ck0001556898-ex991

	Revenue					Income from Operations					Income Before Income Taxes					Net Income					Non-GAAP Net Income
Year Ended December 31,	Amount		% Change			Amount		% Change			Amount		% Change			Amount		% Change			Amount		% Change
2018	$	31,098		(0.1	)%	$	1,815		(71.4	)%	$	2,044		(67.4	)%	$	1,885		(49.8	)%	$	3,143		(32.0	)%
	¥	3,451,878				¥	201,465				¥	226,884				¥	209,235				¥	348,873
2017	$	31,142		14.7	%	$	6,345		18.3	%	$	6,272		16.9	%	$	3,757		7.9	%	$	4,625		22.8	%
	¥	3,456,762				¥	704,295				¥	696,192				¥	417,027				¥	513,375

Our consolidated financial statements are prepared in U.S. dollars. For amounts disclosed in Japanese yen, an exchange rate of ¥111.00 Japanese yen to $1.00 U.S. dollar was used based on the Telegraphic Transfer Middle Rate quoted by Mitsubishi UFJ Financial Group’s official index as of December 28, 2018.

Our comprehensive income for the year ended December 31, 2018 and 2017 was $1.9 million (¥209.2 million, 49.8%) and $3.8 million (¥417.0 million, 7.9%), respectively. Our non-GAAP operating income for the year ended December 31, 2018 was $3.2 million (¥352.9 million) based on the exclusion of stock-based compensation of $1.4 million (¥151.4 million). Our non-GAAP net income for the year ended December 31, 2018 was $3.1 million (¥348.9 million) based on the exclusion of stock-based compensation of $1.4 million (¥151.4 million) and the relating income tax impact based on a 7.74% effective tax rate. Our non-GAAP operating income for the year ended December 31, 2017 was $7.8 million (¥865.0 million) based on the exclusion of stock-based compensation of $1.4 million (¥160.7 million). Our non-GAAP net income for the year ended December 31, 2017 was $4.6 million (¥513.4 million) based on the exclusion of stock-based compensation of $1.4 million (¥160.7 million) and the relating income tax impact based on a 40.07% effective tax rate.

The forecasted basic and diluted EPS for the year ended December 31, 2019 was computed using a forecasted weighted average shares outstanding for the year ended December 31, 2019. The forecasted non-GAAP figures exclude stock-based compensation of $1.5 million (¥161.3 million) and the relating income tax impact based on a 21.9% effective tax rate.

This Tanshin is not in scope for audit procedures by our independent auditors under the Financial Instruments and Exchange Act of Japan. Additionally, as of the date of this Tanshin, audit procedures performed in accordance with the standards of the Public Company Accounting Oversight Board (“PCAOB”) in the United States have yet to be completed. The Company’s independent auditors have not compiled or been involved in the preparation of the forecasted financial results for the year ending December 31, 2019. Accordingly, they assume no responsibility for the accuracy or presentation of this information.

The Tanshin includes forward-looking statements that involve a number of risks and uncertainties, many of which are beyond the Company’s control. The Company’s actual results may differ from those anticipated or expressed in these forward-looking statements as a result of various factors. All statements other than statements of historical facts contained in the Tanshin, including statements regarding our future results of operations and financial position, strategy and plans, and our expectations for future operations, are 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. In light of these risks, uncertainties and assumptions, the forward-looking events and circumstances discussed in the Tanshin may not occur, and actual results could differ materially and adversely from those anticipated or implied in the forward-looking statements. Although 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 the Tanshin 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 the Tanshin, except as required by law.

The investor meeting for holders of our Japanese depositary shares (“JDSs”) is scheduled for early June 2019 in Tokyo. Please refer to our website for details on our planned Investors Meetings.

Revenue decreased by $44,000 (¥5 million), or 0.1%, for the year ended December 31, 2018 as compared to the year ended December 31, 2017. This decrease was driven by a shift in product mix as we continue to develop and expand our product offerings particularly in the automotive market and the demand increases for our integrated HD-TVI transmitters and Image Signal Processor products which resulted in a 24% decrease in overall average selling prices, partially offset by a 31% increase in volume of shipments as a result of increased demand for these newer generation products. For the year ended December 31, 2018 and 2017, we recorded revenue of $4.8 million (¥530 million) and $3.0 million (¥333 million) from sales into the automotive market, respectively. For the year ended December 31, 2018 and 2017, we derived 15% and 10% of our revenue from sales into the automotive market, respectively.

