10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2019

OR

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _______ to _______

Commission File Number: 000-55843

Techpoint, Inc.

(Exact Name of Registrant as Specified in its Charter)

Delaware	80-0806545
( State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

2550 N. First Street, #550

San Jose, CA 95131 USA

(408) 324-0588

(Address, including zip code, and telephone number,

including area code, of registrant’s principal executive offices)

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

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Japanese Depositary Shares, each representing one Common Stock Share, Par Value $0.0001 Per Share	M-6697	Tokyo Stock Exchange (Mothers Market)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.     Yes  ☐    No  ☒

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes  ☒    No  ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☐	Accelerated filer	☒
Non-accelerated filer	☐	Smaller reporting company	☐
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. ☒

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ☐    No  ☒

As of Aug 5, 2019, the registrant had 17,372,413 shares of common stock, $0.0001 par value per share, outstanding.

Table of Contents

		Page
PART I.	FINANCIAL INFORMATION
Item 1.	Financial Statements (Unaudited)	1
	Condensed Consolidated Balance Sheets	1
	Condensed Consolidated Statements of Operations	2
	Condensed Consolidated Statements of Stockholders’ Equity	3
	Condensed Consolidated Statements of Cash Flows	4
	Notes to Unaudited Condensed Consolidated Financial Statements	5
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	16
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	24
Item 4.	Controls and Procedures	24
PART II.	OTHER INFORMATION
Item 1.	Legal Proceedings	25
Item 1A.	Risk Factors	25
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	25
Item 6.	Exhibits	25
	Signatures	27

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements.

Techpoint, Inc.

Condensed Consolidated Balance Sheets

(in thousands, except share and per share amounts, unaudited)

	June 30,		December 31,
	2019		2018
Assets
Current assets:
Cash and cash equivalents	$	26,238	$	25,941
Accounts receivable		155		236
Inventory		3,781		2,207
Prepaid expenses and other current assets		943		936
Total current assets		31,117		29,320
Property and equipment - net		509		611
Deferred tax assets		673		560
Lease assets		525		—
Other assets		210		215
Total assets	$	33,034	$	30,706
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	1,321	$	1,063
Accrued liabilities		754		718
Liability related to early exercised stock options		102		136
Customer deposits		1,059		2
Lease liabilities		499		—
Total current liabilities		3,735		1,919
Other liabilities		198		156
Total liabilities		3,933		2,075
Commitments and contingencies (Note 5)
Stockholders’ equity
Preferred stock, par value $0.0001 per share - 5,000,000 shares authorized    as of June 30, 2019 and December 31, 2018; nil shares issued and    outstanding as of June 30, 2019 and December 31, 2018		—		—
Common stock, par value $0.0001 per share - 75,000,000 shares    authorized as of June 30, 2019 and December 31, 2018; 17,255,610 and    17,130,507 shares issued and outstanding as of June 30, 2019 and    December 31, 2018, respectively		2		2
Additional paid-in-capital		20,111		19,358
Retained earnings		8,988		9,271
Total stockholders’ equity		29,101		28,631
Total liabilities and stockholders’ equity	$	33,034	$	30,706

See accompanying notes to condensed consolidated financial statements.

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Techpoint, Inc.

Condensed Consolidated Statements of Operations

(in thousands, except share and per share amounts, unaudited)

	Three Months Ended					Six Months Ended
	June 30,					June 30,
	2019		2018			2019			2018
Revenue	$	7,175	$	6,470		$	12,196		$	13,523
Cost of revenue		3,402		3,008			5,988			6,293
Gross profit		3,773		3,462			6,208			7,230
Operating expenses
Research and development		1,600		1,578			3,076			3,789
Selling, general and administrative		1,828		1,572			3,497			3,193
Total operating expenses		3,428		3,150			6,573			6,982
Income (loss) from operations		345		312			(365	)		248
Other income (expense)		52		(165	)		39			224
Income (loss) before income taxes		397		147			(326	)		472
Income tax provision (benefits)		62		(54	)		(43	)		(202	)
Net income (loss)	$	335	$	201		$	(283	)	$	674
Net income (loss) per share:
Basic	$	0.02	$	0.01		$	(0.02	)	$	0.04
Diluted	$	0.02	$	0.01		$	(0.02	)	$	0.04
Weighted average shares outstanding in computing net income (loss) per share
Basic		17,228,184		16,940,745			17,200,595			16,883,574
Diluted		17,814,303		18,017,564			17,200,595			18,050,768

See accompanying notes to condensed consolidated financial statements.

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Techpoint, Inc.

Condensed Consolidated Statements of Stockholders’ Equity

(in thousands, except share amounts, unaudited)

	Common Stock
	Shares		Amount		Additional Paid-In Capital		Retained Earnings		Total Stockholders' Equity
Balances as of December 31, 2017		16,752,171	$	2	$	17,580	$	7,386	$	24,968
Issuance of common stock upon exercise of stock options and vesting of early exercised options		132,348		—		138		—		138
Stock-based compensation		—		—		270		—		270
Net Income		—		—		—		473		473
Balances as of March 31, 2018		16,884,519	$	2	$	17,988	$	7,859	$	25,849
Issuance of common stock upon exercise of stock options and vesting of early exercised options		114,658		—		122		—		122
Stock-based compensation		—		—		193		—		193
Net Income		—		—		—		201		201
Balances as of June 30, 2018		16,999,177		2		18,303		8,060		26,365

	Common Stock
	Shares			Amount		Additional Paid-In Capital			Retained Earnings			Total Stockholders' Equity
Balances as of December 31, 2018		17,130,507		$	2	$	19,358		$	9,271		$	28,631
Issuance of common stock upon exercise of stock options and vesting of early exercised options		46,666			—		64			—			64
Issuance of common stock upon vesting of RSUs		14,200			—		—			—			—
Shares repurchased for tax withholdings on vesting of RSUs		(1,510	)		—		(7	)		—			(7	)
Stock-based compensation		—			—		336			—			336
Net loss		—			—		—			(618	)		(618	)
Balances as of March 31, 2019		17,189,863		$	2	$	19,751		$	8,653		$	28,406
Issuance of common stock upon exercise of stock options and vesting of early exercised options		38,000			—		36			—			36
Issuance of common stock upon vesting of RSUs		31,300			—		—			—			—
Shares repurchased for tax withholdings on vesting of RSUs		(3,553	)		—		(24	)		—			(24	)
Stock-based compensation		—			—		348			—			348
Net Income		—			—		—			335			335
Balances as of June 30, 2019		17,255,610		$	2	$	20,111		$	8,988		$	29,101

See accompanying notes to condensed consolidated financial statements.

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Techpoint, Inc.

Condensed Consolidated Statements of Cash Flows

(in thousands, unaudited)

	Six Months Ended
	June 30,
	2019			2018
Cash Flows From Operating Activities
Net income (loss)	$	(283	)	$	674
Adjustments to reconcile net income (loss) to net cash provided by    operating activities:
Depreciation and amortization		489			107
Stock-based compensation		684			463
Provision for excess inventories		234			41
Deferred income taxes		(113	)		(235	)
Changes in operating assets and liabilities:
Accounts receivable		81			(62	)
Inventory		(1,808	)		739
Prepaid expenses and other current assets		(17	)		173
Other assets		(3	)		(64	)
Accounts payable		410			279
Accrued expenses		59			(8	)
Customer deposits		1,057			23
Lease liabilities		(155	)		—
Other liabilities		(148	)		10
Net cash provided by operating activities		487			2,140
Cash Flows From Investing Activities
Purchase of property and equipment		(225	)		(143	)
Net cash used in investing activities		(225	)		(143	)
Cash Flows From Financing Activities
Net proceeds from exercise of stock options		66			281
Payment for shares withheld for tax withholdings on vesting of restricted stock units		(31	)		—
Payment of deferred costs		—			(18	)
Net cash provided by financing activities		35			263
Net increase in cash and cash equivalents		297			2,260
Cash and cash equivalents at beginning of period		25,941			21,536
Cash and cash equivalents at end of period	$	26,238		$	23,796
Supplemental Disclosure of Cash Flow Information
Cash paid for income taxes	$	13		$	23
Supplemental Disclosure of Noncash Investing and Financing Information
Vesting of early exercised options	$	34		$	36
Property and equipment purchased but not yet paid	$	—		$	54
Unpaid deferred costs	$	—		$	39

See accompanying notes to condensed consolidated financial statements.

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Techpoint, Inc.

Notes to Condensed Consolidated Financial Statements

(unaudited)

1. Organization and Summary of Significant Accounting Policies

Organization

Techpoint, Inc. and its wholly-owned subsidiaries (the “Company”) was originally incorporated in California in April 2012 and reincorporated into Delaware in July 2017. The Company is a fabless semiconductor company that designs, markets and sells mixed-signal integrated circuits for multiple video applications in the security surveillance and automotive markets. The Company is headquartered in San Jose, California.

Basis of Consolidation and Significant Accounting Policies

The accompanying unaudited condensed 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 Condensed Consolidated Statements of Operations.

The accompanying unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and related notes for the year ended December 31, 2018 contained in our Annual Report on Form 10-K filed with the SEC on March 15, 2019.

In the opinion of management, the accompanying unaudited condensed consolidated financial statements reflect all adjustments, which only include normal recurring adjustments, necessary to present fairly the Company’s financial position, results of operations and cash flows for the interim periods and are not necessarily indicative of the results to be expected for the full fiscal year or for any other future annual or interim periods.

Revenue Recognition

The Company principally sells its products to distributors who, in turn, sell to original design manufacturers, or ODMs, contract manufacturers and design houses. The Company adopted ASC Topic 606, or ASC 606, Revenue from Contracts with Customers on January 1, 2018. Under ASC 606, the Company satisfies its performance obligations and primarily recognizes revenue upon shipment, at which time control of its products is transferred to its customers. The Company applies the following five-step model for recognizing revenue from contracts with customers: (1) identify the contract with a customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to the performance obligations in the contract; and (5) recognize revenue when the performance obligation is satisfied.

Product revenues consist of sales of mixed-signal integrated circuits into the security surveillance and automotive camera markets. The Company generally requires advance payments from customers and records these advance payments, or contract liabilities, as customer deposits on its Consolidated Balance Sheet. Since the Company’s performance obligations relate to contracts with a duration of less than one year, the Company has elected to apply the optional exemption practical expedient provided in ASC 606 and is therefore not required to disclose the aggregate amount of the transaction price allocated to performance obligations that are unsatisfied or partially unsatisfied at the end of the reporting period. The Company provides product assurance warranty only and does not offer warranties to be purchased separately. The Company does not offer variable consideration or other significant payment terms and allocates the transaction price to each distinct product based on a relative standalone selling price. Revenue is recognized when control of the product is transferred to our customers, upon shipment, at which time the performance obligation is satisfied. The Company’s shipping terms are primarily FOB (free on board) shipping point, whereby legal title, risks and rewards of ownership, and physical possession are transferred to the customer upon shipment. Substantially all of the Company’s customers pay in advance of shipment, and no stock rotation, price protection or return rights are offered.

Use of Management’s Estimates

The preparation of condensed consolidated financial statements in conformity with GAAP requires management to make estimates, judgments and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and reported amounts ofrevenue and expenses during the reporting period. Significant estimates included in the condensed consolidated financial statements include inventory valuation, valuation allowance for recorded

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deferred tax assets, and stock based compensation. These estimates are based upon information available as of the date of the condensed consolidated financial statements. Actual results could differ materially from those estimates.

Concentration of Customer and Credit Risk

Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash and cash equivalents and trade receivables. Risks associated with cash and cash equivalents are mitigated by banking with creditworthy institutions. The Company generally requires advance payments from customers. The Company also performs credit evaluations of its customers and provides credit to certain customers in the normal course of business. The Company has not incurred bad debt write-offs during any of the periods presented.

For each significant customer, or distributor, and significant end-customer, revenue as a percentage of total revenue is as follows:

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2019			2018			2019			2018
Customer
Customer A		54	%		75	%		58	%		80	%
Customer B	*				11	%	*			*
End-Customer
End-Customer A (1)		40	%		63	%		38	%		65	%
End-Customer B (1)		15	%	*				19	%	*

* Less than 10%

(1) Sales to End-Customer A and End-Customer B primarily occurred through Customer A

Recently Adopted Accounting Pronouncements

Stock Compensation Guidance. In June 2018, the FASB issued ASU No 2018-07, Stock Compensation: Improvements to Nonemployee Share-Based Payment Accounting, which amends ASC 718 to include share-based payments issued to nonemployees for goods or services. The amendments in this update are effective for annual periods beginning after December 15, 2018, and interim periods therein. Early adoption is permitted, but no earlier than a company’s adoption date of Topic 606, Revenue from Contracts with Customers. The Company early adopted this guidance on July 1, 2018 during the third quarter of fiscal 2018, which resulted in no impact on its condensed consolidated financial statements.  

Lease Guidance. In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842). ASU 2016-02 requires lessees to recognize all leases with terms in excess of one year on their balance sheet as a right of use asset and a lease liability at the commencement date. The new standard also simplifies the accounting for sale and leaseback transactions. The amendments in this update are effective for annual periods beginning after December 15, 2018, and interim periods therein and must be adopted using a modified retrospective method for leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements. The new standard also requires lessees and lessors to disclose qualitative and quantitative information about their leases and significant judgements made in applying the standard. The Company adopted this guidance on January 1, 2019 in the first quarter of fiscal 2019 under the modified retrospective transition method approach. The Company elected to use the package of practical expedients and did not reassess whether any expired or existing contracts are or contain leases, the lease classification for any expired or existing leases, or initial direct costs for any existing leases, and the practical expedient to not separate lease and non-lease components. Additionally, the Company elected the short-term lease exception and excluded all leases that are twelve or less months in duration. As a result, financial information for reporting periods beginning after January 1, 2019 are reported under the new standard, while comparative financial information has not been adjusted and continues to be reported in accordance with the previous standard. As a result, the Company recognized $0.8 million of lease assets and $0.9 million of lease liabilities, of which $0.2 million is recorded as non-current lease liabilities on the Company’s Condensed Consolidated Balance Sheet as of January 1, 2019. Additionally upon adoption, there was no impact on the Condensed Consolidated Statement of Operations and no cumulative effect adjustment to retained earnings as of January 1, 2019.

Revenue Recognition Guidance. In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers, creating ASC 606. Upon adoption, revenue is recognized under a five-step process: 1. Identify the contract(s) with a customer. 2. Identify the performance obligations in the contract. 3. Determine the transaction price. 4. Allocate the transaction price to performance obligations in the contract. 5. Recognize revenue when (or as) the entity satisfies a performance obligation. Additional

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considerations under this update include accounting for costs to obtain or fulfill a contract with a customer and additional quantitative and qualitative disclosures. ASU 2014-09 became effective for periods beginning after December 15, 2017 (including interim reporting periods within those periods), or the first quarter 2018, and allows for retrospective or modified retrospective application. The Company adopted this guidance in the first quarter of fiscal 2018 under the modified retrospective approach as applied to customer contracts that were not completed as of January 1, 2018. As a result, financial information for reporting periods beginning after January 1, 2018 are reported under the new standard. There was no cumulative impact to adopting the new standard on the Company’s consolidated financial statements.

2. Balance Sheet Components

Inventory

Inventory consists of the following (in thousands):

	June 30,		December 31,
	2019		2018
Work in process	$	1,891	$	961
Finished goods		1,890		1,246
Total inventory	$	3,781	$	2,207

Property and Equipment - Net

Property and equipment – net consists of the following (in thousands):

	June 30,			December 31,
	2019			2018
Computer equipment and software	$	1,247		$	1,173
Leasehold improvements		84			84
Furniture		30			30
Total property and equipment		1,361			1,287
Less: accumulated depreciation		(852	)		(676	)
Total property and equipment - net	$	509		$	611

The Company recorded $0.1 million and $0.1 million of depreciation expense for the three months ended June 30, 2019 and 2018, respectively, and $0.2 million and $0.1 million for the six months ended June 30, 2019 and 2018, respectively.

Accrued Liabilities

Accrued liabilities consist of the following (in thousands):

	June 30,		December 31,
	2019		2018
Payroll-related expenses	$	453	$	398
Accrued warranty		90		73
Taxes payable		65		28
Engineering services		60		134
Professional fees		32		48
Other		54		37
Total accrued liabilities	$	754	$	718

Customer Deposits

Customer deposits represent payments received in advance of shipments and fluctuate depending on timing of customer pre-payments and product shipment. Customer deposits were $1.1 million, $0.2 million and $2,000 as of June 30, 2019, March 31, 2019 and December 31, 2018, respectively. The Company generally expects to recognize revenue from customer deposits during the three

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month interim period immediately following the balance sheet date. During the three months ended June 30, 2019, the Company recognized $0.2 million of revenue from the March 31, 2019 customer deposits balance. During the six months ended June 30, 2019, the Company recognized $2,000 of revenue from the December 31, 2018 customer deposits balance.

3. Fair Value Measurements

Fair value is defined as the exchange price that would be received from selling an asset or paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. The Company measures financial assets and liabilities at fair value at each reporting period using a fair value hierarchy which requires us to maximize the use of observable inputs and minimize the use of unobservable inputs. A financial instrument’s classification within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. Three levels of inputs may be used to measure fair value:

Level 1. Quoted prices in active markets for identical assets or liabilities.

