What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2023-02-27 compared with 2022-03-01 · 322 added, 204 removed, 655 unchanged (45% of the section changed)

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

We evaluated the length of time between when a sale occurs and a return is processed by recalculating the time between (1) the return dates from customers’ return claims and (2) the estimated date the sale occurred.

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, 2022.

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San Francisco, California

March 1, 2022

February 27, 2023

Corsair Gaming, Inc.

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Total operating expenses

Operating income

Operating income (loss)

Other (expense) income:

Interest expense

Other expense, net

Interest expense, net

Other (expense) income, net

Total other expense, net

Income (loss) before income taxes

Income tax (expense) benefit

Income tax benefit (expense)

Net income (loss)

Net income (loss) per share

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

Net income attributable to noncontrolling interest

Net income (loss) attributable to Corsair Gaming, Inc.

Calculation of net income (loss) per share attributable to common stockholders of Corsair Gaming, Inc.:

Net income (loss) attributable to Corsair Gaming, Inc.

Change in redemption value of redeemable noncontrolling interest

Net income (loss) attributable to common stockholders of Corsair Gaming, Inc.

Net income (loss) per share attributable to common stockholders of Corsair Gaming, Inc.:

Weighted-average common shares outstanding:

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

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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 $ 76 ,

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

2020, and 2019, respectively

Foreign currency translation adjustments, net of tax benefit of $ 344 , $ 0 and $ 0 for the years ended December 31, 2022, 2021 and 2020, respectively

Unrealized foreign exchange gain (loss) from long-term intercompany loans, net of tax benefit (expense) of $ 182 , $ 76 , and $( 150 ) for the years ended December 31, 2022, 2021, and 2020, respectively

Comprehensive income (loss)

Comprehensive loss attributable to noncontrolling interest

Comprehensive income (loss) attributable to Corsair Gaming, Inc.

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

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Intangible assets, net

Liabilities and Stockholders’ Equity

Current liabilities:

Debt maturing within one year

Debt maturing within one year, net

Accounts payable

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Total current liabilities

Long-term debt

Long-term debt, net

Deferred tax liabilities

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Commitments and Contingencies (Note 9)

Temporary equity

Redeemable noncontrolling interest

Permanent equity

Corsair Gaming, Inc.

stockholders’ equity:

Preferred stock, $ 0.0001 par value:

5,000 shares authorized, nil and nil shares issued

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

5,000 shares authorized, nil and nil shares issued and outstanding as of December 30, 2022 and 2021, respectively

Common stock, $ 0.0001 par value:

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

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

300,000 shares authorized, 101,385 and 94,510 shares issued and outstanding as of December 31, 2022 and 2021, respectively

Additional paid-in capital

Retained earnings (accumulated deficit)

Accumulated other comprehensive income (loss)

Total Stockholders’ Equity

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY

Retained earnings

Accumulated other comprehensive loss

Total Corsair Gaming, Inc.

stockholders’ equity

Nonredeemable noncontrolling interest

Total permanent equity

Total liabilities, temporary equity and permanent equity

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

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(In thousands)

Retained Earnings (Accumulated

Comprehensive

Stockholders’

Nonredeemable

Noncontrolling

Income (Loss)

Balance as of December 31, 2019

Cumulative effect of adoption of new

accounting standard

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

contribution from stockholders

Repurchase of common stock

Stock-based compensation

Other comprehensive income

Balance as of December 31, 2019

Issuance of common stock to directors

Issuance of common stock in

connection with employee

equity incentive plans

Issuance of common stock upon

initial public offering,

net of underwriting discounts

and commissions and other

offering costs

Issuance of common stock upon initial public offering, net of underwriting discounts, commissions and other offering costs

Issuance of common stock in connection with employee equity incentive plans

Shares withheld related to net share settlement

Stock-based compensation

Other comprehensive income

Balance as of December 31, 2020

Issuance of common stock in

connection with employee

equity incentive plans

Shares withheld related to net share

Other comprehensive loss

Issuance of common stock in connection with employee equity incentive plans

Shares withheld related to net share settlement

Stock-based compensation

Balance as of December 31, 2021

Net income (loss)

