Nevada
|
27-2767540
|
(State or other jurisdiction of
incorporation or organization)
|
(I.R.S. Employer
Identification Number)
|
|
|
|
Page
|
PART I.
|
|
|
|
|
|
Item 1.
|
||
Item 1A.
|
||
Item 1B.
|
||
Item 2.
|
||
Item 3.
|
||
Item 4.
|
||
|
|
|
PART II.
|
|
|
Item 5.
|
||
Item 6.
|
||
Item 7.
|
||
Item 7A.
|
||
Item 8.
|
||
Item 9.
|
||
Item 9A.
|
||
Item 9B.
|
||
|
|
|
PART III.
|
|
|
Item 10.
|
||
Item 11.
|
||
Item 12.
|
||
Item 13.
|
||
Item 14.
|
||
|
|
|
PART IV.
|
|
|
|
|
|
Item 15.
|
||
|
|
|
SIGNATURES
|
||
EXHIBIT INDEX
|
•
|
New product releases that increased the number of next-generation headsets available at retail to eight Xbox One and five PlayStation®4 compatible headsets.
|
•
|
The first gaming headsets for the PlayStation®4 and Xbox One with DTS Headphone:X 7.1 surround sound technology, an innovative new sound experience designed to make movies, music and games sound better through headphones.
|
•
|
The first gaming headset to provide truly wireless game and chat audio for the Xbox One.
|
•
|
The first headset for the PlayStation®4 with noise cancellation and invisible microphones.
|
•
|
The introduction of a new feature called Superhuman Hearing™ which amplifies soft sounds using audio signal processing technology.
|
•
|
ability to create a beam of sound and place it where it is intended;
|
•
|
ability to direct advertising to patrons in sound zones, enhancing video content while limiting the noise that interferes with workers or the conduct of commerce at checkout or other locations;
|
•
|
ability to manipulate or selectively position or diffuse the source of sound;
|
•
|
ability to deliver a beam of sound over longer distances than conventional speakers, such as down a grocery store aisle or from a tall box store ceiling; and
|
•
|
ability to penetrate other competing ambient sounds to more effectively communicate.
|
•
|
Accelerate Console Headset Growth.
We have delivered innovative console gaming headsets in every category. We believe that our brand's image among consumers is a competitive advantage and that our success is attributable to our emphasis on delivering the most innovative and advanced headsets.
|
•
|
continuing to deliver innovative, high quality console gaming headsets that incorporate advanced audio and wireless technology;
|
•
|
maintaining our strategic relationships that provide our brand a larger presence with consumers and create opportunities for retailers to carry our products;
|
•
|
growing our gaming headset business in all areas including personal computer headsets;
|
•
|
continuing to improve our cost position through increased global sourcing and expanded points of distribution.
|
•
|
Accelerate International Expansion.
We have a strong market position in North America, United Kingdom, and Australia, and believe there is further opportunity for growth in the rest of Europe. Asia, in particular China, and Latin America are viewed as additional long-term growth opportunities. The Company intends to continue investing to increase our presence and growth in these regions.
|
•
|
Grow HyperSound Business.
We have built the infrastructure to expand our commercial business and launch the hearing healthcare audio business. Our goal is to grow a substantial customer base through key channel partners and continued product development.
|
•
|
Expand Our Product Lines.
We intend to increase our sales by continuing to develop internally, or through potential acquisitions, products that we offer to our customers. We are investing the resources necessary to maintain and expand our technical capability to manufacture multiple product lines that incorporate the latest technologies.
|
|
2014
|
|
|
2013
|
|
|
2012
|
|
|||||||||
|
(in thousands)
|
|
|||||||||||||||
United States
|
$
|
117,715
|
|
63.2
|
%
|
|
$
|
111,514
|
|
62.5
|
%
|
|
$
|
136,494
|
|
65.9
|
%
|
United Kingdom
|
29,425
|
|
15.8
|
%
|
|
26,439
|
|
14.8
|
%
|
|
27,100
|
|
13.1
|
%
|
|||
Europe
|
24,082
|
|
12.9
|
%
|
|
18,565
|
|
10.4
|
%
|
|
19,116
|
|
9.2
|
%
|
|||
Other
|
14,954
|
|
8.1
|
%
|
|
21,952
|
|
12.3
|
%
|
|
24,426
|
|
11.8
|
%
|
|||
Total revenues
|
$
|
186,176
|
|
|
|
|
$
|
178,470
|
|
|
|
$
|
207,136
|
|
|
•
|
our ability to timely demonstrate or manufacture reliable products that have the features required by our HyperSound customers;
|
•
|
our ability to develop relationships with new customers that will lead to sales of our HyperSound products or licensing opportunities for our HyperSound technology;
|
•
|
our ability to develop and expand into new markets for our HyperSound audio products and technology; and
|
•
|
our ability to develop international product distribution or licensing directly or through partners.
|
•
|
If our forecasts of demand for products are too high, we may accumulate excess inventories of products, which could lead to markdown allowances or write-offs affecting some or all of such excess inventories. We may also have to adjust the prices of our existing products to reduce such excess inventories.
|
•
|
If demand for specific products increases beyond what we forecast, our suppliers and third-party manufacturers may not be able to increase production rapidly enough to meet the demand. Our failure to meet market demand may lead to missed opportunities to increase our base of gamers, damage our relationships with retailers or harm our business.
|
•
|
The on-going console transition increases the likelihood that we could fail to accurately forecast demand for our next generation console headsets and our existing headsets.
|
•
|
Rapid increases in production levels to meet unanticipated demand could result in increased manufacturing errors, as well as higher component, manufacturing and shipping costs, all of which could reduce our profit margins and harm our relationships with retailers and consumers.
|
•
|
trade restrictions, higher tariffs, currency fluctuations or the imposition of additional regulations relating to import or export of our products, especially in China, where all of our Turtle Beach products are manufactured, which could force us to seek alternate manufacturing sources or increase our expenses;
|
•
|
difficulties obtaining domestic and foreign export, import and other governmental approvals, permits and licenses, and compliance with foreign laws, which could halt, interrupt or delay our operations if we cannot obtain such approvals, permits and licenses;
|
•
|
difficulties encountered by our international distributors or us in staffing and managing foreign operations or international sales, including higher labor costs;
|
•
|
transportation delays and difficulties of managing international distribution channels;
|
•
|
longer payment cycles for, and greater difficulty collecting, accounts receivable,;
|
•
|
political and economic instability, including wars, terrorism, political unrest, boycotts, curtailment of trade and other business restrictions, any of which could materially and adversely affect our net sales and results of operations; and
|
•
|
natural disasters.
|
•
|
cease selling, incorporating or using products or services that incorporate the challenged intellectual property;
|
•
|
obtain a license from the holder of the infringed intellectual property right, which license may not be available on reasonable terms, if at all; and/or
|
•
|
redesign products or services that incorporate the disputed technology.
|
Location
|
State or Country
|
Principal Business Activity
|
Approx. Square Feet
|
Owned or Expiration Date of Lease
|
|
Valhalla
|
NY
|
Administration
|
21,000
|
|
2019
|
San Diego
|
CA
|
Administration
|
10,000
|
|
2015
|
Basingstoke
|
U.K.
|
Administration
|
6,850
|
|
2021
|
Poway
|
CA
|
HyperSound
|
9,650
|
|
2015
|
San Jose
|
CA
|
Research & Development
|
3,500
|
|
2015
|
Elmsford
|
NY
|
Warehouse
|
6,200
|
|
2016
|
Darlington
|
U.K.