The table below sets forth the major components of the change in revenue by geographic region for the year ended December 31, 2018 and 2017:

Cost of revenue increased $2.1 million (¥233 million), or 15.8%, for the year ended December 31, 2018 as compared to the year ended December 31, 2017. Gross margin decreased to 51% for the year ended December 31, 2018 from 58% for the year ended December 31 2017. The increase in cost of revenue was primarily driven by a 31% increase in unit sales offset by changes in product mix. The decrease in gross margin was driven by the shift in product mix causing a 24% decrease in overall average selling prices.

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 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 increased $1.9 million (¥216 million), or 36.2%, for the year ended December 31, 2018 as compared to the year ended December 31, 2017. This increase was primarily due to a $1.1 million (¥123 million) increase in tape-out expenses, a $0.4 million (¥39 million) increase in personnel costs due to a 14% increase in headcount as a result of expanding operations, and a $0.2 million (¥27 million) increase in product development costs relating to design, prototype, and software expenses.

Selling, general and administrative expenses increased by $0.4 million (¥49 million), or 7.2%, for the year ended December 31, 2018 as compared to the year ended December 31, 2017. This increase was primarily due to a $0.3 million (¥31 million) increase in professional service fees due to costs associated with being a public company, a $0.3 million (¥31 million) increase in personnel costs, rent, and other office expenses due to a 10% increase in headcount as a result of expanding operations, offset by a $0.2 million (¥23 million) decrease in stock-based compensation.

Other income increased by $0.3 million (¥34 million) for the year ended December 31, 2018 primarily due to foreign currency exchange transactions and foreign currency fluctuations from IPO proceeds received in Japanese yen in September 2017.

The provision for income taxes decreased by $2.4 million (¥262 million), or 93.7%, for the year ended December 31, 2018 as compared to the year ended December 31, 2017. The decrease in the provision for income taxes is primarily due to a decrease in taxable income, a reduction in the U.S. corporate tax rate to 21% as a result of tax law changes during December 2017, and an increase in tax benefits from stock-option exercises and dispositions.

As a result of the foregoing, net income decreased by $1.9 million (¥208 million), or 49.8%, for the year ended December 31, 2018 as compared to the year ended December 31, 2017.

Our cash and cash equivalents as of December 31, 2018 were $25.9 million (¥2,879 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.

During the year ended December 31, 2018, net cash provided by operating activities was $4.4 million (¥493 million), primarily due to net income of $1.9 million (¥209 million), non-cash charges of $1.8 million (¥195 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 $0.8 million (¥89 million). The cash inflow provided by the change in net operating assets and liabilities was primarily due to a $0.6 million (¥71 million) cash inflow in inventory due to product sales in excess of units manufactured during the period, and a $0.2 million (¥17 million) cash inflow in accounts payable driven by the timing of payments made to our vendors.

During the year ended December 31, 2018, cash used in investing activities was $0.4 million (¥42 million) due to purchases of property and equipment.

During the year ended December 31, 2018, cash provided by financing activities was $0.3 million (¥38 million) primarily due to net proceeds from the exercise of stock options.

The following assumptions are used for the Forecasted Consolidated Results of Operations for the year ending December 31, 2019.

Revenue for the year ending December 31, 2019 is expected to be $32.7 million (¥3,635 million), an increase of 5.3% as compared to revenue for the year ended December 31, 2018, driven by increased automotive market sales. Automotive market revenue is expected to increase by $4.4 million (¥490 million), or 92.4%, to $9.2 million (¥1,019 million) for the year ending December 31, 2019 from $4.8 million (¥530 million) for the year ended December 31, 2018. This growth is expected to be driven by the increased use of rear view cameras, car navigation, and drive recorder systems by automotive manufacturers in Japan and Asia. The Company expects to derive 28.0% of its fiscal 2019 revenue from the automotive market as compared to 15.3% for fiscal 2018.

