# EDGAR Filing Document

**Accession Number:** 0001556898
**File Stem:** 0001564590-23-001717
**Filing Date:** 2023-2
**Character Count:** 52137
**Document Hash:** 4c2a5f7353bdaaae1476a4882002e4cb
**Contains OCR:** False
**Source Format:** 

## Filing Content

## Filing Summary
**0001564590-23-001717.hdr.sgml**: 20230210

**ACCESSION NUMBER**: 0001564590-23-001717

**CONFORMED SUBMISSION TYPE**: 8-K

**PUBLIC DOCUMENT COUNT**: 13

**CONFORMED PERIOD OF REPORT**: 20230210

**ITEM INFORMATION**: Results of Operations and Financial Condition

**ITEM INFORMATION**: Regulation FD Disclosure

**ITEM INFORMATION**: Financial Statements and Exhibits

**FILED AS OF DATE**: 20230210

**DATE AS OF CHANGE**: 20230210

**FILER**: 

**COMPANY DATA:**
- **COMPANY CONFORMED NAME:** Techpoint, Inc.
- **CENTRAL INDEX KEY:** 0001556898
- **STANDARD INDUSTRIAL CLASSIFICATION:** SEMICONDUCTORS & RELATED DEVICES [3674]
- **IRS NUMBER:** 800806545
- **STATE OF INCORPORATION:** CA
- **FISCAL YEAR END:** 1231

**FILING VALUES:**
- **FORM TYPE:** 8-K
- **SEC ACT:** 1934 Act
- **SEC FILE NUMBER:** 000-55843
- **FILM NUMBER:** 23610367

**BUSINESS ADDRESS:**
- **STREET 1:** 2550 N. FIRST STREET
- **STREET 2:** SUITE 550
- **CITY:** SAN JOSE
- **STATE:** CA
- **ZIP:** 95131
- **BUSINESS PHONE:** 408-324-0588

**MAIL ADDRESS:**
- **STREET 1:** 2550 N. FIRST STREET
- **STREET 2:** SUITE 550
- **CITY:** SAN JOSE
- **STATE:** CA
- **ZIP:** 95131

?xml version="1.0" encoding="utf-8"? ck1556898-8k_20230210.htm

### UNITED STATES

### SECURITIES AND EXCHANGE COMMISSION

#### WASHINGTON, D.C. 20549

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### FORM 8-K

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#### CURRENT REPORT

#### Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

#### Date of Report (Date of earliest event reported): February 10, 2023

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## Techpoint, Inc.

#### (Exact Name of Registrant as Specified in its Charter)

------

---

| | | |
|:---|:---|:---|
| **Delaware** | **000-55843** | **80-0806545** |
| (State or other jurisdiction of<br> incorporation or organization) | (Commission File Number) | (I.R.S. Employer<br>Identification No.) |

---

---

| | |
|:---|:---|
| **2550 N. First Street, #550**<br> **San Jose, CA** | <br> **95131** |
| (Address of principal executive offices) | (Zip Code) |

---

Registrant's Telephone Number, Including, Area Code: **(408)324-0588**

#### N/A
(Former name or former address, if changed since last report.)

------

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) 

☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) 

☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) 

☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) 

Securities registered pursuant to Section 12(b) of the Act:

---

| | | |
|:---|:---|:---|
| **Title of each class** | **Trading**<br> **Symbol(s)** | **Name of each exchange on which registered** |
| Japanese Depositary Shares, each representing one Common Stock Share, $0.0001 par value per share | M-6697 | Tokyo Stock Exchange (Growth Market) |

---

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).

Emerging growth company ☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☒

------

#### Item 2.02 Results of Operations and Financial Condition.
On February 10, 2023 (Japanese Standard Time), Techpoint, Inc. (together with its wholly-owned subsidiaries, the "Company", "we", "us" and "our") filed with the Tokyo Stock Exchange a Japanese report referred to as "Kessan Tanshin," which contained the Company's unaudited financial results for the year ended December 31, 2022 (the "Tanshin"). A copy of the English translation of the Tanshin is attached hereto as Exhibit 99.1 and is incorporated by reference herein.

The information in this Form 8-K, including Exhibit 99.1, shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), or otherwise subject to the liabilities of that section and shall not be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended (the "Securities Act"), except as shall be expressly set forth by specific reference in such a filing.

#### Item 7.01 Regulation FD Disclosure.
The information in Item 2.02 is incorporated by reference into this Item 7.01.

*Non-GAAP Financial Information*

• In the Tanshin, for the years ended December 31, 2022, and 2021, the Company presents non-GAAP income from operations based on the exclusion of stock-based compensation expense and non-GAAP net income based on the exclusion of stock-based compensation expense and the relating tax impact.

The following tables contain a reconciliation of the non-GAAP financial measures to the most directly comparable GAAP (generally accepted accounting principles in the United States) financial measures (dollars in thousands).

---

| | | | | |
|:---|:---|:---|:---|:---|
| **Year Ended December 31, 2022** | **Income From**<br> **Operations** | **Income From**<br> **Operations** | **Net Income** | **Net Income** |
| GAAP | $| 19348 | $| 17663 |
| &nbsp;&nbsp;&nbsp;&nbsp; Stock-based compensation expense |  | 1813 |  | 1813 |
| &nbsp;&nbsp;&nbsp;&nbsp; Adjustment for taxes (1) |  |  |  | (179) |
| Non-GAAP | $ | 21161 | $ | 19297 |
| (1) Adjustment for taxes based on an assumed 9.86% effective tax rate, which was our assumed effective tax rate for fiscal 2022. | (1) Adjustment for taxes based on an assumed 9.86% effective tax rate, which was our assumed effective tax rate for fiscal 2022. | (1) Adjustment for taxes based on an assumed 9.86% effective tax rate, which was our assumed effective tax rate for fiscal 2022. | (1) Adjustment for taxes based on an assumed 9.86% effective tax rate, which was our assumed effective tax rate for fiscal 2022. | (1) Adjustment for taxes based on an assumed 9.86% effective tax rate, which was our assumed effective tax rate for fiscal 2022. |

