AGM 2023, page-26

I prefer you to the announcement by AP/EM of Dec 21 in which EM is described as :

"... Earth Mountain (Shanghai) Intelligent Technology Co., Limited (hereafter “EM”), an advanced full- service semiconductor company, focused on mass commercialization of devices and systems rooted in Micro Electrical Mechanical Systems (MEMS), announce a comprehensive agreement to mass produce Audio Pixels’ transformational digital loudspeaker products.

EM’s innovative CIDM models (Community Integrated Device Manufacturing) has brought to bear significant commercialization experience and cutting-edge facilities to deliver AP’s groundbreaking digital loudspeaker, in record time. EM has already made a substantial investment of many millions of dollars to produced chips which are already routinely used in the company’s development, customer prototypes and demonstrations systems. EM is expected to commence volume production of our digital MEMS speaker within the first quarter of 2022. Under the terms of the agreement EM is guaranteeing AKP long-term resilient supply of tens of millions of digital loudspeaker chips per year.

Helen Du EM’s CEO said: “We are excited to be a part of Audio Pixels’ international ambitions to transition sound reproduction technologies into the digital era. We hope to expand our relationship in AKP beyond this fabrication and commercialization agreement to include promotion, distribution and support for the products throughout greater China.”

Fred Bart, Chairman of AKP, added “This agreement with EM represents a major milestone toward the commercialization of our technologies is all the more valuable given that it comes at a time when industry at large is struggling to secure semiconductor fabrication capacity. Our collaboration with EM enables us to expedite and broaden the number of customers and applications for our groundbreaking technologies” ..."

I am not entirely sure how a CIDM works, but I gather it allows a group of independently owned but like minded enterprises to act in concert to provide a service to customers. I would assume that the CIDM deals with lots of customers on the same basis, not just AP, so we would presumably not have exclusive use of the facilities. EM may or may not own all of the FABs that are currently producing MEMS chips for AP, but they are currently all at our service, and they (EM) claim to have spent a lot to become our supplier both now and into the future. It is part of the FABless model and one that will work well for us so long as we are doing the business we - and they - expect us to.

However I am also not entirely sure how EM's patented IP relates to AP's IP, and I would be very keen to hear that clarified at the AGM.