What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2022-03-01 compared with 2021-03-11 · 378 added, 610 removed, 481 unchanged (67% of the section changed)

Financial Statements and Supplementary Data.

INDEX TO COMBINED CONSOLIDATED FINANCIAL STATEMENTS

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

Report of Independent Registered Public Accounting Firm

Combined Consolidated Statements of Operations - Years ended December 31, 2020, 2019, and 2018

Combined Consolidated Statements of Comprehensive Income (Loss) – Years ended December 31, 2020, 2019, and 2018

Combined Consolidated Balance Sheets – As of December 31, 2020 and 2019

Combined Consolidated Statements of Stockholders’ Equity - Years ended December 31, 2020, 2019, and 2018

Combined Consolidated Statements of Cash Flows - Years ended December 31, 2020 and 2019, and 2018

Notes to Combined Consolidated Financial Statements

Consolidated Statements of Operations - Years ended December 31, 2021, 2020, and 2019

Consolidated Statements of Comprehensive Income (Loss) – Years ended December 31, 2021, 2020, and 2019

Consolidated Balance Sheets – As of December 31, 2021 and 2020

Consolidated Statements of Stockholders’ Equity - Years ended December 31, 2021, 2020, and 2019

Consolidated Statements of Cash Flows - Years ended December 31, 2021 and 2020, and 2019

Notes to Consolidated Financial Statements

Report of Independent Registered Public Accounting Firm

To the Stockholders and Board of Directors

To the Stockholders and the Board of Directors

Corsair Gaming, Inc.:

Opinion on the Combined Consolidated Financial Statements

We have audited the accompanying combined consolidated balance sheets of Corsair Gaming, Inc.

and subsidiaries (the Company) as of December 31, 2020 and 2019, the related combined consolidated statements of operations, comprehensive income (loss), stockholders’ equity, and cash flows for each of the years in the three‑year period ended December 31, 2020, and the related notes and financial statement schedule II (collectively, the combined consolidated financial statements).

In our opinion, the combined consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2020 and 2019, and the results of its operations and its cash flows for each of the years in the three‑year period ended December 31, 2020, in conformity with U.S.

Opinions on the Consolidated Financial Statements and Internal Control Over Financial Reporting

We have audited the accompanying consolidated balance sheets of Corsair Gaming, Inc.

and subsidiaries (the Company) as of December 31, 2021 and 2020, the related consolidated statements of operations, comprehensive income (loss), stockholders’ equity, and cash flows for each of the years in the three-year period ended December 31, 2021, and the related notes (collectively, the consolidated financial statements).

We also have audited the Company’s internal control over financial reporting as of December 31, 2021, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2021 and 2020, and the results of its operations and its cash flows for each of the years in the three-year period ended December 31, 2021, in conformity with U.S.

generally accepted accounting principles.

Change in Accounting Principle

As discussed in Note 2 to the combined consolidated financial statements, the Company has changed its method of accounting for leases as of January 1, 2020, due to the adoption of Accounting Standards Codification (ASC) 842, Leases , and has changed its method of accounting for revenue as of January 1, 2019, due to the adoption of ASC 606, Revenue from Contracts with Customers.

Basis for Opinion

These combined consolidated financial statements are the responsibility of the Company’s management.

Our responsibility is to express an opinion on these combined consolidated financial statements based on our audits.

Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2021 based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

Basis for Opinions

The Company’s management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management's Report on Internal Control over Financial Reporting.

Our responsibility is to express an opinion on the Company’s consolidated financial statements and an opinion on the Company’s internal control over financial reporting based on our audits.

We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S.

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We conducted our audits in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the combined consolidated financial statements are free of material misstatement, whether due to error or fraud.

Our audits included performing procedures to assess the risks of material misstatement of the combined consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the combined consolidated financial statements.

Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the combined consolidated financial statements.

We believe that our audits provide a reasonable basis for our opinion.

Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.

Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements.

Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.

Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk.

Our audits also included performing such other procedures as we considered necessary in the circumstances.

We believe that our audits provide a reasonable basis for our opinions.

Definition and Limitations of Internal Control Over Financial Reporting

A company’s internal control over financial reporting is a process designed 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.

A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company;

(2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company;

and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.

Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current period audit of the combined consolidated financial statements that was communicated or required to be communicated to the audit committee and that:

(1) relates to accounts or disclosures that are material to the combined consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of a critical audit matter does not alter in any way our opinion on the combined consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Evaluation of the transaction price in contracts with customers

As discussed in Note 2 to the combined consolidated financial statements, the transaction price received by the Company from sales to distributors and retailers is net of variable consideration that may include product returns and customer incentives.

The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that:

(1) relates to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of a critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Transaction price in contracts with customers

As discussed in Note 2 to the consolidated financial statements, the transaction price received by the Company from sales to distributors and retailers is net of variable consideration that may include product returns and customer incentives.

Estimates of expected future product returns are recorded based on historical return rates, among other factors.

Customer incentive programs include special pricing arrangements, promotions, rebates, volume-based incentives, and price protection credits for certain customers.

The amounts recorded for accrued reserves for sales returns and accrued reserves for customer incentive programs were $35,673,000 and $49,619,000, respectively, as of December 31, 2020.

Customer incentive programs are recorded based on historical experience and forecasted incentives, and include special pricing arrangements, promotions, rebates, volume-based incentives, and price protection credits for certain customers.

The amounts recorded for accrued reserves for sales returns and accrued reserves for customer incentive programs were $37.2 million and $66.7 million, respectively, as of December 31, 2021.

We identified the evaluation of the transaction price in contracts with customers as a critical audit matter.

Subjective auditor judgment was required to evaluate changes in conditions and events affecting the Company’s (1) historical return rates, and

(2) length of time between when a sale occurs and a return is processed, which are used to determine accrued sales returns.

In addition, subjective auditor judgment was required to evaluate the reliability of data used to determine the accrual for certain accrued reserves for customer incentive programs.

Subjective auditor judgment was required to evaluate changes in conditions and events affecting (1) the Company’s historical return rates, and (2) the length of time between when a sale occurs and a return is processed, which are used to determine accrued reserves for sales returns.

In addition, subjective auditor judgment was required to evaluate the reliability of data used to determine certain accrued reserves for customer incentive programs.

The following are the primary procedures we performed to address this critical audit matter.

We evaluated the historical sales return rate by assessing the historical relationship between sales and returns, considering the effect of external market conditions obtained from peer company data and market publications.

We evaluated the length of time between when a sale occurs and return is processed by comparing (1) the return date obtained from return claims from customers to (2) the estimated date the sale occurred obtained from supporting documentation.

We evaluated the reliability of data used to determine the accrual for certain customer incentive programs by selecting a sample of incentives recorded during the year and (1) comparing the key inputs to correspondence with customers and customer agreements, and (2) recalculating the total incentive amount and comparing it to the incentive recorded and the claim from the customer if it was received by the Company before December 31, 2020.

We evaluated the design and tested the operating effectiveness of certain internal controls related to the Company’s process to determine the transaction price, including controls related to estimating variable consideration related to product returns and customer incentives.

We evaluated the historical return rates by assessing the historical relationship between sales and returns, considering the effect of external market conditions obtained from peer company data and market publications.

We evaluated the length of time between when a sale occurs and a return is processed by comparing (1) the return date obtained from return claims from customers to (2) the estimated date the sale occurred obtained from supporting documentation.

We evaluated the reliability of data used to determine certain accrued reserves for customer incentive programs by selecting a sample of incentives recorded during the year and (1) comparing the key inputs to correspondence with customers and customer agreements, and (2) recalculating the total incentive amount and comparing it to the incentive recorded or the claim from the customer if it was received by the Company before December 31, 2021.

We have served as the Company’s auditor since 2007.

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Corsair Gaming, Inc.

Combined Consolidated Statements of Operations

Consolidated Statements of Operations

(In thousands, except per share amounts)

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Interest expense

Other (expense) income, net

Other expense, net

Total other expense, net

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Weighted-average shares used to compute net income (loss) per share

The accompanying notes are an integral part of these combined consolidated financial statements.

The accompanying notes are an integral part of these consolidated financial statements.

Corsair Gaming, Inc.

Combined Consolidated Statements of Comprehensive Income (Loss)

Consolidated Statements of Comprehensive Income (Loss)

(In thousands)

Years Ended December 31,

Year Ended December 31,

Net income (loss)

Other comprehensive gain (loss):

Other comprehensive income (loss):

Foreign currency translation adjustments, net of zero tax

Unrealized foreign exchange gain (loss) from long-term intercompany

loans, net of tax benefit (expense) of $( 150 ), $ 55 , and $ 300 for the

years ended December 31, 2020, 2019, and 2018, respectively

Unrealized foreign exchange gain (loss) from long-term

intercompany loans, net of tax benefit (expense) of $ 76 ,

$( 150 ), and $ 55 for the years ended December 31, 2021,

2020, and 2019, respectively

Comprehensive income (loss)

The accompanying notes are an integral part of these combined consolidated financial statements.

The accompanying notes are an integral part of these consolidated financial statements.

Corsair Gaming, Inc.

Combined Consolidated Balance Sheets

Consolidated Balance Sheets

(In thousands, except per share amounts)

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Total current assets

Restricted cash, noncurrent

Property and equipment, net

Intangible assets, net

Restricted cash, noncurrent

Liabilities and Stockholders’ Equity

Current liabilities:

Debt maturing within one year

Accounts payable

Current portion of debt, net

Other liabilities and accrued expenses

Total current liabilities

Debt, net including related party balance of nil and $ 5,779 as of December 31, 2020

and 2019, respectively

Long-term debt

Deferred tax liabilities

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Preferred stock, $ 0.0001 par value:

5,000 shares and nil authorized;

nil and nil issued and outstanding as of December 31, 2020 and 2019, respectively

5,000 shares authorized, nil and nil shares issued

and outstanding as of December 30, 2021 and 2020, respectively

Common stock, $ 0.0001 par value:

300,000 shares and 100,000 shares authorized;

91,935 and 84,079 shares issued and outstanding as of December 31, 2020 and 2019, respectively

300,000 shares authorized, 94,510 and 91,935

shares issued and outstanding as of December 31, 2021 and 2020,

Additional paid-in capital

Accumulated deficit

Retained earnings (accumulated deficit)

Accumulated other comprehensive income (loss)

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TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY

The accompanying notes are an integral part of these combined consolidated financial statements.

The accompanying notes are an integral part of these consolidated financial statements.

Corsair Gaming, Inc.

Combined Consolidated Statements of Stockholders’ Equity

Consolidated Statements of Stockholders’ Equity

(In thousands)

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Balance as of December 31, 2018

Issuance of common stock in relation to

Issuance of common stock for stock

option exercises

Dividends paid to common stockholders

Stock-based compensation

Other comprehensive loss

Balance as of December 31, 2018

Cumulative effect of adoption of new

accounting standard

Issuance of common stock in relation to

Issuance of common stock for stock

option exercises

Issuance of common stock in relation

to acquisitions

Issuance of common stock in

connection with employee

equity incentive plans

Issuance of common stock for capital

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Issuance of common stock to directors

Issuance of common stock for

stock option exercises

Issuance of common stock in

connection with employee

equity incentive plans

Issuance of common stock upon

vesting of restricted stock units

Issuance of common stock upon initial

public offering, net of underwriting

discounts and commissions and other

initial public offering,

net of underwriting discounts

and commissions and other

offering costs

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Balance as of December 31, 2020

The accompanying notes are an integral part of these combined consolidated financial statements.

Issuance of common stock in

connection with employee

equity incentive plans

Shares withheld related to net share

Stock-based compensation

Other comprehensive loss

Balance as of December 31, 2021

The accompanying notes are an integral part of these consolidated financial statements.

Corsair Gaming, Inc.

Combined Consolidated Statements of Cash Flows

Consolidated Statements of Cash Flows

(in thousands)

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Cash flows from investing activities:

Acquisition of business, net of cash acquired

Payment of deferred consideration

Acquisition of businesses, net of cash acquired

Payment of deferred and contingent consideration

Purchase of property and equipment

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Payment of debt issuance costs

(Repayments of) borrowings from line of credit, net

Borrowings from line of credit

Repayment of line of credit

Proceeds from initial public offering, net of $ 8,925 underwriting

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Proceeds from issuance of common stock to common stockholders

Cash dividends paid to common stockholders

Repurchase of common stock

Proceeds from exercise of stock options

Proceeds from issuance of shares through employee equity incentive plans

Payment of taxes related to net share settlement of equity awards

Net cash provided by (used in) financing activities

Effect of exchange rate changes on cash

Net increase in cash and restricted cash

Cash and restricted cash at the beginning of the period

Cash and restricted cash at the end of the period

Net increase (decrease) in cash and restricted cash

Cash and restricted cash at the beginning of the year

Cash and restricted cash at the end of the year

Supplemental cash flow disclosures:

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Issuance of common stock relating to business acquisitions

Deferred purchase consideration (Note 5)

Deferred purchase consideration related to business acquisitions

Measurement period adjustments relating to business acquisitions

Deferred offering costs included in accounts payable and accrued expenses

The accompanying notes are an integral part of these combined consolidated financial statements.