---

---

| | | | | |
|:---|:---|:---|:---|:---|
| **Year Ended December 31, 2021** | **Income From**<br> **Operations** | **Income From**<br> **Operations** | **Net Income** | **Net Income** |
| GAAP | $| 19885 | $| 17287 |
| &nbsp;&nbsp;&nbsp;&nbsp; Stock-based compensation expense |  | 1845 |  | 1845 |
| &nbsp;&nbsp;&nbsp;&nbsp; Adjustment for taxes (1) |  |  |  | (243) |
| Non-GAAP | $ | 21730 | $ | 18889 |
| (1) Adjustment for taxes based on an assumed 13.19% effective tax rate, which was our assumed effective tax rate for fiscal 2021. | (1) Adjustment for taxes based on an assumed 13.19% effective tax rate, which was our assumed effective tax rate for fiscal 2021. | (1) Adjustment for taxes based on an assumed 13.19% effective tax rate, which was our assumed effective tax rate for fiscal 2021. | (1) Adjustment for taxes based on an assumed 13.19% effective tax rate, which was our assumed effective tax rate for fiscal 2021. | (1) Adjustment for taxes based on an assumed 13.19% effective tax rate, which was our assumed effective tax rate for fiscal 2021. |

---

Note on non-GAAP financial information: The Company uses non-GAAP measures of adjusted income from operations and net income, which are adjusted from results based on GAAP to exclude certain expenses. These non-GAAP financial measures are provided to enhance the overall understanding of the Company's current financial performance and its prospects for the future. Specifically, the Company's management believes that non-GAAP results provide useful information to the Company's board of directors, management and investors as these non-GAAP results exclude certain expenses that management believes are not indicative of the Company's core operating results and can be impacted by factors beyond management's direct control, such as the market price of the Company's Japanese Depositary Shares. These non-GAAP results are some of the primary measurements management uses to assess the Company's performance, allocate resources and plan for future periods. Reported non-GAAP results should only be considered as supplemental to results prepared in accordance with GAAP, and not considered as a substitute for, or superior to, GAAP results. These non-GAAP measures may differ from the non-GAAP measures reported by other companies in the Company's industry. A reconciliation of non-GAAP guidance measures to corresponding GAAP measures on a forward-looking basis is not available due to high variability and low visibility with respect to the charges which are excluded from these non-GAAP measures.

------

#### Item 9.01 Financial Statements and Exhibits.
(d) Exhibits.

---

| | |
|:---|:---|
| **Exhibit**<br> **Number** | **Description** |
| 99.1 | [<u>English Translation of Tanshin, dated February 10, 2023.</u>](ck1556898-ex991_6.htm) |
| 104 | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) |

---

------

#### SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

---

| | | |
|:---|:---|:---|
|  | **Techpoint, Inc.** | **Techpoint, Inc.** |
| Date: February 10, 2023 | By: | /s/ Fumihiro Kozato |
|  |  | **Fumihiro Kozato** |
|  |  | **President and Chief Executive Officer**<br> **(Principal Executive Officer)** |

---

## Exhibit 99.1

#### Exhibit 99.1

#### Financial Results for the Year Ended December 31, 2022 (Unaudited)
February 10, 2023

---

| | |
|:---|:---|
| Company Name: | Techpoint, Inc. |
| Listed Exchange: | Growth market of the Tokyo Stock Exchange |
| Identification Code: | 6697 |
| Website URL: | www.techpoint.co.jp |
| Representative: | Fumihiro Kozato, President and Chief Executive Officer |
| Contact: | Hiroshi Kondo, Vice President Corporate Marketing and |
|  | President of Techpoint Japan KK |
|  | 03-6205-8405 |
| Expected Date of Annual Shareholders Meeting: | June 1, 2023 |
| Expected Date of Annual Securities Report Filing: | March 14, 2023 |
| Expected Start Date of Dividend Payment: | February 15, 2023 |
| Supplementary Materials for Financial Results: | Included |
| Earnings Announcement for Financial Results: | Included |

---

**1.** **Unaudited Financial Results for the Year Ended December 31, 2022 (January 1, 2022 to December 31, 2022)** 

(1) Consolidated Operating Results

(Unit: thousands, % change as compared to the previous year)

---

| | | | | | | | | | | | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  |  | **Revenue** | **Revenue** | **Revenue** |  | **Income from**<br> **Operations** | **Income from**<br> **Operations** |  | **Income Before**<br> **Income Taxes** | **Income Before**<br> **Income Taxes** |  | **Net Income** | **Net Income** | **Net Income** | **Net Income** |  | **Non-GAAP**<br> **Net Income** | **Non-GAAP**<br> **Net Income** | **Non-GAAP**<br> **Net Income** | **Non-GAAP**<br> **Net Income** |
| **Year Ended December 31,** |  | **Amount** |  | **%**<br> **Change** |  | **Amount** | **%**<br> **Change** | **Amount** | **Amount** | **%**<br> **Change** | **Amount** | **Amount** | **%**<br> **Change** | **%**<br> **Change** | **%**<br> **Change** | **Amount** | **Amount** | **%**<br> **Change** | **%**<br> **Change** | **%**<br> **Change** |
| 2022 | $65083 | 65083 | 0.6 | 0.6% | $19348 | 19348 | (2.7 | $19594 | 19594 | (1.6 | $ | $17663 | 17663 | 2.2 | % | $ | $19297 | 19297 | 2.2 | % |
|  | ¥8636514 | 8636514 |  |  | ¥2567480 | 2567480 |  | ¥2600124 | 2600124 |  | ¥ | ¥2343880 | 2343880 |  |  | ¥ | ¥2560712 | 2560712 |  |  |
| 2021 | $64707 | 64707 | 88.4 | 88.4% | $19885 | 19885 | 437.7 | $19914 | 19914 | 408.5 | $ | $17287 | 17287 | 417.3 | % | $ | $18889 | 18889 | 309.7 | % |
|  | ¥8586619 | 8586619 |  |  | ¥2638740 | 2638740 |  | ¥2642588 | 2642588 |  | ¥ | ¥2293985 | 2293985 |  |  | ¥ | ¥2506570 | 2506570 |  |  |

---

The Company's consolidated financial statements are prepared in U.S. dollars. For amounts disclosed in Japanese yen, an exchange rate of ¥132.70 Japanese yen to $1.00 U.S. dollar was used based on the Telegraphic Transfer Middle Rate quoted by Mitsubishi UFJ Financial Group's official index as of December 30, 2022. This rate is also used for amounts disclosed in Japanese yen for prior periods in order to exclude the impact from the change in foreign currency exchange rates when comparing financial results in the current period to those in the prior period, which is permitted according to the current disclosure requirements for Tanshin in Japan.