Other comprehensive loss

Issuance of common stock in relation to public offering, net of underwriting discounts, commissions and other offering costs

Issuance of common stock in relation to business acquisition

Noncontrolling interest from business combination

Change in redemption value of redeemable noncontrolling interest

Dividend paid to nonredeemable noncontrolling interest

Issuance of common stock in connection with employee equity incentive plans

Shares withheld related to net share settlement

Stock-based compensation

Balance as of December 31, 2022

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Stock-based compensation

Amortization of intangible assets

Debt issuance costs amortization

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Purchase of property and equipment

Purchase of intangible asset

Investment in available-for-sale convertible note

Net cash used in investing activities

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Proceeds from issuance of debt, net

Repayment of debt

Payment of debt issuance costs

Repayment of debt and debt issuance costs

Borrowings from line of credit

Repayment of line of credit

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

discounts and commissions

Proceeds from public offering, net of underwriting discounts and commissions

Payment of other offering costs

Proceeds from issuance of common stock to common stockholders

Repurchase of common stock

Proceeds from issuance of shares through employee equity incentive plans

Payment of taxes related to net share settlement of equity awards

Dividend paid to noncontrolling interest

Payment of contingent consideration

Net cash provided by (used in) financing activities

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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 consolidated financial statements.

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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, many of which build their own PCs using our components.

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Gamer and creator peripherals .

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.

Includes our high-performance gaming keyboards, mice, headsets, controllers, and 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.

Initial Public Offering and Secondary Offering

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

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

On September 25, 2020, we completed our initial public offering (“ 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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We did no t receive any of the proceeds from the sale of shares by the selling stockholders.

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 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 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”).

On July 22, 2022, we filed a shelf registration statement on Form S-3 with the SEC, which was declared effective August 1, 2022 (“2022 Shelf Registration Statement”).

The 2022 Shelf Registration Statement registered securities to be offered by us, in an amount up to $ 300.0 million, including common stock, preferred stock and warrants.

In addition, the 2022 Shelf Registration Statement registered 54,179,559 shares of common stock held by the selling securityholders named in the 2022 Shelf Registration Statement.

We will not receive any of the proceeds from the sale of the shares registered by the selling securityholders.

In November 2022, we issued 4,545,455 shares of common stock at a price of $ 16.50 per share in a registered underwritten public offering pursuant to the 2022 Shelf Registration Statement.

Following the partial exercise in December 2022 by the underwriters of their option to purchase additional shares, we issued an additional 500,000 shares.

The total proceeds from the underwritten public offering, net of underwriting discounts, commission and offering expenses, were approximately $ 81.0 million.

Summary of Significant Accounting Policies

Basis of Presentation and Principles of Consolidation

The accompanying 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 (“SEC”).

The accompanying consolidated financial statements include the accounts of Corsair and its wholly owned subsidiaries.

All intercompany accounts and transactions have been eliminated in consolidation.

For consolidated entities where we own less than 100% of the equity, our consolidated net comprehensive income (loss) is reduced by the portion attributable to the noncontrolling interest.

In determining whether an entity is considered a controlled entity, we apply the VIE (variable interest entity) and VOE (voting interest entity) models.

Entities that do not qualify as a VIE are assessed for consolidation under the VOE model.

Under the VOE model, we consolidate the entity if we determine that we have a controlling financial interest in the entity through our ownership of greater than 50% of the outstanding voting shares of the entity and that other equity holders do not have substantive voting, participating or liquidation rights.

On January 1, 2022 (“Closing” or “Closing Date”), we completed the acquisition of a 51 % ownership stake in Elgato iDisplay Holdings LTD.

and its related companies (together “iDisplay”).

(See Note 5, “Business Combination - iDisplay Acquisition” for more details on the iDisplay Acquisition).

We have determined that iDisplay does not qualify as a VIE and Corsair has a controlling financial interest in iDisplay under the VOE model and therefore, iDisplay is fully consolidated with Corsair with effect from January 1, 2022.

Use of Estimates

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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).

These estimates and assumptions are based on management’s best estimates and judgment.