The accompanying notes are an integral part of these consolidated financial statements.

Corsair Gaming, Inc.

Notes to Combined Consolidated Financial Statements

Notes to Consolidated Financial Statements

Description of Business and Basis of Presentation

Description of Business

Corsair Gaming, Inc., a Delaware corporation, together with its subsidiaries (collectively, “Corsair” the “Company”, “we”, “us”, or “our”) , is a global provider and innovator of high-performance gear for gamers, streamers and content creators.

Corsair is organized into two reportable segments:

Gamer and creator peripherals .

Includes our high-performance gaming keyboards, mice, headsets, controllers, and our streaming gear including capture cards, Stream Decks, USB microphones, studio accessories and EpocCam software, as well as coaching and training services, among others.

Includes our high-performance gaming keyboards, mice, headsets, controllers, and our streaming gear, which includes capture cards, Stream Decks, USB microphones, our Facecam streaming camera, studio accessories and EpocCam software, as well as coaching and training services, among others.

Gaming components and systems .

Includes our high-performance power supply units, or PSUs, cooling solutions, computer cases, DRAM modules, as well as high-end prebuilt and custom-built gaming PCs, among others.

Reorganization

On September 15, 2020, a corporate reorganization (the “Reorganization”) was consummated whereby we now own directly and indirectly all of the operating subsidiaries and assets that were formerly owned by Corsair Group (Cayman), LP (the “Parent”) and Corsair Group (US), LLC, a minority interest holder.

The Parent is a limited partnership domiciled in the Cayman Islands.

The Parent and Corsair Group (US), LLC are under common control of the affiliates of EagleTree Capital, LP, a private equity investment firm.

Prior to the Reorganization, the North American and international operations of Corsair were conducted by certain operating subsidiaries held by separate entities, Corsair Gaming, Inc.

and Corsair Holdings (Lux) S.à r.l.

(or “Corsair Luxco”) , respectively, each of which was substantially owned by and under common control of the Parent.

The Reorganization was comprised of a series of steps as set forth below:

The Parent acquired the minority interest held by Corsair Group (US), LLC in exchange for its own units.

Corsair Gaming, Inc.

acquired all of the outstanding capital stock of Corsair Luxco from the Parent in exchange for its own stock.

In order for management and certain other partnership unit holders of the Parent to hold Corsair’s common stock directly, we entered into exchange agreements with such holders to exchange the Parent’s units for shares of Corsair’s common stock on a pro rata basis relative to their holdings in the Parent prior to the Reorganization.

The Parent’s 2017 Equity Incentive Program was assumed by Corsair and all of the outstanding options to acquire units under the Parent’s 2017 Equity Incentive Program were converted into options to purchase Corsair’s common stock on a pro rata basis with an adjusted exercise price to reflect the assumption.

We implemented a 1-for- 28,693.596843964 stock split resulting in there being 84,405,366 shares of Corsair’s common stock outstanding and 10,029,388 options outstanding to purchase Corsair’s common stock as of the date of the Reorganization.

As all legal entities included in the Reorganization are under common control of the Parent, all steps of the Reorganization were accounted for as a combination of entities under common control.

Unless otherwise indicated, the accompanying combined consolidated financial statements and related notes that reference Corsair’s capitalization, including other matters relating to equity, share, and per share information, have been retroactively revised to reflect the Reorganization for all periods presented.

Accordingly, references in the footnotes related to transactions entered into by the Parent involving the Parent’s units or options to purchase the Parent’s units have been revised as common share equivalents of Corsair and options to purchase shares of Corsair’s common stock using the ratio of Corsair’s issued and outstanding shares immediately post-Reorganization to the Parent’s issued and outstanding units immediately post-Reorganization but prior to the unit exchanges described above.

Corsair Gaming, Inc.

Notes to Combined Consolidated Financial Statements — Continued

Initial Public Offering and Secondary Offering

On September 25, 2020, we completed our initial public offering (IPO) .

On September 25, 2020, we completed our initial public offering (the “IPO”) .

In connection with the IPO, we sold 7,500,000 shares of common stock at $ 17.00 per share, resulting in proceeds of $ 118.6 million, net of the underwriting discounts and commissions and before offering costs.

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Deferred offering costs consist primarily of accounting, legal, and other fees related to the IPO.

Prior to the IPO, all deferred offering costs were capitalized in other assets in the combined consolidated balance sheets.

After the IPO, $ 12.0 million of deferred offering costs were reclassified into stockholders’ equity as a reduction of the IPO proceeds in the combined consolidated balance sheet as of December 31, 2020.

The amount of deferred offering costs capitalized as of December 31, 2019 was $ 5.8 million.

Prior to the IPO, all deferred offering costs were capitalized in other assets in the consolidated balance sheets.

After the IPO, $ 12.0 million of deferred offering costs were reclassified into stockholders’ equity as a reduction of the IPO proceeds in the consolidated balance sheet as of December 31, 2020.

Basis of Presentation

The accompanying combined consolidated financial statements include those of Corsair and its subsidiaries, after elimination of all intercompany balances and transactions.

These combined consolidated financial statements have been prepared in accordance with United States generally accepted accounting principles (“U.S.

The accompanying consolidated financial statements include those of Corsair and its subsidiaries, after elimination of all intercompany balances and transactions.

These consolidated financial statements have been prepared in accordance with United States generally accepted accounting principles (“U.S.

GAAP”) and pursuant to the rules and regulations of the United States Securities and Exchange Commission (the “SEC”).

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Use of Estimates

The preparation of combined consolidated financial statements in conformity with U.S.

GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the combined consolidated financial statements and the reported amounts of revenues and expenses during the reporting period.

The preparation of consolidated financial statements in conformity with U.S.

GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period.

Such estimates include, but are not limited to, the valuation of intangible assets, accounts receivable, sales return reserves, reserves for customer incentives, warranty reserves, inventory, derivative instruments, stock-based compensation, deferred income tax, and common stock (prior to the IPO completed in September 2020).

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Due to the COVID-19 pandemic, there has been and will continue to be uncertainty and disruption in the global economy and financial markets.

This negative financial impact has been offset by strong revenue growth year-over-year partly due to an increase in demand for our gear as more people in more countries are under shelter-in-place restrictions.

The increase in demand continued into the second half of 2020 as the COVID-19 pandemic continues.

However, as the global economic activity slows down, the demand for our gear could decline despite these trends.

Since early 2020, we have experienced some business disruptions due to COVID-19 including the stoppage in our factories in early 2020, disruption in our supply chain and increased distribution costs in 2021, which led to increases in operating costs such as the significantly elevated ocean freight costs we incurred in the second half of 2021, as compared to the same period of 2020.

These negative financial impacts have been offset by revenue growth in 2020 and 2021, partly due to an increase in demand for our gear as more people are under shelter-in-place restrictions, which we believe have limited people’s access to alternative forms of entertainment and social interaction, and thus have increased the demand for home entertainment and connecting with others through content creation.

In contrast, as the COVID-19 pandemic subsides, it has, and could continue to, result in shelter-in-place and other similar restrictions being eased.

Such easing of restrictions likely has, and will continue to, result in consumers returning to other alternative forms of entertainment and interaction.

This in turn has, and could continue to, result in a decline in demand for our products.

The extent to which the COVID-19 outbreak ultimately impacts our business, sales, results of operations and financial condition will depend on future developments, which are highly uncertain and cannot be predicted, including, but not limited to, the duration and spread of the outbreak, its severity, the actions to contain the virus or treat its impact, and how quickly and to what extent normal economic and operating conditions can resume.

Even after the COVID-19 outbreak has subsided, we may continue to experience significant impacts to our business as a result of its global economic impact, including any economic downturn or recession that has occurred or may occur in the future.

As of the date of issuance of these combined consolidated financial statements, we are not aware of any specific event or circumstance that would require updates to our estimates and judgments or revisions due to COVID-19 to the carrying value of our

Corsair Gaming, Inc.

Notes to Combined Consolidated Financial Statements — Continued

assets or liabilities.

These estimates may change, as new events occur and additional information is obtained, and are recognized in the combined consolidated financial statements as soon as they become known.

Actual results could differ from those estimates and any such differences m ay be material to the combined consolidated financial statements.

As of the date of issuance of these consolidated financial statements, we are not aware of any specific event or circumstance that would require updates to our estimates and judgments or revisions due to COVID-19 to the carrying value of our assets or liabilities.

These estimates may change, as new events occur and additional information is obtained, and are recognized in the consolidated financial statements as soon as they become known.

Actual results could differ from those estimates and any such differences may be material to the consolidated financial statements.

Revenue Recognition

Our products are primarily sold through a network of distributors and retailers, including online retailers, and to a lesser extent direct to consumers.

We sell hardware products, such as gamer and creator peripherals and gaming components and systems, which may include embedded software that provides advanced performance tuning, user customization and system monitoring.

Hardware devices are generally plug and play, requiring no configuration and little or no installation.

Under Topic 605, we recognized revenue when persuasive evidence of an arrangement exists, delivery has occurred, title has transferred, the price becomes fixed or determinable and collectability is reasonably assured.

Evidence of an arrangement existed when there is a customer contract or a standard customer purchase order.

We considered delivery complete when title and risk of loss transfer to the customer, which is generally upon shipment, but no later than physical receipt by the customer.

On January 1, 2019 we adopted Topic 606 using the modified retrospective method applied to those contracts which were not completed as of December 31, 2018.

Results for reporting periods beginning after December 31, 2018 are presented under Topic 606, while prior period amounts are not adjusted and continue to be reported under Topic 605.

Under Topic 606, we determine revenue recognition through the following steps:

We determine revenue recognition through the following five-step approach:

identification of the contract, or contracts, with the customer

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recognition of revenue when, or as the performance obligation is fulfilled

With the adoption of Topic 606, revenue is recognized when performance obligations are satisfied under the terms of the contracts, and control of the products is transferred to the customers in an amount that reflects the consideration we expect to receive from the customers in exchange for those products or services.

Generally, the control of the products is transferred to the customer occurs upon shipment or delivery to customer.

Our revenue recognition policies are consistent worldwide.

Revenue is recognized when performance obligations are satisfied under the terms of the contracts, and control of the products is transferred to the customers in an amount that reflects the consideration we expect to receive from the customers in exchange for those products or services.

Our products are primarily sold through a network of distributors and retailers, including online retailers, and to a lesser extent direct to consumers.

We sell hardware products, such as gamer and creator peripherals and gaming components and systems.

We primarily sell hardware products, such as gamer and creator peripherals and gaming components and systems.

These products are hardware devices, which may include embedded software that function together, and are considered as one performance obligation.

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We generally provide a warranty on products that provides assurance that our products conform to published specifications.

Such assurance-type warranties are not deemed to be separate performance obligations from the product, and costs associated with providing the warranties are accrued in accordance with ASC 460-10, Guarantees .

Such assurance-type warranties are not deemed to be separate performance obligations from the product, and costs associated with providing these warranties are accrued in accordance with ASC 460-10, Guarantees.

We offer return rights and customer incentive programs.

Customer incentive programs include special pricing arrangements, promotions, rebates and volume-based incentives.

Corsair Gaming, Inc.

Notes to Combined Consolidated Financial Statements — Continued

We ha ve agreements with certain customers that contain terms allowing price protection credits to be issued in the event of a subsequent price reduction.

We have agreements with certain customers that contain terms allowing price protection credits to be issued in the event of a subsequent price reduction.

Our decision to make price reductions is influenced by product life cycle stage, market acceptance of products, the competitive environment, new product introductions and other factors.

Accruals for estimated expected future pricing actions are recognized at the time of sale based on analysis of historical pricing actions by customer and by product, inventories owned by and located at distributors and retailers, current customer demand, current operating conditions, and other relevant customer and product information, such as stage of product life-cycle.

The transaction price received by us from sales to distributors and retailers is calculated as selling price net of variable consideration which may include product returns, price protection, and our estimate of claims for customer incentive programs related to current period product revenue.

The transaction price received by us from sales to distributors and retailers is calculated as selling price net of variable consideration which may include rebates, product returns and price protection.

Rights of return vary by customer and range from the right to return products to limited stock rotation rights allowing the exchange of a percentage of the customer’s quarterly purchases.

Estimates of expected future product returns qualify as variable consideration and are recorded as a reduction of the transaction price of the contract at the time of sale based on historical return trends.

Return trends are influenced by product life cycle status, new product introductions, market acceptance of products, sales levels, the type of customer, seasonality, product quality issues, competitive pressures, operational policies and procedures, and other factors.

Return rates are influenced by product life cycle status, new product introductions, market acceptance of products, sales levels, the type of customer, seasonality, product quality issues, competitive pressures, operational policies and procedures, and other factors.

Return rates can fluctuate over time but are sufficiently predictable to allow us to estimate expected future product returns.

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Our contracts with customers typically do not include significant financing components as the period between the satisfaction of the performance obligations and timing of payment are generally within one year .

Customer incentive programs are considered variable consideration, which we estimate and record as a reduction to revenue at the time of sale based on historical experience and forecasted incentives.