|
Warehouse
|
120,000
|
|
2018
|
|
High
|
|
Low
|
||||
Fiscal Year 2013
|
|
|
|
||||
First Quarter
|
$
|
20.25
|
|
|
$
|
7.10
|
|
Second Quarter
|
22.39
|
|
|
14.15
|
|
||
Third Quarter
|
17.90
|
|
|
10.57
|
|
||
Fourth Quarter
|
16.70
|
|
|
10.21
|
|
|
Year Ended December 31,
|
||||||||||||||||||
|
2014
(1)
|
|
2013
|
|
2012
|
|
2011
|
|
2010
|
||||||||||
|
(in thousands, except per share data)
|
||||||||||||||||||
Net Revenue
|
$
|
186,176
|
|
|
$
|
178,470
|
|
|
$
|
207,136
|
|
|
$
|
166,121
|
|
|
$
|
91,870
|
|
Cost of Revenue
|
135,509
|
|
|
128,141
|
|
|
132,795
|
|
|
96,536
|
|
|
50,556
|
|
|||||
Gross Profit
|
50,667
|
|
|
50,329
|
|
|
74,341
|
|
|
69,585
|
|
|
41,314
|
|
|||||
Gross Margin
|
27.2
|
%
|
|
28.2
|
%
|
|
35.9
|
%
|
|
41.9
|
%
|
|
45.0
|
%
|
|||||
Operating income (loss)
|
(13,825
|
)
|
|
1,598
|
|
|
42,910
|
|
|
38,268
|
|
|
18,287
|
|
|||||
Operating Margin
|
(7.4
|
)%
|
|
0.9
|
%
|
|
20.7
|
%
|
|
23.0
|
%
|
|
19.9
|
%
|
|||||
Net income (loss)
|
$
|
(15,486
|
)
|
|
$
|
(6,163
|
)
|
|
$
|
26,460
|
|
|
$
|
21,554
|
|
|
$
|
10,122
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Net earnings (loss) per share:
|
|
|
|
|
|
|
|
|
|
||||||||||
Basic
|
$
|
(0.39
|
)
|
|
$
|
(0.49
|
)
|
|
$
|
0.13
|
|
|
$
|
1.70
|
|
|
$
|
0.80
|
|
Diluted
|
$
|
(0.39
|
)
|
|
$
|
(0.49
|
)
|
|
$
|
0.13
|
|
|
$
|
1.70
|
|
|
$
|
0.80
|
|
Weighted average number of shares:
|
|
|
|
|
|
|
|
|
|
||||||||||
Basic
|
39,665
|
|
|
12,700
|
|
|
12,700
|
|
|
12,700
|
|
|
12,700
|
|
|||||
Diluted
|
39,665
|
|
|
12,700
|
|
|
12,700
|
|
|
12,700
|
|
|
12,700
|
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Balance Sheet Data
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash and cash equivalents
|
7,908
|
|
|
6,509
|
|
|
5,219
|
|
|
15,942
|
|
|
7,990
|
|
|||||
Total Assets
|
246,968
|
|
|
127,307
|
|
|
134,195
|
|
|
105,165
|
|
|
57,143
|
|
|||||
Total Debt
|
44,555
|
|
|
64,578
|
|
|
74,250
|
|
|
37,200
|
|
|
28,000
|
|
|||||
Series B Redeemable Preferred Stock
|
14,916
|
|
|
13,713
|
|
|
12,703
|
|
|
13,648
|
|
|
12,637
|
|
|||||
Series A Convertible Preferred Stock
|
—
|
|
|
24,345
|
|
|
24,345
|
|
|
24,345
|
|
|
24,345
|
|
|
|
Year Ended
|
||||||||||
|
|
December 31,
|
||||||||||
|
|
2014
|
|
2013
|
|
2012
|
||||||
|
|
(in thousands)
|
||||||||||
Net income (loss)
|
|
$
|
(15,486
|
)
|
|
$
|
(6,163
|
)
|
|
$
|
26,460
|
|
Interest expense
|
|
7,209
|
|
|
6,626
|
|
|
4,738
|
|
|||
Depreciation and amortization
|
|
6,866
|
|
|
5,345
|
|
|
2,606
|
|
|||
Stock-based compensation
|
|
5,194
|
|
|
2,563
|
|
|
985
|
|
|||
Income tax expense (benefit)
|
|
(6,272
|
)
|
|
1,090
|
|
|
14,008
|
|
|||
Business transaction costs
|
|
3,744
|
|
|
3,864
|
|
|
342
|
|
|||
Restructuring charges
|
|
747
|
|
|
—
|
|
|
—
|
|
|||
Payments to founders
|
|
—
|
|
|
527
|
|
|
527
|
|
|||
Gain on bargain purchase from acquisition
|
|
—
|
|
|
—
|
|
|
(2,303
|
)
|
|||
Adjusted EBITDA
|
|
$
|
2,002
|
|
|
$
|
13,852
|
|
|
$
|
47,363
|
|
|
Year Ended
|
||||||||||
|
December 31,
|
||||||||||
|
2014
|
|
2013
|
|
2012
|
||||||
|
(in thousands)
|
||||||||||
Net Revenue
|
$
|
186,176
|
|
|
$
|
178,470
|
|
|
$
|
207,136
|
|
Cost of Revenue
|
135,509
|
|
|
128,141
|
|
|
132,795
|
|
|||
Gross Profit
|
50,667
|
|
|
50,329
|
|
|
74,341
|
|
|||
Operating expenses
|
64,492
|
|
|
48,731
|
|
|
31,431
|
|
|||
Operating income (loss)
|
(13,825
|
)
|
|
1,598
|
|
|
42,910
|
|
|||
Interest expense
|
7,209
|
|
|
6,626
|
|
|
4,738
|
|
|||
Other non-operating expense, net
|
724
|
|
|
45
|
|
|
7
|
|
|||
Gain on bargain purchase from acquisition
|
—
|
|
|
—
|
|
|
(2,303
|
)
|
|||
Earnings (Loss) before income tax expense (benefit)
|
(21,758
|
)
|
|
(5,073
|
)
|
|
40,468
|
|
|||
Income tax expense (benefit)
|
(6,272
|
)
|
|
1,090
|
|
|
14,008
|
|
|||
Net income (loss)
|
$
|
(15,486
|
)
|
|
$
|
(6,163
|
)
|
|
$
|
26,460
|
|
|
Year Ended
|
||||||||||
|
December 31,
|
||||||||||
|
2014
|
|
2013
|
|
2012
|
||||||
|
(in thousands)
|
||||||||||
Selling and marketing
|
$
|
33,442
|
|
|
$
|
31,645
|
|
|
$
|
22,837
|
|
Research and development
|
9,400
|
|
|
4,873
|
|
|
2,099
|
|
|||
General and administrative
|
17,159
|
|
|
8,349
|
|
|
6,153
|
|
|||
Business transaction costs
|
3,744
|
|
|
3,864
|
|
|
342
|
|
|||
Restructuring charges
|
747
|
|
|
—
|
|
|
—
|
|
|||
Total operating expenses
|
$
|
64,492
|
|
|
$
|
48,731
|
|
|
$
|
31,431
|
|
|
2014
|
|
2013
|
|
2012
|
||||||
|
(in thousands)
|
||||||||||
Cash and cash equivalents at beginning of period
|
$
|
6,509
|
|
|
$
|
5,219
|
|
|
$
|
15,942
|
|
Net cash provided by (used for) operating activities
|
(14,834
|
)
|
|
18,290
|
|
|
6,977
|
|
|||
Net cash provided by (used for) investing activities
|
557
|
|
|
(6,167
|
)
|
|
(11,280
|
)
|
|||
Net cash provided by (used for) financing activities
|
15,969
|
|
|
(11,017
|
)
|
|
(6,341
|
)
|
|||
Effect of foreign exchange on cash
|
(293
|
)
|
|
184
|
|
|
(79
|
)
|
|||
Cash and cash equivalents at end of period
|
$
|
7,908
|
|
|
$
|
6,509
|
|
|
$
|
5,219
|
|
|
|
Payments Due by Period
|
||||||||||||||||||
|
|
(in thousands)
|
||||||||||||||||||
|
|
Total
|
|
Less Than One Year
|
|
1 - 3 Years
|
|
3 - 5 Years
|
|
More Than Five Years
|
||||||||||
Contractual Obligations: (1)
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Operating lease obligations (2)
|
|
$
|
4,309
|
|
|
$
|
1,146
|
|
|
$
|
1,661
|
|
|
$
|
1,318
|
|
|
184
|
|
|
Series B Redeemable Preferred Stock (3)
|
|
51,928
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
51,928
|
|
|||||
Long term debt (4)
|
|
44,555
|
|
|
38,786
|
|
|
5,128
|
|
|
641
|
|
|
—
|
|
|||||
Total
|
|
$
|
100,792
|
|
|
$
|
39,932
|
|
|
$
|
6,789
|
|
|
$
|
1,959
|
|
|
$
|
52,112
|
|
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
|
|
|
|
|
Page
|
|
|
Consolidated Financial Statements:
|
|
/s/ BDO USA, LLP
|
Stamford, Connecticut
|
March 30, 2015
|
/s/ FREED MAXICK CPAs, P.C.