Security surveillance revenue is expected to decrease by 10.5% in fiscal 2019 as compared to fiscal 2018. Beginning in the first half of fiscal 2018, the Company’s DVR customers began to transition from existing “H.264” to next generation “H.265” DVR technology. Although this transition is expected to be complete by the first quarter of fiscal 2019, given the macroeconomic factors related to a slowing China market, the Company expects its security surveillance revenue to be adversely effected for fiscal 2019.

The Company expects revenue in the first half of fiscal 2019 to be negatively impacted by a slowing China market, ongoing trade discussions between US and China, and seasonal factors such as Lunar New Year holidays. These factors will cause revenue in the first half of fiscal 2019 and the first quarter of fiscal 2019, specifically, to be abnormally low. The Company anticipates that only 36.7% of revenue for fiscal 2019 will be derived in the first half of fiscal 2019. Sales are projected to recover beginning in the second half of fiscal 2019 driven by sales in the automotive market. The Company expects revenue and operating profit in the second half of fiscal 2019 to increase as compared to the second half of fiscal 2018.

Potential upside for the Company’s fiscal 2019 revenue projection is dependent upon the recovery of the China market. To expand our technological offerings, we continue to seek growth opportunities including, but not limited to, licensure, M&A, and other ventures. However, we have no agreements or understandings with respect to any licenses, acquisitions or similar transactions at this time.

Fiscal 2019 operating profit is expected to be $2.4 million (¥267 million), a 32.7% increase from fiscal 2018 driven by an increase in revenue and a reduction in research and development expense of 0.6%, offset by increased expenses resulting from an increase in headcount. The Company expects overall operating expense to increase by 0.9% in fiscal 2019 as compared to fiscal 2018.

We have never declared nor paid cash dividends on our capital stock. We currently intend to retain any future earnings to finance the operation and expansion of our business, and we do not expect to declare or pay any dividends in the foreseeable future. In addition, our ability to pay cash dividends on our capital stock could be restricted by the terms of any future debt financing arrangement.

Any future determination to pay dividends on our common stock will be at the discretion of our board of directors and will depend upon, among other factors, our results of operations, financial condition, capital requirements and contractual restrictions. If we pay any dividends, including the fees and expenses payable thereunder, we will pay JDS holders to the same extent as holders of our common stock, subject to the terms of the August 31, 2017 trust agreement between the Company; Mizuho Securities Co., Ltd.; Mitsubishi UFJ Trust and Banking Corporation; and The Master Trust Bank of Japan, Ltd.

We do not expect to declare or pay cash dividends for the year ending December 31, 2019.

The Company’s consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries, and have been prepared in conformity with generally accepted accounting principles in the United States (“GAAP”) and applicable rules and regulations of the Securities and Exchange Commission (“SEC”). As the Company is developing business globally, we believe that by using GAAP we can properly reflect our business and benefit Japanese and other foreign investors. The Company has adopted ASU 2014-09, Revenue from Contracts with Customers (ASC 606) in the first quarter of fiscal 2018 under the modified retrospective approach. There was no cumulative impact from adopting the new standard on the Company’s condensed consolidated financial statements for the year ended December 31, 2018.

	December 31, 2018				December 31, 2017
	$		¥		$		¥
Assets
Current assets:
Cash and cash equivalents	$	25,941	¥	2,879,451	$	21,536	¥	2,390,496
Accounts receivable		236		26,196		93		10,323
Inventory		2,207		244,977		2,847		316,017
Prepaid expenses and other current assets		936		103,896		978		108,558
Total current assets		29,320		3,254,520		25,454		2,825,394
Property and equipment - net		611		67,821		325		36,075
Deferred tax assets		560		62,160		652		72,372
Other assets		215		23,865		161		17,871
Total assets	$	30,706	¥	3,408,366	$	26,592	¥	2,951,712
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	1,063	¥	117,993	$	760	¥	84,360
Accrued liabilities		718		79,698		573		63,603
Liability related to early exercised stock options		136		15,096		152		16,872
Customer deposits		2		222		6		666
Total current liabilities		1,919		213,009		1,491		165,501
Other liabilities		156		17,316		133		14,763
Total liabilities		2,075		230,325		1,624		180,264
Commitments and contingencies (Note 5)
Stockholders’ equity
Preferred stock, par value $0.0001 per share - 5,000,000 shares authorized as of December 31, 2018 and 2017; nil shares issued and outstanding as of December 31, 2018 and 2017		—		—		—		—
Common stock, par value $0.0001 per share - 75,000,000 shares authorized as of December 31, 2018 and 2017; 17,130,507 and 16,752,171 shares issued and outstanding as of December 31, 2018 and 2017, respectively		2		222		2		222
Additional paid-in-capital		19,358		2,148,738		17,580		1,951,380
Retained earnings		9,271		1,029,081		7,386		819,846
Total stockholders’ equity		28,631		3,178,041		24,968		2,771,448
Total liabilities and stockholders’ equity	$	30,706	¥	3,408,366	$	26,592	¥	2,951,712