Certain customer incentives require management to estimate the percentage of those programs which will not be claimed or will not be earned by customers based on historical experience and on the specific terms and conditions of particular programs.

The percentage of these customer programs that will not be claimed or earned is commonly referred to as “breakage”.

We account for breakage as part of variable consideration, subject to constraint, and record the estimated impact in the same period when revenue is recognized at the expected value.

Significant management judgment and estimates are used to determine the amount of variable consideration to be recognized, as well as any subsequent adjustments to it, such that it is probable that a significant reversal of revenue will not occur.

Customer incentive programs are considered variable consideration, which we estimate and record as a reduction to revenue at the time of sale.

Significant management judgments and estimates must be used to determine the cost of these programs to be included in the transaction price in any accounting period including a reduction for the estimate of amounts that ultimately will not be claimed for certain customer incentive programs.

We use the expected value method to arrive at the amount of variable consideration.

The Company constrains variable consideration until the likelihood of a significant revenue reversal is not probable.

The accrual estimates are based on actual sales data, historical experience, forecasted incentives, anticipated volume of future purchases, and inventory levels in the channel.

During the years ended December 31, 2021 and 2020, we did not recognize any material revenue adjustments related to performance obligations satisfied in prior periods as a result of changes in estimated variable consideration.

Because performance obligations in our contracts with customers relate to contracts with a duration of less than one year , we have elected to apply the optional exemption to not 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.

Because the majority of the performance obligations in our contracts with customers relate to contracts with a duration of less than one year , we have elected to apply the optional exemption to not 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.

Contract Balances

Contract assets represent amounts that have been recognized as revenue but for which we did not have the unconditional right to invoice the customers.

There were no contract assets as of December 31, 2021 and 2020.

Contract liabilities are obligations to transfer products or services to a customer for which we have received consideration, or the amount is due, from the customer.

Our contract liabilities primarily consist of deferred revenue and unearned revenue.

Deferred revenue consists primarily of amounts that have been shipped and invoiced but not recognized as revenue as of period end because the control of the inventory has not passed to the customer.

Revenue will be recognized when the customer has obtained control of the inventory sold, which is generally within 3 months or less.

The deferred revenue balances as of December 31, 2021 and 2020 were not material.

Unearned revenue consists of payments received from customers in advance of product shipment for our webstore orders.

These orders are generally shipped within two weeks from order date and revenue will be recognized when the customer has obtained control of the inventory sold.

The unearned revenue balance as of December 31, 2021 and 2020 was $ 4.8 million and $ 8.0 million, respectively.

Contract liabilities are included in other liabilities and accrued expenses and other liabilities noncurrent on the consolidated balance sheets.

Cost of Revenue

Cost of revenue consists of product costs, including costs of contract manufacturers, inbound freight costs from manufacturers to our distribution hubs, as well as inter-hubs shipments, duties and tariffs, warranty replacement costs, costs to process and rework returned items, depreciation of tooling equipment, warehousing costs, excess and obsolete inventory write-downs, certain allocated costs related to facilities and IT department, and personnel-related expenses and other operating expenses related to supply chain logistics.

Cost of revenue consists of product costs, including purchases from contract manufacturers, inbound freight costs from manufacturers to our distribution hubs, as well as inter-hubs shipments, duties and tariffs, warranty replacement costs, costs to process and rework returned items, depreciation of tooling equipment, warehousing costs, inventory valuation write-downs, certain allocated costs related to facilities and IT department, and personnel-related expenses and other operating expenses related to supply chain logistics.

Distribution Costs

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We do not consider distribution costs to be part of the costs to bring our products to the finished condition and therefore record such distribution costs as sales, general and administrative expense rather than in cost of revenue.

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Notes to Combined Consolidated Financial Statements — Continued

Product Development Costs

Product development costs are generally expensed as incurred and reported in the combined consolidated statements of operations.

Product development costs are generally expensed as incurred.

Product development costs consist primarily of the costs associated with the design and testing of new products and improvements to existing products.

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Advertising Costs

Advertising costs are expensed as incurred and are included as a component of sales, general and administrative expense in the combined consolidated statements of operations.

Advertising costs are expensed as incurred and are included as a component of sales, general and administrative expense in the consolidated statements of operations.

Advertising and promotion expenses were $ 19.8 million, $ 19.1 million, and $ 11.3 million for the years ended December 31, 2021, 2020, and 2019, respectively.

Stock-Based Compensation

We measure and recognize compensation for all stock-based compensation awards, including stock options and restricted stock units (“RSU”), based upon the grant-date fair value of those awards.

The fair value of our stock option awards is estimated at grant date using a Black-Scholes-Merton option-pricing model.

We measure and recognize compensation for all stock-based compensation awards, including stock options, stock purchase rights and restricted stock units (“RSU”), based upon the grant-date fair value of those awards.

The grant-date fair value of our stock options and stock purchase rights is estimated using a Black-Scholes-Merton option-pricing model.

The fair value of our RSUs is calculated based on the market value of our stock at the grant date.

Stock-based compensation is recognized on a straight-line basis over the requisite service period based on awards ultimately expected to vest.

We have elected to recognize actual forfeitures by reducing the stock-based compensation in the same period as the forfeitures occur.

Stock-based compensation is recognized on a straight-line basis over the requisite service period and we have elected to recognize actual forfeitures by reducing the stock-based compensation in the same period as the forfeitures occur.

Operating segments are based on components of a company that engage in business activity that earn revenue and incur expenses and (a) whose operating results are regularly reviewed by its chief operating decision maker (“CODM”) to make decisions about resource allocation and performance and (b) for which discrete financial information is available.

We have two reportable segments:

Gamer and Creator Peripherals , which includes high-performance gaming keyboards, mice, headsets, controllers, and our gaming gear including capture cards, Stream Decks, USB microphones, studio accessories and EpocCam software, as well as coaching and training services, among others.

Gamer and Creator Peripherals , which includes high-performance gaming keyboards, mice, headsets, controllers, and our gaming gear including capture cards, Stream Decks, USB microphones, our Facecam streaming camera, studio accessories and EpocCam software, as well as coaching and training services, among others.

Gaming Components and Systems , which includes high performance power supply units, or PSUs, cooling solutions, computer cases, DRAM modules, as well as high-end prebuilt and custom-built gaming PCs, among others.

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We maintain trade credit insurance to mitigate credit risks on certain of our accounts receivable that reimburse us for up to 90 % of collection losses.

We estimate an allowance for credit losses by using a combination of relevant information including historical loss information, adjusted to take into account current market conditions and our customers’ financial condition, the amount of any receivables in dispute, the current receivables aging, and the current payment terms.

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Notes to Combined Consolidated Financial Statements — Continued

We estimate an allowance for credit losses by using a combination of

relevant information including historical loss information, adjusted to take into account current market conditions and our customers’ financial condition, the amount of any receivables in dispute, the current receivables aging, and the current payment terms.

Concentration of Credit Risk

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Leasehold improvements are amortized over the shorter of the remaining lease term or the estimated useful lives of the improvements .

Our lease portfolio consists primarily of real estate facilities for manufacturing, distribution, warehousing and office use purposes under operating leases.

We determine if an arrangement is or contains a lease at inception.

Right-of-use (“ROU”) assets and lease liabilities are recognized at commencement based on the present value of the lease consideration in the contracts over the lease term.

We do not record leases with an initial term of 12 months or less on our consolidated balance sheet but continue to record rent expense on a straight-line basis over the lease term.

Certain of our lease agreements include options to extend or renew the lease terms.

Such options are excluded from the ROU assets and lease liabilities unless they are reasonably certain to be exercised.

We account for the lease and non-lease components as a single lease component.

Operating lease expense is recognized on a straight-line basis over the lease term.

We apply the incremental borrowing rate, in determining the present value of the lease consideration, as our leases do not provide an implicit rate.

Our incremental borrowing rate is the rate of interest we would have to pay on a collateralized basis to borrow an amount equal to the lease payments under similar terms.

Because we do not frequently borrow on a collateralized basis, we consider a combination of factors to determine our incremental borrowing rate, including our credit worthiness, adjusted to approximate a collateralized rating, observable market yield curves, and the U.S.

and foreign currency risk-free rates.

Our variable lease expense consists primarily of warehousing and distribution services related to our outsourced distribution hubs, and to a lesser extent, variable costs related to office common area maintenance charges.

Our service contracts with third-party logistic service providers include both fixed payments for the use of a fixed warehouse space and variable payments based on the usage of their services for distribution and warehouse management.

The fixed payments are included in the calculation of the ROU asset and lease liability, but the variable payments are expensed as incurred.

In addition, our real estate leases typically contain variable payments for office common area maintenance and these costs are also expensed as incurred.

Fair Value of Financial Instruments

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These securities are measured using management’s best estimate of fair value, where the inputs into the determination of fair value are not observable and require significant management judgment or estimation.

Fair value accounting is applied to all financial assets and liabilities that are recognized or disclosed at fair value in our combined consolidated financial statements on a recurring basis.

Fair value accounting is applied to all financial assets and liabilities that are recognized or disclosed at fair value in our consolidated financial statements on a recurring basis.

Our financial instruments, including cash, restricted cash, accounts receivable, accounts payable, borrowings from credit lines and other liabilities and accrued expenses approximate fair value due to their short-term maturities.

Management believes that the long-term debt bearing variable interest rates represents the prevailing market rates for instruments with similar characteristics;

accordingly, the carrying value of this instrument approximates its fair value.

Business Combinations

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Amounts recorded in a business combination may change during the measurement period, which is a period not to exceed one year from the date of acquisition, as additional information about conditions existing at the acquisition date becomes available.

We include the results of operations of the acquired business in the combined consolidated financial statements prospectively from the date of

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Notes to Combined Consolidated Financial Statements — Continued

We include the results of operations of the acquired business in the consolidated financial statements prospectively from the date of acquisition.

Acquisition-related charges, including primarily third-party professional fees, accounting fees and legal fees are recognized separately from the business combination and are expensed as incurred.

Goodwill and Intangible Assets

Goodwill represents the excess purchase price over the estimated fair value of net assets acquired in a business combination.

Identifiable intangible assets with finite lives are carried at cost and amortized using a method that reflects the pattern in which the economic benefits of the intangible asset are consumed or otherwise used up or, if that pattern cannot be reliably determined, using a straight-line amortization method.

Amortization expense related to patents is included in cost of revenues.

Amortization expense related to developed technology is included in product development costs.

Amortization expense related to customer relationships, trade name and non-compete agreements is included in sales, general and administrative costs.

For definite-lived intangible assets, we evaluate the recoverability of intangible assets for impairment whenever events or circumstances indicate that the carrying amount of such assets may not be recoverable.

Recoverability of these assets is measured by a comparison of the carrying amounts to the future undiscounted cash flows the assets are expected to generate.

If the carrying amount exceeds the fair value, an impairment charge is recognized in an amount equal to that excess.

No such impairment charges were recorded in the periods presented.

We test for goodwill impairment at the reporting unit level on an annual basis at October 1, or more frequently if events or changes in circumstances indicate that the asset is more likely than not impaired.

In reviewing goodwill for impairment, we have the option to first assess qualitative factors to determine whether the existence of events or circumstances leads to a determination that it is more likely than not (greater than 50 %) that the estimated fair value of a reporting unit is less than its carrying amount.

Goodwill and Indefinite-lived Intangible Assets

Goodwill and indefinite-lived intangible assets are not amortized and are tested for impairment on an annual basis at October 1 or between annual tests if an event occurs or circumstances change that would more likely than not reduce the fair value of the reporting unit or asset below its carrying value.

We perform our annual goodwill impairment assessment at the reporting unit level and our indefinite-lived intangible assets at the individual asset level.

In reviewing impairment, we have the option to first assess qualitative factors to determine whether the existence of events or circumstances leads to a determination that it is more likely than not (greater than 50 %) that the estimated fair value of a reporting unit is less than its carrying amount.

We also may elect not to perform the qualitative assessment and, instead, proceed directly to the quantitative impairment test.

The ultimate outcome of the goodwill impairment review for a reporting unit should be the same whether we choose to perform the qualitative assessment or proceeds directly to the quantitative impairment test.

The ultimate outcome of the goodwill impairment review for a reporting unit should be the same whether we choose to perform the qualitative assessment or proceed directly to the quantitative impairment test.

A qualitative assessment requires that we consider events or circumstances including macroeconomic conditions, industry and market considerations, cost factors, overall financial performance, changes in management or key personnel, changes in strategy, changes in customers, changes in the composition or carrying amount of a reporting segment’s net assets and changes in our stock price.

If, after assessing the totality of events or circumstances, we determine that it is more likely than not that the fair values of our reporting units are greater than the carrying amounts, then the quantitative goodwill impairment test is not performed.

For the year ended December 31, 2020, we elected to perform the qualitative assessment and determined that an impairment was not more likely than not and no further analysis was required.

For the year ended December 31, 2021, we elected to perform the qualitative assessment for both goodwill and indefinite-lived intangible assets and determined that an impairment was not more likely than not for both assets and no further analysis was required.