|
Buffalo, New York
|
March 28, 2014, except for Note 10, 15, and
|
Supplemental Schedule as to which the date is March 30, 2015
|
|
December 31, 2014
|
|
December 31, 2013
|
||||
ASSETS
|
(in thousands, except par value and share amounts)
|
||||||
Current Assets:
|
|
|
|
|
|
||
Cash and cash equivalents
|
$
|
7,908
|
|
|
$
|
6,509
|
|
Accounts receivable, less allowances for $9,806 and $8,980 in 2014 and 2013, respectively
|
61,059
|
|
|
48,542
|
|
||
Inventories, net
|
38,400
|
|
|
49,643
|
|
||
Deferred income taxes
|
4,930
|
|
|
2,214
|
|
||
Prepaid income taxes
|
1,482
|
|
|
2,925
|
|
||
Prepaid expenses and other current assets
|
3,818
|
|
|
3,561
|
|
||
Total Current Assets
|
117,597
|
|
|
113,394
|
|
||
Property and equipment, net
|
6,722
|
|
|
7,369
|
|
||
Goodwill
|
80,974
|
|
|
—
|
|
||
Intangible assets, net
|
39,726
|
|
|
3,972
|
|
||
Deferred income taxes
|
1,128
|
|
|
827
|
|
||
Other assets
|
821
|
|
|
1,745
|
|
||
Total Assets
|
$
|
246,968
|
|
|
$
|
127,307
|
|
LIABILITIES, CONVERTIBLE PREFERRED STOCK AND
STOCKHOLDERS' EQUITY (DEFICIT)
|
|
|
|
|
|||
Current Liabilities:
|
|
|
|
|
|||
Revolving credit facilities
|
$
|
36,863
|
|
|
$
|
39,736
|
|
Term loan
|
1,923
|
|
|
14,500
|
|
||
Accounts payable
|
35,546
|
|
|
44,136
|
|
||
Due to shareholders
|
—
|
|
|
3,125
|
|
||
Other current liabilities
|
14,525
|
|
|
9,712
|
|
||
Total Current Liabilities
|
88,857
|
|
|
111,209
|
|
||
Term loan, long-term portion
|
5,769
|
|
|
—
|
|
||
Series B redeemable preferred stock
|
14,916
|
|
|
13,713
|
|
||
Deferred income taxes
|
648
|
|
|
850
|
|
||
Subordinated notes - related party
|
—
|
|
|
10,342
|
|
||
Other liabilities
|
5,592
|
|
|
1,986
|
|
||
Total Liabilities
|
115,782
|
|
|
138,100
|
|
||
Commitments and Contingencies
|
|
|
|
||||
Series A convertible preferred stock, $0.01 par value - 50,000,000 shares authorized;
48,689,555 shares issued and outstanding as of December 31, 2013
|
—
|
|
|
24,345
|
|
||
Stockholders' Equity (Deficit)
|
|
|
|
|
|
||
Common stock, $0.001 par value - 50,000,000 shares authorized; 42,027,991 and 12,700,460 shares issued and outstanding as of December 31, 2014 and 2013, respectively
|
42
|
|
|
13
|
|
||
Additional paid-in capital
|
128,084
|
|
|
(54,031
|
)
|
||
Retained earnings
|
3,289
|
|
|
18,775
|
|
||
Accumulated other comprehensive income (loss)
|
(229
|
)
|
|
105
|
|
||
Total Stockholders' Equity (Deficit)
|
131,186
|
|
|
(35,138
|
)
|
||
Total Liabilities, Convertible Preferred Stock and Stockholders' Equity (Deficit)
|
$
|
246,968
|
|
|
$
|
127,307
|
|
|
Year Ended
|
||||||||||
|
December 31, 2014
|
|
December 31, 2013
|
|
December 31, 2012
|
||||||
|
(in thousands, except per share data)
|
||||||||||
Net Revenue
|
$
|
186,176
|
|
|
$
|
178,470
|
|
|
$
|
207,136
|
|
Cost of Revenue
|
135,509
|
|
|
128,141
|
|
|
132,795
|
|
|||
Gross Profit
|
50,667
|
|
|
50,329
|
|
|
74,341
|
|
|||
Operating expenses:
|
|
|
|
|
|
||||||
Selling and marketing
|
33,442
|
|
|
31,645
|
|
|
22,837
|
|
|||
Research and development
|
9,400
|
|
|
4,873
|
|
|
2,099
|
|
|||
General and administrative
|
17,159
|
|
|
8,349
|
|
|
6,153
|
|
|||
Business transaction costs
|
3,744
|
|
|
3,864
|
|
|
342
|
|
|||
Restructuring charges
|
747
|
|
|
—
|
|
|
—
|
|
|||
Total operating expenses
|
64,492
|
|
|
48,731
|
|
|
31,431
|
|
|||
Operating income (loss)
|
(13,825
|
)
|
|
1,598
|
|
|
42,910
|
|
|||
Interest expense
|
7,209
|
|
|
6,626
|
|
|
4,738
|
|
|||
Other non-operating expense, net
|
724
|
|
|
45
|
|
|
7
|
|
|||
Gain on bargain purchase from acquisition
|
—
|
|
|
—
|
|
|
(2,303
|
)
|
|||
Earnings (Loss) before income tax expense (benefit)
|
(21,758
|
)
|
|
(5,073
|
)
|
|
40,468
|
|
|||
Income tax expense (benefit)
|
(6,272
|
)
|
|
1,090
|
|
|
14,008
|
|
|||
Net income (loss)
|
$
|
(15,486
|
)
|
|
$
|
(6,163
|
)
|
|
$
|
26,460
|
|
|
|
|
|
|
|
||||||
Net income (loss) attributable to common stockholders
|
$
|
(15,486
|
)
|
|
$
|
(6,163
|
)
|
|
$
|
1,611
|
|
|
|
|
|
|
|
||||||
Net earnings (loss) per share attributable to common stockholders:
|
|
|
|
|
|
||||||
Basic
|
$
|
(0.39
|
)
|
|
$
|
(0.49
|
)
|
|
$
|
0.13
|
|
Diluted
|
$
|
(0.39
|
)
|
|
$
|
(0.49
|
)
|
|
$
|
0.13
|
|
Weighted average number of shares:
|
|
|
|
|
|
||||||
Basic
|
39,665
|
|
|
12,700
|
|
|
12,700
|
|
|||
Diluted
|
39,665
|
|
|
12,700
|
|
|
12,700
|
|
|
Year Ended
|
||||||||||
|
December 31, 2014
|
|
December 31, 2013
|
|
December 31, 2012
|
||||||
|
(in thousands)
|
||||||||||
Net income (loss)
|
$
|
(15,486
|
)
|
|
$
|
(6,163
|
)
|
|
$
|
26,460
|
|
|
|
|
|
|
|
||||||
Other comprehensive income (loss):
|
|
|
|
|
|
||||||
Foreign currency translation adjustment
|
(334
|
)
|
|
184
|
|
|
(79
|
)
|
|||
Other comprehensive income (loss)
|
(334
|
)
|
|
184
|
|
|
(79
|
)
|
|||
Comprehensive income (loss)
|
$
|
(15,820
|
)
|
|
$
|
(5,979
|
)
|
|
$
|
26,381
|
|
|
Year Ended December 31,
|
||||||||||
|
2014
|
|
2013
|
|
2012
|
||||||
CASH FLOWS FROM OPERATING ACTIVITIES
|
(in thousands)
|
||||||||||
Net income (loss)
|
$
|
(15,486
|
)
|
|
$
|
(6,163
|
)
|
|
$
|
26,460
|
|
Adjustments to reconcile net income (loss) to net cash provided by (used for) operating activities:
|
|
|
|
|
|
||||||
Depreciation and amortization
|
5,800
|
|
|
4,422
|
|
|
1,858
|
|
|||
Amortization of intangible assets
|
1,066
|
|
|
923
|
|
|
748
|
|
|||
Amortization of deferred financing costs
|
2,621
|
|
|
1,556
|
|
|
835
|
|
|||
Stock-based compensation
|
5,194
|
|
|
2,563
|
|
|
985
|
|
|||
Accrued interest on Series B redeemable preferred stock
|
1,203
|
|
|
1,010
|
|
|
1,032
|
|
|||
Paid in kind interest
|
1,138
|
|
|
342
|
|
|
—
|
|
|||
Gain on bargain purchase from acquisition
|
—
|
|
|
—
|
|
|
(2,303
|
)
|
|||
Deferred income taxes
|
(9,998
|
)
|
|
3,353
|
|
|
(1,598
|
)
|
|||
Provision for (Reversal of) sales returns reserve
|
(2,111
|
)
|
|
(1,482
|
)
|
|
1,596
|
|
|||
Provision for (Reversal of) doubtful accounts
|
37
|
|
|
(235
|
)
|
|
358
|
|
|||
Provision for obsolete inventory
|
532
|
|
|
93
|
|
|
588
|
|
|||
Loss on disposal of property and equipment
|
9
|
|
|
108
|
|
|
47
|
|
|||