Management evaluates its estimates and assumptions on an ongoing basis using historical experience and other factors, including the current economic environment.

We adjust such estimates and assumptions when facts and circumstances dictate.

As future events and their effects cannot be determined with precision, actual results could differ significantly from these estimates.

Risks and Uncertainties related to the COVID-19 Pandemic

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

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 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.

As of December 31, 2022, the impact to our business from the changing macroeconomic factors continued to unfold.

We continue to assess and evaluate impacts from the events in Ukraine, inflationary concerns and, certain supply chain disruptions, as well as the impacts of COVID-19 pandemic that remain uncertain and cannot be predicted.

As a result, many of our estimates and assumptions required increased judgment and may carry a higher degree of variability and volatility.

As events continue to evolve and additional information becomes available, our estimates may change in future periods.

Management bases its estimates on historical experience and on various other assumptions that it believes to be reasonable under the circumstances.

Management believes that the accounting estimates employed and the resulting amounts are reasonable;

however, actual results may differ from these estimates.

Making estimates and judgments about future events is inherently unpredictable and is subject to significant uncertainties, some of which are beyond our control.

Should any of these estimates and assumptions change or prove to have been incorrect, it could have a material impact on our results of operations, financial position and cash flows.

Revenue Recognition

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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.

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 rebates, product returns and price protection.

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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 recorded when cash payments are received or due in advance of performance, primarily for our webstore sales and extended warranty subscriptions.

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

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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, 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.

Gamer and Creator Peripherals .

Includes our high-performance gaming keyboards, mice, headsets, controllers, and 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 .

Our CODM is determined to be Corsair’s Chief Executive Officer.

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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.

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.

On September 29, 2022, one of our fully consolidated subsidiaries entered into an accounts receivable factoring agreement (“Factoring Agreement ” ) with a third-party financial institution (“Factor ” ).

Pursuant to the terms of the arrangement, we sell certain of our customer receivables on a non-recourse basis to the Factor.

Proceeds from factoring the accounts receivable are due upon collection of payments from the customers, but upon our request, the Factor may, at their sole discretion, remit a portion of the proceeds to us prior to their collection of payments from the customers.

Our obligations to the Factor, related to advances from the Factor, are secured by certain assets of our subsidiary.

Transactions under this agreement are accounted for as sales of accounts receivable, and the receivables sold are removed from the consolidated balance sheet at the time of the sales transaction.

We classify proceeds received from the sales of accounts receivable as an operating cash flow in the consolidated statement of cash flows.

We record the factoring fees in selling, general and administrative expenses in our consolidated statement of operations.

In the year ended December 31, 2022, we sold receivables and received cash proceeds of $ 175.1 million and $ 83.4 million, respectively.

The factoring fees incurred in the year ended December 31, 2022 totaled $ 0.5 million .

As of December 31, 2022, t he amount due from the Factor was $ 91.0 million , or 38.6 % of our accounts receivable, net balance, and there was one other customer with more than 10% of our accounts receivable, net balance.

Two customers represented 10% or more of our accounts receivable, net balance as of December 31, 2021.

Concentration of Credit Risk

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One customer accounted for more than 10 % of our consolidated net revenue for the years ended December 31, 2022, 2021 and 2020.

As of December 31, 2021, and 2020, two customers each represented more than 10 % of our accounts receivable, net.

Inventories primarily consist of finished goods and to a lesser extent component parts, which are purchased from contract manufacturers and component suppliers.

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We may be required to write down the value of inventory if estimates of future demand and market conditions indicate estimated excess or obsolete inventory.

For the periods presented, we have not experienced significant write-downs.

We recognized inventory impairment related charges of $ 25.5 million and $ 7.9 million for the years ended December 31, 2022, and 2021, respectively.

The increase in inventory impairment related charges in the year ended December 31, 2022 was primarily due to the buildup of excess inventory in the distribution channels as the demand from our customers was negatively impacted in 2022, primarily due to unfavorable macroeconomic conditions and also because more entertainment options have become available as a result of the easing of COVID-19 shelter-in-place restrictions.

Property and Equipment, net

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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, 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.