The Company's comprehensive income for the year ended December 31, 2022 and 2021 was $17.5 million (¥2,327.8 million, 1.9%) and $17.2 million (¥2,285.1 million, 406.8%), respectively. The Company's non-GAAP operating income for the year ended December 31, 2022 was $21.2 million (¥2,808.1 million) based on the exclusion of stock-based compensation of $1.8 million (¥240.6 million). The Company's non-GAAP net income for the year ended December 31, 2022 was $19.3 million (¥2,560.7 million) based on the exclusion of stock-based compensation of $1.8 million (¥240.6 million) and the related income tax impact based on a 9.86% effective tax rate. The Company's non-GAAP operating income for the year ended December 31, 2021 was $21.7 million (¥2,883.6 million) based on the exclusion of stock-based compensation of $1.8 million (¥244.8 million). The Company's non-GAAP net income for the year ended December 31, 2021 was $18.9 million (¥2,506.6 million) based on the exclusion of stock-based compensation of $1.8 million (¥244.8 million) and the related income tax impact based on an assumed 13.19% effective tax rate.

------

(Unit: $ or ¥, except for % data)

---

| | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|
| **Year Ended December 31,** | **Basic EPS** | **Diluted**<br> **EPS** | **Non-GAAP**<br> **Basic EPS** | **Non-GAAP**<br> **Diluted EPS** | **Ratio of Net**<br> **Income to**<br> **Equity** | **Ratio of**<br> **Income**<br> **Before**<br> **Tax to**<br> **Total Assets** | **Operating**<br> **Margin** |
| 2022 | $0.98 | $0.95 | $1.07 | $1.04 | 31.0% | 29.1% | 29.7% |
|  | ¥130 | ¥126 | ¥142 | ¥138 |  |  |  |
| 2021 | $0.97 | $0.93 | $1.06 | $1.02 | 38.8% | 37.9% | 30.7% |
|  | ¥129 | ¥123 | ¥141 | ¥135 |  |  |  |

---

(2) Consolidated Financial Position

(Unit: thousands, except per share and % data)

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| **Year Ended December 31,** | **Total Assets** | **Net Assets** | **Total**<br> **Stockholders'**<br> **Equity** | **Stockholders'**<br> **Equity Ratio** | **Stockholders'**<br> **Equity**<br> **Per Share** |
| 2022 | $72940 | $62076 | $62076 | 85.1% | $3.41 |
|  | ¥9679138 | ¥8237485 | ¥8237485 |  | ¥453 |
| 2021 | $61938 | $51817 | $51817 | 83.7% | $2.89 |
|  | ¥8219173 | ¥6876116 | ¥6876116 |  | ¥384 |

---

(3) Consolidated Cash Flows

(Unit: thousands)

---

| | | | | |
|:---|:---|:---|:---|:---|
| **Year Ended December 31,** | **Net Cash Provided by**<br> **Operating Activities** | **Net Cash Provided by (Used in)**<br> **Investing Activities** | **Net Cash Used in**<br> **Financing Activities** | **Cash and Cash**<br> **Equivalents** |
| 2022 | $19621 | $(18559) | $(9049) | $19392 |
|  | ¥2603707 | ¥(2462779) | ¥(1200803) | ¥2573318 |
| 2021 | $14247 | $1183 | $(135) | $27379 |
|  | ¥1890577 | ¥156984 | ¥(17915) | ¥3633193 |

---

**2.** **Dividends** 

(Unit: $ or ¥, except for % data)

---

| | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **Annual Dividend and Record Date** | **Annual Dividend and Record Date** | **Annual Dividend and Record Date** | **Annual Dividend and Record Date** | **Annual Dividend and Record Date** |  |  | **Ratio of**<br> **Total**<br> **Dividends** |
| **Year Ended December 31,** | **First**<br> **Quarter** | **Second**<br> **Quarter** | **Third**<br> **Quarter** | **Year-**<br> **End** | **Total** | **Total**<br> **Dividends** | **Payout**<br> **Ratio** | **to**<br> **Net Assets** |
| 2021 | $- | $- | $- | $- | $- | $- | - | - |
|  | ¥- | ¥- | ¥- | ¥- | ¥- | ¥- | - | - |
| 2022 | $0.25 | $0.25 | $- | $- | $0.50 | $9031 | 51.0% | 15.9% |
|  | ¥33 | ¥33 | ¥- | ¥- | ¥66 | ¥1198414 |  |  |
| 2023 (Forecast) | $0.25 | $0.25 | $- | $- | $0.50 | $- |  |  |
|  | ¥33 | ¥33 | ¥- | ¥- | ¥66 | ¥- |  |  |

---

------

**3.** **Forecasted Operating Results for the Year Ending December 31, 2023 (January 1, 2023 to December 31, 2023)** 

---

| | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **Revenue** | **Revenue** | **Income from**<br> **Operations** | **Income from**<br> **Operations** | **Income Before**<br> **Income Taxes** | **Income Before**<br> **Income Taxes** | **Net Income** | **Net Income** | **Non-GAAP**<br> **Net Income** | **Non-GAAP**<br> **Net Income** |
| **Year Ending December 31,** | **Amount** | **%**<br> **Change** | **Amount** | **%**<br> **Change** | **Amount** | **%**<br> **Change** | **Amount** | **%**<br> **Change** | **Amount** | **%**<br> **Change** |
| 2023 | $62812 | (3.5)% | $16010 | (17.3)% | $18010 | (8.1)% | $16209 | (8.2)% | $17840 | (7.6)% |
|  | ¥8335152 |  | ¥2124527 |  | ¥2389927 |  | ¥2150934 |  | ¥2367368 |  |

---

(Unit: thousands, except per share and % data)

---

| | | | | |
|:---|:---|:---|:---|:---|
| **Year Ending December 31,** | **Basic EPS** | **Diluted EPS** | **Non-GAAP**<br> **Basic EPS** | **Non-GAAP**<br> **Diluted EPS** |
| 2023 | $0.89 | $0.87 | $0.98 | $0.95 |
|  | ¥118 | ¥115 | ¥130 | ¥126 |

---

The forecasted basic and diluted Earnings Per Share, or EPS, for the year ending December 31, 2023 was computed using a forecasted weighted average shares outstanding for the year ending December 31, 2023. The forecasted non-GAAP figures exclude stock-based compensation of $1.8 million (¥240.6 million) net of the related income tax impact based on an assumed 10% effective tax rate.