Level 2. Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data.

Level 3. Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities, including pricing models, discounted cash flow methodologies and similar techniques.

Financial assets measured at fair value on a recurring basis were as follows (in thousands):

	Fair Value Measurement at Reporting Date Using
	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total
As of June 30, 2019
Assets:
Money market funds	$	6,986	$	—	$	—	$	6,986
As of December 31, 2018
Assets:
Money market funds	$	6,974	$	—	$	—	$	6,974

As of June 30, 2019 and December 31, 2018, money market funds are classified as Level 1 because they are valued using quoted market prices and are included in cash and cash equivalents.

4. Segment Information

Operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker in deciding how to allocate resources and in assessing performance.

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.

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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):

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2019		2018		2019		2018
China	$	4,689	$	5,113	$	8,185	$	11,184
Taiwan		1,285		133		1,893		344
South Korea		860		801		1,551		1,313
Japan		334		423		555		677
Other		7		-		12		5
Total revenue	$	7,175	$	6,470	$	12,196	$	13,523

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

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2019		2018		2019		2018
Security surveillance	$	4,322	$	5,252	$	7,812	$	11,539
Automotive		2,853		1,218		4,384		1,984
Total revenue	$	7,175	$	6,470	$	12,196	$	13,523

Long-lived assets are attributed to the geographic region where they are located. Net long-lived assets by geographic region were as follows (in thousands):

	June 30,		December 31,
	2019		2018
Taiwan	$	348	$	399
Japan		84		104
United States		71		102
South Korea		5		4
China		1		2
Total property and equipment - net	$	509	$	611

5. Commitments and Contingencies

Operating leases

The Company leases facilities under non-cancellable lease agreements expiring through fiscal year 2020. The Company’s agreements do not include variable lease payments or any restrictions or covenants imposed by the leases. As the rate implicit in each lease agreement is not readily determinable, the Company’s incremental borrowing rate was used as the discount rate. The Company’s lease assets and lease liabilities have been adjusted for initial direct costs and prepaid rent but do not reflect any options to extend or terminate its lease agreements, any residual value guarantees, or any leases that have yet to be commenced.

As of June 30, 2019, the right of use asset and lease liabilities related to operating leases were as follows (in thousands):

	June 30,
	2019
Lease assets	$	525
Lease liabilities - Current	$	499
Lease liabilities - Non-Current		34
Total lease liabilities	$	533

Rent expense under operating leases was $0.2 million and $0.1 million for the three months ended June 30, 2019 and 2018, respectively, and $0.3 million and $0.3 million for the six months ended June 30, 2019 and 2018, respectively.

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The following table summarizes the Company’s lease costs and weighted-average assumptions used in determining its lease assets and lease liabilities (in thousands):

	Six Months Ended
	June 30, 2019
Operating lease cost (1)	$	331
Cash paid for operating leases (1)	$	345
Lease assets obtained in exchange for operating lease liabilities (2)	$	839
Weighted average remaining term for operating leases	0.88 years
Weighted average discount rate for operating leases		6.0	%

(1) Operating lease cost and Cash paid for operating leases for the three months ended June 30, 2019 were $0.2 million and $0.2 million, respectively.

(2) Represents the amount for operating leases existing on January 1, 2019. There were no new leases that commenced in six months ended June 30, 2019.

As of December 31, 2018, the aggregate future minimum lease payments under operating leases consist of the following (in thousands):

Year Ending December 31,	Amount
2019	$	645
2020		201
Total	$	846

As of June 30, 2019, the aggregate future minimum lease payments under operating leases consist of the following (in thousands):

Year Ending December 31,	Amount
2019 (remaining six months)	$	344
2020		201
Total		545
Less effects of discounting		(12	)
Lease liabilities recognized	$	533

Purchase Commitments

As of June 30, 2019, the Company had purchase commitments with its third-party suppliers through fiscal year 2022. Future minimum payments under purchase commitments are $0.1 million for the remaining six months ending December 31, 2019 and $0.3 million, $0.2 million and $49,000 for the year ending December 31, 2020, 2021 and 2022, respectively.

Litigation

Although the Company is not currently subject to any litigation, and no litigation is currently threatened against it, the Company may be subject to legal proceedings, claims and litigation, including intellectual property litigation, arising in the ordinary course of business. Such matters are subject to many uncertainties and outcomes and are not predictable with assurance. The Company accrues amounts that it believes are adequate to address any liabilities related to legal proceedings and other loss contingencies that the Company believes will result in a probable loss that is reasonably estimable.

Indemnification

During the normal course of business, the Company may make certain indemnities, commitments and guarantees which may include intellectual property indemnities to certain of the Company’s customers in connection with the sales of the Company’s products and indemnities for liabilities associated with the infringement of other parties’ technology based upon the Company’s

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products. The Company’s exposure under these indemnification provisions is generally limited to the total amount paid by a customer under the agreement. However, certain agreements include indemnification provisions that could potentially expose us to losses in excess of the amount received under the agreement. In addition, the Company indemnifies its officers, directors and certain key employees while they are serving in good faith in such capacities.

The Company has not recorded any liability for these indemnities, commitments and guarantees in the accompanying condensed consolidated balance sheets. Where necessary, the Company accrues for losses for any known contingent liabilities, including those that may arise from indemnification provisions, when future payment is probable.

6. Stockholders’ Equity

Preferred Stock

The Company was authorized to issue 5,000,000 shares of preferred stock with a $0.0001 par value per share as of June 30, 2019 and December 31, 2018. The shares of preferred stock issued and outstanding was nil as of June 30, 2019 and December 31, 2018.

Common Stock

The Company was authorized to issue 75,000,000 shares of common stock with $0.0001 par value per share as of June 30, 2019 and December 31, 2018. As of June 30, 2019, the shares of common stock issued and outstanding were 17,255,610 excluding 104,257 legally issued shares subject to repurchase related to the early exercise of options to purchase common stock. As of December 31, 2018, the shares of common stock issued and outstanding were 17,130,507 excluding 155,257 legally issued shares subject to repurchase related to the early exercise of options to purchase common stock.

The Company has reserved the following number of shares of common stock for future issuances:

	June 30,
	2019
Outstanding stock awards		1,396,686
Shares available for future issuance under the 2017 Stock Incentive Plan		4,994,324
Total common stock reserved for future issuances		6,391,010

7. Stock Option Plan

Stock Incentive Plan

In April 2012, the Company adopted the 2012 Stock Option Plan (“2012 Plan”). The 2012 Plan provides for the granting of stock-based awards to employees, directors, and consultants under terms and provisions established by the Company’s board of directors. Under the terms of the 2012 Plan, options may be granted at an exercise price not less than fair market value. For employees holding more than 10% of the voting rights of all classes of stock, the exercise prices for incentive and nonstatutory stock options must be at least 110% of fair market of the common stock on the grant date, as determined by the Company’s board of directors. The terms of options granted under the 2012 Plan may not exceed ten years.

The 2012 Plan was superseded by the 2017 Stock Option Plan (“2017 Plan”). Any outstanding awards under the 2012 Plan will continue to be governed by the terms of the 2012 Plan.

In August 2017, the Company adopted the 2017 Plan. The Company’s stockholders approved the 2017 Plan in September 2017 and it became effective immediately prior to the closing of the Company’s IPO. In connection with the adoption of the 2017 Plan, no additional awards and no shares of common stock remain available for future issuance under the 2012 Plan and shares reserved but not issued under the 2012 Plan as of the effective date of the 2017 Plan were included in the number of shares reserved for issuance under the 2017 Plan. In addition, shares subject to awards under the 2012 Plan that are forfeited or terminated will be added to the 2017 Plan. The number of shares available for issuance under the 2017 Plan will be automatically increased on the first day of each fiscal year beginning on January 1, 2018 and ending on (and including) January 1, 2027, in an amount equal to the lesser of (1) 4% of the outstanding shares of our common stock on the last day of the immediately preceding fiscal year, or (2) another amount determined by the Company’s board of directors. The automatic increase in the number of shares available for issuance under the 2017 plan for the fiscal year 2019 was 691,431 shares. The 2017 Plan provides for the granting of incentive stock options, or ISOs, within the meaning of Section 422 of the Internal Revenue Code to employees and the granting of nonstatutory stock options, or NSOs, to employees,

11

non-employee directors, advisors and consultants. The 2017 Plan also provides for the grants of restricted stock, stock appreciation rights, or SARs, stock unit and cash-based awards to employees, non-employee directors, advisors and consultants.

The Company’s stock award activity under the stock incentive plan is summarized as follows:

	Awards Available for Grant
As of December 31, 2018		4,434,310
Authorized		691,431
Granted		(148,750	)
Canceled		17,333
As of June 30, 2019		4,994,324

Early Exercise of Stock Options

Certain employees and directors have exercised option grants prior to vesting. The unvested shares are subject to a repurchase right held by the Company at the original purchase price. The proceeds initially are recorded as a liability related to early exercised stock options and reclassified to common stock and additional paid in capital as the repurchase right lapses.

For the three and six months ended June 30, 2019, there were no options early exercised. In addition, the Company did not repurchase any shares of unvested common stock related to early exercised stock options during the period.

For the three and six months ended June 30, 2018, the Company issued 24,166 unvested shares of common stock upon early exercise for total exercise proceeds of $0.1 million and repurchased 6,834 shares of unvested common stock related to early exercised options at the original purchase price.

As of June 30, 2019 and December 31, 2018, 104,257 and 155,257 shares, respectively, held by employees and nonemployees were subject to repurchase at an aggregate price of $0.1 million and $0.1 million, respectively.

Stock Options

The Company’s stock option activity under the stock incentive plan is summarized as follows:

	Options Issued and Outstanding			Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Term (Years)		Aggregate Intrinsic Value (in thousands)
As of December 31, 2018		1,139,935		$	2.01		7.6	$	3,428
Granted		—		$	—
Exercised (1)		(84,666	)	$	1.18
Canceled		(2,333	)	$	0.97
As of June 30, 2019		1,052,936		$	2.08		7.1	$	4,030
Options vested and expected to vest as of June 30, 2019		1,052,936		$	2.08		7.1	$	4,030
Options vested and exercisable as of June 30, 2019		493,137		$	1.86		6.9	$	1,996

(1) Includes vesting of early-exercised options.

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The stock options outstanding and exercisable by exercise price at June 30, 2019 are as follows:

		Options Outstanding						Options Vested and Exercisable
Exercise Price		Number Outstanding		Weighted- Average Remaining Contractual Life (Years)		Weighted- Average Exercise Price		Number Exercisable		Weighted- Average Exercise Price
$	0.16		64,950		4.6	$	0.16		64,950	$	0.16
$	0.37		153,338		5.9	$	0.37		70,663	$	0.37
$	0.97		144,001		6.7	$	0.97		73,952	$	0.97
$	2.51		177,695		7.2	$	2.51		80,860	$	2.51
$	2.89		49,000		7.7	$	2.89		19,500	$	2.89
$	2.93		333,752		7.9	$	2.93		139,097	$	2.93
$	3.18		130,200		8.1	$	3.18		44,115	$	3.18
			1,052,936		7.1	$	2.08		493,137	$	1.86

The aggregate intrinsic value of options exercised for the six months ended June 30, 2019 and 2018 was $0.2 million and $2.5 million, respectively. The Company has various vesting agreements with employees.Options granted generally vest over a five-year period and generally are exercisable up to 10 years.

Restricted Stock Units

The Company’s restricted stock units activity is summarized as follows:

	Units Issued and Outstanding			Weighted-Average Grant Date Fair Value
As of December 31, 2018		255,500		$	11.53
Granted		148,750		$	6.18
Released		(45,500	)	$	13.39
Canceled		(15,000	)	$	9.97
As of June 30, 2019		343,750		$	9.04

Restricted stock units are converted into shares of the Company’s common stock upon vesting on a one-for-one basis. Restricted stock unit awards generally vest over a five-year period and are subject to the grantee’s continued service with the Company.

8. Stock-Based Compensation

The following table summarizes the distribution of stock-based compensation expense (in thousands):

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2019		2018		2019		2018
Cost of revenue	$	28	$	9	$	54	$	18
Research and development		123		33		246		120
Selling, general and administrative		197		151		384		325
Total	$	348	$	193	$	684	$	463

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9. Net Income (Loss) Per Share

The following table presents the calculation of basic and diluted net income (loss) per share (amounts in thousands, except per share data):

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2019		2018		2019			2018
Numerator:
Basic:
Net income (loss)	$	335	$	201	$	(283	)	$	674
Diluted:
Net income (loss)	$	335	$	201	$	(283	)	$	674
Denominator:
Basic shares:
Weighted-average shares outstanding in computing basic    net income (loss) per share		17,228,184		16,940,745		17,200,595			16,883,574
Diluted shares:
Effect of potentially dilutive securities:
Stock awards (1)		586,119		1,076,819		—			1,167,194
Weighted-average shares used in computing diluted net    income (loss) per share		17,814,303		18,017,564		17,200,595			18,050,768
Net income (loss) per common share:
Basic	$	0.02	$	0.01	$	(0.02	)	$	0.04
Diluted	$	0.02	$	0.01	$	(0.02	)	$	0.04

(1) Including early-exercised options.

For a net loss period, basic net loss per share and diluted net loss per share are the same as the effect of potential common shares is antidilutive and therefore excluded. The potentially dilutive securities outstanding for the three months ended June 30, 2019 and 2018 and for the six months ended June 30, 2019 and 2018 that were excluded from the computation of diluted net income (loss) per common share for the period presented as the effect would have been antidilutive was 404,000; 65,000; 1,009,000; and 15,000 shares, respectively.

10. Income Taxes

The components of income (loss) before income taxes are as follows (in thousands):

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2019		2018		2019			2018
Domestic	$	343	$	111	$	(438	)	$	381
Foreign		54		36		112			91
Income (loss) before income taxes	$	397	$	147	$	(326	)	$	472

The components of the benefit from income taxes are as follows (in thousands):

	Three Months Ended					Six Months Ended
	June 30,					June 30,
	2019		2018			2019			2018
United States	$	55	$	(57	)	$	(59	)	$	(215	)
Foreign		7		3			16			13
Income tax provision (benefit)	$	62	$	(54	)	$	(43	)	$	(202	)

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As of June 30, 2019, there was no material increase in the liability for unrecognized tax benefits nor any accrued interest and penalties related to uncertain tax positions.

Additionally, as of June 30, 2019, the Company had approximately $0.3 million of unrecognized tax benefits of which $0.2 million was netted against deferred tax assets with a full valuation allowance. If these amounts are recognized, there will be a tax benefit of $0.2 million against the Company's effective tax rate.

The Company’s federal, state, and foreign tax returns may be subject to examination by the tax authorities for fiscal years ended from 2014 to 2018.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Information Regarding Forward-Looking Statements

This Quarterly Report on Form10-Q includes forward-looking statements. All statements other than statements of historical facts contained in this Quarterly Report on Form 10-Q, including statements regarding our future results of operations and financial position, strategy and plans, and our expectations for future operations, are forward-looking statements. The words “believe,” “may,” “will,” “estimate,” “continue,” “anticipate,” “design,” “plan,” “project,” “intend,” “expect” or the negative version of these words and similar expressions are intended to identify forward-looking statements. We have based these forward-looking statements largely on our current expectations and projections about future events and trends that we believe may affect our financial condition, results of operations, strategy, short-term and long-term business operations and objectives, and financial needs. These forward-looking statements are subject to a number of risks, uncertainties and assumptions, including the following:

• fluctuations in our future financial performance, including our revenue, cost of sales and operating expenses;

• our ability to effectively manage or sustain our growth;

• our ability to attract and retain end-customers in our current or future target markets;

• our ability to continue to develop new technologies and obtain and maintain intellectual property rights protecting such technologies;

• our ability to form and expand partnerships with technology partners and consulting partners;

• our ability to maintain, protect and enhance our intellectual property;

• our ability to successfully defend litigation brought against us;

• new product releases and timing;

• anticipated trends, key factors and challenges in our business and the competition that we face;

• our liquidity and working capital requirements;

• our expectations regarding future expenses and investments; and

• those other risks set forth in this Quarterly Report on Form 10-Q under Part II – Other Information, Item 1A. Risk Factors.

In light of these risks, uncertainties and assumptions, the forward-looking events and circumstances discussed in this Quarterly Report on Form 10-Q may not occur, and actual results could differ materially and adversely from those anticipated or implied in the forward-looking statements. Although we believe 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 us in this Quarterly Report on Form 10-Q speaks only as of the date on which it is made. We disclaim any duty to update any of these forward-looking statements after the date of this Quarterly Report on Form 10-Q, except as required by law.

General Background

The following discussion and analysis should be read together with our condensed consolidated financial statements and the notes to those statements that appear in this Quarterly Report on Form 10-Q and our consolidated financial statements and the notes to those statements that appear in our Annual Report on Form 10-K for the year ended December 31, 2018 filed with the SEC on March 15, 2019. This discussion contains forward-looking statements based on our current expectations, assumptions, estimates and projections. These forward-looking statements involve risks and uncertainties. Our actual results could differ materially from those indicated in these forward-looking statements as a result of certain factors, as more fully described in “Risk Factors” in this Quarterly Report on Form 10-Q.