Intangible Assets with finite-lives and Long-Lived Assets

Our intangible assets with finite lives principally include acquired technology, patents, tradenames, customer relationships and non-compete agreements.

The assets are carried at cost and amortized using a straight-line method over the estimated economic lives of the assets.

Amortization expense related to patents is included in cost of revenues.

Amortization expense related to developed technology is included in product development costs.

Amortization expense related to customer relationships, trade name and non-compete agreements is included in sales, general and administrative costs.

Our long-lived assets are primarily comprised of operating lease ROU assets and property and equipment.

We evaluate the recoverability of intangible assets with finite lives and long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amounts may not be recoverable.

For ROU assets such circumstances would include a decision to abandon the use of all or part of an asset, or subleases that do not fully recover the costs of the associated lease.

Recoverability is measured by comparing the carrying amounts to the future undiscounted cash flows the assets are expected to generate.

If it is determined that an asset may not be recoverable, an impairment loss equal to the excess of the asset’s carrying value over its fair value is recorded.

Fair value is determined based on an asset’s projected discounted future cash flow or appraised value, depending on the nature of the asset.

Such impairment charges recorded in the periods presented were not material.

Warranty Reserve

All of our products are covered by warranty to be free from defects in material and workmanship for periods ranging from six months to five years , and for life for memory products.

Our warranty does not provide a service beyond assuring that the product complies with agreed-upon specifications and is generally not sold separately.

All of our products are covered by warranty to be free from defects in material and workmanship for periods ranging from six months to ten years , and for life for memory products.

Our warranty does not provide a service beyond assuring that the product complies with agreed-upon specifications.

At the time of sale, an estimate of future warranty costs is recorded as a component of cost of revenue and a warranty liability is recorded for estimated costs to satisfy the warranty obligation.

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Amounts paid to creditors are recorded as a reduction in the proceeds received by the creditor and are considered a discount on the issuance of debt.

Deferred issuance costs and debt discounts are amortized over the terms of the long-term financing agreements using the effective-interest method and recorded as a deduction of the carrying amount of the debt in the combined consolidated balance sheets.

Deferred issuance costs of our revolving line of credit are recorded in prepaid expenses and other current assets and other assets, according to the timing of amortization.

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Notes to Combined Consolidated Financial Statements — Continued

Nonmonetary Transactions

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When we transact the reciprocal purchase of inventory from the manufacturer, we will record a payable to the manufacturer at the repurchase price, which replaces the initial nonmonetary transaction and inventory will be reflected at carrying value, which includes the costs for the raw materials and the incremental costs charged by the manufacturer for additional work performed on the inventory.

As of December 31, 2020, and 2019, we recognized $ 5.9 million and $ 0.8 million, respectively, in prepaid inventories and accrued liabilities in the combined consolidated balance sheet related to such nonmonetary transactions with our manufacturers.

Because the transactions are nonmonetary, they have not been included in the combined consolidated statements of cash flows pursuant to ASC 230, Statement of Cash Flows .

In connection with such nonmonetary transactions with our manufacturers, as of December 31, 2021, we recognized $ 5.0 million prepaid inventory and $ 5.4 million accrued liabilities, and as of December 31, 2020, we recognized $ 5.9 million prepaid inventory and accrued liabilities.

Because the transactions are nonmonetary, they have not been included in the consolidated statements of cash flows pursuant to ASC 230, Statement of Cash Flows.

Foreign Currency

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Revenues and expenses are translated using average exchange rates in effect during the reporting period.

Cumulative translation gains and losses are included as a component of stockholders’ equity in accumulated other

comprehensive loss.

Cumulative translation gains and losses are included as a component of stockholders’ equity in accumulated other comprehensive income (loss).

Monetary assets or liabilities denominated in currencies other than the functional currency are remeasured using exchange rates prevailing on the balance sheet date.

Foreign currency remeasurement gains and (losses), net is included in other (expense) income, net in the combined consolidated statements of operations and the amounts were $ 1.6 million, $ 1.4 million and $( 0.4 ) million for the years ended December 31, 2020, 2019 and 2018, respectively.

Foreign currency remeasurement gains and (losses), net is included in other (expense) income, net in the consolidated statements of operations and the amounts were $( 6.3 ) million, $ 1.6 million and $ 1.4 million for the years ended December 31, 2021, 2020 and 2019, respectively.

These amounts do not include the change in fair value of our foreign currency forward contracts.

Refer to Note 4, Derivative Financial Instruments for more information on our hedging instruments.

Gains and losses on long-term intercompany loans not intended to be repaid in the foreseeable future are recorded in other comprehensive loss.

Gains and losses on long-term intercompany loans not intended to be repaid in the foreseeable future are recorded as a component of accumulated other comprehensive income (loss).

Income taxes are accounted for under the asset and liability method.

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We are subject to foreign income taxes on our foreign operations.

All deferred tax assets and liabilities are classified as non-current in the combined consolidated financial statements.

Uncertain Tax Positions

All deferred tax assets and liabilities are classified as non-current in the consolidated financial statements.

We recognize the effect of income tax positions only if those positions are more likely than not of being sustained on examination based on the technical merit of the position.

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Basic net income (loss) per share is computed by dividing net income (loss) by the weighted-average number of shares outstanding during the period, without consideration of potential dilutive securities.

Diluted net income per share is computed based

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Notes to Combined Consolidated Financial Statements — Continued

on the weighted-average number of shares outstanding during the period, adjusted to include the incremental shares expected to be issued for assumed exercise of options under the treasury stock method.

Diluted net income per share is computed based on the weighted-average number of shares outstanding during the period, adjusted to include the incremental shares expected to be issued for assumed exercise of options under the treasury stock method.

Recently Adopted Accounting Pronouncements

In February 2016, the FASB issued ASU No.

2016-02, Leases , and subsequent updates (collectively, referred to as Accounting Standard Codification 842 or Topic 842).

Topic 842 requires a lessee to recognize right of use (“ROU”) assets and lease liabilities on the combined consolidated balance sheet and to disclose key information related to the leasing arrangements.

On January 1, 2020 , we adopted Topic 842 using the modified retrospective method, applying Topic 842 to all leases existing at the date of initial application.

We elected to use the effective date as the date of initial application.

Consequently, prior period balances and disclosures have not been restated.

We elected the package of transitional practical expedients, which among other provisions, allows us to carry forward prior conclusions about lease identification and classification.

In addition, for operating leases, we elected to account for lease and non-lease components as a single lease component.

We also made an accounting policy election not to apply the recognition guidance of Topic 842 to record all leases that, at the lease commencement date, have a lease term of 12 months or less on the combined consolidated balance sheet.

The adoption of Topic 842 had a material impact to our combined consolidated balance sheet but did not have an impact on our combined consolidated statements of operations or cash flows.

As a result of adopting Topic 842 as of January 1, 2020, we recognized lease liabilities of $ 17.9 million and corresponding ROU assets of $ 17.7 million.

See Note 17, Leases, for additional information.

In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses (Topic 326):

Measurement of Credit Losses on Financial Instruments, which was further updated and clarified by the FASB through issuance of additional related ASUs.

ASU 2016-13 replaces the incurred-loss impairment methodology and requires immediate recognition of estimated credit losses expected to occur for most financial assets, including trade receivables.

We adopted this standard effective January 1, 2020 using a modified retrospective approach.

The adoption of this new standard did not have a material impact on our combined consolidated financial statements.

In January 2017, the FASB issued ASU No.

2017-04, Intangibles – Goodwill and other (Topic 350):

Simplifying the Test for Goodwill Impairment .

The ASU simplifies the subsequent measurement of goodwill by eliminating the second step of the goodwill impairment test.

The second step measures goodwill impairment loss by comparing the implied fair value of a reporting unit’s goodwill with the carrying amount of that goodwill.

Under the new guidance, a company will record an impairment charge based on the excess of a reporting unit’s carrying amount over its fair value.

We adopted this standard effective January 1, 2020 .

The adoption of this new standard did not have a material impact on our combined consolidated financial statements.

In August 2018, the FASB issued ASU No.

2018-13, Fair Value Measurement (Topic 820) , to modify certain disclosure requirements on fair value measurements in Topic 820.

We adopted this standard effective January 1, 2020 .

The adoption of this new standard did not have a material impact on our combined consolidated financial statements.

In August 2018, the FASB issued ASU No.

2018-15, Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40):

Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract.

The amendments in ASU 2018-15 align the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software.

As permitted by ASU 2018-15, we early-adopted this standard on a prospective basis beginning January 1, 2019 .

The adoption of this ASU did not have a material impact on our combined consolidated financial statements.

Recently Issued Accounting Pronouncements, Not Yet Adopted

In December 2019, the FASB issued ASU No.

2019-12, Income Taxes (Topic 740), to simplify various aspects related to the accounting for income taxes.

The new guidance is effective for us beginning in year 2021.

We do not anticipate the adoption of this accounting standard update will have a material impact on our combined consolidated financial statements.

We adopted this standard effective January 1, 2021 .

The adoption of this new standard did not have a material impact on our consolidated financial statements.

Recently Issued Accounting Pronouncements, Not Yet Adopted

In March 2020, the FASB issued ASU No.

2020-04, Reference Rate Reform (Topic 848), to provide optional expedients and exceptions for applying generally accepted accounting principles to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met.

The new guidance is effective, at our election, beginning March 12, 2020 through

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Notes to Combined Consolidated Financial Statements — Continued

December 31, 2022.

Our term loan and revolving line of credit have interest payments that are correlated to a reference rate, and we are currently evaluating the impact of adopting this guidance and the potential effects it could have on our combined consolidated financial statements.

The new guidance is effective, at our election, beginning March 12, 2020 through December 31, 2022.

We plan to adopt ASU 2019-12 effective January 1, 2022, and we do not expect the adoption will have a material impact on our consolidated financial statements.

Fair Value Measurement

The following tables summarize our financial assets and liabilities that were measured at fair value on a recurring basis, and indicate the fair value hierarchy of the valuation inputs utilized to determine such fair value:

The balances of our financial assets that were measured at fair value on a recurring basis as of December 31, 2021 and 2020 were not material.

The following tables summarize our financial liabilities that were measured at fair value on a recurring basis, and indicate the fair value hierarchy of the valuation inputs utilized to determine such fair value (in thousands):

December 31, 2021

(in thousands)

Contingent cash consideration in connection with a

business acquisition—Origin (1)

Contingent cash consideration in connection with a

business acquisition—SCUF (2)

Deferred cash consideration in connection with a

business acquisition—Origin (3)

Foreign currency forward contracts (1)

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December 31, 2020

(In thousands)

Contingent cash consideration in connection with a

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Total liabilities

The fair value of the Origin earn-out liability is estimated at acquisition date using a Monte Carlo Simulation, a simulation-based measurement technique with significant inputs that are not observable in the market and thus represents a level 3 fair value measurement.

The significant inputs in the fair value measurement not supported by market activity included the expected future standalone EBITDA of Origin during the earn-out period, appropriately discounted by a risk adjustment factor, considering the uncertainties associated with the obligation, its associated volatility, and calculated in accordance with the terms of the Unit Purchase Agreement for this acquisition.

As a result of fair value remeasurements on the Origin earnout liability, we have recorded a charge of $ 1.0 million and a credit of $ 0.6 million in the year ended December 31, 2020 and 2019, respectively to our sales, general and administrative expenses.

The earn-out liability of $ 2.4 million based on Origin’s 2019 standalone EBITDA was fully paid in April 2020.

The remaining earnout liability of $ 2.9 million, determined based on the contractual amount, will be paid in 2021.

The fair value of the SCUF contingent consideration was determined based on the estimates of acquired tax benefits owed to SCUF’s sellers according to the merger agreement.

These estimates involve unobservable inputs and thus represent a level 3 fair value measurement.

The $ 1.6 million liability as of December 31, 2019 was subject to update upon filing our tax returns for tax years 2019 through 2021.

The $ 1.3 million liability as of December 31, 2020 is consisted of $ 0.1 million based on contractual amount and the remaining $ 1.2 million is subject to update upon filing our tax returns for tax years 2020 and 2021.

The fair value of Origin’s deferred cash consideration is determined at the Origin acquisition date by using the contractual cash payments and a discount rate of 6.5 %.

This discount rate approximated our borrowing rate under the revolving line of credit at the acquisition date and represented a Level 3 input under the fair value hierarchy.

This liability was fully repaid in January 2021.

The fair values of the forward contracts and interest rate cap contract are based on similar exchange traded derivatives and the related asset or liability is, therefore, included within Level 2 of the fair value hierarchy.

The fair value of the contingent consideration from our SCUF acquisition in 2019 was determined based on the estimates of acquired tax benefits owed to SCUF’s sellers according to the merger agreement, and these estimates represent a level 3 fair value measurement.

The $ 1.3 million liability as of December 31, 2020 consisted of $ 0.1 million based on a contractual amount and the remaining $ 1.2 million is subject to update upon filing our tax returns for tax years 2020 and 2021.

In September 2021, we filed the tax return for the 2020 tax year, and as a result, the $ 1.3 million liability as of December 31, 2021 was updated to consist of $ 0.3 million based on a contractual amount and the remaining $ 1.0 million is subject to update upon filing our tax return for tax year 2021.