Changes in operating assets and liabilities:
|
|
|
|
|
|
||||||
Accounts receivable
|
(10,396
|
)
|
|
18,761
|
|
|
(23,461
|
)
|
|||
Inventories
|
11,363
|
|
|
(9,030
|
)
|
|
(857
|
)
|
|||
Accounts payable
|
(10,552
|
)
|
|
19,946
|
|
|
4,123
|
|
|||
Due to shareholders
|
(3,125
|
)
|
|
(3,125
|
)
|
|
(3,125
|
)
|
|||
Prepaid expenses and other assets
|
(212
|
)
|
|
(1,778
|
)
|
|
(1,203
|
)
|
|||
Income taxes payable
|
4,704
|
|
|
(9,780
|
)
|
|
(534
|
)
|
|||
Other liabilities
|
3,379
|
|
|
(3,194
|
)
|
|
1,428
|
|
|||
Net cash provided by (used for) operating activities
|
(14,834
|
)
|
|
18,290
|
|
|
6,977
|
|
|||
CASH FLOWS FROM INVESTING ACTIVITIES
|
|
|
|
|
|
||||||
Purchase of property and equipment
|
(3,536
|
)
|
|
(6,167
|
)
|
|
(5,945
|
)
|
|||
Cash acquired (cash paid) in business combinations
|
4,093
|
|
|
—
|
|
|
(5,335
|
)
|
|||
Net cash provided by (used for) investing activities
|
557
|
|
|
(6,167
|
)
|
|
(11,280
|
)
|
|||
CASH FLOWS FROM FINANCING ACTIVITIES
|
|
|
|
|
|
||||||
Borrowings on revolving credit facilities
|
157,982
|
|
|
51,250
|
|
|
48,000
|
|
|||
Repayment of revolving credit facilities
|
(160,855
|
)
|
|
(44,514
|
)
|
|
(27,000
|
)
|
|||
Repayment of capital leases
|
(34
|
)
|
|
—
|
|
|
—
|
|
|||
Borrowings on term loan
|
7,692
|
|
|
—
|
|
|
45,000
|
|
|||
Repayment of term loan
|
(14,500
|
)
|
|
(26,750
|
)
|
|
(28,950
|
)
|
|||
Repayment of subordinated notes
|
(18,481
|
)
|
|
—
|
|
|
—
|
|
|||
Proceeds from sale of common stock, net of issuance costs
|
37,230
|
|
|
—
|
|
|
—
|
|
|||
Proceeds from exercise of stock options
|
1,618
|
|
|
—
|
|
|
—
|
|
|||
Debt financing costs
|
(1,683
|
)
|
|
(1,003
|
)
|
|
(2,391
|
)
|
|||
Proceeds from issuance of subordinated notes
|
7,000
|
|
|
10,000
|
|
|
—
|
|
|||
Dividends paid on common and preferred stock
|
—
|
|
|
—
|
|
|
(41,000
|
)
|
|||
Net cash provided by (used for) financing activities
|
15,969
|
|
|
(11,017
|
)
|
|
(6,341
|
)
|
|||
Effect of exchange rate changes on cash and cash equivalents
|
(293
|
)
|
|
184
|
|
|
(79
|
)
|
|||
Net increase (decrease) in cash and cash equivalents
|
1,399
|
|
|
1,290
|
|
|
(10,723
|
)
|
|||
Cash and cash equivalents - beginning of period
|
6,509
|
|
|
5,219
|
|
|
15,942
|
|
|||
Cash and cash equivalents - end of period
|
$
|
7,908
|
|
|
$
|
6,509
|
|
|
$
|
5,219
|
|
|
|
|
|
|
|
||||||
SUPPLEMENTAL DISCLOSURE OF INFORMATION
|
|
|
|
|
|
||||||
Cash paid for interest
|
$
|
3,209
|
|
|
$
|
3,694
|
|
|
$
|
4,716
|
|
Cash paid for income taxes
|
$
|
554
|
|
|
$
|
8,224
|
|
|
$
|
16,749
|
|
Accrual for purchases of property and equipment
|
$
|
1,420
|
|
|
$
|
1,104
|
|
|
$
|
457
|
|
Value of shares issued to acquire HyperSound business
|
$
|
113,782
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Conversion of Series A Preferred Stock
|
$
|
24,345
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Settlement of accounts receivable related to acquisition
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
8,920
|
|
|
Series A Convertible Preferred Stock
|
|
Common Stock
|
|
Additional Paid-In Capital
|
|
Retained Earnings
|
|
Accumulated Other Comprehensive Income (Loss)
|
|
Total
|
||||||||||||||||
|
Shares
|
Amount
|
|
Shares
|
Amount
|
|
|
|
|
||||||||||||||||||
|
(in thousands)
|
||||||||||||||||||||||||||
Balance at December 31, 2011
|
48,690
|
|
$
|
24,345
|
|
|
12,700
|
|
$
|
13
|
|
|
$
|
(57,579
|
)
|
|
$
|
37,501
|
|
|
$
|
—
|
|
|
$
|
(20,065
|
)
|
Net income
|
—
|
|
—
|
|
|
—
|
|
—
|
|
|
—
|
|
|
26,460
|
|
|
—
|
|
|
26,460
|
|
||||||
Other comprehensive loss
|
—
|
|
—
|
|
|
—
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(79
|
)
|
|
(79
|
)
|
||||||
Stock-based compensation
|
—
|
|
—
|
|
|
—
|
|
—
|
|
|
985
|
|
|
—
|
|
|
—
|
|
|
985
|
|
||||||
Cash dividends ($0.46 per share)
|
—
|
|
—
|
|
|
—
|
|
—
|
|
|
—
|
|
|
(39,023
|
)
|
|
—
|
|
|
(39,023
|
)
|
||||||
Balance at December 31, 2012
|
48,690
|
|
24,345
|
|
|
12,700
|
|
13
|
|
|
(56,594
|
)
|
|
24,938
|
|
|
$
|
(79
|
)
|
|
(31,722
|
)
|
|||||
Net loss
|
—
|
|
—
|
|
|
—
|
|
—
|
|
|
—
|
|
|
(6,163
|
)
|
|
—
|
|
|
(6,163
|
)
|
||||||
Other comprehensive income
|
—
|
|
—
|
|
|
—
|
|
—
|
|
|
—
|
|
|
—
|
|
|
184
|
|
|
184
|
|
||||||
Stock-based compensation
|
—
|
|
—
|
|
|
—
|
|
—
|
|
|
2,563
|
|
|
—
|
|
|
—
|
|
|
2,563
|
|
||||||
Balance at December 31, 2013
|
48,690
|
|
24,345
|
|
|
12,700
|
|
13
|
|
|
(54,031
|
)
|
|
18,775
|
|
|
$
|
105
|
|
|
(35,138
|
)
|
|||||
Net loss
|
—
|
|
—
|
|
|
—
|
|
—
|
|
|
—
|
|
|
(15,486
|
)
|
|
—
|
|
|
(15,486
|
)
|
||||||
Other comprehensive loss
|
—
|
|
—
|
|
|
—
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(334
|
)
|
|
(334
|
)
|
||||||
Adjustment for reverse merger
|
|
|
|
7,275
|
|
7
|
|
|
113,775
|
|
|
|
|
—
|
|
|
113,782
|
|
|||||||||
Conversion of Series A Preferred
|
(48,690
|
)
|
(24,345
|
)
|
|
17,527
|
|
18
|
|
|
24,327
|
|
|
|
|
—
|
|
|
24,345
|
|
|||||||
Cashless exercise of warrants
|
—
|
|
—
|
|
|
24
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Sale of common stock, net of issuance costs
|
—
|
|
—
|
|
|
4,000
|
|
4
|
|
|
37,226
|
|
|
—
|
|
|
—
|
|
|
37,230
|
|
||||||
Stock options exercised
|
—
|
|
—
|
|
|
502
|
|
—
|
|
|
1,593
|
|
|
—
|
|
|
—
|
|
|
1,593
|
|
||||||
Stock-based compensation
|
—
|
|
—
|
|
|
—
|
|
—
|
|
|
5,194
|
|
|
|
|
—
|
|
|
5,194
|
|
|||||||
Balance at December 31, 2014
|
—
|
|
$
|
—
|
|
|
42,028
|
|
$
|
42
|
|
|
$
|
128,084
|
|
|
$
|
3,289
|
|
|
$
|
(229
|
)
|
|
$
|
131,186
|
|
Cost of Revenue
|
|
Operating Expenses
|
Cost to manufacture products;
|
|
Payroll, bonus and benefit costs;
|
Freight costs associated with moving product from suppliers to distribution center and to customers;
|
|
Costs incurred in the research and development of new products and enhancements to existing products;
|
Costs associated with the movement of merchandise through customs;
|
|
Depreciation related to demonstration units;
|
Costs associated with material handling and warehousing;
|
|
Legal, finance, information systems and other corporate overhead costs;
|
Product royalty costs.
|
|
Advertising and marketing costs.
