), and the purchase price paid by the Employee Entities represented a discount of 20% from the purchase price paid by the other Investors.

In addition to the capital increase, ACM Shanghai entered into a supplemental agreement (“Supplemental Agreement”) with each of the Investors. Under each Supplemental Agreement, ACM Shanghai and the Investor party thereto agreed to use their respective best efforts to facilitate the completion of the Listing and the STAR IPO within three years from the date on which the Placement Shares are issued. If, by the end of such three-year period, the Listing and the STAR IPO have not been completed and the China Securities Regulatory Commission has not otherwise approved the registration of ACM Shanghai’s Listing registration application, the Investor and ACM Shanghai each will have the right to require that ACM Shanghai repurchase the Investor’s shares for a price equal to the initial purchase price paid by the Investor, without interest. The Supplemental Agreements will be automatically terminated on the date when ACM Shanghai formally submits the Listing registration application document to the Shanghai Stock Exchange.

Because the Investors have the right to require ACM Shanghai to repurchase their ownership interests in ACM Shanghai at a fixed purchase price, those ownership interests are classified as redeemable non-controlling interests under ASC 480. The Company has elected to apply the entire adjustment method (income classification) for subsequent measurement in accordance with ASC 480‑10-S99.

The components of the change in the redeemable non-controlling interests for the nine months ended September 30, 2019 are presented in the following table:

Balance at January 1, 2019	$	-
Increase in redeemable non-controlling interests due to issuance of common stock		27,264
Net income attributable to redeemable non-controlling interests		307
Effect of foreign currency translation loss attributable to redeemable non-controlling interests		(683	)
Balance at September 30, 2019	$	26,888