T otal earn-out liability of $ 2.9 million and deferred cash consideration of $ 1.5 million from our Origin acquisition in 2019 were fully paid and settled in 2021.

Derivative Financial Instruments

From time to time, we enter into derivative instruments such as foreign currency forward contracts, to minimize the short-term impact of foreign currency exchange rate fluctuations on certain foreign currency denominated assets and liabilities, and interest rate

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Notes to Combined Consolidated Financial Statements — Continued

cap contracts, to minimize our exposure to interest rate movements on our variable rate debts.

The derivative instruments are recorded at fair value in prepaid expenses and other current assets or other liabilities and accrued expenses on the combined consolidated balance sheets.

The derivative instruments are recorded at fair value in prepaid expenses and other current assets or other liabilities and accrued expenses on the consolidated balance sheets.

We do not designate such instruments as hedges for accounting purposes;

accordingly, changes in the value of these contracts are recognized in each reporting period in other (expense) income, net in the combined consolidated statements of operations.

accordingly, changes in the value of these contracts are recognized in each reporting period in other (expense) income, net in the consolidated statements of operations.

We do no t enter into derivative instruments for trading purposes.

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The notional principal amount of outstanding foreign exchange forward contracts was $ 48.6 million and $ 41.6 million as of December 31, 2021 and December 31, 2020, respectively.

The fair value gain (loss) recognized in other (expense) income, net in relation to these derivative instruments was $( 3.0 ) million, $( 0.2 ) million, and $ 0.1 million for the year ended December 31, 2020, 2019, and 2018, respectively.

We entered into interest rate contracts in 2020 and the contracts mature on June 30, 2022.

We recognized $ 0.5 million net loss for the change in fair value of the interest rate contracts in interest expense for the year ended December 31, 2020.

The net fair value gain (loss) recognized in other (expense) income, net in relation to these derivative instruments was $ 0.5 million, $( 3.0 ) million, and $( 0.2 ) million for the year ended December 31, 2021, 2020, and 2019, respectively.

Business Combinations

2020 Immaterial Acquisitions

For the year ended December 31, 2020, we completed two immaterial acquisitions, EpocCam and Gamer Sensei, for total cash consideration of $ 1.3 million, which were accounted for using the acquisition method of accounting.

2019 Acquisition

SCUF Acquisition

On December 19, 2019 (the “SCUF Acquisition Closing Date”) , one of our subsidiaries entered into an Agreement and Plan of Merger with Scuf Holdings, Inc.

and subsidiaries (collectively “SCUF”) and acquired 100 % of their equity interests (the “SCUF Acquisition”) .

SCUF, headquartered in Georgia, U.S., specializes in delivering high-performance accessories and customized gaming controllers for consoles and PCs used by top professionals as well as casual gamers.

We believe that the SCUF Acquisition will enhance our product and service offerings to both console and PC gamers.

Because the acquired companies met the definition of a business, the SCUF Acquisition has been accounted for as a business combination using the acquisition method of accounting.

Subsequent to the SCUF Acquisition Closing Date, we recorded measurement period adjustments which reduced purchase price, inventories and goodwill by $ 1.8 million, $ 0.5 million and $ 1.3 million, respectively, and accordingly, the SCUF Acquisition total adjusted purchase consideration was $ 136.0 million.

The SCUF Acquisition purchase consideration consisted of (i) $ 128.2 million cash consideration (including the payment of SCUF’s transaction costs and debt on behalf of SCUF), (ii) $ 8.0 million equity consideration (an issuance of approximately 1.1 million equivalent shares of our common stock immediately post-Reorganization and prior to the exchange agreements described in Note 1), (iii) $ 1.3 million estimated contingent cash consideration relating to our expected utilization of the acquired SCUF tax liabilities or tax benefits relating to pre-acquisition SCUF results in our taxable periods from 2019 to 2021, (iv) additional cash earn-out based on the achievement of certain SCUF standalone EBITDA targets for 2019 and the ability of SCUF to renew a licensing agreement with a certain vendor, which were determined to have zero value based on the assessment of the outcome of these contingent events on the SCUF Acquisition Closing Date, and (v) net of $ 1.5 million contingent cash consideration paid on the SCUF Acquisition Closing Date that is expected to be returned by the sellers to us to fund an incentive payment to certain ex-SCUF employees who joined Corsair and are required to remain employed through a contractual service period.

Corsair Gaming, Inc.

Notes to Combined Consolidated Financial Statements — Continued

Final purchase price allocation

The following table summarizes the final allocation of the purchase consideration to the estimated fair value of the assets acquired and liabilities assumed at the SCUF Acquisition Closing Date.

(In thousands)

Assets acquired:

Accounts receivable

Prepaid and other assets

Identifiable intangible assets

Property and equipment

Liabilities assumed:

Accounts payable

Sales tax payable

Deferred revenue

Other liabilities and accrued expenses

Deferred tax liabilities

Net identifiable net assets acquired

Net assets acquired

The fair value of the inventory acquired was estimated using the expected selling price of the inventory, then deducting direct selling expenses and a reasonable allocation of profit to a likely buyer.

The difference between the fair value of the inventories and the amount recorded by SCUF immediately before the acquisition date was $ 1.5 million, which was recognized in cost of revenue in the combined consolidated statements of operations upon the sale of the acquired inventory.

The excess of the purchase price over the net tangible assets and intangible assets was recorded as goodwill at $ 72.3 million, is primarily related to the value of the acquired workforce and the ability to design and generate revenue from future technology and customers.

The goodwill and identifiable intangible assets are not deductible for tax purposes.

The following table summarizes the components of identifiable intangible assets acquired and their estimated useful lives as of the SCUF Acquisition Closing Date:

Average Useful

(In thousands)

Developed technology

Customer Relationships

Total identifiable intangible assets

Intangible assets acquired as a result of the SCUF Acquisition are being amortized over their estimated useful lives using the straight-line method of amortization, which reflects the pattern in which the economic benefits of the intangible asset are consumed or otherwise used up.

Amortization expenses of patent and developed technology are included in cost of revenue and product development expense, respectively.

Amortization expenses of customer relationships and trade names are included in sales, general and administrative expense in the combined consolidated statements of operations.

Corsair Gaming, Inc.

Notes to Combined Consolidated Financial Statements — Continued

Origin Acquisition

On July 22, 2019 (the “Origin Closing Date”) , one of our subsidiaries acquired all the equity interests in Origin PC Corporation (“Origin” and such acquisition, the “Origin Acquisition”) .

Origin, based in Florida, U.S., specializes in delivering hand-built, personalized PCs.

We believe the integration of Origin’s expertise in personalized custom gaming systems and Corsair’s strength in performance PC hardware and the iCUE software ecosystems enhances and expands our product and service offerings to PC gamers.

Origin met the definition of a business, and therefore this acquisition is accounted for as a business combination.

Subsequent to the Origin Closing Date, we recorded measurement period adjustments which increased the purchase price by $ 0.2 million and reduced other liabilities and accrued expenses by $ 0.3 million and goodwill by $ 0.1 million, and accordingly, the Origin Acquisition total adjusted purchase consideration was $ 13.8 million.

The Origin Acquisition purchase consideration consisted of (i) $ 5.5 million cash consideration (including the payment of Origin’s transaction costs and debt on behalf of Origin), (ii) $ 2.0 million equity consideration provided by Corsair (which was immediately exchanged for approximately 0.2 million equivalent shares of our common stock immediately post-Reorganization and prior to the exchange agreements described in Note 1), (iii) $ 1.4 million deferred cash consideration payable 18 months after closing, not contingent on any future conditions, (iv) $ 4.6 million of additional cash earn-out based on the achievement of certain Origin standalone EBITDA targets for 2019 and 2020, and (v) $ 0.3 million estimated contingent cash consideration relating to the finalization of pre-acquisition sales tax liabilities owed to Origin’s sellers according to the terms of the Origin Unit Purchase Agreement.

The final allocation of the Origin Acquisition purchase consideration to the estimated fair value of the assets acquired and liabilities assumed at the acquisition date is as follows:

(In thousands)

Assets acquired:

Cash, net of cash acquired

Accounts receivable

Prepaid and other assets

Identifiable intangible assets (customer relationship with estimated 6 years of useful life)

Property and equipment

Liabilities assumed:

Accounts payable

Other liabilities and accrued expenses

Other liabilities, noncurrent

Net identifiable assets acquired

Net assets acquired

The goodwill and identifiable intangible assets are deductible for tax purposes.

The estimated fair value of Origin’s contingent earn-out based on Origin’s standalone 2019 and 2020 EBITDA was decreased from $ 4.6 million at the Origin Closing Date to $ 4.0 million at December 31, 2019 primarily resulting from Origin’s lower-than-expected EBITDA for 2020.

The earn-out liability of $ 2.4 million based on Origin’s 2019 EBITDA was fully paid in April 2020.

The remaining earn-out liability was remeasured based on Origin’s actual 2020 EBITDA and increased from $ 1.6 million to $ 2.6 million as of December 31, 2020 due to improvement in Origin’s financial performance primarily from higher-than-expected revenue.

The 2020 earn-out liability is expected to be paid in 2021.

As a result, the $ 0.6 million decrease and the $ 1.0 million increase in the fair value of the Origin earn-out liability was recorded to sales and general administrative expenses in our combined consolidated statement of operations in 2019 and 2020, respectively.

Acquisition-related costs

We incurred acquisition-related costs of approximately $ 1.0 million, $ 2.6 million and $ 1.5 million for the years ended December 31, 2020, 2019 and 2018, respectively, and these costs are recorded in sales, general and administrative expenses in the combined consolidated statement of operations.

Corsair Gaming, Inc.

Notes to Combined Consolidated Financial Statements — Continued

Unaudited Pro Forma Financial Information

The following unaudited pro forma financial information combines the unaudited combined consolidated results of operations as if the SCUF Acquisition had occurred as of January 1, 2019:

(in thousands)

The unaudited pro forma adjustments to net loss primarily include amortization for intangible assets acquired, the purchase accounting effect on contract liabilities assumed and inventory acquired, acquisition-related costs and interest expense related to financing arrangements.

The unaudited pro forma combined consolidated information is provided for informational purposes only and is not indicative of the results of operations that would have been achieved if the SCUF Acquisition and any borrowings undertaken to finance the SCUF Acquisition had taken place at the beginning of the periods presented.

Pro forma financial information for the Origin Acquisition was not prepared because the effects of the acquisition were not material to our combined consolidated statement of operations for 2019.

We completed four acquisitions in the last two years, namely, Visual by Impulse and BoxFX Ltd in 2021, and EpocCam and Gamer Sensei in 2020, none of which were material, both individually and in the aggregate, to our consolidated financial statements.

They were accounted for using the acquisition method of accounting.

Goodwill and Intangible Assets

Goodwill represents the difference between the purchase price and the estimated fair value of the identifiable assets acquired and liabilities assumed.

Goodwill is allocated among and evaluated for impairment at the reporting unit level, which is defined as an operating segment or one level below an operating segment.

We have four reporting units:

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The Gamer and Creator Peripherals segment includes the Gaming Peripherals reporting unit, and the Gaming Components and Systems segment includes the Gaming Components, Gaming Memory and Gaming Systems reporting units.

The following table summarizes the changes in the carrying amount of goodwill by reportable segment:

(In thousands)

The following table summarizes the changes in the carrying amount of goodwill by reportable segment (in thousands):

December 31, 2019

Addition from business acquisitions

Measurement period adjustments

Effect of foreign currency exchange rates

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December 31, 2021

Corsair Gaming, Inc.

Notes to Combined Consolidated Financial Statements — Continued

Intangible assets, net

The following table is a summary of intangible assets, net:

The following table is a summary of intangible assets, net (in thousands):

December 31, 2021

December 31, 2020

(In thousands)

Developed technology

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Indefinite life trade name

Indefinite life

Total intangible assets

In the year after an identified intangible asset becomes fully amortized, we remove the fully amortized balances from the gross asset and accumulated amortization amounts from the table above.

Amortization expense of intangible assets is recognized in our combined consolidated statements of operations as follows:

Amortization expense of intangible assets is recognized in our consolidated statements of operations as follows (in thousands):

Year Ended December 31,

(In thousands)

Cost of revenue

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Total amortization of intangible assets

The estimated future amortization expense of intangible assets as of December 31, 2020 is as follows:

(in thousands)

Corsair Gaming, Inc.

Notes to Combined Consolidated Financial Statements — Continued

The estimated future amortization expense of intangible assets as of December 31, 2021 is as follows (in thousands):

Balance Sheet Components

Cash and Restricted Cash

(In thousands)

The following tables present the components of certain balance sheet amounts (in thousands):

Restricted cash—short term

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Total cash and restricted cash

Accounts Receivable, net

(In thousands)

Accounts receivable

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Accounts receivable, net

(In thousands)

Raw materials

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Finished goods

Property and Equipment, Net

(In thousands)

Manufacturing equipment

Computer equipment, software and office equipment

Furniture and fixtures

Leasehold improvements

Furniture and fixtures

Total property and equipment

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Property and equipment, net

Corsair Gaming, Inc.