|
|
|
Estimated Life
|
Machinery and equipment
|
|
3 years
|
Software and software development
|
|
2-3 years
|
Furniture and fixtures
|
|
5 years
|
Tooling
|
|
2 years
|
Leasehold improvements
|
|
5 years or term of lease, if shorter
|
Demonstration units and convention booths
|
|
2 years
|
|
Year Ended
|
||||||
|
December 31,
|
||||||
|
2014
|
|
2013
|
||||
|
(in thousands)
|
||||||
Legal fees
|
$
|
786
|
|
|
$
|
1,452
|
|
Accounting fees
|
84
|
|
|
2,254
|
|
||
Advisory fees
|
2,219
|
|
|
—
|
|
||
Termination and severance
|
450
|
|
|
—
|
|
||
Other
|
205
|
|
|
158
|
|
||
Total Transaction Costs
|
$
|
3,744
|
|
|
$
|
3,864
|
|
|
(in thousands)
|
||
Fair Value of Parametric shares outstanding
|
$
|
104,027
|
|
Fair Value of Parametric stock options
|
9,755
|
|
|
Purchase Price
|
$
|
113,782
|
|
|
Year Ended
|
|
Year Ended
|
||||||||||||
|
December 31, 2014
|
|
December 31, 2013
|
||||||||||||
|
Reported
|
|
Proforma
|
|
Reported
|
|
Proforma
|
||||||||
|
(in thousands)
|
||||||||||||||
Net Revenue
|
$
|
186,176
|
|
|
$
|
186,176
|
|
|
$
|
178,470
|
|
|
$
|
178,992
|
|
Net Loss
|
$
|
(15,486
|
)
|
|
$
|
(17,576
|
)
|
|
$
|
(6,163
|
)
|
|
$
|
(15,536
|
)
|
|
December 31, 2013
|
||||||||||||||
|
Level I
|
|
Level II
|
|
Level III
|
|
Total
|
||||||||
|
(in thousands)
|
||||||||||||||
Financial Assets and Liabilities:
|
|
|
|
|
|
|
|
||||||||
Cash and cash equivalents - money market funds
|
$
|
19
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
19
|
|
Total financial assets
|
$
|
19
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
19
|
|
|
|
|
|
|
|
|
|
||||||||
Other current liabilities - derivative liabilities
|
$
|
—
|
|
|
$
|
(392
|
)
|
|
$
|
—
|
|
|
$
|
(392
|
)
|
Total financial liabilities
|
$
|
—
|
|
|
$
|
(392
|
)
|
|
$
|
—
|
|
|
$
|
(392
|
)
|
|
Year Ended
|
||||||||||
|
December 31,
|
||||||||||
|
2014
|
|
2013
|
|
2012
|
||||||
|
(in thousands)
|
||||||||||
Balance, beginning of period
|
$
|
6,266
|
|
|
$
|
7,748
|
|
|
$
|
6,152
|
|
Reserve accrual
|
13,042
|
|
|
20,146
|
|
|
19,659
|
|
|||
Recoveries and deductions, net
|
(15,153
|
)
|
|
(21,628
|
)
|
|
(18,063
|
)
|
|||
Balance, end of period
|
$
|
4,155
|
|
|
$
|
6,266
|
|
|
$
|
7,748
|
|
|
December 31, 2014
|
|
December 31, 2013
|
||||
|
(in thousands)
|
||||||
Raw materials
|
$
|
2,065
|
|
|
$
|
5,499
|
|
Finished goods
|
36,335
|
|
|
44,144
|
|
||
Total inventories, net
|
$
|
38,400
|
|
|
$
|
49,643
|
|
|
December 31, 2014
|
|
December 31, 2013
|
||||
|
(in thousands)
|
||||||
Machinery and equipment
|
$
|
599
|
|
|
$
|
249
|
|
Software and software development
|
847
|
|
|
581
|
|
||
Furniture and fixtures
|
226
|
|
|
144
|
|
||
Tooling
|
2,417
|
|
|
1,756
|
|
||
Leasehold improvements
|
104
|
|
|
59
|
|
||
Demonstration units and convention booths
|
13,702
|
|
|
10,014
|
|
||
Total property and equipment, gross
|
17,895
|
|
|
12,803
|
|
||
Less: accumulated depreciation and amortization
|
(11,173
|
)
|
|
(5,434
|
)
|
||
Total property and equipment, net
|
$
|
6,722
|
|
|
$
|
7,369
|
|
|
(in thousands)
|
||
Balance as of January 1, 2014
|
$
|
—
|
|
Activity in 2014
|
|
||
Acquisition of HyperSound business
|
$
|
80,974
|
|
Balance as of December 31, 2014
|
$
|
80,974
|
|
|
December 31, 2014
|
||||||||||
|
Gross Carrying Value
|
|
Accumulated Amortization
|
|
Net Book Value
|
||||||
|
(in thousands)
|
||||||||||
Customer relationships
|
$
|
5,597
|
|
|
$
|
2,323
|
|
|
$
|
3,274
|
|
Non-compete agreements
|
171
|
|
|
171
|
|
|
—
|
|
|||
In-process Research and Development
|
27,100
|
|
|
—
|
|
|
27,100
|
|
|||
Developed technology
|
8,880
|
|
|
104
|
|
|
8,776
|
|
|||
Trade names
|
170
|
|
|
33
|
|
|
137
|
|
|||
Patent and trademarks
|
439
|
|
|
—
|
|
|
439
|
|
|||
Total Intangible Assets
|
$
|
42,357
|
|
|
$
|
2,631
|
|
|
$
|
39,726
|
|
|
|
|
|
|
|
||||||
|
|
|
|
|
|
||||||
|
December 31, 2013
|
||||||||||
|
Gross Carrying Value
|
|
Accumulated Amortization
|
|
Net Book Value
|
||||||
|
(in thousands)
|
||||||||||
Customer relationships
|
$
|
5,526
|
|
|
$
|
1,623
|
|
|
$
|
3,903
|
|
Non-compete agreements
|
177
|
|
|
108
|
|
|
69
|
|
|||
Total
|
$
|
5,703
|
|
|
$
|
1,731
|
|
|
$
|
3,972
|
|
|
(in thousands)
|
||
2015
|
$
|
2,603
|
|
2016
|
2,030
|
|
|
2017
|
1,866
|
|
|
2018
|
1,789
|
|
|
2019
|
1,697
|
|
|
Thereafter
|
2,202
|
|
|
Total
|
$
|
12,187
|
|
|
December 31, 2014
|
|
December 31, 2013
|
||||
|
(in thousands)
|
||||||
Revolving credit facility, maturing March 2019
|
$
|
36,863
|
|
|
$
|
—
|
|
Revolving line of credit, repaid in March 2014
|
—
|
|
|
39,736
|
|
||
Term loans
|
7,692
|
|
|
14,500
|
|
||
Subordinated notes
|
—
|
|
|
10,342
|
|
||
Total outstanding debt
|
44,555
|
|
|
64,578
|
|
||
Less: current portion of revolving line of credit
|
(36,863
|
)
|
|
(39,736
|
)
|
||
Less: current portion of term loan
|
(1,923
|
)
|
|
(14,500
|
)
|
||
Total noncurrent portion of long-term debt
|
$
|
5,769
|
|
|
$
|
10,342
|
|
|
Year Ended
|
||||||||||
|
December 31,
|
||||||||||
|
2014
|
|
2013
|
|
2012
|
||||||
|
(in thousands)
|
||||||||||
Federal:
|
|
|
|
|
|
||||||
Current
|
$
|
3,271
|
|
|
$
|
(2,456
|
)
|
|
$
|
13,660
|
|
Deferred
|
(9,424
|
)
|
|
3,574
|
|
|
(1,148
|
)
|
|||
Total Federal
|
(6,153
|
)
|
|
1,118
|
|
|
12,512
|
|
|||
State and Local:
|
|
|
|
|
|
||||||
Current
|
455
|
|
|
54
|
|
|
1,510
|
|
|||
Deferred
|
(347
|
)
|
|
190
|
|
|
(120
|
)
|
|||
Total State and Local
|
108
|
|
|
244
|
|
|
1,390
|
|
|||
Foreign
|
|
|
|
|
|
||||||
Current
|
—
|
|
|
233
|
|
|
436
|
|
|||
Deferred
|
(227
|
)
|
|
(505
|
)
|
|
(330
|
)
|
|||
Total Foreign
|
(227
|
)
|
|
(272
|
)
|
|
106
|
|
|||
Total
|
$
|
(6,272
|
)
|
|
$
|
1,090
|
|
|
$
|
14,008
|
|
|
Year Ended
|
||||||||||
|
December 31,
|
||||||||||
|
2014
|
|
2013
|
|
2012
|
||||||
|
(in thousands)
|
||||||||||
U.S. Operations
|
$
|
(21,639
|
)
|
|
$
|
(6,026
|
)
|
|
$
|
39,626
|
|
Foreign Operations
|
(119
|
)
|
|
953
|
|
|
842
|
|
|||
Income (loss) before income taxes
|
(21,758
|
)
|
|
(5,073
|
)
|
|
40,468
|
|
|||
Federal statutory rate
|
35
|
%
|
|
35
|
%
|
|
35
|
%
|
|||
Provision for income taxes at federal statutory rate
|
(7,615
|
)
|
|
(1,776
|
)
|
|
14,164
|
|
|||
State taxes, net of federal benefit
|
37
|
|
|
158
|
|
|
904
|
|
|||
Foreign tax rate differential
|
151
|
|
|
(282
|
)
|
|
(49
|
)
|
|||
Research credits
|
(728
|
)
|
|
—
|
|
|
—
|
|
|||
Gain on bargain purchase
|
—
|
|
|
—
|
|
|
(804
|
)
|
|||
Acquisition costs
|
613
|
|
|
865
|
|
|
—
|
|
|||
Interest on Series B Preferred Stock
|
421
|
|
|
353
|
|
|
—
|
|
|||
Prior year adjustment
|
27
|
|
|
1,177
|
|
|
—
|
|
|||
Change in unrecognized tax benefits
|
875