The Company's forecasts are made in U.S. dollars.

**4.** **Notes** 

(1) Changes in subsidiaries during the period: Not Applicable

(2) Changes in accounting policies

1. Due to codification revisions: None

2. Due to other reasons: None

(3) Stock information:

---

| | | |
|:---|:---|:---|
|  | **December 31, 2022** | **December 31, 2021** |
| Common stock | 18198737 | 17928748 |
| Treasury stock |  |  |
| Weighted average shares outstanding used in computing basic net income per share | 18108369 | 17830808 |

---

#### Audit Procedures:
This Tanshin is not in the scope of audit procedures by the Company's independent auditors under the Financial Instruments and Exchange Act of Japan. Additionally, as of the date of this Tanshin, audit procedures performed in accordance with the standards of the Public Company Accounting Oversight Board ("PCAOB") in the United States have yet to be completed. The Company's independent auditors have not compiled or been involved in the preparation of the forecasted financial results for the year ending December 31, 2023. Accordingly, they assume no responsibility for the accuracy or presentation of this information.

#### Forward Looking Statements:
The Tanshin includes forward-looking statements that involve a number of risks and uncertainties, many of which are beyond the Company's control. The Company's actual results may differ from those anticipated or expressed in these forward-looking statements as a result of various factors. All statements other than statements of historical facts contained in the Tanshin, including statements regarding the Company's future results of operations and financial position, strategy and

------

plans, and the Company's expectations for future operations, are forward-looking statements. The Company has based these forward-looking statements largely on its current expectations and projections about future events and trends that we believe may affect the Company's financial condition, results of operations, strategy, short-term and long-term business operations and objectives, and financial needs. In light of these risks, uncertainties and assumptions, the forward-looking events and circumstances discussed in the Tanshin may not occur, and actual results could differ materially and adversely from those anticipated or implied in the forward-looking statements. Although the Company believes that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, level of activity, performance, or achievements. Any forward-looking statement made by the Company in the Tanshin speaks only as of the date on which it is made. The Company disclaims any duty to update any of these forward-looking statements after the date of the Tanshin, except as required by law.

#### Investors Meeting:
Please refer to the Company's website for details on its Investors Meetings for holders of the Company's Japanese depositary shares, or JDSs.

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#### Appendix Index

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| | | |
|:---|:---|:---|
|  |  | **Page** |
| &nbsp;&nbsp;&nbsp;&nbsp;1. | **Management's Discussion and Analysis of:** |  |
| &nbsp;&nbsp;&nbsp;&nbsp;(1) | [<u>Financial Condition and Results of Operations</u>](#MDA) | 2 |
| &nbsp;&nbsp;&nbsp;&nbsp;(2) | [<u>Liquidity and Capital Resources</u>](#LIQUIDITY_AND_CAPITAL_RESOURCES) | 4 |
| &nbsp;&nbsp;&nbsp;&nbsp;(3) | [<u>Forecast for the Year Ending December 31, 2023</u>](#FORECAST) | 4 |
| &nbsp;&nbsp;&nbsp;&nbsp;(4) | [<u>Dividends</u>](#Dividend2) | 5 |
| &nbsp;&nbsp;&nbsp;&nbsp;2.  | **[<u>Accounting Standards</u>](#ACCOUNTING_STANDARDS)** | 6 |
| &nbsp;&nbsp;&nbsp;&nbsp;3. | **Consolidated Financial Statements and Supplementary Data (Unaudited)** |  |
| &nbsp;&nbsp;&nbsp;&nbsp;(1) | [<u>Consolidated Balance Sheets</u>](#BALANCE_SHEET) | 7 |
| &nbsp;&nbsp;&nbsp;&nbsp;(2) | [<u>Consolidated Statements of Operations and Comprehensive Income</u>](#INCOME) | 8 |
| &nbsp;&nbsp;&nbsp;&nbsp;(3) | [<u>Consolidated Statements of Stockholders' Equity</u>](#CONSOLIDATED_STATEMENTS_STOCKHOLDERS_EQU) | 9 |
| &nbsp;&nbsp;&nbsp;&nbsp;(4) | [<u>Consolidated Statements of Cash Flows</u>](#CASH_FLOWS) | 10 |
| &nbsp;&nbsp;&nbsp;&nbsp;(5) | [<u>Notes to Consolidated Financial Statements</u>](#Note) | 11 |

---

The Company's consolidated financial statements are prepared in U.S. dollars. For amounts disclosed in Japanese yen, an exchange rate of ¥132.70 Japanese yen to $1.00 U.S. dollar was used based on the Telegraphic Transfer Middle Rate quoted by Mitsubishi UFJ Financial Group's official index as of December 30, 2022. This rate is also used for amounts disclosed in Japanese yen for prior periods in order to exclude the impact from the change in foreign currency exchange rates when comparing financial results in the current period to those in the prior periods, which is permitted according to the current disclosure requirements for Tanshin in Japan. The Company's JDSs are traded on the Growth market of the Tokyo Stock Exchange. Each JDS represents one share of common stock.

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**1.** **Management's Discussion and Analysis** 

***(1)***  ***Comparison of the Year Ended December 31, 2022 and December 31, 2021*** 

#### Revenue

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| | | | | |
|:---|:---|:---|:---|:---|
|  | **Year Ended December 31,** | **Year Ended December 31,** | **Change** | **Change** |
|  | **2022** | **2021** | **Amount** | **%** |
|  | **(dollars in thousands)** | **(dollars in thousands)** | **(dollars in thousands)** | **(dollars in thousands)** |
| Automotive | $38985 | $32071 | $6914 | 22% |
| Security surveillance | 26098 | 32636 | (6538) | (20)% |
| Revenue | $65083 | $64707 | $376 | 1% |

---

Revenue increased $0.4 million, or 1%, for the year ended December 31, 2022 as compared to the year ended December 31, 2021. This was attributable to a $6.9 million increase in automotive market revenue as a result of an increase in the volume of shipments and an increase in average selling price attributable to product mix, offset by a $6.5 million decrease in security surveillance revenue due to a decrease in the volume of shipments offset by an increase in average selling price attributable to product mix.