Notes to Combined Consolidated Financial Statements — Continued

Other Liabilities and Accrued Expenses

(In thousands)

Right-of-use assets

Deferred tax asset

Accrued reserves for customer incentive programs

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Accrued payroll and related expenses

Accrued freight expenses

Income tax payable

Operating lease liabilities, current

Other liabilities and accrued expenses

Contract Balances

Contract assets represent amounts that have been recognized as revenue but for which we did not have the unconditional right to invoice the customer.

There were no contract assets as of December 31, 2020 and 2019.

Contract liabilities consist of deferred revenue and unearned revenue.

Deferred revenue consists primarily of amounts that have been shipped and invoiced but not recognized as revenue as of period end because the control of the inventory has not been passed to the customer.

Revenue will be recognized when the customer has obtained control of the inventory sold, which is generally within 3 months or less.

The current portion of deferred revenue balances are recognized over the next 12 months.

As of December 31, 2020, the current and long-term portion of our deferred revenue was $ 1.8 million and $ 0.5 million, respectively.

As of December 31, 2019, the current and long-term portion of our deferred revenue was $ 2.9 million and $ 0.4 million, respectively.

Unearned revenue consists of payments received from customers in advance of product shipment for our webstore orders.

These orders are generally shipped within two weeks from order date and revenue will be recognized when the customer has obtained control of the inventory sold.

The unearned revenue balance as of December 31, 2020 and 2019 was $ 8.0 million and $ 1.3 million, respectively, and the increase in unearned revenue from prior year was primarily due to higher backlog of webstore orders not yet shipped at the end of 2020 compared to 2019.

Unearned revenue and the current portion of deferred revenue are included in other liabilities and accrued expenses, and the long-term portion of deferred revenue is included in other liabilities on the combined consolidated balance sheets.

First Lien Credit and Guaranty Agreement

On August 28, 2017, we entered into a syndicated First Lien Credit and Guaranty Agreement ( “First Lien” ) with various financial institutions.

Operating lease liabilities, noncurrent

Other liabilities, noncurrent

Our debt consisted of the following (in thousands):

Term Loan (variable rate) due September 2026

First Lien Term Loan (variable rate) extinguished in September 2021

Debt discount and issuance cost, net of amortization

debt maturing within one year

Long-term debt

First Lien Credit and Guaranty Agreement (Extinguished in September 2021)

In August 2017, we entered into a syndicated First Lien Credit and Guaranty Agreement ( “First Lien” ) with various financial institutions.

The First Lien originally provided a $ 235 million term loan ( “First Lien Term Loan” ) for a business acquisition and to repay existing indebtedness of the acquired company and a $ 50 million revolving line-of-credit ( “Revolver” ).

The First Lien and the Revolver mature on August 28, 2024 and August 28, 2022 , respectively.

Subsequently, we entered into several amendments to the First Lien and the principal amount of the First Lien Term Loan was increased by $ 10 million in 2017 and increased by $ 115 million in each of 2018 and 2019, primarily to fund various business acquisitions and operational needs.

Subsequently, we entered into several amendments to the

First Lien and the principal amount of the First Lien Term Loan was increased by $ 10 million in 2017 and increased by $ 115 million in each of 2018 and 2019, primarily to fund various business acquisitions and operation al needs.

The First Lien Term Loan initially carried interest at a rate equal to, at our election, either the (a) greatest of (i) the prime rate, (ii) sum of the Federal Funds Effective Rate plus 0.5 %, (iii) one month LIBOR plus 1.0 % and (iv) 2 %, plus a margin of 3.5 %, or (b) the greater of (i) LIBOR and (ii) 1.0 %, plus a margin of 4.5 %.

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As a result of the First Lien amendment in October 2018, the First Lien term loan and Revolver margin were both changed to range from 2.75 % to 3.25 % for base rate loans and to range from 3.75 % to 4.25 % for Eurodollar loans, based on our net leverage ratio.

The effective interest rate of the First Lien Term Loan is 6.45 %.

Corsair Gaming, Inc.

Notes to Combined Consolidated Financial Statements — Continued

Additionally, new contingent repayment provisions were added in the First Lien amendment in October 2018.

Five business days after the initial public offering ( “IPO” ) of our stock, we were required to prepay all amounts (principal and interest) outstanding under the Second Lien term loan.

Concurrently, we also were required to prepay the First Lien Term Loan in an amount equal to the IPO proceeds, less the amount used to repay the Second Lien Term Loan, multiplied by 50 %.

Accordingly, in September 2020, with the IPO proceeds, we repaid the mandatory minimum amount of $ 55.8 million and made an additional $ 30.8 million voluntary repayment.

We may prepay the First Lien Term Loan and the Revolver at any time without premium or penalty other than customary LIBOR breakage.

According to the Consolidated Excess Cash Flow clause as defined in the First Lien, in April 2020, we prepaid $ 2.6 million of the First Lien Term Loan.

In the fourth quarter of 2020, we prepaid an additional $ 50.0 million of the First Lien Term Loan with our excess cash on hand.

The amendments to the First Lien were accounted for as loan modifications.

The following table summarizes the carrying value of the First Lien Term Loan:

(In thousands)

Principal amount outstanding

Debt discount, net of amortization

Debt issuance costs, net of amortization

Carrying amount

Our obligation under the First Lien is secured by substantially all of our personal property assets and those of our United States-organized subsidiaries, including intellectual property.

The First Lien Term Loan includes customary restrictive covenants that impose operating and financial restrictions on Corsair, including restrictions on our ability to take actions that could be in our best interests.

These restrictive covenants include operating covenants restricting, among other things, our ability to incur additional indebtedness, effect certain acquisitions or make other fundamental changes.

As of December 31, 2020, we were in compliance with all covenants.

In addition, the First Lien contains events of default that include, among others, non-payment of principal, interest or fees, breach of covenants, inaccuracy of representations and warranties, cross defaults to certain other indebtedness, bankruptcy and insolvency events, material judgments and events constituting a change of control.

Upon the occurrence and during the continuance of an event of default, interest on the obligations may accrue at an increased rate in the case of a non-payment or bankruptcy and insolvency and the lenders may accelerate our obligations under the First Lien Term Loan, except that acceleration will be automatic in the case of bankruptcy and insolvency events of default.

Second Lien Credit and Guaranty Agreement

On August 28, 2017, we also entered into a syndicated Second Lien Credit and Guaranty Agreement ( “Second Lien” ) with various financial institutions.

According to the repayment schedule, the Consolidated Excess Cash Flow (as defined in the First Lien) and the IPO repayment provisions as set forth in the First Lien, we made required repayments of the First Lien Term Loan of $ 59.6 million, in aggregate, in 2020 using the net proceeds from our IPO and excess cash on hand.

Further, we may prepay the First Lien Term Loan and the Revolver at any time without premium or penalty other than customary LIBOR breakage.

In 2020, we began to prepay the First Lien Term loan using our excess cash on hand, resulting in voluntary prepayments of $ 80.8 million in 2020 and $ 78.3 million in 2021 through September 2021.

The remainder of First Lien Term Loan of $ 248.5 million was fully prepaid with the proceeds from the Term Loan (defined below) on September 3, 2021, and as a result, all obligations and covenants thereunder were terminated.

In connection with the progressive prepayments of the First Lien Term Loan throughout 2020 and 2021, we have recorded losses on extinguishment of debt of $ 4.9 million and $ 2.5 million for the years ended December 31, 2021 and 2020, respectively.

Second Lien Credit and Guaranty Agreement (Extinguished in September 2020)

In August 2017, we also entered into a syndicated Second Lien Credit and Guaranty Agreement ( “Second Lien” ) with various financial institutions.

The Second Lien initially provided a $ 65 million term loan ( “Second Lien Term Loan” ), with a maturity date of August 28, 2025 , for a business acquisition and for general corporate operations purposes.

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In October 2017, we entered into an amendment to the Second Lien and the principal amount of the Second Lien Term Loan was reduced to $ 50 million and the applicable interest rate margins for both the base rate loans and Eurodollar loans were increased by 0.25 %.

The amendment to the Second Lien was accounted for as a loan modification.

We had the ability to prepay the Second Lien Term Loan any time after the first and second anniversary without premium or penalty.

In the second and third quarters of 2020, with excess cash on hand, we repaid an aggregate of $ 50 million of the outstanding principal balance of the Second Lien Term Loan and following these repayments, the Second Lien Term Loan was fully repaid and all obligations and covenants thereunder were terminated.

Corsair Gaming, Inc.

Notes to Combined Consolidated Financial Statements — Continued

The following table summarizes the carrying value of the Second Lien Term Loan:

(In thousands)

Principal amount outstanding

Debt discount, net of amortization

Debt issuance costs, net of amortization

Carrying amount

The following table summarizes the interest expense recognized for the First Lien and Second Lien:

In 2020, with excess cash on hand, we prepaid the entire outstanding balance of $ 50 million on the Second Lien Term Loan without paying any premium or penalty, and as a result, all obligations and covenants thereunder were terminated.

In connection with the prepayments of the Second Lien Term Loan in 2020, we have recorded losses on extinguishment of debt of $ 1.6 million for the year ended December 31, 2020.

The weighted average effective interest rate inclusive of the debt discount and debt issuance costs for the First Lien and Second Lien, in aggregate, was approximately 5.4 % and 6.4 % for years ended December 31, 2021 and 2020, respectively.

Credit Agreement

On September 3, 2021, we entered into a new Credit Agreement (“ Credit Agreement ”) which provides for a $ 100.0 million five-year revolving credit facility (“ Revolving Facility ”) and a $ 250.0 million five-year term loan facility (“ Term Loan ”), with each maturing in September 2026 .

The Credit Agreement also permits, subject to conditions stated therein, additional incremental facilities in a maximum aggregate principal amount not to exceed $ 250.0 million.

We may prepay the Term Loan and the Revolving Facility at any time without premium or penalty.

The credit facilities under the Credit Agreement replaced our senior credit facilities under the First Lien Credit and Guaranty Agreement.

The net proceeds from borrowings under the Credit Agreement of $ 248.5 million (net of $ 1.5 million of debt discount) were used to repay all amounts outstanding under the First Lien Term Loan on September 3, 2021.

The Term Loan and Revolving Facility under the Credit Agreement will each bear interest at the Company’s election, either (a) LIBOR plus a percentage spread (ranging from 1.25 % to 2.0 %) based on our total net leverage ratio, or (b) the base rate (described in the Credit Agreement as the greatest of (i) the prime rate, (ii) the federal funds rate plus 0.50 % and (iii) one-month LIBOR plus 1.0 %) plus a percentage spread (ranging from 0.25 % to 1.0 %) based on our net leverage ratio.

Our obligations under the Credit Agreement are guaranteed by substantially all of our U.S.

subsidiaries and secured by a security interest in substantially all assets of the Company and the guarantor subsidiaries, subject to certain exceptions detailed in the Credit Agreement and related ancillary documentation.

The Credit Agreement contains covenants with which we must comply during the term of the agreement, which we believe are ordinary and standard for agreements of this nature, including the maintenance of a maximum Consolidated Total Net Leverage Ratio

of 3.0 to 1.0 and a minimum Consolidated Interest Coverage Ratio of 3.0 to 1.0 (as defined in our credit facilities) .

The Credit Agreement also includes events of default customary for facilities of this nature and upon the occurrence of such events of default, among other things, all outstanding amounts under the Credit Agreement may be accelerated and/or the lenders’ commitments terminated.

In addition, upon the occurrence of certain events of default, the interest rate on the Term loan and Revolving Facility can be increased by 2.0 %.

As of December 31, 2021, we were not in default under the Credit Agreement and our Consolidated Total Net Leverage Ratio and Consolidated Interest Coverage Ratio were 1.1 to 1.0 and 11.5 to 1.0 as of December 31, 2021, respectively.

As of December 31, 2021, we had no outstanding balance under the Revolving Facility.

As of December 31, 2021, the carrying value of our Term Loan was $ 247.7 million.

The estimated fair value of our Term Loan as of December 31, 2021, which we have classified as a Level 2 financial instrument, was approximately $ 261.7 million.

The effective interest rate inclusive of the debt discount and debt issuance costs for the Term Loan was approximately 1.4 % for the year ended December 31, 2021.

The following table summarizes the interest expense recognized for all periods presented (in thousands):

Year Ended December 31,

(In thousands)

Contractual interest expense for First Lien and Second Lien Term Loan

Contractual interest expense for Revolver

Amortization of debt discount

Amortization of debt issuance costs

First and Second Lien Guaranty Agreement:

Contractual interest expense for term loan

Contractual interest expense for revolving facility

Amortization of debt discount and issuance cost

Loss on debt extinguishment

Credit Agreement:

Contractual interest expense for term loan

Contractual interest expense for revolving facility

Amortization of debt discount and issuance cost

Total interest expense recognized

The estimated future principal payments under our total long-term debt as of December 31, 2020 are as follows:

(In thousands)

Discount and debt issuance costs

Total Debt, net of discount and debt issuance costs

Presented on the combined consolidated balance sheet under:

Current portion of debt, net

The estimated future principal payments under our total long-term debt as of December 31, 2021 are as follows (in thousands):

Commitments and Contingencies

Product Warranties

Changes in our assurance-type warranty obligations were as follows:

(In thousands)

Changes in our assurance-type warranty obligations were as follows (in thousands):

Beginning of the period

Balance assumed from business acquisitions

Warranty provision related to products shipped

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End of period

Corsair Gaming, Inc.