|
|
|
—
|
|
|
—
|
|
|||
Other
|
(53
|
)
|
|
595
|
|
|
(207
|
)
|
|||
Provision (benefit) for income taxes
|
$
|
(6,272
|
)
|
|
$
|
1,090
|
|
|
$
|
14,008
|
|
|
December 31, 2014
|
|
December 31, 2013
|
||||
|
(in thousands)
|
||||||
Deferred Tax Assets:
|
|
|
|
||||
Allowance for doubtful accounts
|
73
|
|
|
$
|
82
|
|
|
Inventories
|
543
|
|
|
757
|
|
||
Employee benefits
|
3,895
|
|
|
2,777
|
|
||
Net operating loss
|
11,422
|
|
|
33
|
|
||
Unrecognized tax benefits
|
3,045
|
|
|
559
|
|
||
Other
|
677
|
|
|
(41
|
)
|
||
Total deferred tax assets
|
19,655
|
|
|
4,167
|
|
||
|
|
|
|
||||
Deferred Tax Liabilities:
|
|
|
|
||||
Depreciation and amortization
|
(734
|
)
|
|
(1,138
|
)
|
||
Intangible assets
|
(13,511
|
)
|
|
(838
|
)
|
||
Total deferred tax liabilities
|
(14,245
|
)
|
|
(1,976
|
)
|
||
Net deferred tax assets
|
$
|
5,410
|
|
|
$
|
2,191
|
|
|
December 31, 2014
|
|
December 31, 2013
|
||||
|
(in thousands)
|
||||||
Gross unrecognized tax benefit, beginning of period
|
$
|
1,468
|
|
|
$
|
1,468
|
|
Additions based on tax positions related to the current year
|
2,497
|
|
|
—
|
|
||
Gross unrecognized tax benefit, end of period
|
$
|
3,965
|
|
|
$
|
1,468
|
|
|
Year Ended
|
||||||||||
|
December 31,
|
||||||||||
|
2014
|
|
2013
|
|
2012
|
||||||
|
(in thousands, expect per-share data)
|
||||||||||
Net Income (Loss)
|
$
|
(15,486
|
)
|
|
$
|
(6,163
|
)
|
|
$
|
26,460
|
|
Noncumulative dividends on Series A Convertible Preferred Stock
|
—
|
|
|
—
|
|
|
(22,627
|
)
|
|||
Undistributed earnings allocated to Series A Convertible Preferred Stock
|
—
|
|
|
—
|
|
|
(2,222
|
)
|
|||
Net income (loss) attributable to common stockholders
|
$
|
(15,486
|
)
|
|
$
|
(6,163
|
)
|
|
$
|
1,611
|
|
|
|
|
|
|
|
||||||
Weighted average common shares outstanding — Basic
|
39,665
|
|
|
12,700
|
|
|
12,700
|
|
|||
Plus incremental shares from assumed conversions:
|
|
|
|
|
|
||||||
Dilutive effect of stock options
|
—
|
|
|
—
|
|
|
—
|
|
|||
Weighted average common shares outstanding — Diluted
|
39,665
|
|
|
12,700
|
|
|
12,700
|
|
|||
|
|
|
|
|
|
||||||
Net earnings (loss) per share attributable to common stockholders:
|
|
|
|
|
|
||||||
Basic
|
$
|
(0.39
|
)
|
|
$
|
(0.49
|
)
|
|
$
|
0.13
|
|
Diluted
|
$
|
(0.39
|
)
|
|
$
|
(0.49
|
)
|
|
$
|
0.13
|
|
|
Year Ended
|
|||||||
|
December 31,
|
|||||||
|
2014
|
|
2013
|
|
2012
|
|||
|
(in thousands)
|
|||||||
Stock options
|
6,081
|
|
|
3,961
|
|
|
3,961
|
|
Warrants
|
36
|
|
|
—
|
|
|
—
|
|
Unvested restricted stock awards
|
6
|
|
|
—
|
|
|
—
|
|
Total
|
6,123
|
|
|
3,961
|
|
|
3,961
|
|
|
Year Ended
|
||||||||||
|
December 31,
|
||||||||||
|
2014
|
|
2013
|
|
2012
|
||||||
|
(in thousands)
|
||||||||||
Cost of revenue
|
$
|
310
|
|
|
$
|
60
|
|
|
$
|
60
|
|
Selling and marketing
|
866
|
|
|
343
|
|
|
281
|
|
|||
Research and development
|
846
|
|
|
342
|
|
|
121
|
|
|||
General and administrative
|
3,172
|
|
|
1,818
|
|
|
523
|
|
|||
Total stock-based compensation
|
$
|
5,194
|
|
|
$
|
2,563
|
|
|
$
|
985
|
|
|
Options Outstanding
|
|||||||||||
|
Number of Shares Underlying Outstanding Options
|
|
Weighted-Average Exercise Price
|
|
Weighted-Average Remaining Contractual Term
|
|
Aggregate Intrinsic Value
|
|||||
|
|
|
|
|
(In years)
|
|
|
|||||
Outstanding at December 31, 2013
|
3,960,793
|
|
|
$
|
4.71
|
|
|
8.45
|
|
$
|
3,031,094
|
|
Granted
|
2,074,377
|
|
|
10.81
|
|
|
|
|
|
|||
Assumed in acquisition
|
1,392,854
|
|
|
6.02
|
|
|
|
|
|
|||
Exercised
|
(502,087
|
)
|
|
3.22
|
|
|
|
|
|
|||
Forfeited
|
(337,840
|
)
|
|
6.11
|
|
|
|
|
|
|||
Outstanding at December 31, 2014
|
6,588,097
|
|
|
$
|
6.95
|
|
|
6.96
|
|
$
|
1,327,366
|
|
Vested and expected to vest at December 31, 2014
|
6,408,076
|
|
|
$
|
6.89
|
|
|
6.89
|
|
$
|
1,327,366
|
|
Exercisable at December 31, 2014
|
3,215,667
|
|
|
$
|
4.89
|
|
|
5.22
|
|
$
|
1,251,874
|
|
|
Year Ended
|
||||
|
December 31,
|
||||
|
2014
|
|
2013
|
|
2012
|
|
(in thousands)
|
||||
Expected term (in years)
|
6.1
|
|
6.0
|
|
6.0
|
Risk-free interest rate
|
1.8% - 2.0%
|
|
1.0% - 1.1%
|
|
0.8% - 1.1%
|
Expected volatility
|
47.5% - 49.8%
|
|
50.4% - 50.5%
|
|
50.5% - 51.1%
|
Dividend rate
|
0%
|
|
0%
|
|
0%
|
|
Shares
|
|
Weighted Average Grant Date Fair Value Per Share
|
|||
Nonvested restricted stock at December 31, 2013
|
—
|
|
|
$
|
—
|
|
Granted
|
6,396
|
|
|
15.63
|
|
|
Nonvested restricted stock at December 31, 2014
|
6,396
|
|
|
15.63
|
|
|
Year Ended
|
||||||||||
|
December 31,
|
||||||||||
|
2014
|
|
2013
|
|
2012
|
||||||
|
(in thousands)
|
||||||||||
United States
|
$
|
117,715
|
|
|
$
|
111,514
|
|
|
$
|
136,494
|
|
United Kingdom
|
29,425
|
|
|
26,439
|
|
|
27,100
|
|
|||
Europe
|
24,082
|
|
|
18,565
|
|
|
19,116
|
|
|||
Other
|
14,954
|
|
|
21,952
|
|
|
24,426
|
|
|||
Total net revenue
|
$
|
186,176
|
|
|
$
|
178,470
|
|
|
$
|
207,136
|
|
|
(in thousands)
|
||
2015
|
$
|
1,146
|
|
2016
|
859
|
|
|
2017
|
802
|
|
|
2018
|
733
|
|
|
2019
|
585
|
|
|
Thereafter
|
184
|
|
|
Total
|
$
|
4,309
|
|
|
Year Ended
|
||||||||||
|
December 31,
|
||||||||||
|
2014
|
|
2013
|
|
2012
|
||||||
|
(in thousands)
|
||||||||||
Warranty, beginning of period
|
$
|
139
|
|
|
$
|
165
|
|
|
$
|
109
|
|
Warranty costs accrued
|
850
|
|
|
614
|
|
|
618
|
|
|||
Settlements of warranty claims
|
(496
|
)
|
|
(640
|
)
|
|
(562
|
)
|
|||
Warranty, end of period
|
$
|
493
|
|
|
$
|
139
|
|
|
$
|
165
|
|
Fiscal 2014
|
Quarter
|
||||||||||||||
|
First
|
|
Second
|
|
Third
|
|
Fourth
|
||||||||
|
(in thousands, except per share data)
|
||||||||||||||
Net Revenue
|
$
|
38,288
|
|
|
$
|
22,296
|
|
|
$
|
33,325
|
|
|
$
|
92,267
|
|
Gross Margin
|
12,276
|
|
|
4,831
|
|
|
7,749
|
|
|
25,811
|
|
||||
Net Income (Loss)
|
(2,906
|
)
|
|
(9,302
|
)
|
|
(5,638
|
)
|
|
2,360
|
|
||||
Earnings (Loss) Per Share
|
|
|
|
|
|
|
|
||||||||
Basic
|
$
|
(0.09
|
)
|
|
$
|
(0.23
|
)
|
|
$
|
(0.13
|
)
|
|
$
|
0.06
|
|
Diluted
|
$
|
(0.09
|
)
|
|
$
|
(0.23
|
)
|
|
$
|
(0.13
|
)
|
|
$
|
0.06
|
|
Fiscal 2013
|
Quarter
|
||||||||||||||
|
First
|
|
Second
|
|
Third
|
|
Fourth
|
||||||||
|
(in thousands, except per share data)
|
||||||||||||||
Net Revenue
|
$
|
29,533
|
|
|
$
|
24,520
|
|
|
$
|
38,299
|
|
|
$
|
86,118
|
|
Gross Margin
|
8,625
|
|
|
6,322
|
|
|
8,646
|
|
|
26,736
|
|
||||
Net Income (Loss)
|
(2,304
|
)
|
|
(3,338
|
)
|
|
(1,402
|
)
|
|
881
|
|
||||
Earnings (Loss) Per Share
(1)
|
|
|
|
|
|
|
|
||||||||
Basic
|
$
|
(0.18
|
)
|
|
$
|
(0.26
|
)
|
|
$
|
(0.11
|
)
|
|
$
|
0.07
|
|
Diluted
|
$
|
(0.18
|
)
|
|
$
|
(0.26
|
)
|
|
$
|
(0.11
|
)
|
|
$
|
0.07
|
|
/s/ BDO USA, LLP
|
Stamford, Connecticut
|
March 30, 2015
|
a.