In this Quarterly Report, unless otherwise specified or the context otherwise requires, “Techpoint,” “we,” “us,” and “our” refer to Techpoint, Inc. and its consolidated subsidiaries.

Overview

We are a fabless semiconductor company that designs, markets and sells mixed-signal integrated circuits for multiple video applications in the security surveillance and automotive markets. Our integrated circuits are enabling the transition from standard definition, or SD, video to high definition, or HD, video in the security surveillance and automotive industries.

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Our solutions take HD video signals from a camera and convert them into analog signals for reliable long distance transmission, then convert the HD analog signal into the appropriate format for video processing and display. Our HD analog technology operates at the same 1080p HD resolution as digital HD, but processes video in an HD analog format and transmits the video in this same analog format, thereby eliminating the need for any compression or decompression. Our integrated circuits are based on our proprietary architecture and mixed signal technologies that we believe provide high video quality, enable high levels of integration and are cost effective. Our integrated circuits are used by security surveillance manufacturers, such as Hikvision in China, IDIS in South Korea and AVTech in Taiwan. These three manufacturers are each a leading security surveillance manufacturer in their respective countries.

We derive our revenue from sales of our mixed-signal integrated circuits into the security surveillance and automotive camera markets. The security surveillance market accounted for a majority of our revenue in the six months ended June 30, 2019 and fiscal year 2018. We have secured design wins with major automotive equipment manufacturers to sell our solutions to them for automotive backup cameras. We began shipping our products in 2013 and to date, we have sold over 102 million integrated circuits. Our revenue was $12.2 million and $13.5 million for the six months ended June 30, 2019 and 2018, respectively. We recognized $4.4 million and $2.0 million of revenue on sales into the automotive market for the six months ended June 30, 2019 and 2018, respectively. We recorded net loss of $0.3 million and net income of $0.7 million for the six months ended June 30, 2019 and 2018, respectively.

We sell our products to distributors that fulfill third-party orders for our products. We also sell directly to ODMs. For the six months ended June 30, 2019 and 2018, we derived substantially all of our revenue from products sold to distributors as compared to products sold to ODMs directly.

We undertake significant product development efforts well in advance of a product’s release, and in advance of receiving purchase orders. Our product development efforts, which are focused on developing new designs with broad demand and potential for future derivative products, typically take from six to twenty-four months until production begins, depending on the product’s complexity. If we secure a design win, we believe the system designer is likely to continue to use the same or enhanced versions of our product across a number of their models, tending to extend the life cycles of our products. Conversely, if a competitor secures the design win, it may be difficult for us to sell into the end-customer’s application for an extended period. Our sales cycle typically ranges from three to six months for the security surveillance market and one to three years for the automotive industry. Due to the length of our product development and sales cycle, the majority of our revenue for any period is likely to be weighted toward products introduced for sale in the prior one or two years. As a result, our present revenue is not necessarily representative of future sales because our future sales are likely to be comprised of a different mix of products, some of which are now in the development stage.

We employ a fabless manufacturing strategy and use market-leading suppliers for all phases of the manufacturing process, including wafer fabrication, assembly, testing and packaging. This strategy significantly reduces the capital investment that would otherwise be required to operate manufacturing facilities of our own.

We have made significant investments in research and development in order to develop our products to attract and retain end-customers. Our research and development expense was $1.6 million for three months ended June 30, 2019 and 2018, respectively, and $3.1 million and $3.8 million for the six months ended June 30, 2019 and 2018, respectively. Our research and development expenses can vary from period-to-period and can be significantly impacted by the number of tape-outs and new products that we initiate in any given period. As of June 30, 2019, we had 73 employees, 26 of whom are in research and development. Our headquarters are located in San Jose, California, with additional operations in Japan, Taiwan, China and South Korea.

Key Factors Affecting Our Results of Operations

The following are key factors that impact our results of operations:

Ability to attract and retain customers that make large orders. While we expect the composition of our end-customers to change over time, our business and operating results depend on our ability to continually target new and retain existing end-customers that make large orders. For the six months ended June 30, 2019 and 2018, Hikvision, the largest security surveillance manufacturer in China and one of our end-customers, accounted for 38% and 65% of our revenue, respectively. Although large customers can help us increase our revenue and improve our results of operations, reliance on large customers is a risk to our business. For example, the U.S. Senate’s recent passage of the 2019 National Defense Authorization Act (“NDAA”) could adversely impact our business with Hikvision because the NDAA includes a provision barring U.S. government agencies from purchasing video surveillance products from certain Chinese manufacturers, including Hikvision. Although this does not prohibit commercial sales of video surveillance products by Hikvision in the U.S., which we understand is the predominant business Hikvision does in the U.S with video surveillance products that incorporate our products, the impact of these new regulations and the uncertainty of U.S. and China trade relations may adversely impact our business in the future with Hikvision and other significant customers.

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Design wins with new and existing customers. We believe our products provide high-quality HD video with an attractive combination of characteristics, at a lower overall cost than competing solutions. In order to get our solutions designed into our end-customer’s products, we work with our end-customers and potential end-customers to understand their product roadmaps and strategies. We consider design wins to be critical to our future success. We define a design win as the successful completion of the evaluation stage, where an end-customer has tested our product, verified that our product meets its requirements and qualified our integrated circuits for their products. We have secured design wins with major automotive manufacturers to sell our solutions to them for automotive backup cameras. The revenue that we generate, if any, from each design win can vary significantly. Our long-term sales expectations are based on forecasts from end-customers, internal estimates of end-customer demand factoring in expected time to market for end-customer products incorporating our solutions and associated revenue potential and internal estimates of overall demand based on historical trends.

Pricing, product cost and gross margins of our products. Our gross margin has been and will continue to be affected by a variety of factors, including the timing of changes in pricing, shipment volumes, new product introductions, changes in product mixes, changes in our purchase price of fabricated wafers and assembly and test service costs, manufacturing yields and inventory write downs, if any. In general, newly introduced products and products with higher performance and more features tend to be priced higher than older, more mature products. Average selling prices in the semiconductor industry typically decline as products mature. Consistent with this historical trend, we expect that the average selling prices of our products will decline as they mature. In the normal course of business, we will seek to offset the effect of declining average selling prices on existing products by reducing manufacturing costs and introducing new and higher value-added products. If we are unable to maintain overall average selling prices or offset any declines in average selling prices with realized savings on product costs, our gross margin will decline.

Product adoption and safety regulations in the automotive market. We have secured design wins with major automotive equipment manufacturers to sell our solutions to them for automotive backup cameras. Certain jurisdictions, including the United States, have passed laws and regulations requiring that all new cars sold after May 2018 must contain back-up cameras. If these jurisdictions do not maintain and implement these rules, or if back-up cameras are not put into automobiles sold in other locations as well, or do so more slowly than we expect, our financial results could be adversely affected.

Investment in growth. We have invested, and intend to continue to invest, in expanding our operations, increasing our headcount, developing our products and differentiated technologies to support our growth and expanding our infrastructure. We expect our total operating expenses to increase significantly in the foreseeable future to meet our growth objectives. We plan to continue to invest in our sales and support operations throughout the world, with a particular focus in the near term of adding additional sales and field applications personnel in the Asia-Pacific region to further broaden our support and coverage of our existing end-customer base, in addition to developing new end-customer relationships and generating design wins. We also intend to continue to invest additional resources in research and development to support the development of our products and differentiated technologies. Any investments we make in our sales and marketing organization or research and development will occur in advance of experiencing any benefits from such investments, and the return on these investments may be lower than we expect. In addition, as we invest in expanding our operations into new areas internationally, our business and results will become further subject to the risks and challenges of operations in those locations, including potentially higher operating expenses and the impact of legal and regulatory developments.

Components of Condensed Consolidated Statements of Operations

Revenue

We derive substantially all of our revenue through the sale of our products to distributors who, in turn, sell to our end-customers, which consists of ODMs, contract manufacturers and design houses. Upon adoption of ASC 606, revenue is recognized after we (1) identify the contract with a customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to the performance obligations in the contract; and (5) satisfy the performance obligation when control is transferred to the customer.

Cost of revenue

Cost of revenue primarily consists of costs paid to our third-party manufacturers for wafer fabrication, assembly and testing of our products. To a lesser extent, cost of revenue also includes write-downs of inventory for excess and obsolete inventory, depreciation of test equipment, and expenses relating to manufacturing support activities, including personnel-related costs, logistics and quality assurance and shipping.

Research and Development Expenses

Research and development expenses consist primarily of compensation and associated costs of employees engaged in research and development, contractor costs, tape-out costs, development testing and evaluation costs, and depreciation expense. Before

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releasing new products, we incur charges for mask sets, prototype wafers and mask set revisions, which we refer to as tape-out costs. Tape-out costs cause our research and development expenses to fluctuate because they are not incurred uniformly every quarter. We expect our research and development costs to increase in absolute dollars in the future as we increase our investment in developing new products and headcount to support our development efforts.

Selling, General and Administrative Expenses

Selling expenses consist primarily of personnel-related costs for our sales, business development, marketing, and applications engineering activities, promotional and other marketing expenses, and travel expenses. We expect selling expenses to increase in absolute dollars for the foreseeable future as we continue to expand our sales teams and increase our marketing activities.

General and administrative expenses consist primarily of personnel-related costs, consulting expenses, professional fees and facility costs. Professional fees principally consist of legal, audit, tax and accounting services. We expect general and administrative expenses to increase in absolute dollars for the foreseeable future as we hire additional personnel, make improvements to our infrastructure and incur significant additional costs for the compliance requirements of operating as a public company, including higher legal, insurance and accounting expenses, particularly with respect to operating as a U.S. company that is publicly traded in Japan. Personnel-related costs, including salaries, benefits, bonuses and stock-based compensation, are the most significant component of each of selling expenses and general and administrative expenses.

Income Tax Provision

The provision for income taxes consists of our estimated federal, state and foreign income taxes based on our pre-tax income. Our provision differs from the federal statutory rate primarily due to the research and development tax credits, non-deductible stock-based compensation, international tax reform provisions, and tax benefits from stock-option exercises and dispositions.

Results of Operations

The following table sets forth our condensed consolidated results of operations for the periods shown (in thousands):

	Three Months Ended					Six Months Ended
	June 30,					June 30,
	2019		2018			2019			2018
Revenue	$	7,175	$	6,470		$	12,196		$	13,523
Cost of revenue (1)		3,402		3,008			5,988			6,293
Gross profit		3,773		3,462			6,208			7,230
Operating expenses: (1)
Research and development		1,600		1,578			3,076			3,789
Selling, general and administrative		1,828		1,572			3,497			3,193
Total operating expenses		3,428		3,150			6,573			6,982
Income (loss) from operations		345		312			(365	)		248
Other income (expense)		52		(165	)		39			224
Income (loss) before income taxes		397		147			(326	)		472
Income tax provision (benefit)		62		(54	)		(43	)		(202	)
Net income (loss)	$	335	$	201		$	(283	)	$	674

(1) Includes stock-based compensation expense as follows (in thousands):

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2019		2018		2019		2018
Cost of revenue	$	28	$	9	$	54	$	18
Research and development		123		33		246		120
Selling, general and administrative		197		151		384		325
Total	$	348	$	193	$	684	$	463

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The following table sets forth the condensed consolidated statements of operations data for each of the periods presented as a percentage of revenue:

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2019			2018			2019			2018
Revenue		100	%		100	%		100	%		100	%
Cost of revenue		47			46			49			47
Gross profit		53			54			51			53
Operating expenses:
Research and development		22			25			25			28
Selling, general and administrative		26			24			29			24
Total operating expenses		48			49			54			52
Income (loss) from operations		5			5			(3	)		1
Other income (expense)		1			(3	)		—			2
Income (loss) before income taxes		6			2			(3	)		3
Income tax provision (benefit)		1			(1	)		—			(1	)
Net income (loss)		5	%		3	%		(3	)%		4	%

Comparison of the Three and Six Months Ended June 30, 2019 and June 30, 2018

Revenue

	Three Months Ended June 30,				Change					Six Months Ended June 30,				Change
	2019		2018		Amount		%			2019		2018		Amount			%
	(dollars in thousands)
Revenue	$	7,175	$	6,470	$	705		11	%	$	12,196	$	13,523	$	(1,327	)		(10	)%

Revenue increased $0.7 million, or 11%, for the three months ended June 30, 2019 as compared to the three months ended June 30, 2018. This was mainly due to a $1.6 million increase in automotive camera market revenue resulting from a 128% increase in volume of shipments. This increase was partially offset by a $0.9 million decrease in security surveillance camera market revenue due to a 20% decrease in average selling price from customer and product mix, primarily in China.

Revenue decreased $1.3 million, or 10%, for the six months ended June 30, 2019 as compared to the six months ended June 30, 2018. This was mainly due to a $3.7 million decrease in security surveillance camera market revenue due to a 21% average selling price decrease from customer and product mix and a 14% decrease in volume of shipments, primarily in China. This decrease was partially offset by a $2.4 million increase in automotive camera market revenue driven by a 112% increase in volume of shipments.

Revenue by geographic region

The table below sets forth the major components of the change in revenue by geographic region for the three and six months ended June 30, 2019 and June 30, 2018:

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2019			2018			2019			2018
China		65	%		79	%		66	%		83	%
Taiwan		18			2			16			2
South Korea		12			12			13			10
Japan		5			7			5			5
Other		-			-			-			-
Total		100	%		100	%		100	%		100	%

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Cost of revenue and gross margin

	Three Months Ended June 30,						Change					Six Months Ended June 30,						Change
	2019			2018			Amount		%			2019			2018			Amount			%
	(dollars in thousands)
Cost of revenue	$	3,402		$	3,008		$	394		13	%	$	5,988		$	6,293		$	(305	)		(5	)%
Gross margin		53	%		54	%							51	%		53	%

Cost of revenue increased by $0.4 million, or 13%, while gross margin decreased to 53% from 54% for the three months ended June 30, 2019 as compared to the three months ended June 30, 2018. Cost of revenue increased due to a 26% increase in volume of shipments. Gross margins were negatively impacted by customer and product mix.

Cost of revenue decreased by $0.3 million, or 5%, while gross margin decreased to 51% from 53% for the six months ended June 30, 2019 as compared to the six months ended June 30, 2018. Cost of revenue decreased due to a $0.6 million decrease in product costs mainly due to the changes in customer and product mix. This decrease was partially offset by a 4% increase in volume of shipments and a $0.2 million increase in inventory write downs. Gross margins were negatively impacted primarily by the increase in inventory write downs.

Gross margin fluctuations are due to changes in product mix and fluctuations in period costs. We expect gross margins to fluctuate in future periods due to changes in customer and product mix, average unit selling prices, manufacturing costs, manufacturing yields, levels of inventory valuation, if any, and levels of product demand.

Research and development expense

	Three Months Ended June 30,				Change					Six Months Ended June 30,				Change
	2019		2018		Amount		%			2019		2018		Amount			%
	(dollars in thousands)
Research and development	$	1,600	$	1,578	$	22		1	%	$	3,076	$	3,789	$	(713	)		(19	)%

Research and development expenses increased $22,000, or 1%, for the three months ended June 30, 2019 as compared to the three months ended June 30, 2018 primarily due to a $0.1 million increase in stock based compensation expense and a $0.1 million increase in personnel costs due to a 7% increase in headcount as a result of expanding operations, offset by a $0.2 million decrease in tape-out expenses.

Research and development expenses decreased $0.7 million, or 19% for the six months ended June 30, 2019 as compared to the six months ended June 30, 2018 primarily due to a $0.9 million decrease in tape-out expenses partially offset by a $0.1 million increase in stock based compensation expense and a $0.1 million increase in personnel costs due to a 6% increase in headcount as a result of expanding operations.

Selling, general and administrative expense

	Three Months Ended June 30,				Change					Six Months Ended June 30,				Change
	2019		2018		Amount		%			2019		2018		Amount		%
	(dollars in thousands)
Selling, general and administrative	$	1,828	$	1,572	$	256		16	%	$	3,497	$	3,193	$	304		10	%

Selling, general and administrative expenses increased $0.3 million, or 16%, for the three months ended June 30, 2019 as compared to the three months ended June 30, 2018 mainly due to a $0.2 million increase in professional service fees primarily related to the review of potential acquisitions of new technologies.

Selling, general and administrative expenses increased, $0.3 million or, 10% for the six months ended June 30, 2019 as compared to the six months ended June 30, 2018 primarily due to a $0.2 million increase in professional service fees primarily related to the review of potential acquisitions of new technologies.

21

From time to time, we evaluate new technologies to assess whether it is more economical to acquire or develop technologies internally.  We can provide no assurance that we will develop or acquire any new technologies that we evaluate, and if we do acquire or develop these technologies that they will be successful in leading to new products that are accepted in our target markets.

Other income and expense

	Three Months Ended June 30,					Change					Six Months Ended June 30,				Change
	2019		2018			Amount		%			2019		2018		Amount			%
	(dollars in thousands)
Other income (expense)	$	52	$	(165	)	$	217		(132	)%	$	39	$	224	$	(185	)		(83	)%

Other income for the three months ended June 30, 2019 was $0.1 million and other expense for the three months ended June 30, 2018 was $0.2 million. This change was mainly driven by foreign currency exchange transactions and foreign currency fluctuations.