Notes to Combined Consolidated Financial Statements — Continued

Unconditional Purchase Obligations

Our long-term non-cancelable purchase commitments consist primarily of multi-year contractual arrangements relating to subscriptions for cloud computing hosting arrangements for our enterprise resource planning (ERP) system and the related support services as well as marketing sponsorship.

The total long-term non-cancelable purchase commitment as of December 31, 2020 were as follows:

(In thousands)

In the normal course of business, we enter into various purchase commitments for goods or services.

Our long-term non-cancelable purchase commitments consist primarily of multi-year contractual arrangements relating to subscriptions for cloud computing hosting arrangements for our enterprise resource planning (“ERP” ) system and the related support services as well as

marketing sponsorship.

The total long-term non-cancelable purchase commitment s as of December 31, 2021 was as follows (in thousands) :

Our total non-cancelable long-term purchase commitments outstanding as of December 31, 2020 was $ 6.8 million.

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We have entered into indemnification agreements with directors and certain officers and employees that will require Corsair, among other things, to indemnify them against certain liabilities that may arise by reason of their status or service as directors, officers or employees.

No demands have been made upon Corsair to provide indemnification under such agreements, and thus, there are no claims that we are aware of that could have a material effect on our combined consolidated balance sheets, statements of operations, or statements of cash flows.

No demands have been made upon Corsair to provide indemnification under such agreements, and thus, there are no claims that we are aware of that could have a material effect on our consolidated balance sheets, statements of operations, or statements of cash flows.

We currently have directors’ and officers’ insurance.

Stockholders’ Equity

On December 19, 2019, we issued 7,046,049 equivalent shares of our common stock (following the Reorganization and prior to the exchange agreements described in Note 1), as a result of a capital call, for a total capital contribution of $ 53.5 million to fund the SCUF Acquisition.

During 2019, we issued an aggregate of 1,322,075 equivalent shares of our common stock (following the Reorganization and prior to the exchange agreements described in Note 1), as part of the consideration for business acquisitions.

The common stock had an estimated fair value of $ 10.0 million, in aggregate, at the time of issuance.

Refer to Note 5 for additional information regarding our acquisitions.

On September 15, 2020, we completed a Reorganization through a series of steps as discussed in Note 1.

In connection with the Reorganization, we filed a certificate of amendment to our Amended and Restated Certificate of Incorporation which authorized 100,000,000 shares of our common stock for issuance, with a par value of $ 0.0001 per share and effected a 1-for- 28,693.596843964 stock split resulting in there being 84,405,366 shares of Corsair’s common stock outstanding as of September 15, 2020.

On September 25, 2020, in connection with the closing of the IPO, we filed an Amended and Restated Certificate of Incorporation which increased the authorized shares of common stock for issuance to 300,000,000 and authorized 5,000,000 shares of preferred stock, with a par value of $ 0.0001 per share, for issuance.

There were no shares of preferred stock outstanding as of December 31, 2020.

Corsair Gaming, Inc.

Notes to Combined Consolidated Financial Statements — Continued

There were no shares of preferred stock outstanding as of December 31, 2021 and 2020.

Equity Incentive Plans and Stock-Based Compensation

Equity Incentive Plans

In 2017, the Parent adopted the 2017 Equity Incentive Program ( the “2017 Plan” ).

The 2017 Plan was administered by the General Partner, EagleTree-Carbide (GP), LLC, who determines the types of awards to be granted, the number of units subject to the awards, the exercise price and the vesting requirements.

Only our employees and directors participated in this program.

In connection with the Reorganization discussed in Note 1, we assumed the 2017 Plan and all the outstanding options to acquire units of the Parent under the 2017 Plan were converted into options to purchase our common stock on a pro rata basis with an adjusted exercise price to reflect the assumption.

No other modifications were made to the options and no further options will be granted under the 2017 Plan following the Reorganization.

In September 2020, we adopted the 2020 Incentive Award Plan ( the “2020 Plan” ), which became effective on September 22, 2020, the day prior to the first public trading date of our common stock.

In 2017, we adopted the 2017 Equity Incentive Program ( the “2017 Plan” ).

In September 2020, we adopted the 2020 Incentive Award Plan ( the “2020 Plan ”).

The 2020 Plan is the successor and continuation to the 2017 Plan.

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All other awards may be granted to eligible employees, non-employee directors and consultants, at the discretion of our board of directors ( the “Board” ).

Under the 2020 Plan, 5,125,000 shares of our common stock are initially reserved for issuance.

Under the 2020 Plan, 5,125,000 shares of our common stock were initially reserved for issuance.

The 2020 Plan reserve also includes any shares under the 2017 Plan and the 2020 Plan that may become available for issuance if the award terminates without the delivery of shares or if shares are tendered to satisfy the exercise price or tax withholding obligation with respect of the award.

The 2020 Plan reserve increases annually on January 1 of each calendar year, starting on January 1, 2021 through January 1, 2030, by an amount equal to the lesser of (a) 4 % of the shares outstanding on the last day of the immediately preceding fiscal year or (b) a smaller number of shares as determined by the Board;

provided, however, no more than 75,000,000 shares of our common stock may be issued upon the exercise of incentive stock options.

According to the provisions in the 2020 Plan, in March 2021, our Board approved an annual increase in the shares of common stock reserved for issuance by 3,677,385 shares.

As of December 31, 2021, there were 7,626,827 shares reserved for future issuance the 2020 Plan.

All stock options under the 2017 Plan and the 2020 Plan are issued at exercise prices not less than the fair market value on the date of grant.

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Both stock options and RSUs vest over a period of time as determined by the Board, generally four to five years , and expire ten years from date of grant.

As of December 31, 2020, 4,759,890 shares were available for grant under the 2020 Plan.

Employee Stock Purchase Plan

In September 2020, we adopted the 2020 Employee Stock Purchase Plan ( the “ESPP” ), which became effective September 22, 2020, the day prior to the first public trading date of our common stock.

The ESPP is intended to qualify under Section 423 of the U.S.

Internal Revenue Service Code.

The ESPP initially reserved 1,025,000 shares of our common stock for issuance.

The ESPP reserve increases annually on January 1 of each calendar year, starting on January 1, 2021 through January 1, 2030, by an amount equal to the lesser of (a) 1 % of the shares outstanding on the last day of the immediately preceding fiscal year or (b) a smaller number of shares as determined by the Board;

provided, however, no more than 20,000,000 shares of our common stock may be issued under the ESPP.

In September 2020, we adopted the 2020 Employee Stock Purchase Plan ( the “ESPP ”).

The ESPP is designed to allow eligible employees to purchase shares of our common stock, at semi-annual intervals, with their accumulated payroll deductions.

Under the ESPP, participants are offered the option to purchase shares of our common stock at a discount during a series of successive offering periods, the duration and timing of which will be determined by the ESPP administrator.

The offering period may not be longer than 27 months in length.

The option purchase price will be the lower of 85 % of the closing trading price per share of our common stock on the first trading date of an offering period in which a participant is enrolled or 85 % of the closing trading price per share on the purchase date, which will occur on the last trading day of each offering period.

Employees may participate through payroll deductions of 1 % to 15 % of their earnings.

No participant may purchase more than 5,000 shares in each offering period and may not subscribe for more than $ 25,000 in fair market value of shares of our common stock (determined based on the closing stock price on the enrollment date of each offering period) during any calendar year.

The first offering period begins on January 1, 2021.

Corsair Gaming, Inc.

Notes to Combined Consolidated Financial Statements — Continued

The ESPP initially reserved 1,025,000 shares of our common stock for issuance.

According to the provisions in the ESPP, in March 2021, our Board approved an annual increase in the shares of common stock reserved for issuance by 919,346 shares.

The first ESPP offering

period began on January 1, 2021.

For the year ended December 31, 2021, 205,464 shares of common stock were sold to our employees under the ESPP.

As of December 31, 2021, there were 1,738,882 shares reserved for future issuance under the ESPP.

Stock Options Activities

The following table summarizes the stock option activities and related information for the year ended December 31, 2021:

Stock Options

Number of Shares

Intrinsic Value

(In thousands)

Balance as of December 31, 2019

Outstanding as of December 31, 2020

Forfeited/cancelled

Balance as of December 31, 2020

Outstanding as of December 31, 2021

Vested and exercisable as of December 31, 2021

The total intrinsic value of options exercised for the years ended December 31, 2020, 2019 and 2018 were $ 1.5 million, $ 0.1 million and $ 15 thousand, respectively.

As of December 31, 2020, the unrecognized stock-based compensation cost related to outstanding unvested stock options was $ 14.7 million, which is expected to be recognized over a weighted average period of 2.9 years.

The weighted-average grant date fair value per share for stock options granted in years ended December 31, 2021, 2020 and 2019 was $ 16.77 , $ 3.68 and $ 2.89 , respectively.

The total intrinsic value of options exercised for the years ended December 31, 2021, 2020 and 2019 was $ 66.0 million, $ 1.5 million, and $ 0.1 million, respectively.

RSU Activities

The following table summarizes the RSUs activities and related information for the year ended December 31, 2020:

Unvested RSUs

The following table summarizes the RSU activities and related information for the year ended December 31, 2021:

Number of Shares

Grant Date Fair

Value Per Share

Balance as of December 31, 2019

Outstanding as of December 31, 2020

Forfeited/cancelled

Balance as of December 31, 2020

The weighted-average grant date fair value of all RSUs granted during 2020 was $ 28.66 per share.

The fair value of all RSUs vested during 2020 was $ 0.1 million.

As of December 31, 2020, the unrecognized stock-based compensation costs related to outstanding unvested RSUs was $ 4.3 million, which is expected to be recognized over a weighted average period of 3.6 year.

Corsair Gaming, Inc.

Notes to Combined Consolidated Financial Statements — Continued

Outstanding as of December 31, 2021

The weighted-average grant date fair value per share for RSUs granted in years ended December 31, 2021 and 2020 was $ 34.78 and $ 28.66 , respectively.

The total fair value of RSUs vested in the years ended December 31, 2021 and 2020 was $ 1.4 million and $ 0.1 million, respectively.

Stock-based Compensation

The following table summarizes stock-based compensation expense by line item in our combined consolidated statements of operations:

The following table summarizes stock-based compensation expense by line item in our consolidated statements of operations (in thousands):

Year Ended December 31,

(In thousands)

Cost of revenue

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Product development

Total stock-based compensation expense

Stock-based compensation expense, net of amounts capitalized (1)

Income tax benefits (expense) related to stock-based

compensation expense

Total stock-based compensation expense capitalized in inventory was not material for each of the periods presented.

The following table summarizes by type of grant, the total unrecognized stock-based compensation expense and the remaining period over which such expense is expected to be recognized (in thousands, except number of years):

December 31, 2021

Unrecognized Expense

Remaining weighted average period

Stock Options

Total unrecognized stock-based compensation expense

Valuation Assumptions

We estimate the fair value of the stock options on the date of grant using the Black-Scholes-Merton pricing model, with the following valuation assumptions:

We estimate the fair value of the stock options at the date of grant using the Black-Scholes-Merton pricing model, with the following valuation assumptions and values:

Year Ended December 31,

Weighted average grant date fair value of common stock (per share)

Expected term (years)

Expected volatility

43.1% - 47.0%

35.8% - 44.0%

34.3% - 36.1%

Dividend yield

Range of risk-free interest rate

Risk-free interest rate

0.05% - 1.34%

We estimate the fair value of the shares under the ESPP at the date of grant using the Black-Scholes-Merton pricing model, with the following valuation assumptions and inputs:

Year Ended December 31,

Expected term (years)

Expected volatility

43.2% - 45.1%

Dividend yield

Risk-free interest rate

0.05% - 0.09%

Each of the inputs to the Black-Scholes-Merton pricing model, as discussed below, is subjective and generally requires significant judgment and estimation by management.

Fair Value of Common Stock —Prior to our IPO, the fair value was determined by our board of directors, with input from management and valuation reports prepared by third-party valuation specialists.

Stock-based compensation for financial reporting purposes was measured based on updated estimates of fair value when appropriate, such as when additional relevant information related to the estimate became available in a valuation report issued as of a subsequent date.

After our IPO, the fair value of each share of underlying common stock was based on the closing price of our common stock as reported on the date of the grant on The Nasdaq Global Select Market.

Expected Term —The expected term represents the period that stock options are expected to be outstanding.

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Treasury yield curve in effect at the date of grant for zero-coupon U.S.

Treasury notes with maturities approximately equal to the stock-based awards’ expected term.

Expected Dividend Rate —The expected dividend is zero as, other than the declaration and payment of a special one-time cash dividend of $ 85.0 million in March 2018, we have no t paid nor do we anticipate paying any dividends on our common stock in the foreseeable future.