|
List of documents filed as part of this Annual Report:
|
1.
|
The following Consolidated Financial Statements of the Company are filed as part of this Annual Report:
|
2.
|
All schedules have been omitted because they are not applicable, not required or the information has been otherwise supplied in the financial statements or notes thereto.
|
3.
|
The exhibits listed in the Exhibit Index attached hereto are filed as part of this Annual Report and incorporated herein by reference
|
b.
|
The exhibits listed in the Exhibit Index attached hereto are filed as part of this Annual Report and incorporated herein by reference.
|
c.
|
Not applicable.
|
|
|
|
TURTLE BEACH CORPORATION
|
|
|
|
|
Date:
|
March 30, 2015
|
By:
|
/S/ JOHN T. HANSON
|
|
|
|
John T. Hanson
Chief Financial Officer, Treasurer and Secretary
|
|
|
|
(Principal Financial Officer)
|
|
|
|
Date:
|
March 30, 2015
|
/s/ JUERGEN STARK
|
|
|
Juergen Stark, Chief Executive Officer, President and Director
|
|
|
(Principal Executive Officer)
|
|
|
|
Date:
|
March 30, 2015
|
/S/ JOHN T. HANSON
|
|
|
John T. Hanson, Chief Financial Officer, Treasurer and Secretary
|
|
|
(Principal Financial Officer)
|
Date:
|
March 30, 2015
|
/S/ RONALD DOORNINK
|
|
|
Ronald Doornink, Non-Executive Chairman of the Board and Director
|
Date:
|
March 30, 2015
|
/S/ LAUREEN DeBUONO
|
|
|
Laureen DeBuono, Director
|
Date:
|
March 30, 2015
|
/S/ KENNETH A. FOX
|
|
|
Kenneth A.Fox, Director
|
Date:
|
March 30, 2015
|
/S/ WILLIAM E. KEITEL
|
|
|
William E. Keitel, Director
|
Date:
|
March 30, 2015
|
/S/ ANDREW WOLFE
|
|
|
Andrew Wolfe, Director
|
2.1*
|
Agreement and Plan of Merger, dated August 5, 2013, among the Company, Merger Sub and VTBH (Incorporated by reference to Exhibit 2.1 to the Company’s Current Report on Form 8-K originally filed with the SEC on August 5, 2013).
|
|
|
3.1
|
Articles of Incorporation of Turtle Beach Corporation (Incorporated by reference to Exhibit 3.1 to the Company’s Quarterly Report on Form 10-Q originally filed with the SEC on August 11, 2014).
|
|
|
3.2
|
Bylaws, as amended, of Turtle Beach Corporation (Incorporated by reference to Exhibit 3.2 to the Company’s Quarterly Report on Form 10-Q originally filed with the SEC on August 11, 2014).
|
|
|
3.3
|
Third Amended and Restated Certificate of Incorporation of VTBH (Incorporated by reference to Exhibit B to Exhibit 2.1 to the Company’s Current Report on Form 8-K originally filed with the Securities and Exchange Commission on August 5, 2013).
|
|
|
4.1
|
Stockholder Agreement dated August 5, 2013 among Turtle Beach Corporation and certain of our shareholders. (Incorporated by reference to Exhibit 99.1 to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on August 5, 2013).
|
|
|
4.2
|
Amendment No. 1 to the Stockholder Agreement, dated July 10, 2014, by and among the Company and the shareholders party thereto (Incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on July 10, 2014).
|
|
|
4.3
|
Form of Turtle Beach Corporation stock certificate. (Incorporated by reference to Exhibit 4.1 to Form 10/A filed July 27, 2010.)
|
|
|
10.1
|
Loan, Security and Guarantee Agreement, dated as of March 31, 2014, among Parametric Sound Corporation and Voyetra Turtle Beach, Inc. as US Borrowers and UK Guarantors, Turtle Beach Europe Limited as UK Borrower, PSC Licensing Corp. and VTB Holdings, Inc. as a US Guarantor and a UK Guarantor, and Bank of America, N.A., as Agent, Sole Lead Arranger and Sole Bookrunner (Incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on April 1, 2014).
|
|
|
10.2**
|
Amendment No. 2 to Loan, Security and Guarantee Agreement, dated as of March 31, 2014, among Parametric Sound Corporation and Voyetra Turtle Beach, Inc. as US Borrowers and UK Guarantors, Turtle Beach Europe Limited as UK Borrower, PSC Licensing Corp. and VTB Holdings, Inc. as a US Guarantor and a UK Guarantor, and Bank of America, N.A., as Agent, Sole Lead Arranger and Sole Bookrunner.
|
|
|
10.2.1
|
Amendment No. 3 to Loan, Security and Guarantee Agreement, dated as of March 31, 2014, among Parametric Sound Corporation and Voyetra Turtle Beach, Inc. as US Borrowers and UK Guarantors, Turtle Beach Europe Limited as UK Borrower, PSC Licensing Corp. and VTB Holdings, Inc. as a US Guarantor and a UK Guarantor, and Bank of America, N.A., as Agent, Sole Lead Arranger and Sole Bookrunner.(Incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on March 20, 2015).
|
|
|
10.3†
|
Parametric Sound Corporation 2013 Stock-Based Incentive Compensation Plan (Incorporated by reference to Annex E to the Company’s Definitive Proxy Statement on Schedule 14A originally filed with the SEC on December 3, 2013).
|
|
|
10.4†
|
Parametric Sound Corporation Annual Incentive Bonus Plan (Incorporated by reference to Annex F to the Company’s Definitive Proxy Statement on Schedule 14A originally filed with the SEC on December 3, 2013).
|
|
|
10.5
|
Form of Lock-up Agreement, among the Company, VTBH and certain officers and directors of VTBH (Incorporated by reference to Exhibit 10.13 to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on January 16, 2014).
|
|
|
10.6
|
Master Purchasing Agreement, dated December 5, 2011, between the Company and Weifang GoerTek Electronics, Co., Ltd. and GoerTek Inc. (Incorporated by reference to Exhibit 10.11 to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on May12, 2014).
|
|
|
10.7†
|
VTB Holdings, Inc. 2011 Phantom Equity Appreciation Plan (Incorporated by reference to Exhibit 10.13 to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on May12, 2014).
|
|
|
10.8†
|
Offer Letter, dated as of August 13, 2012, between Voyetra Turtle Beach, Inc. and Juergen Stark (Incorporated by reference to Exhibit 10.14 to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on May12, 2014).
|
|
|
10.9†
|
Stock Option Award Agreement, dated as of September 4, 2012, by and between VTB Holdings, Inc. and Juergen Stark (Incorporated by reference to Exhibit 10.15 to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on May12, 2014).
|
|
|
10.10†
|
Offer Letter, dated as of September 16, 2013, by and between Voyetra Turtle Beach, Inc. and John Hanson (Incorporated by reference to Exhibit 10.26 to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on May12, 2014).
|
|
|
10.11†
|
Stock Award Agreement, dated as of June 21, 2011, by and between VTB Holdings, Inc. and Ronald Doornink (Incorporated by reference to Exhibit 10.16 to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on May12, 2014).
|
|
|
10.11.1†
|
First Amendment to Stock Award Agreement, dated as of February 26, 2013, by and between VTB Holdings, Inc. and Ronald Doornink (Incorporated by reference to Exhibit 10.17 to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on May12, 2014).