Our product pricing has increased in our target markets in response to our increased manufacturing costs. Additionally, fluctuations in our overall average selling price are directly attributable to changes in product mix given the natural pricing variation of the products in our portfolio and customer base. When the product mix shifts towards the higher priced products in our portfolio, the average selling price will be higher than when the product mix shifts towards the lower price point products.

#### Revenue by geographic region
The table below sets forth the major components of revenues by the geographic region to which products were delivered as a percentage of total revenues for the year ended December 31, 2022 and 2021:

---

| | | |
|:---|:---|:---|
|  | **Year Ended** | **Year Ended** |
|  | **December 31,** | **December 31,** |
|  | **2022** | **2021** |
| China | 69% | 69% |
| Taiwan | 15 | 16 |
| South Korea | 10 | 11 |
| Japan | 4 | 3 |
| Other | 2 | 1 |
| &nbsp;&nbsp;&nbsp;&nbsp; Total revenue | 100% | 100% |

---

#### Cost of revenue and gross margin

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **Year Ended December 31,** | **Year Ended December 31,** | **Change** | **Change** |
|  | **2022** | **2021** | **Amount** | **%** |
|  | **(dollars in thousands)** | **(dollars in thousands)** | **(dollars in thousands)** | **(dollars in thousands)** |
| Cost of revenue | $29185 | $29660 | $(475) | (2)% |
| Gross margin | 55% | 54% |  |  |

---

Cost of revenue decreased $0.5 million, or 2%, for the year ended December 31, 2022 as compared to the year ended December 31, 2021. Gross margin increased to 55% for the year ended December 31, 2022 from 54% for the year ended December 31, 2021, due to changes in product mix and market mix. We expect gross margins to fluctuate in future periods due to changes in customer and product mix, average unit selling prices, manufacturing costs, adjustments to inventory, if any, and end market product demand.

------

#### Research and development expense

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **Year Ended December 31,** | **Year Ended December 31,** | **Change** | **Change** |
|  | **2022** | **2021** | **Amount** | **%** |
|  | **(dollars in thousands)** | **(dollars in thousands)** | **(dollars in thousands)** | **(dollars in thousands)** |
| Research and development | $7801 | $6371 | $1430 | 22% |

---

Research and development expense increased $1.4 million, or 22%, for the year ended December 31, 2022 as compared to the year ended December 31, 2021**,** primarily due to a $1.7 million increase in tape-out and design service cost, partially offset by a $0.2 million decrease in personnel cost, and a $0.1 million decrease in software cost.

#### Selling, general and administrative expense

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  |  | **Year Ended December 31,** | **Year Ended December 31,** | **Change** | **Change** |
|  | **Property and equipment, net** | **2022** | **2021** | **Amount** | **%** |
|  |  | **(dollars in thousands)** | **(dollars in thousands)** | **(dollars in thousands)** | **(dollars in thousands)** |
| Selling, general and administrative |  | $8749 | $8791 | $(42) | (0)% |

---

The change in selling, general, and administrative expenses was flat for the year ended December 31, 2022 as compared to the year ended December 31, 2021.

#### Other income – net

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **Year Ended December 31,** | **Year Ended December 31,** | **Change** | **Change** |
|  | **2022** | **2021** | **Amount** | **%** |
|  | **(dollars in thousands)** | **(dollars in thousands)** | **(dollars in thousands)** | **(dollars in thousands)** |
| Other income - net | $246 | $29 | $217 | 748% |

---

Other income - net for the year ended December 31, 2022 increased by $0.2 million, or 748% as compared to the year ended December 31, 2021, primarily due to an increase in interest income.

#### Provision for income taxes

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **Year Ended December 31,** | **Year Ended December 31,** | **Change** | **Change** |
|  | **2022** | **2021** | **Amount** | **%** |
|  | **(dollars in thousands)** | **(dollars in thousands)** | **(dollars in thousands)** | **(dollars in thousands)** |
| Provision for income taxes | $1931 | $2627 | $(696) | (26)% |

---

The provision for income taxes decreased by $0.7 million, or 26%, for the year ended December 31, 2022 as compared to the year ended December 31, 2021, primarily due to an increase in the foreign-derived intangible income deduction for tax purposes.

#### Net Income

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **Year Ended December 31,** | **Year Ended December 31,** | **Change** | **Change** |
|  | **2022** | **2021** | **Amount** | **%** |
|  | **(dollars in thousands)** | **(dollars in thousands)** | **(dollars in thousands)** | **(dollars in thousands)** |
| Net income | $17663 | $17287 | $376 | 2% |

---

As a result of the foregoing, net income increased by $0.4 million, or 2% for the year ended December 31, 2022 as compared to the year ended December 31, 2021.

------

***(2)***  ***Liquidity and Capital Resources*** 

Our cash, cash equivalents and short-term investments as of December 31, 2022 were $44.7 million. We believe our existing cash, cash equivalents, short-term investments and the cash we expect to generate from operations will be sufficient to meet our anticipated cash needs for at least the next 12 months.

#### Operating Activities
Our primary source of cash from operating activities has been from cash collections from our customers. We expect cash inflows from operating activities to be affected by fluctuations in sales. Our primary uses of cash from operating activities have been for personnel costs and investments in research and development and sales and marketing.

During the year ended December 31, 2022, net cash provided by operating activities was $19.6 million, due to net income of $17.7 million and non-cash charges of $2.3 million, and net cash outflows from changes in operating assets and liabilities of $0.3 million.

Non-cash charges primarily consisted of stock-based compensation of $1.8 million, operating lease amortization right-of-use assets of $0.7 million, an increase in the inventory valuation adjustment of $0.9 million and depreciation and amortization of $0.4 million, partially offset by an increase in deferred tax assets of $1.7 million.