Treasury notes with maturities approximately equal to the expected term of the stock-based awards.

Expected Dividend Rate —The expected dividend is zero as we do not anticipate paying any dividends on our common stock in the foreseeable future.

The expense is recognized over the requisite service period.

Corsair Gaming, Inc.

Notes to Combined Consolidated Financial Statements — Continued

Net Income (Loss) Per Share

Following the Reorganization, all share and per share information in this section has been revised as Corsair common share equivalents.

The following table summarizes the calculation of basic and diluted net income (loss) per share:

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

Year Ended December 31,

(in thousands, except per share amounts)

Net income (loss)

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Potential common share equivalents were not included in the calculation of diluted net income per share as the effect would have been anti-dilutive.

Income (loss) before income tax consists of the following:

Income (loss) before income tax consists of the following (in thousands):

Year Ended December 31,

(In thousands)

Foreign operations

Income (loss) before income tax

Income tax (expense) benefit consists of the following:

Income tax (expense) benefit consists of the following (in thousands):

Year Ended December 31,

(In thousands)

United States federal taxes:

1 unchanged sentence

Income tax (expense) benefit

Corsair Gaming, Inc.

Notes to Combined Consolidated Financial Statements — Continued

The income tax (expense) benefit differs from the amount which would result by applying the applicable statutory deferral rate to income before income taxes as follows:

The income tax (expense) benefit differs from the amount which would result by applying the applicable statutory deferral rate to income before income taxes as follows (in thousands):

Year Ended December 31,

(In thousands)

Provision at federal statutory rate

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Change in tax rate on deferred tax assets

Expired capital losses and tax credits

Income tax (expense) benefit

The major drivers for the change in tax (expense) benefit in 2020 were a decrease in valuation allowance in 2020 as a result of the release of Federal valuation allowance due to anticipated increase in taxable income in future years from inclusion of foreign earnings under the Global Intangible Low-Taxed Income (“GILTI”) regime which the company has elected to account for as a period cost when incurred, the mix of income and losses in the various tax jurisdictions in which we operate, and the impact of the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”).

The major drivers for the change in tax (expense) benefit in 2021 were the excess tax benefits from stock-based compensation and a decrease in valuation allowance in 2021 as a result of the release of our California valuation allowance due to increased U.S.

profitability.

The disclosure for foreign rate differential reflects the impact of the effective tax rate benefit from operations in jurisdictions where the applicable foreign tax rate is lower than the U.S.

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Deferred tax assets and liabilities comprise the following:

(In thousands)

Deferred tax assets:

Accrued expenses and reserves

Equity-based compensation

Stock-based compensation

NOL and capital losses

Interest expense carryover

Capitalized research expenditures

Total deferred tax assets

7 unchanged sentences

Due to the anticipated future taxable income under the GILTI regime, we have released most of our valuation allowance except on $ 1.2 million of foreign tax credit carryovers for U.S.

federal purposes and maintained a valuation allowance on certain of our California, Netherlands, and Luxemburg deferred tax assets.

Corsair Gaming, Inc.

Notes to Combined Consolidated Financial Statements — Continued

federal purposes and maintained a valuation allowance on our Luxemburg deferred tax assets.

As of December 31, 2021, we had net operating loss carry forwards for federal, state and foreign tax purposes of $ 9.6 million, $ 26.4 million, and $ 13.6 million, respectively.

The federal and state net operating losses will begin to expire starting in 2037 and 2031 , respectively.

An immaterial amount of the foreign losses will expire in 2021 and the remaining will expire starting 2025 through 2037 .

As defined under Internal Revenue Code Section 382, certain tax attributes are subject to an annual limitation as a result of our change in ownership in August 2017 due to the Acquisition Transaction.

The federal, state and foreign net operating losses will begin to expire starting in 2037 , 2030 , and 2034 , respectively.

As defined under Internal Revenue Code Section 382, certain tax attributes are subject to an annual limitation as a result of our change in ownership in August 2017.

In August 2017, we acquired the interests of the operating subsidiaries from Corsair Components (Cayman) Ltd.

We do not expect our tax attributes to be materially affected by the annual limitation.

The CARES Act, enacted on March 27, 2020, provides tax relief to individuals and businesses in light of the impacts of COVID-19.

Changes in tax laws or rates are accounted for in the period of enactment and as a result, we have recorded income tax benefits of $ 0.6 million during the year ended December 31, 2020 resulting from the enactment of the CARES Act.

As of December 31, 2020, we had $ 1.2 million of cumulative unrecognized tax benefits.

Change in gross unrecognized tax benefits, excluding interest and penalties, as a result of uncertain tax positions are as follows (in thousands):

Year Ended December 31,

Beginning balance

Tax position related to current year

Tax position related to prior year

All of these unrecognized tax benefits will favorably impact our effective tax rate in future periods to the extent benefits are recognized.

There are no provisions for which it is reasonably possible that the total amounts of unrecognized tax benefits will significantly increase or decrease within 12 months of the reporting date.

We did no t recognize significant expense for interest and penalties related to uncertain tax positions during 2020, 2019 and 2018.

We did no t recognize significant expense for interest and penalties related to uncertain tax positions for the years ended December 31, 2021, 2020 and 2019.

We file income tax returns with the U.S.

4 unchanged sentences

Accumulated Other Comprehensive Income (Loss)

The components of accumulated other comprehensive income (loss) were as follows:

(In thousands)

Accumulated foreign currency translation gain (loss)

The components of accumulated other comprehensive income (loss) were as follows (in thousands):

Accumulated foreign currency translation gain

Unrealized foreign exchange loss from long-term intercompany loans, net of tax

Total Accumulated Other Comprehensive Income (Loss)

Related-Party Transactions

A company affiliated with the general partner, EagleTree-Carbide (GP), LLC provides management and consulting services to us.

We incurred $ 0.1 million, $ 0.3 million and $ 0.3 million for the years ended December 31, 2020, 2019, and 2018, respectively, which covers travel and out-of-pocket expenses related to such services.

This management and consulting service agreement was terminated in September 2020.

One of our directors, through one of his companies, entered into a service agreement to serve as our business management consultant.

We incurred $ 48 thousand, $ 0.1 million and $ 0.1 million of consulting fees under the service agreement for the years ended December 31, 2020, 2019 and 2018, respectively.

This service agreement was terminated in September 2020.

We entered into a lease agreement with a business entity owned by our Chief Executive Officer and recorded associated rent expense of $ 15 thousand, $ 54 thousand and $ 54 thousand for the years ended December 31, 2020, 2019 and 2018.

We provided a security deposit of $ 5 thousand as collateral for the lease.

There was no unpaid rent balance as of December 31, 2020.

As discussed in Note 8, we had a Second Lien Term Loan outstanding as of December 31, 2019.

The total net carrying value of the Second Lien Term Loan balance held by all related parties, an affiliate of the Parent and one of our directors, was $ 5.8 million as of December 31, 2019.

As of December 31, 2020, the outstanding balance of the Second Lien Term Loan was fully repaid and as a result, there was no debt held by related parties as of December 31, 2020.

Corsair Gaming, Inc.

Notes to Combined Consolidated Financial Statements — Continued

Segment and Geographic Information

The table below summarizes the financial information for each reportable segment:

The table below summarizes the financial information for each reportable segment (in thousands):

Year Ended December 31,

(In thousands)

Gamer and Creator Peripherals

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Geographic Information

The following table summarizes our net revenue by geographic region based on the location of the customer:

The following table summarizes our net revenue by geographic region based on the location of the customer (in thousands):

Year Ended December 31,

(In thousands)

Europe and Middle East

Total net revenue

Revenues from sales to customers in the United States represented 38 %, 35 % and 35 % for the year ended December 31, 2020, 2019 and 2018, respectively.

Revenues from sales to customers in the United States represented 38 % , 38 % and 35 % for the years ended December 31, 2021, 2020 and 2019, respectively.

No other single country represented 10 % or more of total net revenue during these periods.

Long-lived assets are comprised primarily of property and equipment, net.

The following table summarizes property and equipment, net by country:

(In thousands)

Long-lived assets consist primarily of property and equipment, net and right-of-use assets.

The following table summarizes long-lived assets by regions that represent 10 % of more of our total long-lived assets (in thousands):

United States

Other countries

Total property and equipment, net

No other countries represented 10 % or more of our consolidated property and equipment, net as of December 31, 2020 and 2019.

Corsair Gaming, Inc.

Notes to Combined Consolidated Financial Statements — Continued

Total long-lived assets

Our lease portfolio consists primarily of real estate facilities for manufacturing, distribution, warehousing and office use purposes under operating leases.

We determine if an arrangement is or contains a lease at inception.

ROU assets and lease liabilities are recognized at commencement based on the present value of the lease consideration in the contracts over the lease term.

We do not record leases with an initial term of 12 months or less on our combined consolidated balance sheet but continue to record rent expense on a straight-line basis over the lease term.

Certain of our lease agreements include options to extend or renew the lease terms.

Such options are excluded from the ROU assets and lease liabilities unless they are reasonably certain to be exercised.

Operating lease expense is recognized on a straight-line basis over the lease term.

We apply the incremental borrowing rate, using a portfolio approach, in determining the present value of the lease consideration, as our leases do not provide an implicit rate.

Our incremental borrowing rate is the rate of interest we would have to pay on a collateralized basis to borrow an amount equal to the lease payments under similar terms.

Because we generally do not borrow on a collateralized basis, we consider a combination of factors to determine our incremental borrowing rate , including our credit worthiness, adjusted to approximate a collateralized rating, observable market yield curves, and the U.S.

and foreign currency risk-free rates.

The fixed payments are included in the calculation of the ROU asset and lease liability, but the variable payments are expensed as incurred.

In addition, our real estate leases typically contain variable payments for office common area maintenance and these costs are also expensed as incurred.

The table below summarizes the components of lease expenses:

(In thousands)

The components of lease expenses were as follows (in thousands):

Year Ended December 31,

Operating lease expense

1 unchanged sentence

Total lease expense

Supplemental cash flow information related to leases:

(In thousands)

Cash payments included in the measurement of our operating lease liabilities

Operating lease ROU assets recognized in exchange for operating lease obligations

As of December 31, 2020, the weighted-average remaining lease term was 3.9 years and the weighed-average discount rate was 3.9 %.

Corsair Gaming, Inc.

Notes to Combined Consolidated Financial Statements — Continued

Amounts of future undiscounted cash flows related to operating lease payments over the lease term included in the measurement of lease liabilities as of December 31, 2020 are as follows:

(In thousands)

Supplemental cash flow information related to operating leases was as follows (in thousands):

Year Ended December 31,

Cash paid for amounts included in the measurement of operating lease liabilities

Right-of-use assets recognized in exchange for operating lease obligations

Supplemental balance sheet information related to operating leases was as follows (in thousands):

Year Ended December 31,

Right-of-use assets (included in other assets)

Lease incentive receivable (included in prepaid expenses and other current assets)

Operating lease liabilities (included in other liabilities and accrued expenses)

Operating lease liabilities, noncurrent (included in other liabilities, noncurrent)

Weighted-average remaining lease term (in years)

Weighted-average discount rate

The following table summarizes the maturity of operating lease liabilities as of December 31, 2021 (in thousands):

Total future lease payments

1 unchanged sentence

Present value of operating lease liabilities

Current portion of operating lease liabilities (1)

Long-term operating lease liabilities (1)

The current portion and long-term portion of operating lease liabilities are included in “other liabilities and accrued expenses” and “other liabilities, noncurrent”, respectively, on our combined consolidated balance sheets.

Future minimum lease payments under non-cancelable operating leases as of December 31, 2019, as defined under the previous lease accounting guidance of ASC Topic 840, were as follows:

(In thousands)

Selected Quarterly Financial data (unaudited)

Year ended December 31, 2020

Year ended December 31, 2019

(In thousands, except per share amounts)

Operating income (loss)

Net income (loss)

Basic net income (loss) per share

Diluted net income (loss) per

Subsequent event

On January 1, 2022, we acquired a 51 % stake in iDisplay Technology (“iDisplay”), a leader in electronic development and design specializing in display technology.

Pursuant to the Share Purchase Agreement, and in consideration for its 51% interest in iDisplay, the Company paid $ 25.3 million in cash and issued 690,333 shares of its Common Stock, having an aggregate value of $ 14.5 million, for total purchase consideration of $ 39.8 million.

The purchase consideration is subject to adjustment for certain working capital adjustments and post-closing indemnities.

Due to the proximity of the acquisition date to the filing of our annual report on Form 10-K for the year ended December 31, 2021, the initial accounting for the iDisplay business combination is incomplete, and therefore we are unable to disclose certain information required by ASC 805, Business Combinations, including the provisional amounts recognized as of the acquisition date for each major class of assets acquired and liabilities assumed and goodwill.

We are currently in the process of finalizing the accounting for this transaction and expect to complete our preliminary allocation of the purchase consideration to the assets acquired and liabilities assumed by the end of the first quarter of 2022 .

Changes in and Disagreements With Accountants on Accounting and Financial Disclosure.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 8. Financial Statements and Supplementary Data