Other income for the six months ended June 30, 2019 and 2018 was $39,000 and $0.2 million, respectively. This change was driven by foreign currency exchange transactions and foreign currency fluctuations.

Provision for income taxes

	Three Months Ended June 30,					Change					Six Months Ended June 30,						Change
	2019		2018			Amount		%			2019			2018			Amount		%
	(dollars in thousands)
Income tax provision (benefit)	$	62	$	(54	)	$	116		(215	)%	$	(43	)	$	(202	)	$	159		(79	)%

The income tax provision for the three months ended June 30, 2019 was $0.1 million and the income tax benefit for the three months ended June 30, 2018 was $0.1 million. This change is primarily due to an increase in taxable income and fewer tax benefits from stock-option exercises and dispositions.

The income tax benefit decreased $0.2 million, or 79%, for the six months ended June 30, 2019 as compared to the six months ended June 30, 2018, primarily due to a decrease in tax benefits from stock-option exercises and dispositions, partially offset by the impact of net loss for the six months ended June 30, 2019 compared to net income for the six months ended June 30, 2018.

Liquidity and Capital Resources

Our primary use of cash is to fund our operations as we continue to grow our business. Cash used to fund operating expenses is impacted by the timing of when we pay expenses, as reflected in the changes in our outstanding accounts payable and accrued expenses.

Our cash and cash equivalents as of June 30, 2019 were $26.2 million. We believe our existing cash and cash equivalents, and cash we expect to generate from operations, will be sufficient to meet our anticipated cash needs for at least the next 12 months. Our future capital requirements will depend on many factors, including our growth rate, the timing and extent of our spending to support research and development activities, the timing and cost of establishing additional sales and marketing capabilities, the introduction of new and enhanced products and our costs to implement new manufacturing technologies or potentially acquire and integrate other companies or assets. In the event that additional financing is required from outside sources, we may not be able to raise it on terms acceptable to us or at all. Any debt financing obtained by us in the future could also involve restrictive covenants relating to our capital-raising activities and other financial and operational matters, which may make it more difficult for us to obtain additional capital and to pursue business opportunities, including potential acquisitions. Additionally, if we raise additional funds through further issuances of equity, convertible debt securities or other securities convertible into equity, our existing stockholders could suffer significant dilution in their percentage ownership of our company, and any new equity securities we issue could have rights, preferences and privileges senior to those of holders of our common stock. If we are unable to obtain adequate financing or financing on terms satisfactory to us when we require it, our ability to continue to grow or support our business and to respond to business challenges could be significantly limited.

22

A summary of operating, investing and financing activities are shown in the following table (in thousands):

	Six Months Ended
	June 30,
	2019			2018
Net cash provided by operating activities	$	487		$	2,140
Net cash used in investing activities		(225	)		(143	)
Net cash provided by financing activities		35			263
Net increase in cash and cash equivalents	$	297		$	2,260

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 six months ended June 30, 2019, net cash provided by operating activities was $0.5 million, primarily due to non-cash charges of $1.3 million primarily driven by stock-based compensation and depreciation and amortization, partially offset by a $0.3 million of net loss and cash outflow used in the change in net operating assets and liabilities of $0.5 million. The cash outflow used in the change in net operating assets and liabilities was primarily due to a $1.8 million cash outflow in inventory as units manufactured during the period and on hand were in excess of product sales and a $0.2 million cash outflow in lease liabilities due to timing of lease payments, partially offset by a $1.1 million cash inflow in customer deposits due to timing of customer pre-payments and a $0.4 million cash inflow in accounts payable due to timing of customer collections.

During the six months ended June 30, 2018, net cash provided by operating activities was $2.1 million, primarily due to net income of $0.7 million, non-cash charges of $0.3 million primarily driven by stock-based compensation, depreciation and amortization and deferred income taxes, and cash inflow provided by the change in net operating assets and liabilities of $1.1 million. The cash inflow provided by the change in net operating assets and liabilities was primarily due to a $0.7 million cash inflow in inventory due to product sales in excess of units on hand and manufactured during the period, a $0.3 million cash inflow in accounts payable due to timing of vendor payments, and a $0.2 million cash inflow in prepaid expenses and other current assets.

Investing Activities

During the six months ended June 30, 2019 and 2018, cash used in investing activities was $0.2 million and $0.1 million, respectively, due to purchases of property and equipment.

Financing Activities

During the six months ended June 30, 2019 and 2018, cash provided by financing activities was $35,000 and $0.3 million, respectively, primarily due to net proceeds from the exercise of stock options.

Contractual Obligations

We are required to make future payments under certain operating leases. Our outstanding contractual obligations as of June 30, 2019 are summarized in the following table:

			Payments Due by Period
	Total		Less than 1 year		1 to 3 years		More than 3 years
			(in thousands)
Operating leases	$	544	$	511	$	33	$	—
Purchase commitments		734		294		440		—
Total	$	1,278	$	805	$	473	$	—

Obligations under contracts that we can cancel without a significant penalty are not included in the table above.

23

Off Balance Sheet Arrangements

During the periods presented, we did not have any relationships with unconsolidated entities or financial partnerships, such as entities referred to as structured finance or special purpose entities, which would have been established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited purposes.

Critical Accounting Policies, Significant Estimates and Judgments

Our financial statements are prepared in accordance with U.S. generally accepted accounting principles, or GAAP. The preparation of these financial statements requires us to make estimates, assumptions and judgments that affect the reported amounts of assets, liabilities, revenue, expenses, and related disclosures. We evaluate our estimates, assumptions and judgments on an ongoing basis. Our estimates, assumptions and judgments are based on historical experience and various other factors that we believe to be reasonable under the circumstances. Different assumptions and judgments would change the estimates used in the preparation of our financial statements, which, in turn, could change the results from those reported. Please see Note 1 of Part I, Item 1 of this Quarterly Report on Form 10-Q for a summary of significant accounting policies.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

We are exposed to market risk from fluctuations in foreign currency exchange rates and interest rates, which may adversely affect our results of operations and financial condition. We seek to minimize these risks through regular operating activities. We do not purchase, hold or sell derivative financial instruments for trading or speculative purposes.

Foreign exchange rates

We transact business globally and are subject to risks associated with fluctuating foreign exchange rates. Substantially all of our revenue was derived from sales outside of the U.S. in the three months ended June 30, 2019 and 2018 and the six months ended June 30, 2019 and 2018. This revenue is generated in U.S. dollars with sales through distributors worldwide. Our operating expenses are denominated in the currencies of the countries in which our subsidiaries are located, and may be subject to fluctuations due to changes in foreign currency exchange rates. To date, we have not entered into any hedging contracts, but may elect to do so in the future. A hypothetical increase or decrease of 10% in foreign exchange rates for the three months ended June 30, 2019 and 2018 and six months ended June 30, 2019 and 2018 would not have resulted in a significant increase or decrease in revenue or net income (loss) during that period.

The U.S. dollar is the functional currency for all of our foreign operations. Monetary assets and liabilities denominated in foreign currencies are remeasured into the functional currency of the subsidiary at the balance sheet date. The gains and losses from remeasurement of foreign currency denominated balances into the functional currency of the subsidiary are included in other income (expense) on our Condensed Consolidated Statement of Operations.

Interest rates

Our exposure to market risk for changes in interest rates relates primarily to our cash and cash equivalents. We seek to minimize the risk to our cash and cash equivalents by investing cash in excess of our operating needs in short-term, high-quality instruments issued by highly creditworthy financial institutions. With the amount of cash and cash equivalents that we maintained at June 30, 2019, a hypothetical increase or decrease of one percentage point, or 100 basis points, in interest rates, would not have had a material effect on our financial statements.

Item 4. Controls and Procedures.

Evaluation of Disclosure Controls and Procedures

Under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, we conducted an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, as of the end of the period covered by this report. Based on management’s evaluation, our principal executive officer and principal financial officer concluded that our disclosure controls and procedures are effective at a reasonable assurance level.

In designing and evaluating our disclosure controls and procedures, management recognizes that any disclosure controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. In addition, the design of disclosure controls and procedures must reflect the fact that there are resource constraints and that management is required to apply its judgment in evaluating the benefits of possible controls and procedures relative to their costs.

24

Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting identified in connection with the evaluation required by Rules 13a-15(d) and 15d-15(d) of the Exchange Act that occurred during the three months ended June 30, 2019 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II—OTHER INFORMATION

Item 1. Legal Proceedings.

We are not currently a party to any material legal proceedings that we believe to be material to our business or financial condition. From time to time we may become party to various litigation matters and subject to claims that arise in the ordinary course of business.

Item 1A. Risk Factors.

There have been no material changes to the previously disclosed risk factors discussed in Part 1 “Part I, Item 1A, Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2018 filed with the SEC on March 15, 2019. You should consider carefully these factors, together with all of the other information in this Quarterly Report on Form 10-Q, including our unaudited condensed consolidated financial statements and related notes included elsewhere in this Quarterly Report on Form 10-Q, before making an investment decision.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

Recent Sale of Unregistered Securities

None.

Item 3. Defaults Upon Senior Securities.

None.

Item 4. Mine Safety Disclosures.

None.

Item 5. Other Information.

None.

Item 6. Exhibits.

Exhibit Number	Description
31.1	Certification of Principal Executive Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2	Certification of Principal Financial Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1*	Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2*	Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS	XBRL Instance Document
101.SCH	XBRL Taxonomy Extension Schema Document
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document
101.LAB	XBRL Taxonomy Extension Label Linkbase Document

25

101.PRE XBRL Taxonomy Extension Presentation Linkbase Document

* In accordance with Item 601(b)(32)(ii) of Regulation S-K and SEC Release No. 34-47986, the certifications furnished in Exhibits 32.1 and 32.2 hereto are deemed to accompany this Form 10-Q and will not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 (the “Exchange Act”) or deemed to be incorporated by reference into any filing under the Exchange Act or the Securities Act of 1933 except to the extent that the registrant specifically incorporates it by reference.

26

SIGNATURES

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.
Date: August 8, 2019	By:	/s/ Stephen Wong
		Stephen Wong
		Interim Chief Financial Officer (Principal Financial and Accounting Officer)
Date: August 8, 2019	By:	/s/ Fumihiro Kozato
		Fumihiro Kozato
		President and Chief Executive Officer (Principal Executive Officer)

27

EX-31.1

Exhibit 31.1

PRINCIPAL EXECUTIVE OFFICER’S CERTIFICATION PURSUANT TO

RULES 13a-14(a) AND 15d-14(a) UNDER THE SECURITIES EXCHANGE ACT OF 1934,

AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Fumihiro Kozato, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Techpoint, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: August 8, 2019	By:	/s/ Fumihiro Kozato
		Fumihiro Kozato
		President and Chief Executive Officer (Principal Executive Officer)

EX-31.2

Exhibit 31.2

PRINCIPAL FINANCIAL AND ACCOUNTING OFFICER’S CERTIFICATION PURSUANT TO

RULES 13a-14(a) AND 15d-14(a) UNDER THE SECURITIES EXCHANGE ACT OF 1934,

AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Stephen Wong, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Techpoint, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: August 8, 2019	By:	/s/ Stephen Wong
		Stephen Wong
		Interim Chief Financial Officer (Principal Financial and Accounting Officer)

EX-32.1

Exhibit 32.1

PRINCIPAL EXECUTIVE OFFICER’S CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Techpoint, Inc. (the “Company”) on Form 10-Q for the quarter ended June 30, 2019 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned officer of the Company certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to such officer’s knowledge:

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: August 8, 2019	By:	/s/ Fumihiro Kozato
		Fumihiro Kozato
		President and Chief Executive Officer (Principal Executive Officer)

EX-32.2

Exhibit 32.2

PRINCIPAL FINANCIAL AND ACCOUNTING OFFICER’S CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Techpoint, Inc. (the “Company”) on Form 10-Q for the quarter ended June 30, 2019 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned officer of the Company certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to such officer’s knowledge:

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: August 8, 2019	By:	/s/ Stephen Wong
		Stephen Wong
		Interim Chief Financial Officer (Principal Financial and Accounting Officer)

XML

Document and Entity Information - shares	6 Months Ended
	Jun. 30, 2019	Aug. 05, 2019
Document And Entity Information [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Jun. 30, 2019
Document Fiscal Year Focus	2019
Document Fiscal Period Focus	Q2
Trading Symbol	0001556898
Entity Registrant Name	Techpoint, Inc.
Entity Central Index Key	0001556898
Current Fiscal Year End Date	--12-31
Entity Filer Category	Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	true
Entity Ex Transition Period	true
Entity Current Reporting Status	No
Entity Shell Company	false
Entity File Number	000-55843
Entity Tax Identification Number	800806545
Entity Address, Address Line One	2550 N. First Street
Entity Address, Address Line Two	#550
Entity Address, City or Town	San Jose
Entity Address, State or Province	CA
Entity Address, Postal Zip Code	95131
Entity Address, Country	US
City Area Code	408
Local Phone Number	324-0588
Entity Common Stock, Shares Outstanding		17,372,413

XML

Condensed Consolidated Balance Sheets (Unaudited) - USD ($) $ in Thousands	Jun. 30, 2019	Dec. 31, 2018
Current assets:
Cash and cash equivalents	$ 26,238	$ 25,941
Accounts receivable	155	236
Inventory	3,781	2,207
Prepaid expenses and other current assets	943	936
Total current assets	31,117	29,320
Property and equipment - net	509	611
Deferred tax assets	673	560
Lease assets	525
Other assets	210	215
Total assets	33,034	30,706
Current liabilities:
Accounts payable	1,321	1,063
Accrued liabilities	754	718
Liability related to early exercised stock options	102	136
Customer deposits	1,059	2
Total current liabilities	3,735	1,919
Lease liabilities	499
Other liabilities	198	156
Total liabilities	3,933	2,075
Commitments and contingencies (Note 5)
Stockholders’ equity
Preferred stock, par value $0.0001 per share - 5,000,000 shares authorized as of June 30, 2019 and December 31, 2018; nil shares issued and outstanding as of June 30, 2019 and December 31, 2018
Common stock, par value $0.0001 per share - 75,000,000 shares authorized as of June 30, 2019 and December 31, 2018; 17,255,610 and 17,130,507 shares issued and outstanding as of June 30, 2019 and December 31, 2018, respectively	2	2
Additional paid-in-capital	20,111	19,358
Retained earnings	8,988	9,271
Total stockholders’ equity	29,101	28,631
Total liabilities and stockholders’ equity	$ 33,034	$ 30,706

XML

Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) - $ / shares	Jun. 30, 2019	Dec. 31, 2018
Statement Of Financial Position [Abstract]
Preferred stock, par value	$ 0.0001	$ 0.0001
Preferred stock, shares authorized	5,000,000	5,000,000
Preferred stock, shares issued	0	0
Preferred stock, shares outstanding	0	0
Common stock, par value	$ 0.0001	$ 0.0001
Common stock, shares authorized	75,000,000	75,000,000
Common stock, shares issued	17,255,610	17,130,507
Common stock, shares outstanding	17,255,610	17,130,507

XML

Condensed Consolidated Statements of Operations (Unaudited) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018
Income Statement [Abstract]
Revenue	$ 7,175	$ 6,470	$ 12,196	$ 13,523
Cost of revenue	3,402	3,008	5,988	6,293
Gross profit	3,773	3,462	6,208	7,230
Operating expenses
Research and development	1,600	1,578	3,076	3,789
Selling, general and administrative	1,828	1,572	3,497	3,193
Total operating expenses	3,428	3,150	6,573	6,982
Income (loss) from operations	345	312	(365)	248
Other income (expense)	52	(165)	39	224
Income (loss) before income taxes	397	147	(326)	472
Income tax provision (benefits)	62	(54)	(43)	(202)
Net income (loss)	$ 335	$ 201	$ (283)	$ 674
Net income (loss) per share:
Basic	$ 0.02	$ 0.01	$ (0.02)	$ 0.04
Diluted	$ 0.02	$ 0.01	$ (0.02)	$ 0.04
Weighted average shares outstanding in computing net income (loss) per share
Basic	17,228,184	16,940,745	17,200,595	16,883,574
Diluted	17,814,303	18,017,564	17,200,595	18,050,768