	Year Ended December 31, 2018				Year Ended December 31, 2017
	$		¥		$			¥
Revenue	$	31,098	¥	3,451,878	$	31,142		¥	3,456,762
Cost of revenue		15,316		1,700,076		13,221			1,467,531
Gross profit		15,782		1,751,802		17,921			1,989,231
Operating expenses
Research and development		7,331		813,741		5,383			597,513
Selling, general and administrative		6,636		736,596		6,193			687,423
Total operating expenses		13,967		1,550,337		11,576			1,284,936
Income from operations		1,815		201,465		6,345			704,295
Other income (expense)		229		25,419		(73	)		(8,103	)
Income before income taxes		2,044		226,884		6,272			696,192
Income taxes		159		17,649		2,515			279,165
Net income	$	1,885	¥	209,235	$	3,757		¥	417,027
Net income allocable to preferred stockholders	$	—	¥	—	$	1,936		¥	214,896
Net income allocable to common stockholders	$	1,885	¥	209,235	$	1,821		¥	202,131
Net income per share allocable to common stockholders:
Basic	$	0.11	¥	12	$	0.25		¥	28
Diluted	$	0.10	¥	11	$	0.24		¥	27
Weighted-average shares outstanding in computing net income per share allocable to common stockholders
Basic		16,982,648				7,145,641
Diluted		17,991,131				8,056,329
Other comprehensive income	$	—	¥	—	$	—		¥	—
Comprehensive income	$	1,885	¥	209,235	$	3,757		¥	417,027

	Convertible Preferred Stock						Common Stock
	Shares			Amount			Shares			Amount		Additional Paid-In Capital			Retained Earnings		Total Stockholders' Equity
Balances as of December 31, 2016		10,742,500		$	8,794			3,725,238		$	—	$	813		$	3,629	$	13,236
		—		¥	976,134			—		¥	—	¥	90,243		¥	402,819	¥	1,469,196
Conversion of convertible preferred stock to common stock upon IPO		(10,742,500	)	$	(8,794	)		10,742,500		$	2	$	8,792		$	—	$	—
		—		¥	(976,134	)		—		¥	222	¥	975,912		¥	—	¥	—
Issuance of common stock upon IPO, net of issuance costs		—		$	—			1,520,000		$	—	$	5,157		$	—	$	5,157
		—		¥	—			—		¥	—	¥	572,427		¥	—	¥	572,427
Issuance of common stock upon exercise of over-allotment option, net of issuance costs		—		$	—			228,000		$	—	$	1,200		$	—	$	1,200
		—		¥	—			—		¥	—	¥	133,200		¥	—	¥	133,200
Issuance of common stock upon exercise of stock options and vesting of early exercised options		—		$	—			506,433		$	—	$	170		$	—	$	170
		—		¥	—			—		¥	—	¥	18,870		¥	—	¥	18,870
Issuance of common stock upon vesting of RSUs		—		$	—			30,000		$	—	$	—		$	—	$	—
		—		¥	—			—		¥	—	¥	—		¥	—	¥	—
Stock-based compensation		—		$	—			—		$	—	$	1,448		$	—	$	1,448
		—		¥	—			—		¥	—	¥	160,728		¥	—	¥	160,728
Net income		—		$	—			—		$	—	$	—		$	3,757	$	3,757
		—		¥	—			—		¥	—	¥	—		¥	417,027	¥	417,027
Balances as of December 31, 2017		—		$	—			16,752,171		$	2	$	17,580		$	7,386	$	24,968
		—		¥	—			—		¥	222	¥	1,951,380		¥	819,846	¥	2,771,448
Issuance of common stock upon exercise of stock options and vesting of early exercised options		—		$	—			368,632		$	—	$	423		$	—	$	423
		—		¥	—			—		¥	—	¥	46,953		¥	—	¥	46,953
Issuance of common stock upon vesting of RSUs		—		$	—			10,500		$	—	$	—		$	—	$	—
		—		¥	—			—		¥	—	¥	—		¥	—	¥	—
Shares repurchased for tax withholdings on vesting of RSUs		—		$	—			(796	)	$	—	$	(9	)	$	—	$	(9	)
		—		¥	—			—		¥	—	¥	(999	)	¥	—	¥	(999	)
Stock-based compensation		—		$	—			—		$	—	$	1,364		$	—	$	1,364
		—		¥	—			—		¥	—	¥	151,404		¥	—	¥	151,404
Net income		—		$	—			—		$	—	$	—		$	1,885	$	1,885
		—		¥	—			—		¥	—	¥	—		¥	209,235	¥	209,235
Balances as of December 31, 2018		—		$	—			17,130,507		$	2	$	19,358		$	9,271	$	28,631
		—		¥	—			—		¥	222	¥	2,148,738		¥	1,029,081	¥	3,178,041