The net cash outflows from changes in operating assets and liabilities totaled $0.3 million, consisting of a $1.1 million increase in inventory, net of valuation adjustment, as units manufactured during the period and on hand were in excess of product sales, and a $0.8 million decrease in accrued expense, lease and other liabilities. Outflows were partially offset by inflows from a $0.2 million decrease in accounts receivable due to timing of receipts from customers versus shipment of units, a $0.4 million decrease in prepaid expenses due to timing of payments, $0.2 million increase in accounts payable and a $0.8 million increase in customer deposits.

#### Investing Activities
During the year ended December 31, 2022, cash used in investing activities was $18.6 million, due to a $30.0 million cash outflow used to purchase debt securities, a $4.0 million cash outflow due to purchase marketable securities and a $0.5 million cash outflow used to purchase of property and equipment, partially offset by a $15.9 million cash inflow due to proceeds from maturities of debt securities.

#### Financing Activities
During the year ended December 31, 2022, cash used in financing activities was $9.0 million, due to a $9.0 million in payments of dividends in February and July 2022, and a $0.2 million in payments for shares withheld for tax withholdings on vesting of restricted stock units, partially offset by a $0.2 million in net proceeds from the exercise of stock options.

***(3)***  ***Forecast for the Year Ending December 31, 2023*** 

After careful consideration of current uncertainties in the global economy, instabilities in global politics, the COVID-19 pandemic and semiconductor manufacturing constraints, the Company is providing its financial forecast for the year ending December 31, 2023, as follows.

The overall worldwide semiconductor demand in 2023 is widely predicted to decrease at least 3.6% and as much as 22% from 2022 with a relatively softer demand in the first half and a stronger demand in the second half of the year. Techpoint is forecasting $62.8M of revenue to be generated only from the current product lines for 2023, a decrease of 3.5% from 2022, with a softer first half and a stronger second half of the year and a market segment mix of 60% and 40% for the Automotive market and Security market, respectively. The 2023 revenue forecast may change favorably depending on the

------

adoption rate and timing by customers of new product lines such as CMOS Image Sensor and Door-Phone. The adoption rate and timing of the new product lines remains uncertain at this time due to in-process inventory adjustments at customer sites. The company will seek to make timely disclosures after this visibility improves.

#### Company's Guidance of 2023 financials

---

| | | |
|:---|:---|:---|
| Revenue | $62.8 million | 62.8 million |
| Income from operations | 16.0 million | 16.0 million |
| Income before income taxes | 18.0 million | 18.0 million |
| GAAP net income | 16.2 million | 16.2 million |
| Non-GAAP net income | 17.8 million | 17.8 million |
| Non-GAAP Basic EPS | $— | 0.98 |

---

*<u>COVID-19 Considerations</u> - Since it is still difficult to predict the cessation of COVID-19, the Company has provided its forecast figures based on the assumption that COVID-19 will continue to have the same level of impact during fiscal year 2023 as it does at present.*

***(4)***  ***Dividends*** 

#### Dividend Policy
The Company's Board of Directors has adopted a dividend policy to link dividend payments to business performance on an ongoing basis. The amount to be paid in future dividends will be reviewed by the Board, with an aggregate dividend target amount for each fiscal year equal to approximately 50% of our annual non-GAAP net income for the prior fiscal year. The Company anticipates making payment of future dividends in two installments following its December 31 year end. This policy can be modified or terminated at any time at the discretion of the Company's Board of Directors, including the Board's determination to cease paying dividends in the future. The payment will be made in accordance with and subject to the terms of the Trust Agreement dated August 31, 2017 between the Company; Mizuho Securities Co., Ltd.; Mitsubishi UFJ Trust and Banking Corporation; and The Master Trust Bank of Japan, Ltd., which agreement governs the rights of JDS holders.

#### 2023 Dividend
On December 15, 2022, the Company announced a special cash dividend of an aggregate of $0.50 per share for fiscal 2023, payable in two equal installments of $0.25 per share. The first installment of the dividend has been accrued as of December 31, 2022 in the amount of $4.5 million and is payable to stockholders of record on January 31, 2023. The payment date for the first installment on its shares of common stock (including common stock underlying its Japanese Depositary Shares (JDS)) will be on or around February 15, 2023. The second installment of the dividend is not accrued as of December 31, 2022 because it is anticipated to be paid in the third fiscal quarter of 2023 and the declaration of the second installment is subject to the Board approval and in accordance with applicable law. The Company intends to provide additional information about the second installment of the dividend in the second fiscal quarter of 2023. The timing for receipt of the dividend payments by individual holders of Techpoint common stock and JDSs will vary due to the payment process for JDS holders. The amount paid to JDS holders will be reduced by any applicable U.S. withholding income tax, and then converted into Japanese Yen. Once the dividend is converted into Japanese Yen, a distribution payment fee and any additional local taxes will be paid from the distribution amount. As a result, the net amount of the first dividend installment that is ultimately received by JDS holders will be less than $0.25 per JDS. The Company anticipates that JDS holders will receive the payment of the first installment of the fiscal 2023 dividend in their accounts in late-March 2023.

**2.** **Accounting Policy Changes** 

None.

------

**3.** **Consolidated Financial Statements and Supplementary Data (Unaudited)** 

***(1)***  ***Consolidated Balance Sheets*** 

(Unit: thousands, except share data)

---

| |
|:---|
| **Assets** |
| &nbsp;&nbsp;&nbsp;&nbsp; Current assets: |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Cash and cash equivalents |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Short-term investments |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Accounts receivable |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Inventory |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Prepaid expenses and other current assets |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total current assets |
| &nbsp;&nbsp;&nbsp;&nbsp; Property and equipment - net |
| &nbsp;&nbsp;&nbsp;&nbsp; Deferred tax assets |
| &nbsp;&nbsp;&nbsp;&nbsp; Right-of-use assets |
| &nbsp;&nbsp;&nbsp;&nbsp; Long-term investments |
| &nbsp;&nbsp;&nbsp;&nbsp; Other assets |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total assets |
| **Liabilities and Stockholders' Equity** |
| &nbsp;&nbsp;&nbsp;&nbsp; Current liabilities: |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Accounts payable |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Accrued liabilities |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Customer deposits |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Lease liabilities |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Dividend payable |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total current liabilities |
| &nbsp;&nbsp;&nbsp;&nbsp; Other liabilities |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total liabilities |
| &nbsp;&nbsp;&nbsp;&nbsp; Commitments and contingencies |
| &nbsp;&nbsp;&nbsp;&nbsp; Stockholders' equity |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Preferred stock, par value $0.0001 per share - 5,000,000 shares authorized as of December 31, 2022 and 2021; nil shares issued and outstanding as of December 31, 2022 and 2021. |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Common stock, par value $0.0001 per share - 75,000,000 shares authorized as of December 31, 2022 and 2021; 18,198,737 and 17,928,748 shares issued and outstanding as of December 31, 2022 and 2021, respectively |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Additional paid-in capital |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Accumulated other comprehensive (loss) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Retained earnings |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total stockholders' equity |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total liabilities and stockholders' equity |