XML

Condensed Consolidated Statements of Stockholders' Equity (Unaudited) - USD ($) $ in Thousands	Total	Common Stock	Additional Paid-In Capital	Retained Earnings
Beginning Balances at Dec. 31, 2017	$ 24,968	$ 2	$ 17,580	$ 7,386
Beginning Balances, Shares at Dec. 31, 2017		16,752,171
Issuance of common stock upon exercise of stock options and vesting of early exercised options	138		138
Issuance of common stock upon exercise of stock options and vesting of early exercised options, Shares		132,348
Stock-based compensation	270		270
Net income (loss)	473			473
Ending Balances at Mar. 31, 2018	25,849	$ 2	17,988	7,859
Ending Balances, Shares at Mar. 31, 2018		16,884,519
Beginning Balances at Dec. 31, 2017	24,968	$ 2	17,580	7,386
Beginning Balances, Shares at Dec. 31, 2017		16,752,171
Net income (loss)	674
Ending Balances at Jun. 30, 2018	26,365	$ 2	18,303	8,060
Ending Balances, Shares at Jun. 30, 2018		16,999,177
Beginning Balances at Mar. 31, 2018	25,849	$ 2	17,988	7,859
Beginning Balances, Shares at Mar. 31, 2018		16,884,519
Issuance of common stock upon exercise of stock options and vesting of early exercised options	122		122
Issuance of common stock upon exercise of stock options and vesting of early exercised options, Shares		114,658
Stock-based compensation	193		193
Net income (loss)	201			201
Ending Balances at Jun. 30, 2018	26,365	$ 2	18,303	8,060
Ending Balances, Shares at Jun. 30, 2018		16,999,177
Beginning Balances at Dec. 31, 2018	28,631	$ 2	19,358	9,271
Beginning Balances, Shares at Dec. 31, 2018		17,130,507
Issuance of common stock upon exercise of stock options and vesting of early exercised options	64		64
Issuance of common stock upon exercise of stock options and vesting of early exercised options, Shares		46,666
Issuance of common stock upon vesting of RSUs, Shares		14,200
Shares repurchased for tax withholdings on vesting of RSUs	(7)		(7)
Shares repurchased for tax withholdings on vesting of RSUs, Shares		(1,510)
Stock-based compensation	336		336
Net income (loss)	(618)			(618)
Ending Balances at Mar. 31, 2019	28,406	$ 2	19,751	8,653
Ending Balances, Shares at Mar. 31, 2019		17,189,863
Beginning Balances at Dec. 31, 2018	28,631	$ 2	19,358	9,271
Beginning Balances, Shares at Dec. 31, 2018		17,130,507
Net income (loss)	(283)
Ending Balances at Jun. 30, 2019	29,101	$ 2	20,111	8,988
Ending Balances, Shares at Jun. 30, 2019		17,255,610
Beginning Balances at Mar. 31, 2019	28,406	$ 2	19,751	8,653
Beginning Balances, Shares at Mar. 31, 2019		17,189,863
Issuance of common stock upon exercise of stock options and vesting of early exercised options	36		36
Issuance of common stock upon exercise of stock options and vesting of early exercised options, Shares		38,000
Issuance of common stock upon vesting of RSUs, Shares		31,300
Shares repurchased for tax withholdings on vesting of RSUs	(24)		(24)
Shares repurchased for tax withholdings on vesting of RSUs, Shares		(3,553)
Stock-based compensation	348		348
Net income (loss)	335			335
Ending Balances at Jun. 30, 2019	$ 29,101	$ 2	$ 20,111	$ 8,988
Ending Balances, Shares at Jun. 30, 2019		17,255,610

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Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018
Cash Flows From Operating Activities
Net income (loss)	$ (283)	$ 674
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization	489	107
Stock-based compensation	684	463
Provision for excess inventories	234	41
Deferred income taxes	(113)	(235)
Changes in operating assets and liabilities:
Accounts receivable	81	(62)
Inventory	(1,808)	739
Prepaid expenses and other current assets	(17)	173
Other assets	(3)	(64)
Accounts payable	410	279
Accrued expenses	59	(8)
Customer deposits	1,057	23
Lease liabilities	(155)
Other liabilities	(148)	10
Net cash provided by operating activities	487	2,140
Cash Flows From Investing Activities
Purchase of property and equipment	(225)	(143)
Net cash used in investing activities	(225)	(143)
Cash Flows From Financing Activities
Net proceeds from exercise of stock options	66	281
Payment for shares withheld for tax withholdings on vesting of restricted stock units	(31)
Payment of deferred costs		(18)
Net cash provided by financing activities	35	263
Net increase in cash and cash equivalents	297	2,260
Cash and cash equivalents at beginning of period	25,941	21,536
Cash and cash equivalents at end of period	26,238	23,796
Supplemental Disclosure of Cash Flow Information
Cash paid for income taxes	13	23
Supplemental Disclosure of Noncash Investing and Financing Information
Vesting of early exercised options	$ 34	36
Property and equipment purchased but not yet paid		54
Unpaid deferred costs		$ 39

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Organization and Summary of Significant Accounting Policies

6 Months Ended

Jun. 30, 2019

Organization Consolidation And Presentation Of Financial Statements [Abstract]

Organization and Summary of Significant Accounting Policies

1. Organization and Summary of Significant Accounting Policies

Organization

Techpoint, Inc. and its wholly-owned subsidiaries (the “Company”) was originally incorporated in California in April 2012 and reincorporated into Delaware in July 2017. The Company is a fabless semiconductor company that designs, markets and sells mixed-signal integrated circuits for multiple video applications in the security surveillance and automotive markets. The Company is headquartered in San Jose, California.

Basis of Consolidation and Significant Accounting Policies

The accompanying unaudited condensed 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 Condensed Consolidated Statements of Operations.

The accompanying unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and related notes for the year ended December 31, 2018 contained in our Annual Report on Form 10-K filed with the SEC on March 15, 2019.

In the opinion of management, the accompanying unaudited condensed consolidated financial statements reflect all adjustments, which only include normal recurring adjustments, necessary to present fairly the Company’s financial position, results of operations and cash flows for the interim periods and are not necessarily indicative of the results to be expected for the full fiscal year or for any other future annual or interim periods.

Revenue Recognition

The Company principally sells its products to distributors who, in turn, sell to original design manufacturers, or ODMs, contract manufacturers and design houses. The Company adopted ASC Topic 606, or ASC 606, Revenue from Contracts with Customers on January 1, 2018. Under ASC 606, the Company satisfies its performance obligations and primarily recognizes revenue upon shipment, at which time control of its products is transferred to its customers. The Company applies the following five-step model for recognizing revenue from contracts with customers: (1) identify the contract with a customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to the performance obligations in the contract; and (5) recognize revenue when the performance obligation is satisfied.

Product revenues consist of sales of mixed-signal integrated circuits into the security surveillance and automotive camera markets. The Company generally requires advance payments from customers and records these advance payments, or contract liabilities, as customer deposits on its Consolidated Balance Sheet. Since the Company’s performance obligations relate to contracts with a duration of less than one year, the Company has elected to apply the optional exemption practical expedient provided in ASC 606 and is therefore not required to disclose the aggregate amount of the transaction price allocated to performance obligations that are unsatisfied or partially unsatisfied at the end of the reporting period. The Company provides product assurance warranty only and does not offer warranties to be purchased separately. The Company does not offer variable consideration or other significant payment terms and allocates the transaction price to each distinct product based on a relative standalone selling price. Revenue is recognized when control of the product is transferred to our customers, upon shipment, at which time the performance obligation is satisfied. The Company’s shipping terms are primarily FOB (free on board) shipping point, whereby legal title, risks and rewards of ownership, and physical possession are transferred to the customer upon shipment. Substantially all of the Company’s customers pay in advance of shipment, and no stock rotation, price protection or return rights are offered.

Use of Management’s Estimates

The preparation of condensed consolidated financial statements in conformity with GAAP requires management to make estimates, judgments and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and reported amounts ofrevenue and expenses during the reporting period. Significant estimates included in the condensed consolidated financial statements include inventory valuation, valuation allowance for recorded deferred tax assets, and stock based compensation. These estimates are based upon information available as of the date of the condensed consolidated financial statements. Actual results could differ materially from those estimates.

Concentration of Customer and Credit Risk

Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash and cash equivalents and trade receivables. Risks associated with cash and cash equivalents are mitigated by banking with creditworthy institutions. The Company generally requires advance payments from customers. The Company also performs credit evaluations of its customers and provides credit to certain customers in the normal course of business. The Company has not incurred bad debt write-offs during any of the periods presented.

For each significant customer, or distributor, and significant end-customer, revenue as a percentage of total revenue is as follows:

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2019			2018			2019			2018
Customer
Customer A		54	%		75	%		58	%		80	%
Customer B	*				11	%	*			*
End-Customer
End-Customer A (1)		40	%		63	%		38	%		65	%
End-Customer B (1)		15	%	*				19	%	*

* Less than 10%

(1) Sales to End-Customer A and End-Customer B primarily occurred through Customer A

Recently Adopted Accounting Pronouncements

Stock Compensation Guidance. In June 2018, the FASB issued ASU No 2018-07, Stock Compensation: Improvements to Nonemployee Share-Based Payment Accounting, which amends ASC 718 to include share-based payments issued to nonemployees for goods or services. The amendments in this update are effective for annual periods beginning after December 15, 2018, and interim periods therein. Early adoption is permitted, but no earlier than a company’s adoption date of Topic 606, Revenue from Contracts with Customers. The Company early adopted this guidance on July 1, 2018 during the third quarter of fiscal 2018, which resulted in no impact on its condensed consolidated financial statements.  

Lease Guidance. In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842). ASU 2016-02 requires lessees to recognize all leases with terms in excess of one year on their balance sheet as a right of use asset and a lease liability at the commencement date. The new standard also simplifies the accounting for sale and leaseback transactions. The amendments in this update are effective for annual periods beginning after December 15, 2018, and interim periods therein and must be adopted using a modified retrospective method for leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements. The new standard also requires lessees and lessors to disclose qualitative and quantitative information about their leases and significant judgements made in applying the standard. The Company adopted this guidance on January 1, 2019 in the first quarter of fiscal 2019 under the modified retrospective transition method approach. The Company elected to use the package of practical expedients and did not reassess whether any expired or existing contracts are or contain leases, the lease classification for any expired or existing leases, or initial direct costs for any existing leases, and the practical expedient to not separate lease and non-lease components. Additionally, the Company elected the short-term lease exception and excluded all leases that are twelve or less months in duration. As a result, financial information for reporting periods beginning after January 1, 2019 are reported under the new standard, while comparative financial information has not been adjusted and continues to be reported in accordance with the previous standard. As a result, the Company recognized $0.8 million of lease assets and $0.9 million of lease liabilities, of which $0.2 million is recorded as non-current lease liabilities on the Company’s Condensed Consolidated Balance Sheet as of January 1, 2019. Additionally upon adoption, there was no impact on the Condensed Consolidated Statement of Operations and no cumulative effect adjustment to retained earnings as of January 1, 2019.

Revenue Recognition Guidance. In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers, creating ASC 606. Upon adoption, revenue is recognized under a five-step process: 1. Identify the contract(s) with a customer. 2. Identify the performance obligations in the contract. 3. Determine the transaction price. 4. Allocate the transaction price to performance obligations in the contract. 5. Recognize revenue when (or as) the entity satisfies a performance obligation. Additional considerations under this update include accounting for costs to obtain or fulfill a contract with a customer and additional quantitative and qualitative disclosures. ASU 2014-09 became effective for periods beginning after December 15, 2017 (including interim reporting periods within those periods), or the first quarter 2018, and allows for retrospective or modified retrospective application. The Company adopted this guidance in the first quarter of fiscal 2018 under the modified retrospective approach as applied to customer contracts that were not completed as of January 1, 2018. As a result, financial information for reporting periods beginning after January 1, 2018 are reported under the new standard. There was no cumulative impact to adopting the new standard on the Company’s consolidated financial statements.

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Balance Sheet Components

6 Months Ended

Jun. 30, 2019

Balance Sheet Related Disclosures [Abstract]

Balance Sheet Components

2. Balance Sheet Components

Inventory

Inventory consists of the following (in thousands):

	June 30,		December 31,
	2019		2018
Work in process	$	1,891	$	961
Finished goods		1,890		1,246
Total inventory	$	3,781	$	2,207

Property and Equipment - Net

Property and equipment – net consists of the following (in thousands):

	June 30,			December 31,
	2019			2018
Computer equipment and software	$	1,247		$	1,173
Leasehold improvements		84			84
Furniture		30			30
Total property and equipment		1,361			1,287
Less: accumulated depreciation		(852	)		(676	)
Total property and equipment - net	$	509		$	611

The Company recorded $0.1 million and $0.1 million of depreciation expense for the three months ended June 30, 2019 and 2018, respectively, and $0.2 million and $0.1 million for the six months ended June 30, 2019 and 2018, respectively.

Accrued Liabilities

Accrued liabilities consist of the following (in thousands):

	June 30,		December 31,
	2019		2018
Payroll-related expenses	$	453	$	398
Accrued warranty		90		73
Taxes payable		65		28
Engineering services		60		134
Professional fees		32		48
Other		54		37
Total accrued liabilities	$	754	$	718

Customer Deposits

Customer deposits represent payments received in advance of shipments and fluctuate depending on timing of customer pre-payments and product shipment. Customer deposits were $1.1 million, $0.2 million and $2,000 as of June 30, 2019, March 31, 2019 and December 31, 2018, respectively. The Company generally expects to recognize revenue from customer deposits during the three month interim period immediately following the balance sheet date. During the three months ended June 30, 2019, the Company recognized $0.2 million of revenue from the March 31, 2019 customer deposits balance. During the six months ended June 30, 2019, the Company recognized $2,000 of revenue from the December 31, 2018 customer deposits balance.

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Fair Value Measurements

6 Months Ended

Jun. 30, 2019

Fair Value Disclosures [Abstract]

Fair Value Measurements

3. Fair Value Measurements

Fair value is defined as the exchange price that would be received from selling an asset or paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. The Company measures financial assets and liabilities at fair value at each reporting period using a fair value hierarchy which requires us to maximize the use of observable inputs and minimize the use of unobservable inputs. A financial instrument’s classification within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. Three levels of inputs may be used to measure fair value:

Level 1. Quoted prices in active markets for identical assets or liabilities.

Level 2. Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data.

Level 3. Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities, including pricing models, discounted cash flow methodologies and similar techniques.

Financial assets measured at fair value on a recurring basis were as follows (in thousands):

	Fair Value Measurement at Reporting Date Using
	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total
As of June 30, 2019
Assets:
Money market funds	$	6,986	$	—	$	—	$	6,986
As of December 31, 2018
Assets:
Money market funds	$	6,974	$	—	$	—	$	6,974

As of June 30, 2019 and December 31, 2018, money market funds are classified as Level 1 because they are valued using quoted market prices and are included in cash and cash equivalents.

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Segment Information

6 Months Ended

Jun. 30, 2019

Segment Reporting [Abstract]

Segment Information

4. Segment Information

Operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker in deciding how to allocate resources and in assessing performance.

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):

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2019		2018		2019		2018
China	$	4,689	$	5,113	$	8,185	$	11,184
Taiwan		1,285		133		1,893		344
South Korea		860		801		1,551		1,313
Japan		334		423		555		677
Other		7		-		12		5
Total revenue	$	7,175	$	6,470	$	12,196	$	13,523

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

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2019		2018		2019		2018
Security surveillance	$	4,322	$	5,252	$	7,812	$	11,539
Automotive		2,853		1,218		4,384		1,984
Total revenue	$	7,175	$	6,470	$	12,196	$	13,523

Long-lived assets are attributed to the geographic region where they are located. Net long-lived assets by geographic region were as follows (in thousands):

	June 30,		December 31,
	2019		2018
Taiwan	$	348	$	399
Japan		84		104
United States		71		102
South Korea		5		4
China		1		2
Total property and equipment - net	$	509	$	611

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Commitments and Contingencies

6 Months Ended

Jun. 30, 2019

Commitments And Contingencies Disclosure [Abstract]

Commitments and Contingencies

5. Commitments and Contingencies

Operating leases

The Company leases facilities under non-cancellable lease agreements expiring through fiscal year 2020. The Company’s agreements do not include variable lease payments or any restrictions or covenants imposed by the leases. As the rate implicit in each lease agreement is not readily determinable, the Company’s incremental borrowing rate was used as the discount rate. The Company’s lease assets and lease liabilities have been adjusted for initial direct costs and prepaid rent but do not reflect any options to extend or terminate its lease agreements, any residual value guarantees, or any leases that have yet to be commenced.

As of June 30, 2019, the right of use asset and lease liabilities related to operating leases were as follows (in thousands):

	June 30,
	2019
Lease assets	$	525
Lease liabilities - Current	$	499
Lease liabilities - Non-Current		34
Total lease liabilities	$	533

Rent expense under operating leases was $0.2 million and $0.1 million for the three months ended June 30, 2019 and 2018, respectively, and $0.3 million and $0.3 million for the six months ended June 30, 2019 and 2018, respectively.

The following table summarizes the Company’s lease costs and weighted-average assumptions used in determining its lease assets and lease liabilities (in thousands):

	Six Months Ended
	June 30, 2019
Operating lease cost (1)	$	331
Cash paid for operating leases (1)	$	345
Lease assets obtained in exchange for operating lease liabilities (2)	$	839
Weighted average remaining term for operating leases	0.88 years
Weighted average discount rate for operating leases		6.0	%

(1) Operating lease cost and Cash paid for operating leases for the three months ended June 30, 2019 were $0.2 million and $0.2 million, respectively.

(2) Represents the amount for operating leases existing on January 1, 2019. There were no new leases that commenced in six months ended June 30, 2019.

As of December 31, 2018, the aggregate future minimum lease payments under operating leases consist of the following (in thousands):

Year Ending December 31,	Amount
2019	$	645
2020		201
Total	$	846

As of June 30, 2019, the aggregate future minimum lease payments under operating leases consist of the following (in thousands):

Year Ending December 31,	Amount
2019 (remaining six months)	$	344
2020		201
Total		545
Less effects of discounting		(12	)
Lease liabilities recognized	$	533

Purchase Commitments

As of June 30, 2019, the Company had purchase commitments with its third-party suppliers through fiscal year 2022. Future minimum payments under purchase commitments are $0.1 million for the remaining six months ending December 31, 2019 and $0.3 million, $0.2 million and $49,000 for the year ending December 31, 2020, 2021 and 2022, respectively.