	Year Ended December 31, 2018						Year Ended December 31, 2017
	$			¥			$			¥
Cash Flows From Operating Activities
Net income	$	1,885		¥	209,235		$	3,757		¥	417,027
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		244			27,084			207			22,977
Stock-based compensation		1,364			151,404			1,448			160,728
Write-off of deferred costs		57			6,327			—			—
Write-off of long lived assets		—			—			9			999
Deferred income taxes		92			10,212			370			41,070
Changes in operating assets and liabilities:
Accounts receivable		(143	)		(15,873	)		(14	)		(1,554	)
Inventory		640			71,040			(264	)		(29,304	)
Prepaid expenses and other current assets		42			4,662			(705	)		(78,255	)
Other assets		(56	)		(6,216	)		(18	)		(1,998	)
Accounts payable		151			16,761			85			9,435
Accrued expenses		145			16,095			180			19,980
Customer deposits		(4	)		(444	)		(739	)		(82,029	)
Other liabilities		23			2,553			43			4,773
Net cash provided by operating activities		4,440			492,840			4,359			483,849
Cash Flows From Investing Activities
Purchase of property and equipment		(376	)		(41,736	)		(170	)		(18,870	)
Net cash used in investing activities		(376	)		(41,736	)		(170	)		(18,870	)
Cash Flows From Financing Activities
Net proceeds from exercise of stock options		407			45,177			98			10,878
Payment for shares withheld for tax withholdings on vesting of RSUs		(9	)		(999	)		—			—
Payments of deferred costs		(57	)		(6,327	)		(2,096	)		(232,656	)
Proceeds from initial public offering, net of underwriter commissions		—			—			9,339			1,036,629
Net cash provided by financing activities		341			37,851			7,341			814,851
Net increase in cash and cash equivalents		4,405			488,955			11,530			1,279,830
Cash and cash equivalents at beginning of period		21,536			2,390,496			10,006			1,110,666
Cash and cash equivalents at end of period	$	25,941		¥	2,879,451		$	21,536		¥	2,390,496

Supplemental Disclosure of Cash Flow Information
Cash paid for income taxes	$	44		¥	4,884		$	2,585		¥	286,935
Supplemental Disclosure of Noncash Investing and Financing Information
Property and equipment purchased but not yet paid	$	173		¥	19,203		$	21		¥	2,331
Vesting of early exercised options	$	74		¥	8,214		$	99		¥	10,989
Conversion of preferred stock to common stock upon initial public offering	$	—		¥	—		$	8,792		¥	975,912

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

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):

For the periods presented prior to the Company’s IPO, basic and diluted net income per common share are presented in conformity with the two-class method required for participating securities. Prior to the closing of the Company’s IPO, all outstanding shares of its Series Seed, Series A, and Series B convertible preferred shares, which were participating securities, were converted to common stock on a one-to-one basis. The common stock issued for the conversion of 10,742,500 preferred shares were included in calculation of the weighted average shares outstanding for the year ended December 31, 2017. Each JDS represents one share of common stock.