---

------

***(2)***  ***Consolidated Statements of Operations and Comprehensive Income*** 

(Unit: thousands, except share and per share data)

---

| |
|:---|
| Revenue |
| Cost of revenue |
| Gross profit |
| Operating expenses |
| &nbsp;&nbsp;&nbsp;&nbsp; Research and development |
| &nbsp;&nbsp;&nbsp;&nbsp; Selling, general and administrative |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Total operating expenses |
| Income from operations |
| Other income - net |
| Income before income taxes |
| Income taxes |
| Net income |
| &nbsp;&nbsp;&nbsp;&nbsp; Basic |
| &nbsp;&nbsp;&nbsp;&nbsp; Diluted |
| Weighted-average shares outstanding used in computing net income per share: |
| &nbsp;&nbsp;&nbsp;&nbsp; Basic |
| &nbsp;&nbsp;&nbsp;&nbsp; Diluted |
| Comprehensive income: |
| &nbsp;&nbsp;&nbsp;&nbsp; Net income |
| &nbsp;&nbsp;&nbsp;&nbsp; Other comprehensive income (loss), net of tax: |
| &nbsp;&nbsp;&nbsp;&nbsp; Unrealized loss on available-for-sale debt securities, net of tax benefit of $32, and $18 for year ended December 31, 2022 and 2021, respectively) |
| &nbsp;&nbsp;&nbsp;&nbsp; Comprehensive income |

---

------

***(3)***  ***Consolidated Statements of Stockholders' Equity*** 

(Unit: thousands, except share data)

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **Common Stock** | **Common Stock** | **Additional**<br> **Paid-In** | **Accumulated**<br> **Other**<br> **Comprehensive** | **Retained** | **Total**<br> **Stockholders'** |
|  | **Shares** | **Amount** | **Capital** | **Income (Loss)** | **Earnings** | **Equity** |
| Balances as of December 31, 2020 | 17690062 | $2 | $22523 | $41 | $14807 | $37373 |
|  |  | ¥265 | ¥2988802 | ¥5441 | ¥1964889 | ¥4959397 |
| &nbsp;&nbsp;&nbsp;&nbsp; Other comprehensive loss - unrealized loss on available-for-sale debt securities |  | $— | $— | $(67) | $— | $(67) |
|  |  | ¥— | ¥— | ¥(8891) | ¥— | ¥(8891) |
| &nbsp;&nbsp;&nbsp;&nbsp; Issuance of common stock upon exercise of stock options and vesting of early exercised options | 110084 | $— | $182 | $— | $— | $182 |
|  |  | ¥— | ¥24151 | ¥— | ¥— | ¥24151 |
| &nbsp;&nbsp;&nbsp;&nbsp; Issuance of common stock upon vesting of restricted stock units | 151608 | $— | $— | $— | $— | $— |
|  |  | ¥— | ¥— | ¥— | ¥— | ¥— |
| &nbsp;&nbsp;&nbsp;&nbsp; Shares repurchased for tax withholdings on vesting of restricted stock units | (23006) | $— | $(299) | $— | $— | $(299) |
|  |  | ¥— | ¥(39677) | ¥— | ¥— | ¥(39677) |
| &nbsp;&nbsp;&nbsp;&nbsp; Stock-based compensation |  | $— | $1845 | $— | $— | $1845 |
|  |  | ¥— | ¥244832 | ¥— | ¥— | ¥244832 |
| &nbsp;&nbsp;&nbsp;&nbsp; Cash dividends declared ($0.25 per share) |  | $— | $— | $— | $(4504) | $(4504) |
|  |  | ¥— | ¥— | ¥— | ¥(597681) | ¥(597681) |
| &nbsp;&nbsp;&nbsp;&nbsp; Net income |  | $— | $— | $— | $17287 | $17287 |
|  |  | ¥— | ¥— | ¥— | ¥2293985 | ¥2293985 |
| Balances as of December 31, 2021 | 17928748 | $2 | $24251 | $(26) | $27590 | $51817 |
|  |  | ¥265 | ¥3218108 | ¥(3450) | ¥3661193 | ¥6876116 |
| &nbsp;&nbsp;&nbsp;&nbsp; Other comprehensive loss - unrealized loss on available-for-sale debt securities |  | $— | $— | $(121) | $— | $(121) |
|  |  | ¥— | ¥— | ¥(16057) | ¥— | ¥(16057) |
| &nbsp;&nbsp;&nbsp;&nbsp; Issuance of common stock upon exercise of stock options and vesting of early exercised options | 119455 | $— | $210 | $— | $— | $210 |
|  |  | ¥— | ¥27867 | ¥— | ¥— | ¥27867 |
| &nbsp;&nbsp;&nbsp;&nbsp; Issuance of common stock upon vesting of restricted stock units | 173375 | $— | $— | $— | $— | $— |
|  |  | ¥— | ¥— | ¥— | ¥— | ¥— |
| &nbsp;&nbsp;&nbsp;&nbsp; Shares repurchased for tax withholdings on vesting of restricted stock units | (22841) | $— | $(228) | $— | $— | $(228) |
|  |  | ¥— | ¥(30256) | ¥— | ¥— | ¥(30256) |
| &nbsp;&nbsp;&nbsp;&nbsp; Stock-based compensation |  | $— | $1813 | $— | $— | $1813 |
|  |  | ¥— | ¥240585 | ¥— | ¥— | ¥240585 |
| &nbsp;&nbsp;&nbsp;&nbsp; Cash dividends declared ($0.25 per share) |  | $— | $— | $— | $(9078) | $(9078) |
|  |  | ¥— | ¥— | ¥— | ¥(1204650) | ¥(1204650) |
| &nbsp;&nbsp;&nbsp;&nbsp; Net income |  | $— | $— | $— | $17663 | $17663 |
|  |  | ¥— | ¥— | ¥— | ¥2343880 | ¥2343880 |
| Balances as of December 31, 2022 | 18198737 | $2 | $26046 | $(147) | $36175 | $62076 |
|  |  | ¥265 | ¥3456304 | ¥(19507) | ¥4800423 | ¥8237485 |