For the 2022 annual goodwill impairment test, we bypassed the qualitative assessment and performed a quantitative assessment in accordance with our policy and concluded that goodwill was not impaired.

For the 2022 annual impairment test for our indefinite-lived intangible assets, we performed a qualitative assessment and determined that an impairment was not more likely than not and no further analysis was required.

We have not recorded any impairment charges related to goodwill or indefinite-lived intangible assets for any prior periods.

Intangible Assets with finite-lives and Long-Lived Assets

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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.

Our long-lived assets are primarily comprised of operating lease ROU assets , property and equipment and capitalized implementation costs of cloud computing arrangements .

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.

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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.

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.

In connection with such nonmonetary transactions with our manufacturers, as of December 31, 2022, we recognized $ 1.0 million prepaid inventory and $ 1.3 million accrued liabilities, and as of December 31, 2021, we recognized $ 5.0 million prepaid inventory and $ 5.4 million 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.

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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).

Noncontrolling Interest

We have included both redeemable noncontrolling interest and noncontrolling interest in our consolidated balance sheet in connection with our consolidation of the 51 % ownership of iDisplay .

Redeemable noncontrolling interest that are redeemable and not solely within our control are classified within temporary equity in the consolidated balance sheets.

Redeemable noncontrolling interest are measured at the greater of the redemption value (calculated based on the formula stipulated in the Shareholders Agreement between the iDisplay seller and Corsair and including the amounts for dividends not currently declared or paid, for which the payment is not solely within our control), or the carrying value before giving effect to the redemption feature.

The redeemable noncontrolling interest are recorded at their maximum redemption value at each reporting date.

The redemption value is remeasured each quarter and changes in the value are recognized immediately.

Any resulting change in the value of the redeemable noncontrolling interest is recognized through retained earnings and this adjustment also impacts the net income or loss attributable to common stockholders of Corsair Gaming, Inc used in the net income (loss) per share calculation.

(See Note 12 “Net Income (Loss) Per Share” and Note 17 “Redeemable Noncontrolling Interest” for more information).

In addition, we have noncontrolling interest recorded at carrying value which do not have redemption features and are classified within permanent equity in our consolidated balance sheet.

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

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Recently Adopted Accounting Pronouncements

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.

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.

We adopted this standard effective January 1, 2022 .

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

In October 2021, the FASB issued ASU No.

2021-08, Business Combinations (Topic 805), which requires contract assets and contract liabilities (i.e., deferred revenue) acquired in a business combination to be recognized and measured by the acquirer on the acquisition date in accordance with ASC 606, Revenue from Contracts with Customers.

Generally, this new guidance will result in the acquirer recognizing contract assets and contract liabilities at the same amounts recorded by the acquiree.

Historically, such amounts were recognized by the acquirer at fair value in acquisition accounting.

We adopted this standard effective January 1, 2022 .

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 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

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December 31, 2022

Contingent cash consideration in connection with a

business acquisition—SCUF (2)

Deferred cash consideration in connection with a business acquisition—SCUF (1)

Foreign currency forward contracts (2)

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December 31, 2021

Contingent cash consideration in connection with a

business acquisition—Origin (3)

Contingent consideration in connection with a

business acquisition—SCUF (2)

Deferred cash consideration in connection with a

business acquisition—Origin (3)

Deferred cash consideration in connection with a business acquisition—SCUF (1)

Foreign currency forward contracts (2)

Total liabilities

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.

In December 2019, one of our subsidiaries entered into an Agreement and Plan of Merger with Scuf Holdings, Inc.

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

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, and these estimates represent a level 3 fair value measurement .

The $ 1.3 million liability as of December 31, 2021 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.

In March 2022, we paid the $ 0.3 million contractual amount, and the contingency around the remaining $ 1.0 million liability was finalized in the fourth quarter of 2022 and this amount is expected to be paid in the first quarter of 2023 .

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

Derivative Financial Instruments

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

The foreign currency forward contracts generally mature within three to four months .

The foreign currency forward contracts generally mature within two to four months .