|
|
|
10.12†
|
Consulting Agreement, dated as of October 12, 2010, by and between Voyetra Turtle Beach, Inc. and Ronald Doornink (Incorporated by reference to Exhibit 10.18 to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on May12, 2014).
|
|
|
10.13†
|
Termination of Consulting Agreement and Continued Service on the Board of Directors, dated as of February 26, 2013, by and between Voyetra Turtle Beach, Inc. and Ronald Doornink (Incorporated by reference to Exhibit 10.19 to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on May12, 2014).
|
|
|
10.14†
|
Performance Bonus Agreement, dated as of October 12, 2010, by and among the Company, Carmine J. Bonnano and Frederick J. Romano (Incorporated by reference to Exhibit 10.20 to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on May12, 2014).
|
|
|
10.15†
|
Employment Agreement, dated as of October 12, 2010, by and between Voyetra Turtle Beach, Inc. and Carmine J. Bonnano (Incorporated by reference to Exhibit 10.21 to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on May12, 2014).
|
|
|
10.16†
|
Severance Agreement, dated as of August 2, 2012, by and between Voyetra Turtle Beach, Inc. and Carmine J. Bonnano (Incorporated by reference to Exhibit 10.22 to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on May12, 2014).
|
|
|
10.17†
|
Employment Agreement, dated as of October 12, 2010, by and between Voyetra Turtle Beach, Inc. and Frederick J. Romano (Incorporated by reference to Exhibit 10.23 to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on May12, 2014).
|
|
|
10.18†
|
Severance Agreement, dated as of August 2, 2012, by and between Voyetra Turtle Beach, Inc. and Frederick J. Romano (Incorporated by reference to Exhibit 10.24 to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on May12, 2014).
|
|
|
10.19†
|
Offer Letter, dated as of October 21, 2013, by and between Voyetra Turtle Beach, Inc. and Frederick J. Romano (Incorporated by reference to Exhibit 10.25 to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on May12, 2014).
|
|
|
|
|
|
|
|
|
||||||||
Description
|
Balance - Begin
|
|
Additions
|
|
Deductions / Other
|
|
Balance - End
|
||||||||
Year Ended December 31, 2014:
|
(in thousands)
|
||||||||||||||
Allowance for sales returns
|
$
|
6,266
|
|
|
$
|
13,042
|
|
|
$
|
(15,153
|
)
|
|
$
|
4,155
|
|
Allowance for cash discounts
|
2,489
|
|
|
18,488
|
|
|
(15,526
|
)
|
|
5,451
|
|
||||
Allowance for doubtful accounts
|
225
|
|
|
$
|
37
|
|
|
$
|
(62
|
)
|
|
200
|
|
||
|
|
|
|
|
|
|
|
$
|
9,806
|
|
|||||
Year Ended December 31, 2013:
|
|
|
|
|
|
|
|
||||||||
Allowance for sales returns
|
$
|
7,748
|
|
|
$
|
20,146
|
|
|
$
|
(21,628
|
)
|
|
$
|
6,266
|
|
Allowance for cash discounts
|
6,196
|
|
|
15,347
|
|
|
(19,054
|
)
|
|
2,489
|
|
||||
Allowance for doubtful accounts
|
460
|
|
|
125
|
|
|
(360
|
)
|
|
225
|
|
||||
|
|
|
|
|
|
|
$
|
8,980
|
|
||||||
Year Ended December 31, 2012:
|
|
|
|
|
|
|
|
||||||||
Allowance for sales returns
|
$
|
6,152
|
|
|
$
|
19,659
|
|
|
$
|
(18,063
|
)
|
|
$
|
7,748
|
|
Allowance for cash discounts
|
4,680
|
|
|
17,293
|
|
|
(15,777
|
)
|
|
6,196
|
|
||||
Allowance for doubtful accounts
|
102
|
|
|
358
|
|
|
—
|
|
|
460
|
|
||||
|
|
|
|
|
|
|
$
|
14,404
|
|
OBLIGATION
|
APPLICABLE INTEREST
|
US Base Rate Loan
|
US Base Rate in effect from time to time,
plus
the
Applicable Margin for US Base Rate Loans
|
US LIBOR Loan
|
LIBOR for the applicable Interest Period,
plus
the
Applicable Margin for US LIBOR Loans
|
UK Base Rate Loan
|
UK Base Rate in effect from time to time,
plus
the
Applicable Margin for UK Base Rate Loans
|
UK LIBOR Loan
|
UK LIBOR for the applicable Interest Period,
plus
the
Applicable Margin for UK LIBOR Loans, plus any
Mandatory Costs
|
US Special Advance Loan
|
Floating LIBOR for the applicable Interest Period,
plus
5.00%
|
any other US Obligation
(including, to the extent permitted by law, interest not paid when due)
|
US Base Rate in effect from time to time, plus the
Applicable Margin for US Base Rate Loans
|
any other UK Obligation
(including to the extent permitted by law, interest not paid when due)
|
UK Base Rate in effect from time to time, plus the
Applicable Margin for UK Base Rate Loans”
|
(a)
|
EACH OBLIGOR HEREBY IRREVOCABLY RELEASES AND FOREVER DISCHARGES AGENT, LENDERS AND THEIR AFFILIATES, AND EACH SUCH PERSON’S RESPECTIVE DIRECTORS, OFFICERS, EMPLOYEES, AGENTS, MEMBERS, ATTORNEYS AND REPRESENTATIVES (EACH, A “
RELEASED PERSON
”) OF AND FROM ALL DAMAGES, LOSSES, CLAIMS, DEMANDS, LIABILITIES, OBLIGATIONS, ACTIONS OR CAUSES OF ACTION WHATSOEVER (EACH A “
CLAIM
”) THAT SUCH OBLIGOR MAY NOW HAVE OR CLAIM TO HAVE AGAINST ANY RELEASED PERSON ON THE DATE OF THIS AMENDMENT, WHETHER KNOWN OR UNKNOWN, OF EVERY NATURE AND EXTENT WHATSOEVER, FOR OR BECAUSE OF ANY MATTER OR THING DONE, OMITTED OR SUFFERED TO BE DONE OR OMITTED BY ANY OF THE RELEASED PERSONS THAT BOTH (1) OCCURRED PRIOR TO OR ON THE DATE OF THIS AMENDMENT AND (2) IS ON ACCOUNT OF OR IN ANY WAY CONCERNING, ARISING OUT OF OR FOUNDED UPON THE LOAN AGREEMENT OR ANY OTHER LOAN DOCUMENT.
|
(b)
|
EACH OBLIGOR INTENDS THE ABOVE RELEASE TO COVER, ENCOMPASS, RELEASE, AND EXTINGUISH, INTER ALIA, ALL CLAIMS, DEMANDS, AND CAUSES OF ACTION THAT MIGHT OTHERWISE BE RESERVED BY THE CALIFORNIA CIVIL CODE SECTION 1542, WHICH PROVIDES AS FOLLOWS:
|
(c)
|
EACH OBLIGOR ACKNOWLEDGES THAT IT MAY HEREAFTER DISCOVER FACTS DIFFERENT FROM OR IN ADDITION TO THOSE NOW KNOWN OR BELIEVED TO BE TRUE WITH RESPECT TO SUCH CLAIMS, DEMANDS, OR CAUSES OF ACTION, AND AGREES THAT THIS AMENDMENT AND THE ABOVE RELEASE ARE AND WILL REMAIN EFFECTIVE IN ALL RESPECTS NOTWITHSTANDING ANY SUCH DIFFERENCES OR ADDITIONAL FACTS.
|
If to Indemnitee:
|
______________________________
|
|
______________________________
|
|
______________________________
|
If to the Company:
|
Turtle Beach Corporation
|
|
13771 Danielson St
|
|
Suite L
|
|
Poway, CA 92064
|
By:
|
___________________________________
|
|
|
By:
|
|
|
|
|
|
1.
|
I have reviewed this annual report on Form
10-K of Turtle Beach Corporation;
|
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(s) 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(s) 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:
|
March 30, 2015
|
By:
|
/s/ JUERGEN STARK
|
|
|
|
Juergen Stark
|
|
|
|
Chief Executive Officer and President
|
1.
|
I have reviewed this annual report on Form
10-K of Turtle Beach Corporation;
|
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(s) 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(s) 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:
|
March 30, 2015
|
By:
|
/s/ JOHN T. HANSON
|
|
|
|
John T. Hanson
|
|
|
|
Chief Financial Officer, Treasurer and Secretary
|
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 result of operations of the Company.
|
Date:
|
March 30, 2015
|
By:
|
/s/ JUERGEN STARK
|
|
|
|
Juergen Stark
|
|
|
|
Chief Executive Officer and President
|
|
|
|
(Principal Executive Officer)
|
Date:
|
March 30, 2015
|
By:
|
/s/ JOHN T. HANSON
|
|
|
|
John T. Hanson
|
|
|
|
Chief Financial Officer, Treasurer and Secretary
|
|
|
|
(Principal Financial Officer)
|