Litigation

Although the Company is not currently subject to any litigation, and no litigation is currently threatened against it, the Company may be subject to legal proceedings, claims and litigation, including intellectual property litigation, arising in the ordinary course of business. Such matters are subject to many uncertainties and outcomes and are not predictable with assurance. The Company accrues amounts that it believes are adequate to address any liabilities related to legal proceedings and other loss contingencies that the Company believes will result in a probable loss that is reasonably estimable.

Indemnification

During the normal course of business, the Company may make certain indemnities, commitments and guarantees which may include intellectual property indemnities to certain of the Company’s customers in connection with the sales of the Company’s products and indemnities for liabilities associated with the infringement of other parties’ technology based upon the Company’s products. The Company’s exposure under these indemnification provisions is generally limited to the total amount paid by a customer under the agreement. However, certain agreements include indemnification provisions that could potentially expose us to losses in excess of the amount received under the agreement. In addition, the Company indemnifies its officers, directors and certain key employees while they are serving in good faith in such capacities.

The Company has not recorded any liability for these indemnities, commitments and guarantees in the accompanying condensed consolidated balance sheets. Where necessary, the Company accrues for losses for any known contingent liabilities, including those that may arise from indemnification provisions, when future payment is probable.

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Stockholders' Equity

6 Months Ended

Jun. 30, 2019

Equity [Abstract]

Stockholders' Equity

6. Stockholders’ Equity

Preferred Stock

The Company was authorized to issue 5,000,000 shares of preferred stock with a $0.0001 par value per share as of June 30, 2019 and December 31, 2018. The shares of preferred stock issued and outstanding was nil as of June 30, 2019 and December 31, 2018.

Common Stock

The Company was authorized to issue 75,000,000 shares of common stock with $0.0001 par value per share as of June 30, 2019 and December 31, 2018. As of June 30, 2019, the shares of common stock issued and outstanding were 17,255,610 excluding 104,257 legally issued shares subject to repurchase related to the early exercise of options to purchase common stock. As of December 31, 2018, the shares of common stock issued and outstanding were 17,130,507 excluding 155,257 legally issued shares subject to repurchase related to the early exercise of options to purchase common stock.

The Company has reserved the following number of shares of common stock for future issuances:

	June 30,
	2019
Outstanding stock awards		1,396,686
Shares available for future issuance under the 2017 Stock Incentive Plan		4,994,324
Total common stock reserved for future issuances		6,391,010

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Stock Option Plan

6 Months Ended

Jun. 30, 2019

Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]

Stock Option Plan

7. Stock Option Plan

Stock Incentive Plan

In April 2012, the Company adopted the 2012 Stock Option Plan (“2012 Plan”). The 2012 Plan provides for the granting of stock-based awards to employees, directors, and consultants under terms and provisions established by the Company’s board of directors. Under the terms of the 2012 Plan, options may be granted at an exercise price not less than fair market value. For employees holding more than 10% of the voting rights of all classes of stock, the exercise prices for incentive and nonstatutory stock options must be at least 110% of fair market of the common stock on the grant date, as determined by the Company’s board of directors. The terms of options granted under the 2012 Plan may not exceed ten years.

The 2012 Plan was superseded by the 2017 Stock Option Plan (“2017 Plan”). Any outstanding awards under the 2012 Plan will continue to be governed by the terms of the 2012 Plan.

In August 2017, the Company adopted the 2017 Plan. The Company’s stockholders approved the 2017 Plan in September 2017 and it became effective immediately prior to the closing of the Company’s IPO. In connection with the adoption of the 2017 Plan, no additional awards and no shares of common stock remain available for future issuance under the 2012 Plan and shares reserved but not issued under the 2012 Plan as of the effective date of the 2017 Plan were included in the number of shares reserved for issuance under the 2017 Plan. In addition, shares subject to awards under the 2012 Plan that are forfeited or terminated will be added to the 2017 Plan. The number of shares available for issuance under the 2017 Plan will be automatically increased on the first day of each fiscal year beginning on January 1, 2018 and ending on (and including) January 1, 2027, in an amount equal to the lesser of (1) 4% of the outstanding shares of our common stock on the last day of the immediately preceding fiscal year, or (2) another amount determined by the Company’s board of directors. The automatic increase in the number of shares available for issuance under the 2017 plan for the fiscal year 2019 was 691,431 shares. The 2017 Plan provides for the granting of incentive stock options, or ISOs, within the meaning of Section 422 of the Internal Revenue Code to employees and the granting of nonstatutory stock options, or NSOs, to employees, non-employee directors, advisors and consultants. The 2017 Plan also provides for the grants of restricted stock, stock appreciation rights, or SARs, stock unit and cash-based awards to employees, non-employee directors, advisors and consultants.

The Company’s stock award activity under the stock incentive plan is summarized as follows:

	Awards Available for Grant
As of December 31, 2018		4,434,310
Authorized		691,431
Granted		(148,750	)
Canceled		17,333
As of June 30, 2019		4,994,324

Early Exercise of Stock Options

Certain employees and directors have exercised option grants prior to vesting. The unvested shares are subject to a repurchase right held by the Company at the original purchase price. The proceeds initially are recorded as a liability related to early exercised stock options and reclassified to common stock and additional paid in capital as the repurchase right lapses.

For the three and six months ended June 30, 2019, there were no options early exercised. In addition, the Company did not repurchase any shares of unvested common stock related to early exercised stock options during the period.

For the three and six months ended June 30, 2018, the Company issued 24,166 unvested shares of common stock upon early exercise for total exercise proceeds of $0.1 million and repurchased 6,834 shares of unvested common stock related to early exercised options at the original purchase price.

As of June 30, 2019 and December 31, 2018, 104,257 and 155,257 shares, respectively, held by employees and nonemployees were subject to repurchase at an aggregate price of $0.1 million and $0.1 million, respectively.

Stock Options

The Company’s stock option activity under the stock incentive plan is summarized as follows:

	Options Issued and Outstanding			Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Term (Years)		Aggregate Intrinsic Value (in thousands)
As of December 31, 2018		1,139,935		$	2.01		7.6	$	3,428
Granted		—		$	—
Exercised (1)		(84,666	)	$	1.18
Canceled		(2,333	)	$	0.97
As of June 30, 2019		1,052,936		$	2.08		7.1	$	4,030
Options vested and expected to vest as of June 30, 2019		1,052,936		$	2.08		7.1	$	4,030
Options vested and exercisable as of June 30, 2019		493,137		$	1.86		6.9	$	1,996

(1) Includes vesting of early-exercised options.

The stock options outstanding and exercisable by exercise price at June 30, 2019 are as follows:

		Options Outstanding						Options Vested and Exercisable
Exercise Price		Number Outstanding		Weighted- Average Remaining Contractual Life (Years)		Weighted- Average Exercise Price		Number Exercisable		Weighted- Average Exercise Price
$	0.16		64,950		4.6	$	0.16		64,950	$	0.16
$	0.37		153,338		5.9	$	0.37		70,663	$	0.37
$	0.97		144,001		6.7	$	0.97		73,952	$	0.97
$	2.51		177,695		7.2	$	2.51		80,860	$	2.51
$	2.89		49,000		7.7	$	2.89		19,500	$	2.89
$	2.93		333,752		7.9	$	2.93		139,097	$	2.93
$	3.18		130,200		8.1	$	3.18		44,115	$	3.18
			1,052,936		7.1	$	2.08		493,137	$	1.86

The aggregate intrinsic value of options exercised for the six months ended June 30, 2019 and 2018 was $0.2 million and $2.5 million, respectively. The Company has various vesting agreements with employees.Options granted generally vest over a five-year period and generally are exercisable up to 10 years.

Restricted Stock Units

The Company’s restricted stock units activity is summarized as follows:

	Units Issued and Outstanding			Weighted-Average Grant Date Fair Value
As of December 31, 2018		255,500		$	11.53
Granted		148,750		$	6.18
Released		(45,500	)	$	13.39
Canceled		(15,000	)	$	9.97
As of June 30, 2019		343,750		$	9.04

Restricted stock units are converted into shares of the Company’s common stock upon vesting on a one-for-one basis. Restricted stock unit awards generally vest over a five-year period and are subject to the grantee’s continued service with the Company.

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Stock-Based Compensation

6 Months Ended

Jun. 30, 2019

Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]

Stock-Based Compensation

8. Stock-Based Compensation

The following table summarizes the distribution of stock-based compensation expense (in thousands):

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2019		2018		2019		2018
Cost of revenue	$	28	$	9	$	54	$	18
Research and development		123		33		246		120
Selling, general and administrative		197		151		384		325
Total	$	348	$	193	$	684	$	463

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Net Income (Loss) Per Share

6 Months Ended

Jun. 30, 2019

Earnings Per Share [Abstract]

Net Income (Loss) Per Share

9. Net Income (Loss) Per Share

The following table presents the calculation of basic and diluted net income (loss) per share (amounts in thousands, except per share data):

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2019		2018		2019			2018
Numerator:
Basic:
Net income (loss)	$	335	$	201	$	(283	)	$	674
Diluted:
Net income (loss)	$	335	$	201	$	(283	)	$	674
Denominator:
Basic shares:
Weighted-average shares outstanding in computing basic    net income (loss) per share		17,228,184		16,940,745		17,200,595			16,883,574
Diluted shares:
Effect of potentially dilutive securities:
Stock awards (1)		586,119		1,076,819		—			1,167,194
Weighted-average shares used in computing diluted net    income (loss) per share		17,814,303		18,017,564		17,200,595			18,050,768
Net income (loss) per common share:
Basic	$	0.02	$	0.01	$	(0.02	)	$	0.04
Diluted	$	0.02	$	0.01	$	(0.02	)	$	0.04

(1) Including early-exercised options.

For a net loss period, basic net loss per share and diluted net loss per share are the same as the effect of potential common shares is antidilutive and therefore excluded. The potentially dilutive securities outstanding for the three months ended June 30, 2019 and 2018 and for the six months ended June 30, 2019 and 2018 that were excluded from the computation of diluted net income (loss) per common share for the period presented as the effect would have been antidilutive was 404,000; 65,000; 1,009,000; and 15,000 shares, respectively.

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Income Taxes

6 Months Ended

Jun. 30, 2019

Income Tax Disclosure [Abstract]

Income Taxes

10. Income Taxes

The components of income (loss) before income taxes are as follows (in thousands):

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2019		2018		2019			2018
Domestic	$	343	$	111	$	(438	)	$	381
Foreign		54		36		112			91
Income (loss) before income taxes	$	397	$	147	$	(326	)	$	472

The components of the benefit from income taxes are as follows (in thousands):

	Three Months Ended					Six Months Ended
	June 30,					June 30,
	2019		2018			2019			2018
United States	$	55	$	(57	)	$	(59	)	$	(215	)
Foreign		7		3			16			13
Income tax provision (benefit)	$	62	$	(54	)	$	(43	)	$	(202	)

As of June 30, 2019, there was no material increase in the liability for unrecognized tax benefits nor any accrued interest and penalties related to uncertain tax positions.

Additionally, as of June 30, 2019, the Company had approximately $0.3 million of unrecognized tax benefits of which $0.2 million was netted against deferred tax assets with a full valuation allowance. If these amounts are recognized, there will be a tax benefit of $0.2 million against the Company's effective tax rate.

The Company’s federal, state, and foreign tax returns may be subject to examination by the tax authorities for fiscal years ended from 2014 to 2018.

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Organization and Summary of Significant Accounting Policies (Policies)

6 Months Ended

Jun. 30, 2019

Organization Consolidation And Presentation Of Financial Statements [Abstract]

Organization

Organization

Techpoint, Inc. and its wholly-owned subsidiaries (the “Company”) was originally incorporated in California in April 2012 and reincorporated into Delaware in July 2017. The Company is a fabless semiconductor company that designs, markets and sells mixed-signal integrated circuits for multiple video applications in the security surveillance and automotive markets. The Company is headquartered in San Jose, California.

Basis of Consolidation and Significant Accounting Policies

Basis of Consolidation and Significant Accounting Policies

The accompanying unaudited condensed 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 Condensed Consolidated Statements of Operations.

The accompanying unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and related notes for the year ended December 31, 2018 contained in our Annual Report on Form 10-K filed with the SEC on March 15, 2019.

In the opinion of management, the accompanying unaudited condensed consolidated financial statements reflect all adjustments, which only include normal recurring adjustments, necessary to present fairly the Company’s financial position, results of operations and cash flows for the interim periods and are not necessarily indicative of the results to be expected for the full fiscal year or for any other future annual or interim periods.

Revenue Recognition

Revenue Recognition

The Company principally sells its products to distributors who, in turn, sell to original design manufacturers, or ODMs, contract manufacturers and design houses. The Company adopted ASC Topic 606, or ASC 606, Revenue from Contracts with Customers on January 1, 2018. Under ASC 606, the Company satisfies its performance obligations and primarily recognizes revenue upon shipment, at which time control of its products is transferred to its customers. The Company applies the following five-step model for recognizing revenue from contracts with customers: (1) identify the contract with a customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to the performance obligations in the contract; and (5) recognize revenue when the performance obligation is satisfied.

Product revenues consist of sales of mixed-signal integrated circuits into the security surveillance and automotive camera markets. The Company generally requires advance payments from customers and records these advance payments, or contract liabilities, as customer deposits on its Consolidated Balance Sheet. Since the Company’s performance obligations relate to contracts with a duration of less than one year, the Company has elected to apply the optional exemption practical expedient provided in ASC 606 and is therefore not required to disclose the aggregate amount of the transaction price allocated to performance obligations that are unsatisfied or partially unsatisfied at the end of the reporting period. The Company provides product assurance warranty only and does not offer warranties to be purchased separately. The Company does not offer variable consideration or other significant payment terms and allocates the transaction price to each distinct product based on a relative standalone selling price. Revenue is recognized when control of the product is transferred to our customers, upon shipment, at which time the performance obligation is satisfied. The Company’s shipping terms are primarily FOB (free on board) shipping point, whereby legal title, risks and rewards of ownership, and physical possession are transferred to the customer upon shipment. Substantially all of the Company’s customers pay in advance of shipment, and no stock rotation, price protection or return rights are offered.

Use of Management's Estimates

Use of Management’s Estimates

The preparation of condensed consolidated financial statements in conformity with GAAP requires management to make estimates, judgments and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and reported amounts ofrevenue and expenses during the reporting period. Significant estimates included in the condensed consolidated financial statements include inventory valuation, valuation allowance for recorded deferred tax assets, and stock based compensation. These estimates are based upon information available as of the date of the condensed consolidated financial statements. Actual results could differ materially from those estimates.

Concentration of Customer and Credit Risk

Concentration of Customer and Credit Risk

Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash and cash equivalents and trade receivables. Risks associated with cash and cash equivalents are mitigated by banking with creditworthy institutions. The Company generally requires advance payments from customers. The Company also performs credit evaluations of its customers and provides credit to certain customers in the normal course of business. The Company has not incurred bad debt write-offs during any of the periods presented.

For each significant customer, or distributor, and significant end-customer, revenue as a percentage of total revenue is as follows:

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2019			2018			2019			2018
Customer
Customer A		54	%		75	%		58	%		80	%
Customer B	*				11	%	*			*
End-Customer
End-Customer A (1)		40	%		63	%		38	%		65	%
End-Customer B (1)		15	%	*				19	%	*

* Less than 10%

(1) Sales to End-Customer A and End-Customer B primarily occurred through Customer A

Recently Adopted Accounting Pronouncements

Recently Adopted Accounting Pronouncements

Stock Compensation Guidance. In June 2018, the FASB issued ASU No 2018-07, Stock Compensation: Improvements to Nonemployee Share-Based Payment Accounting, which amends ASC 718 to include share-based payments issued to nonemployees for goods or services. The amendments in this update are effective for annual periods beginning after December 15, 2018, and interim periods therein. Early adoption is permitted, but no earlier than a company’s adoption date of Topic 606, Revenue from Contracts with Customers. The Company early adopted this guidance on July 1, 2018 during the third quarter of fiscal 2018, which resulted in no impact on its condensed consolidated financial statements.  

Lease Guidance. In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842). ASU 2016-02 requires lessees to recognize all leases with terms in excess of one year on their balance sheet as a right of use asset and a lease liability at the commencement date. The new standard also simplifies the accounting for sale and leaseback transactions. The amendments in this update are effective for annual periods beginning after December 15, 2018, and interim periods therein and must be adopted using a modified retrospective method for leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements. The new standard also requires lessees and lessors to disclose qualitative and quantitative information about their leases and significant judgements made in applying the standard. The Company adopted this guidance on January 1, 2019 in the first quarter of fiscal 2019 under the modified retrospective transition method approach. The Company elected to use the package of practical expedients and did not reassess whether any expired or existing contracts are or contain leases, the lease classification for any expired or existing leases, or initial direct costs for any existing leases, and the practical expedient to not separate lease and non-lease components. Additionally, the Company elected the short-term lease exception and excluded all leases that are twelve or less months in duration. As a result, financial information for reporting periods beginning after January 1, 2019 are reported under the new standard, while comparative financial information has not been adjusted and continues to be reported in accordance with the previous standard. As a result, the Company recognized $0.8 million of lease assets and $0.9 million of lease liabilities, of which $0.2 million is recorded as non-current lease liabilities on the Company’s Condensed Consolidated Balance Sheet as of January 1, 2019. Additionally upon adoption, there was no impact on the Condensed Consolidated Statement of Operations and no cumulative effect adjustment to retained earnings as of January 1, 2019.