---

------

***(4)***  ***Consolidated Statements of Cash Flows*** 

(Unit: thousands, except share data)

---

| |
|:---|
| **Cash Flows From Operating Activities** |
| &nbsp;&nbsp;&nbsp;&nbsp; Net income |
| &nbsp;&nbsp;&nbsp;&nbsp; Adjustments to reconcile net income to net cash provided by operating activities: |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Depreciation and amortization |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Stock-based compensation |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Amortization of premium on available-for-sale investments |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Write-off of deferred costs and long lived assets |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Inventory valuation adjustment |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Deferred income taxes) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Noncash lease expense |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Changes in operating assets and liabilities: |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Accounts receivable) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Inventory) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Prepaid expenses and other current assets) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other assets |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Accounts payable |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Accrued expenses) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Customer deposits |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Lease liabilities) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Other liabilities) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Net cash provided by operating activities |
| **Cash Flows From Investing Activities** |
| &nbsp;&nbsp;&nbsp;&nbsp; Purchase of property and equipment) |
| &nbsp;&nbsp;&nbsp;&nbsp; Purchase of debt securities) |
| &nbsp;&nbsp;&nbsp;&nbsp; Purchase of marketable securities) |
| &nbsp;&nbsp;&nbsp;&nbsp; Proceeds from maturities of debt securities |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Net cash provided by (used in) investing activities |
| **Cash Flows From Financing Activities** |
| &nbsp;&nbsp;&nbsp;&nbsp; Payment of dividends) |
| &nbsp;&nbsp;&nbsp;&nbsp; Net proceeds from exercise of stock options |
| &nbsp;&nbsp;&nbsp;&nbsp; Payment for shares withheld for tax withholdings on vesting of restricted stock units) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Net cash used in financing activities) |
| Net (decrease) increase in cash and cash equivalents |
| Cash and cash equivalents at beginning of period |
| Cash and cash equivalents at end of period |
| **Supplemental Disclosure of Cash Flow Information** |
| &nbsp;&nbsp;&nbsp;&nbsp; Cash paid for income taxes |
| **Supplemental Disclosure of Noncash Investing and Financing Information** |
| &nbsp;&nbsp;&nbsp;&nbsp; Property and equipment purchased but not yet paid |
| &nbsp;&nbsp;&nbsp;&nbsp; Vesting of early exercised options |
| &nbsp;&nbsp;&nbsp;&nbsp; Cash dividend declared but not yet paid |

---

------

***(5)***  ***Notes to Consolidated Financial Statements*** 

#### Going Concern
Not applicable.

#### Basis of Consolidation and Accounting Standards
The Company's consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries, and have been prepared in conformity with generally accepted accounting principles in the United States ("GAAP") and applicable rules and regulations of the Securities and Exchange Commission ("SEC"). All intercompany balances and transactions have been eliminated. The functional currency of each of the Company's subsidiaries is the U.S. dollar. Foreign currency gains or losses are recorded as other income (expense) in the Consolidated Statements of Operations and Comprehensive Income.

#### Segment Information
The Company's chief operating decision maker, the chief executive officer, reviews financial information presented on a consolidated basis for purposes of making operating decisions and assessing financial performance on a regular basis. Accordingly, the Company considers itself to be one reportable segment, which is comprised of one operating segment, the designing, marketing and selling of mixed-signal integrated circuits for the security surveillance and automotive markets.

Product revenue from customers is designated based on the geographic region to which the product is delivered. Revenue by geographic region was as follows (in thousands):

---

| | | |
|:---|:---|:---|
|  | **Year Ended** | **Year Ended** |
|  | **December 31,** | **December 31,** |
|  | **2022** | **2021** |
| China | $45001 | $44549 |
| Taiwan | 9503 | 10611 |
| South Korea | 6533 | 6921 |
| Japan | 2593 | 1792 |
| Other | 1453 | 834 |
| Total revenue | $65083 | $64707 |

---

Revenue by principal product lines were as follows (in thousands):

---

| | | |
|:---|:---|:---|
|  | **Year Ended** | **Year Ended** |
|  | **December 31,** | **December 31,** |
|  | **2022** | **2021** |
| Automotive | $38985 | $32071 |
| Security surveillance | 26098 | 32636 |
| Total revenue | $65083 | $64707 |

---

------

#### Net Income Per Share
The following table presents the calculation of basic and diluted net income per share (amounts in thousands, except per share data):

---

| | | |
|:---|:---|:---|
|  | **Year Ended** | **Year Ended** |
|  | **December 31,** | **December 31,** |
|  | **2022** | **2021** |
| Numerator: |  |  |
| Basic and diluted: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Net income | $17663 | $17287 |
| Denominator: |  |  |
| Basic shares: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Weighted-average shares used in computing basic net income per share | 18108369 | 17830808 |
| Diluted shares: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Effect of potentially dilutive securities: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Stock awards | 428947 | 735074 |
| &nbsp;&nbsp;&nbsp;&nbsp; Weighted-average shares used in computing diluted net income per share | 18537316 | 18565882 |
| Net income per share: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Basic | $0.98 | $0.97 |
| &nbsp;&nbsp;&nbsp;&nbsp; Diluted | $0.95 | $0.93 |
| Non-GAAP net income (1): |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Non-GAAP net income | $19297 | $18889 |
| Basic shares: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Weighted-average shares used in computing basic non-GAAP net income per share | 18108369 | 17830808 |
| Non-GAAP net income per share: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp; Non-GAAP Basic | $1.07 | $1.06 |

---

------

(1) Please refer to "Consolidated Operating Results" under "Unaudited Financial Results for the Year Ended December 31, 2022 (January 1, 2022 to December 31, 2022)" for further non-GAAP information.

#### Subsequent event
None.