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

	Year Ended
	December 31,
	2018		2017
Numerator:
Basic:
Net income	$	1,885	$	3,757
Net income allocable to preferred stockholders		—		1,936
Net income allocable to common stockholders		1,885		1,821
Diluted:
Net income		1,885		3,757
Net income allocable to preferred stockholders		—		1,823
Net income allocable to common stockholders		1,885		1,934
Denominator:
Basic shares:
Weighted-average shares used in computing basic net income per share allocable to common stockholders		16,982,648		7,145,641
Diluted shares:
Effect of potentially dilutive securities:
Stock options (1)		1,008,483		910,688
Weighted-average shares used in computing diluted net income per common share allocable to common stockholders		17,991,131		8,056,329
Net income per common share:
Basic	$	0.11	$	0.25
Diluted	$	0.10	$	0.24

Non-GAAP net income (2) :
Non-GAAP net income	$	3,143	$	4,625
Non-GAAP net income allocable to preferred stockholders		—		2,383
Non-GAAP net income allocable to common stockholders		3,143		2,242
Basic shares:
Weighted-average shares used in computing basic non-GAAP net income per share allocable to common stockholders		16,982,648		7,145,641
Non-GAAP net income per common share:
Non-GAAP Basic	$	0.19	$	0.31

Company Name:		Techpoint, Inc.
Listed Exchange:		Mothers market of the Tokyo Stock Exchange
Identification Code:		6697
Website URL:		www.techpoint.co.jp
Representative:		Fumihiro Kozato, President and Chief Executive Officer
Contact:		Hiroki Yomogita, Vice President Corporate Marketing
		President of Techpoint Japan KK
		03-6205-8405
Expected Date of Annual Shareholders Meeting:		May 31, 2019
Expected Date of Annual Securities Report Filing:		March 14, 2019
Expected Date of Dividend Payment:		Not Applicable
Supplementary Materials for Financial Results:		Included
Earnings Announcement for Financial Results:		Included

	Annual Dividend
Year Ended December 31,	First Quarter		Second Quarter		Third Quarter		Year-End		Total		Total Dividends		Payout Ratio		Ratio of Total Dividends to Net Assets
2017	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	-
2018	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	-
2019 (Forecast)	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	-

		Page
1.	Management’s Discussion and Analysis of:
(1)	Financial Condition and Results of Operations	2
(2)	Liquidity and Capital Resources	3
(3)	Forecast for the Year Ending December 31, 2019	3
(4)	Dividends	4

2.	Accounting Standards	4

3.	Consolidated Financial Statements and Supplementary Data (Unaudited)
(1)	Consolidated Balance Sheets	5
(2)	Consolidated Statements of Operations	6
(3)	Consolidated Statements of Stockholders’ Equity	7
(4)	Consolidated Statements of Cash Flows	8
(5)	Notes to Consolidated Financial Statements	9

Year Ended December 31,	Basic EPS		Diluted EPS		Non-GAAP Basic EPS		Ratio of Net Income to Equity			Ratio of Income Before Tax to Total Assets			Operating Margin
2018	$	0.11	$	0.10	$	0.19		7.0	%		7.1	%		5.8	%
	¥	12	¥	11	¥	21
2017	$	0.25	$	0.24	$	0.31		19.7	%		29.8	%		20.4	%
	¥	28	¥	27	¥	34

Year Ended December 31,	Total Assets		Net Assets		Total Stockholders' Equity		Stockholders' Equity Ratio			Stockholders' Equity Per Share
2018	$	30,706	$	28,631	$	28,631		93.2	%	$	1.67
	¥	3,408,366	¥	3,178,041	¥	3,178,041				¥	185
2017	$	26,592	$	24,968	$	24,968		93.9	%	$	1.49
	¥	2,951,712	¥	2,771,448	¥	2,771,448				¥	165

Year Ending December 31,	Basic EPS		Diluted EPS		Non-GAAP Basic EPS
2019	$	0.11	$	0.10	$	0.18
	¥	12	¥	11	¥	20