Revenue Recognition Guidance. In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers, creating ASC 606. Upon adoption, revenue is recognized under a five-step process: 1. Identify the contract(s) with a customer. 2. Identify the performance obligations in the contract. 3. Determine the transaction price. 4. Allocate the transaction price to performance obligations in the contract. 5. Recognize revenue when (or as) the entity satisfies a performance obligation. Additional considerations under this update include accounting for costs to obtain or fulfill a contract with a customer and additional quantitative and qualitative disclosures. ASU 2014-09 became effective for periods beginning after December 15, 2017 (including interim reporting periods within those periods), or the first quarter 2018, and allows for retrospective or modified retrospective application. The Company adopted this guidance in the first quarter of fiscal 2018 under the modified retrospective approach as applied to customer contracts that were not completed as of January 1, 2018. As a result, financial information for reporting periods beginning after January 1, 2018 are reported under the new standard. There was no cumulative impact to adopting the new standard on the Company’s consolidated financial statements.

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Organization and Summary of Significant Accounting Policies (Tables)

6 Months Ended

Jun. 30, 2019

Organization Consolidation And Presentation Of Financial Statements [Abstract]

Summary of Revenue as Percentage of Total Revenue for Each Significant Customer, or Distributor, and Significant End-Customer

For each significant customer, or distributor, and significant end-customer, revenue as a percentage of total revenue is as follows:

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2019			2018			2019			2018
Customer
Customer A		54	%		75	%		58	%		80	%
Customer B	*				11	%	*			*
End-Customer
End-Customer A (1)		40	%		63	%		38	%		65	%
End-Customer B (1)		15	%	*				19	%	*

* Less than 10%

(1) Sales to End-Customer A and End-Customer B primarily occurred through Customer A

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Balance Sheet Components (Tables)

6 Months Ended

Jun. 30, 2019

Balance Sheet Related Disclosures [Abstract]

Components of Inventory

Inventory consists of the following (in thousands):

	June 30,		December 31,
	2019		2018
Work in process	$	1,891	$	961
Finished goods		1,890		1,246
Total inventory	$	3,781	$	2,207

Components of Property and Equipment - Net

Property and equipment – net consists of the following (in thousands):

	June 30,			December 31,
	2019			2018
Computer equipment and software	$	1,247		$	1,173
Leasehold improvements		84			84
Furniture		30			30
Total property and equipment		1,361			1,287
Less: accumulated depreciation		(852	)		(676	)
Total property and equipment - net	$	509		$	611

Components of Accrued Liabilities

Accrued liabilities consist of the following (in thousands):

	June 30,		December 31,
	2019		2018
Payroll-related expenses	$	453	$	398
Accrued warranty		90		73
Taxes payable		65		28
Engineering services		60		134
Professional fees		32		48
Other		54		37
Total accrued liabilities	$	754	$	718

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Fair Value Measurements (Tables)

6 Months Ended

Jun. 30, 2019

Fair Value Disclosures [Abstract]

Schedule of Financial Assets Measured at Fair Value on Recurring Basis

Financial assets measured at fair value on a recurring basis were as follows (in thousands):

	Fair Value Measurement at Reporting Date Using
	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total
As of June 30, 2019
Assets:
Money market funds	$	6,986	$	—	$	—	$	6,986
As of December 31, 2018
Assets:
Money market funds	$	6,974	$	—	$	—	$	6,974

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Segment Information (Tables)

6 Months Ended

Jun. 30, 2019

Segment Reporting [Abstract]

Schedule of Product Revenue from Customer by Geographic Region

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):

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2019		2018		2019		2018
China	$	4,689	$	5,113	$	8,185	$	11,184
Taiwan		1,285		133		1,893		344
South Korea		860		801		1,551		1,313
Japan		334		423		555		677
Other		7		-		12		5
Total revenue	$	7,175	$	6,470	$	12,196	$	13,523

Schedule of Revenue by Principal Products Lines

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

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2019		2018		2019		2018
Security surveillance	$	4,322	$	5,252	$	7,812	$	11,539
Automotive		2,853		1,218		4,384		1,984
Total revenue	$	7,175	$	6,470	$	12,196	$	13,523

Schedule of Net Long-lived Assets by Geographic Region

Long-lived assets are attributed to the geographic region where they are located. Net long-lived assets by geographic region were as follows (in thousands):

	June 30,		December 31,
	2019		2018
Taiwan	$	348	$	399
Japan		84		104
United States		71		102
South Korea		5		4
China		1		2
Total property and equipment - net	$	509	$	611

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Commitments and Contingencies (Tables)

6 Months Ended

Jun. 30, 2019

Commitments And Contingencies Disclosure [Abstract]

Summary of Right of Use Asset and Lease Liabilities Related to Operating Leases

As of June 30, 2019, the right of use asset and lease liabilities related to operating leases were as follows (in thousands):

	June 30,
	2019
Lease assets	$	525
Lease liabilities - Current	$	499
Lease liabilities - Non-Current		34
Total lease liabilities	$	533

Schedule of Lease Costs and Weighted-Average Assumptions Used in Determining its Lease Assets and Lease Liabilities

The following table summarizes the Company’s lease costs and weighted-average assumptions used in determining its lease assets and lease liabilities (in thousands):

	Six Months Ended
	June 30, 2019
Operating lease cost (1)	$	331
Cash paid for operating leases (1)	$	345
Lease assets obtained in exchange for operating lease liabilities (2)	$	839
Weighted average remaining term for operating leases	0.88 years
Weighted average discount rate for operating leases		6.0	%

(1) Operating lease cost and Cash paid for operating leases for the three months ended June 30, 2019 were $0.2 million and $0.2 million, respectively.

(2) Represents the amount for operating leases existing on January 1, 2019. There were no new leases that commenced in six months ended June 30, 2019.

Schedule of Aggregate Future Minimum Lease Payments Under Operating Leases

As of December 31, 2018, the aggregate future minimum lease payments under operating leases consist of the following (in thousands):

Year Ending December 31,	Amount
2019	$	645
2020		201
Total	$	846

As of June 30, 2019, the aggregate future minimum lease payments under operating leases consist of the following (in thousands):

Year Ending December 31,	Amount
2019 (remaining six months)	$	344
2020		201
Total		545
Less effects of discounting		(12	)
Lease liabilities recognized	$	533

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Stockholders' Equity (Tables)

6 Months Ended

Jun. 30, 2019

Equity [Abstract]

Schedule of Number of Shares of Common Stock Reserved for Future Issuances

The Company has reserved the following number of shares of common stock for future issuances:

	June 30,
	2019
Outstanding stock awards		1,396,686
Shares available for future issuance under the 2017 Stock Incentive Plan		4,994,324
Total common stock reserved for future issuances		6,391,010

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Stock Option Plan (Tables)

6 Months Ended

Jun. 30, 2019

Summary of Stock Options Outstanding and Exercisable by Exercise Price

The stock options outstanding and exercisable by exercise price at June 30, 2019 are as follows:

		Options Outstanding						Options Vested and Exercisable
Exercise Price		Number Outstanding		Weighted- Average Remaining Contractual Life (Years)		Weighted- Average Exercise Price		Number Exercisable		Weighted- Average Exercise Price
$	0.16		64,950		4.6	$	0.16		64,950	$	0.16
$	0.37		153,338		5.9	$	0.37		70,663	$	0.37
$	0.97		144,001		6.7	$	0.97		73,952	$	0.97
$	2.51		177,695		7.2	$	2.51		80,860	$	2.51
$	2.89		49,000		7.7	$	2.89		19,500	$	2.89
$	2.93		333,752		7.9	$	2.93		139,097	$	2.93
$	3.18		130,200		8.1	$	3.18		44,115	$	3.18
			1,052,936		7.1	$	2.08		493,137	$	1.86

Summary of Restricted Stock Units Activity

The Company’s restricted stock units activity is summarized as follows:

	Units Issued and Outstanding			Weighted-Average Grant Date Fair Value
As of December 31, 2018		255,500		$	11.53
Granted		148,750		$	6.18
Released		(45,500	)	$	13.39
Canceled		(15,000	)	$	9.97
As of June 30, 2019		343,750		$	9.04

2012 Stock Option Plan

Summary of Stock Award and Option Activity Under Stock Incentive Plan

The Company’s stock award activity under the stock incentive plan is summarized as follows:

	Awards Available for Grant
As of December 31, 2018		4,434,310
Authorized		691,431
Granted		(148,750	)
Canceled		17,333
As of June 30, 2019		4,994,324

The Company’s stock option activity under the stock incentive plan is summarized as follows:

	Options Issued and Outstanding			Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Term (Years)		Aggregate Intrinsic Value (in thousands)
As of December 31, 2018		1,139,935		$	2.01		7.6	$	3,428
Granted		—		$	—
Exercised (1)		(84,666	)	$	1.18
Canceled		(2,333	)	$	0.97
As of June 30, 2019		1,052,936		$	2.08		7.1	$	4,030
Options vested and expected to vest as of June 30, 2019		1,052,936		$	2.08		7.1	$	4,030
Options vested and exercisable as of June 30, 2019		493,137		$	1.86		6.9	$	1,996

(1) Includes vesting of early-exercised options.

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Stock-Based Compensation (Tables)

6 Months Ended

Jun. 30, 2019

Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]

Distribution of Stock-Based Compensation Expense

The following table summarizes the distribution of stock-based compensation expense (in thousands):

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2019		2018		2019		2018
Cost of revenue	$	28	$	9	$	54	$	18
Research and development		123		33		246		120
Selling, general and administrative		197		151		384		325
Total	$	348	$	193	$	684	$	463

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Net Income (Loss) Per Share (Tables)

6 Months Ended

Jun. 30, 2019

Earnings Per Share [Abstract]

Computation of Basic and Diluted Net Income (Loss) Per Share

The following table presents the calculation of basic and diluted net income (loss) per share (amounts in thousands, except per share data):

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2019		2018		2019			2018
Numerator:
Basic:
Net income (loss)	$	335	$	201	$	(283	)	$	674
Diluted:
Net income (loss)	$	335	$	201	$	(283	)	$	674
Denominator:
Basic shares:
Weighted-average shares outstanding in computing basic    net income (loss) per share		17,228,184		16,940,745		17,200,595			16,883,574
Diluted shares:
Effect of potentially dilutive securities:
Stock awards (1)		586,119		1,076,819		—			1,167,194
Weighted-average shares used in computing diluted net    income (loss) per share		17,814,303		18,017,564		17,200,595			18,050,768
Net income (loss) per common share:
Basic	$	0.02	$	0.01	$	(0.02	)	$	0.04
Diluted	$	0.02	$	0.01	$	(0.02	)	$	0.04

(1) Including early-exercised options.

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Income Taxes (Tables)

6 Months Ended

Jun. 30, 2019

Income Tax Disclosure [Abstract]

Schedule of Components of Income (Loss) Before Income Taxes

The components of income (loss) before income taxes are as follows (in thousands):

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2019		2018		2019			2018
Domestic	$	343	$	111	$	(438	)	$	381
Foreign		54		36		112			91
Income (loss) before income taxes	$	397	$	147	$	(326	)	$	472

Schedule of Components of Benefit From Income Taxes

The components of the benefit from income taxes are as follows (in thousands):

	Three Months Ended					Six Months Ended
	June 30,					June 30,
	2019		2018			2019			2018
United States	$	55	$	(57	)	$	(59	)	$	(215	)
Foreign		7		3			16			13
Income tax provision (benefit)	$	62	$	(54	)	$	(43	)	$	(202	)

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Organization and Summary of Significant Accounting Policies - Additional Information (Details) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2019	Jan. 01, 2019
Organization Consolidation And Presentation Of Financial Statements [Line Items]
Lease assets	$ 525	$ 800
Operating lease, liability	533	900
Operating lease, liability, noncurrent	$ 34	$ 200
California
Organization Consolidation And Presentation Of Financial Statements [Line Items]
Company original incorporation date of incorporation	2012-04
Company Incorporation place	California
Delaware
Organization Consolidation And Presentation Of Financial Statements [Line Items]
Company Incorporation place	Delaware
Company reincorporation incorporation date of incorporation	2017-07

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Organization and Summary of Significant Accounting Policies - Summary of Revenue as Percentage of Total Revenue for Each Significant Customer, or Distributor, and Significant End-Customer (Details) - Sales Revenue, Net - Customer Concentration Risk	3 Months Ended		6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018
Customer A
Product Information [Line Items]
Concentration risk, percentage	54.00%	75.00%	58.00%	80.00%
Customer B
Product Information [Line Items]
Concentration risk, percentage		11.00%
End-Customer A
Product Information [Line Items]
Concentration risk, percentage	40.00%	63.00%	38.00%	65.00%
End-Customer B
Product Information [Line Items]
Concentration risk, percentage	15.00%		19.00%

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Balance Sheet Components - Components of Inventory (Details) - USD ($) $ in Thousands	Jun. 30, 2019	Dec. 31, 2018
Balance Sheet Related Disclosures [Abstract]
Work in process	$ 1,891	$ 961
Finished goods	1,890	1,246
Total inventory	$ 3,781	$ 2,207

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Balance Sheet Components - Components of Property and Equipment - Net (Details) - USD ($) $ in Thousands	Jun. 30, 2019	Dec. 31, 2018
Property Plant And Equipment [Line Items]
Property and equipment, gross	$ 1,361	$ 1,287
Less: accumulated depreciation	(852)	(676)
Total property and equipment - net	509	611
Computer Equipment and Software
Property Plant And Equipment [Line Items]
Property and equipment, gross	1,247	1,173
Leasehold Improvements
Property Plant And Equipment [Line Items]
Property and equipment, gross	84	84
Furniture
Property Plant And Equipment [Line Items]
Property and equipment, gross	$ 30	$ 30

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Balance Sheet Components - Additional Information (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018	Mar. 31, 2019	Dec. 31, 2018
Balance Sheet Related Disclosures [Abstract]
Depreciation expense	$ 100	$ 100	$ 200	$ 100
Payments received in advance of shipments	1,059		1,059		$ 200	$ 2
Company recognized revenue	$ 200		$ 2

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Balance Sheet Components - Components of Accrued Liabilities (Details) - USD ($) $ in Thousands	Jun. 30, 2019	Dec. 31, 2018
Balance Sheet Related Disclosures [Abstract]
Payroll-related expenses	$ 453	$ 398
Accrued warranty	90	73
Taxes payable	65	28
Engineering services	60	134
Professional fees	32	48
Other	54	37
Total accrued liabilities	$ 754	$ 718

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Fair Value Measurements - Schedule of Financial Assets Measured at Fair Value on Recurring Basis (Details) - Fair Value Measurements Recurring - Money Market Funds - USD ($) $ in Thousands	Jun. 30, 2019	Dec. 31, 2018
Assets:
Money market funds	$ 6,986	$ 6,974
Quoted Prices in Active Markets for Identical Assets (Level 1)
Assets:
Money market funds	$ 6,986	$ 6,974

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Segment Information - Additional Information (Details)	6 Months Ended
	Jun. 30, 2019 Segment
Segment Reporting [Abstract]
Number of reportable segments	1
Number of operating segments	1

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Segment Information - Schedule of Product Revenue from Customers by Geographic Region (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018
Revenues From External Customers And Long Lived Assets [Line Items]
Revenue	$ 7,175	$ 6,470	$ 12,196	$ 13,523
China
Revenues From External Customers And Long Lived Assets [Line Items]
Revenue	4,689	5,113	8,185	11,184
Taiwan
Revenues From External Customers And Long Lived Assets [Line Items]
Revenue	1,285	133	1,893	344
South Korea
Revenues From External Customers And Long Lived Assets [Line Items]
Revenue	860	801	1,551	1,313
Japan
Revenues From External Customers And Long Lived Assets [Line Items]
Revenue	334	$ 423	555	677
Other
Revenues From External Customers And Long Lived Assets [Line Items]
Revenue	$ 7		$ 12	$ 5

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Segment Information - Schedule of Revenue by Principal Product Lines (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018
Entity Wide Information Revenue From External Customer [Line Items]
Revenue	$ 7,175	$ 6,470	$ 12,196	$ 13,523
Security Surveillance
Entity Wide Information Revenue From External Customer [Line Items]
Revenue	4,322	5,252	7,812	11,539
Automotive
Entity Wide Information Revenue From External Customer [Line Items]
Revenue	$ 2,853	$ 1,218	$ 4,384	$ 1,984

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Segment Information - Schedule of Net Long-Lived Assets by Geographic Region (Details) - USD ($) $ in Thousands	Jun. 30, 2019	Dec. 31, 2018
Revenues From External Customers And Long Lived Assets [Line Items]
Property and equipment - net	$ 509	$ 611
Taiwan
Revenues From External Customers And Long Lived Assets [Line Items]
Property and equipment - net	348	399
Japan
Revenues From External Customers And Long Lived Assets [Line Items]
Property and equipment - net	84	104
United States
Revenues From External Customers And Long Lived Assets [Line Items]
Property and equipment - net	71	102
South Korea
Revenues From External Customers And Long Lived Assets [Line Items]
Property and equipment - net	5	4
China
Revenues From External Customers And Long Lived Assets [Line Items]
Property and equipment - net	$ 1	$ 2

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Commitments and Contingencies - Additional Information (Details)	3 Months Ended		6 Months Ended
	Jun. 30, 2019 USD ($) Litigation	Jun. 30, 2018 USD ($)	Jun. 30, 2019 USD ($) Litigation	Jun. 30, 2018 USD ($)
Commitments And Contingencies Disclosure [Abstract]
Non-cancellable operating lease agreements, expiration description			non-cancellable lease agreements expiring through fiscal year 2020.
Rent expense under operating leases	$ 200,000	$ 100,000	$ 300,000	$ 300,000
Future minimum payments under purchase commitments for year ending December 31, 2019	100,000		100,000
Future minimum payments under purchase commitments for year ending December 31, 2020	300,000		300,000
Future minimum payments under purchase commitments for year ending December 31, 2021	200,000		200,000
Future minimum payments under purchase commitments for year ending December 31, 2022	$ 49,000		$ 49,000
Number of litigation | Litigation	0		0

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Commitments and Contingencies - Summary of Right of Use Asset and Lease Liabilities Related to Operating Leases (Details) - USD ($) $ in Thousands	Jun. 30, 2019	Jan. 01, 2019
Assets And Liabilities Lessee [Abstract]
Lease assets	$ 525	$ 800
Lease liabilities	499
Lease liabilities - Non-Current	34	200
Total lease liabilities	$ 533	$ 900

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Commitments and Contingencies - Schedule of Lease Costs and Weighted-Average Assumptions Used in Determining its Lease Assets and Lease Liabilities (Details) $ in Thousands	3 Months Ended	6 Months Ended
	Jun. 30, 2019 USD ($)	Jun. 30, 2019 USD ($)
Commitments And Contingencies Disclosure [Abstract]
Operating lease cost	$ 200	$ 331
Cash paid for operating leases	$ 200	345
Lease assets obtained in exchange for operating lease liabilities		$ 839
Weighted average remaining term for operating leases	10 months 17 days	10 months 17 days
Weighted average discount rate for operating leases	6.00%	6.00%

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Commitments and Contingencies - Schedule of Lease Costs and Weighted-Average Assumptions Used in Determining its Lease Assets and Lease Liabilities (Parenthetical) (Details) - USD ($) $ in Thousands	3 Months Ended	6 Months Ended
	Jun. 30, 2019	Jun. 30, 2019
Commitments And Contingencies Disclosure [Abstract]
Operating lease cost	$ 200	$ 331
Cash paid for operating leases	$ 200	$ 345

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Commitments and Contingencies - Schedule of Aggregate Future Minimum Lease Payments Under Operating Leases (Details) - USD ($) $ in Thousands	Jun. 30, 2019	Jan. 01, 2019	Dec. 31, 2018
Commitments And Contingencies Disclosure [Abstract]
2019			$ 645
2019 (remaining six months)	$ 344
2020	201		201
Total	545		$ 846
Less effects of discounting	(12)
Lease liabilities recognized	$ 533	$ 900

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Stockholders' Equity - Additional Information (Details) - $ / shares	Jun. 30, 2019	Dec. 31, 2018
Equity [Abstract]
Preferred stock, shares authorized	5,000,000	5,000,000
Preferred stock, par value	$ 0.0001	$ 0.0001
Preferred stock, shares issued	0	0
Preferred stock, shares outstanding	0	0
Common stock shares authorized	75,000,000	75,000,000
Common stock par value	$ 0.0001	$ 0.0001
Common stock shares issued	17,255,610	17,130,507
Common stock shares outstanding	17,255,610	17,130,507
Common stock issued subject to repurchase related to early exercise of options	104,257	155,257

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Stockholders' Equity - Schedule of Number of Shares of Common Stock Reserved for Future Issuances (Details)	Jun. 30, 2019 shares
Class Of Stock [Line Items]
Common stock reserved for future issuances	6,391,010
Outstanding Stock Awards
Class Of Stock [Line Items]
Common stock reserved for future issuances	1,396,686
Shares Available for Future Issuance under 2017 Stock Incentive Plan
Class Of Stock [Line Items]
Common stock reserved for future issuances	4,994,324

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Stock Option Plan - Additional Information (Details) $ in Millions	1 Months Ended		3 Months Ended		6 Months Ended		9 Months Ended	12 Months Ended
	Sep. 30, 2017 shares	Apr. 30, 2012	Jun. 30, 2019 USD ($) shares	Jun. 30, 2018 USD ($) shares	Jun. 30, 2019 USD ($) shares	Jun. 30, 2018 USD ($) shares	Sep. 30, 2018	Dec. 31, 2019 shares	Dec. 31, 2018 USD ($) shares
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Share-based compensation arrangement by share-based payment award, additional awards					691,431
Common stock reserved for future issuances			6,391,010		6,391,010
Number of options early exercised			0	24,166	0	24,166
Number of shares of unvested common stock repurchased			0	6,834	0	6,834
Proceeds from unvested shares of common stock issued | $				$ 0.1		$ 0.1
Number of shares subject to repurchase			104,257		104,257				155,257
Aggregate price of shares held subject to repurchase | $			$ 0.1		$ 0.1				$ 0.1
Share-based compensation arrangement by share-based payment award, aggregate intrinsic value of options exercised | $					$ 0.2	$ 2.5
Restricted Stock Units
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Share-based compensation arrangement by share-based payment award, options vesting period					5 years
Share-based compensation arrangement by share-based payment award, stock awards conversion ratio					1
2012 Stock Option Plan
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Share-based compensation arrangement by share-based payment award, options vesting term of award					The 2012 Plan provides for the granting of stock-based awards to employees, directors, and consultants under terms and provisions established by the Company’s board of directors. Under the terms of the 2012 Plan, options may be granted at an exercise price not less than fair market value. For employees holding more than 10% of the voting rights of all classes of stock, the exercise prices for incentive and nonstatutory stock options must be at least 110% of fair market of the common stock on the grant date, as determined by the Company’s board of directors. The terms of options granted under the 2012 Plan may not exceed ten years.
Share-based compensation arrangement by share-based payment award, additional awards	0
Common stock reserved for future issuances	0
2012 Stock Option Plan | Minimum
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Share-based compensation arrangement by share-based payment award, percentage of voting rights of all classes of stock to be owned by employees to determine stock options exercise price on grant date		10.00%
Share-based compensation arrangement by share-based payment award, exercise prices percentage of fair market of common stock on grant date		110.00%
2012 Stock Option Plan | Maximum
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Share-based compensation arrangement by share-based payment award, Options exercisable period		10 years
Two Thousand Seventeen Stock Option Plan
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Share-based compensation arrangement by share-based payment award, options vesting term of award							Options granted generally vest over a five-year period and generally are exercisable up to 10 years
Share based compensation arrangement by share based payment award number of shares authorized increment description					The number of shares available for issuance under the 2017 Plan will be automatically increased on the first day of each fiscal year beginning on January 1, 2018 and ending on (and including) January 1, 2027, in an amount equal to the lesser of (1) 4% of the outstanding shares of our common stock on the last day of the immediately preceding fiscal year, or (2) another amount determined by the Company’s board of directors.
Automatic increase in number of shares authorized under stock option plan, start date					Jan. 01, 2018
Automatic increase in number of shares authorized under stock option plan, end date					Jan. 01, 2027
Share-based compensation arrangement by share-based payment award, options vesting period					5 years
Two Thousand Seventeen Stock Option Plan | Scenario Forecast
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Automatic increase in number of shares available for issuance under the stock option plan								691,431
Two Thousand Seventeen Stock Option Plan | Maximum
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Share-based compensation arrangement by share-based payment award, Options exercisable period					10 years
Share-based compensation arrangement by share-based payment award, percentage of annual increase in number of shares authorized of outstanding shares of common stock	4.00%

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Stock Option Plan - Summary of Stock Awards and Option Activity Under Stock Incentive Plan (Details) - USD ($) $ / shares in Units, $ in Thousands	6 Months Ended	12 Months Ended
	Jun. 30, 2019	Dec. 31, 2018
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]
Awards Available for Grant, Beginning balance	4,434,310
Share-based compensation arrangement by share-based payment award, additional awards	691,431
Awards Available for Grant, Granted	(148,750)
Awards Available for Grant, Canceled	17,333
Awards Available for Grant, Ending balance	4,994,324	4,434,310
Options Issued and Outstanding, Beginning balance	1,139,935
Options Issued and Outstanding, Exercised	(84,666)
Options Issued and Outstanding, Canceled	(2,333)
Options Issued and Outstanding, Ending balance	1,052,936	1,139,935
Options Issued and Outstanding, Options vested and expected to vest	1,052,936
Options Issued and Outstanding, Options vested and exercisable	493,137
Weighted Average Exercise Price, Beginning balance	$ 2.01
Weighted Average Exercise Price, Exercised	1.18
Weighted Average Exercise Price, Canceled	0.97
Weighted Average Exercise Price, Ending balance	2.08	$ 2.01
Weighted Average Exercise Price, Options vested and expected to vest	2.08
Weighted Average Exercise Price, Options vested and exercisable	$ 1.86
Weighted-Average Remaining Contractual Term	7 years 1 month 6 days	7 years 7 months 6 days
Weighted-Average Remaining Contractual Term, Options vested and expected to vest	7 years 1 month 6 days
Weighted-Average Remaining Contractual Term, Options vested and exercisable	6 years 10 months 24 days
Aggregate Intrinsic Value	$ 4,030	$ 3,428
Aggregate Intrinsic Value, Options vested and expected to vest	4,030
Aggregate Intrinsic Value, Options vested and exercisable	$ 1,996

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Stock Option Plan - Summary of Stock Options Outstanding and Exercisable by Exercise Price (Details) - $ / shares	6 Months Ended
	Jun. 30, 2019	Dec. 31, 2018
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Options Outstanding, Number Outstanding	1,052,936
Options Outstanding, Weighted-Average Remaining Contractual Life (Years)	7 years 1 month 6 days
Options Outstanding, Weighted-Average Exercise Price	$ 2.08	$ 2.01
Options Vested and Exercisable, Number Exercisable	493,137
Options Vested and Exercisable, Weighted-Average Exercise Price	$ 1.86
Exercise Price 0.16
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Exercise Price	$ 0.16
Options Outstanding, Number Outstanding	64,950
Options Outstanding, Weighted-Average Remaining Contractual Life (Years)	4 years 7 months 6 days
Options Outstanding, Weighted-Average Exercise Price	$ 0.16
Options Vested and Exercisable, Number Exercisable	64,950
Options Vested and Exercisable, Weighted-Average Exercise Price	$ 0.16
Exercise Price 0.37
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Exercise Price	$ 0.37
Options Outstanding, Number Outstanding	153,338
Options Outstanding, Weighted-Average Remaining Contractual Life (Years)	5 years 10 months 24 days
Options Outstanding, Weighted-Average Exercise Price	$ 0.37
Options Vested and Exercisable, Number Exercisable	70,663
Options Vested and Exercisable, Weighted-Average Exercise Price	$ 0.37
Exercise Price 0.97
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Exercise Price	$ 0.97
Options Outstanding, Number Outstanding	144,001
Options Outstanding, Weighted-Average Remaining Contractual Life (Years)	6 years 8 months 12 days
Options Outstanding, Weighted-Average Exercise Price	$ 0.97
Options Vested and Exercisable, Number Exercisable	73,952
Options Vested and Exercisable, Weighted-Average Exercise Price	$ 0.97
Exercise Price 2.51
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Exercise Price	$ 2.51
Options Outstanding, Number Outstanding	177,695
Options Outstanding, Weighted-Average Remaining Contractual Life (Years)	7 years 2 months 12 days
Options Outstanding, Weighted-Average Exercise Price	$ 2.51
Options Vested and Exercisable, Number Exercisable	80,860
Options Vested and Exercisable, Weighted-Average Exercise Price	$ 2.51
Exercise Price 2.89
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Exercise Price	$ 2.89
Options Outstanding, Number Outstanding	49,000
Options Outstanding, Weighted-Average Remaining Contractual Life (Years)	7 years 8 months 12 days
Options Outstanding, Weighted-Average Exercise Price	$ 2.89
Options Vested and Exercisable, Number Exercisable	19,500
Options Vested and Exercisable, Weighted-Average Exercise Price	$ 2.89
Exercise Price 2.93
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Exercise Price	$ 2.93
Options Outstanding, Number Outstanding	333,752
Options Outstanding, Weighted-Average Remaining Contractual Life (Years)	7 years 10 months 24 days
Options Outstanding, Weighted-Average Exercise Price	$ 2.93
Options Vested and Exercisable, Number Exercisable	139,097
Options Vested and Exercisable, Weighted-Average Exercise Price	$ 2.93
Exercise Price 3.18
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Exercise Price	$ 3.18
Options Outstanding, Number Outstanding	130,200
Options Outstanding, Weighted-Average Remaining Contractual Life (Years)	8 years 1 month 6 days
Options Outstanding, Weighted-Average Exercise Price	$ 3.18
Options Vested and Exercisable, Number Exercisable	44,115
Options Vested and Exercisable, Weighted-Average Exercise Price	$ 3.18

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Stock Option Plan - Summary of Restricted Stock Units Activity (Details) - Restricted Stock Units	6 Months Ended
	Jun. 30, 2019 $ / shares shares
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Units Issued and Outstanding, Beginning balance | shares	255,500
Units Issued and Outstanding, Granted | shares	148,750
Units Issued and Outstanding, Released | shares	(45,500)
Units Issued and Outstanding, Canceled | shares	(15,000)
Units Issued and Outstanding, Ending balance | shares	343,750
Weighted-Average Grant Date Fair Value, Beginning balance | $ / shares	$ 11.53
Weighted-Average Grant Date Fair Value, Granted | $ / shares	6.18
Weighted-Average Grant Date Fair Value, Released | $ / shares	13.39
Weighted-Average Grant Date Fair Value, Canceled | $ / shares	9.97
Weighted-Average Grant Date Fair Value, Ending balance | $ / shares	$ 9.04

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Stock-Based Compensation - Distribution of Stock-Based Compensation Expense (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018
Share Based Compensation Expense [Line Items]
Stock-based compensation	$ 348	$ 193	$ 684	$ 463
Cost of Revenue
Share Based Compensation Expense [Line Items]
Stock-based compensation	28	9	54	18
Research and Development
Share Based Compensation Expense [Line Items]
Stock-based compensation	123	33	246	120
Selling, General and Administrative
Share Based Compensation Expense [Line Items]
Stock-based compensation	$ 197	$ 151	$ 384	$ 325

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Net Income (Loss) Per Share - Computation of Basic and Diluted Net Income (Loss) Per Share (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended				6 Months Ended
	Jun. 30, 2019	Mar. 31, 2019	Jun. 30, 2018	Mar. 31, 2018	Jun. 30, 2019	Jun. 30, 2018
Basic:
Net income (loss)	$ 335	$ (618)	$ 201	$ 473	$ (283)	$ 674
Diluted:
Net income (loss)	$ 335	$ (618)	$ 201	$ 473	$ (283)	$ 674
Denominator:
Weighted-average shares outstanding in computing basic net income (loss) per share	17,228,184		16,940,745		17,200,595	16,883,574
Effect of potentially dilutive securities:
Stock awards	586,119		1,076,819			1,167,194
Weighted-average shares used in computing diluted net income (loss) per share	17,814,303		18,017,564		17,200,595	18,050,768
Net income (loss) per common share:
Basic	$ 0.02		$ 0.01		$ (0.02)	$ 0.04
Diluted	$ 0.02		$ 0.01		$ (0.02)	$ 0.04

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Net Income (Loss) Per Share - Additional Information (Details) - shares	3 Months Ended		6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018
Earnings Per Share [Abstract]
Antidilutive securities excluded from computation of earnings per share amount	404,000	65,000	1,009,000	15,000

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Income Taxes - Schedule of Components of Income (Loss) Before Income Taxes (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018
Income Tax Disclosure [Abstract]
Domestic	$ 343	$ 111	$ (438)	$ 381
Foreign	54	36	112	91
Income (loss) before income taxes	$ 397	$ 147	$ (326)	$ 472

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Income Taxes - Schedule of Components of Benefit From Income Taxes (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018
Income Tax Disclosure [Abstract]
United States	$ 55	$ (57)	$ (59)	$ (215)
Foreign	7	3	16	13
Income tax provision (benefit)	$ 62	$ (54)	$ (43)	$ (202)

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Income Taxes - Additional Information (Details) $ in Millions	6 Months Ended
	Jun. 30, 2019 USD ($)
Income Tax [Line Items]
Unrecognized tax benefits	$ 0.3
Deferred tax assets with valuation allowance	0.2
Unrecognized tax benefit against effective tax rate	$ 0.2
Earliest Tax Year
Income Tax [Line Items]
Examination by tax authorities	2014
Latest Tax Year
Income Tax [Line Items]
Examination by tax authorities	2018