The notional principal amount of outstanding foreign exchange forward contracts was $ 23.4 million and $ 48.6 million as of December 31, 2022 and December 31, 2021, respectively.

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Business Combinations

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.

iDisplay Acquisition

On January 1, 2022, we completed the acquisition of a 51 % ownership stake in iDisplay (the “iDisplay Acquisition”), a leader in electronic development and design specializing in display technology, headquartered in Taiwan.

The fair value consideration for iDisplay was $ 36.4 million, including $ 21.9 million in cash and the issuance of 690,333 shares of our common stock with a fair value of $ 14.5 million at Closing Date.

The consideration was reduced for the effective 51 % settlement of a pre-existing contractual accounts payable balance owed to iDisplay of $ 3.5 million.

The iDisplay Acquisition will

allow us to direct the development and integration of iDisplay’s display-based touch-screen technologies into our products for creators, gamers and streamers.

iDisplay’s results of operations are fully consolidated with Corsair with effect from January 1, 2022.

The seller of iDisplay (the “iDisplay Seller”) has retained 49 % noncontrolling interest in iDisplay.

Under the Shareholders Agreement between Corsair and the iDisplay Seller, a put option was provided to the iDisplay Seller and a call option was provided to Corsair for the option to transfer (i) 14 % ownership interest in iDisplay to Corsair upon the first anniversary of the Closing and (ii) an additional 15 % of ownership interest in iDisplay to Corsair upon the second anniversary of the Closing.

Both put and call options expire on January 1, 2025 .

The exercise price of the put option and the call option is based on multiples of iDisplay’s trailing twelve-month earnings before interest, income tax, depreciation and amortization (“TTM EBITDA”) less any debt.

The 29 % noncontrolling interest subject to the put option is considered a redeemable noncontrolling interest.

See Note 2, “Summary of Significant Accounting Policies – Noncontrolling Interest” and Note 17, “Redeemable Noncontrolling Interest” for more information regarding the redeemable noncontrolling interest.

The fair value of the 49 % noncontrolling interest was estimated to be $ 29.6 million.

The control premium was based on an analysis considering similar market transactions involving control premiums, as well as factors specific to iDisplay, including its significant customer concentration.

Subsequent to the iDisplay Acquisition Closing Date, we recorded measurement period adjustments which increased goodwill by $ 1.0 million and decreased identifiable intangible assets and deferred liabilities by $ 1.1 million and $ 0.1 million, respectively.

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

Accounts receivable

Prepaid and other assets

Operating lease right-of-use asset

Property and equipment

Identifiable intangible assets

Total assets acquired

Accounts payable

Deferred tax liabilities

Accrued liabilities

Operating lease liabilities

Total liabilities assumed

Net assets acquired

Noncontrolling interest

Fair value of consideration transferred

Purchase consideration:

Corsair common stock

Fair value of consideration transferred

The fair value of certain working capital related items, including accounts receivable, prepaid and other assets, accounts payable and accrued liabilities, as well as the fair value of property and equipment approximated their book values at the date of the iDisplay Acquisition.

The fair value of the inventories was estimated by major category, at net realizable value, which we believe approximates the price a market participant could achieve in a current sale.

The difference between the fair value of the inventories and the book value recorded by iDisplay on the acquisition date was $ 0.3 million, which was recognized in cost of revenue in the consolidated statements of operations upon the sale of the acquired inventory.

The goodwill recognized for the iDisplay Acquisition, which is the excess of the purchase consideration over the fair value of the identifiable intangible assets and the net tangible assets and liabilities acquired, has been estimated to be $ 33.0 million, of which $ 29.3 million and $ 3.7 million are assigned to our gamer and creator peripherals reporting unit and gaming component and systems reporting unit, respectively.

We believe goodwill represents the strengthening of our supply chain with display-based touch-screen

technologies into our products for creators, gamers and streamers, and the ability to design and generate new technologies to enhance the features of our products.

A portion of the identifiable intangible assets are not deductible for tax purposes for which a $ 4.6 million deferred tax liability has been estimated at the date of acquisition for the difference between the book and tax bases of these assets.

The goodwill is not deductible for tax purposes.

Valuation of identified intangible assets

The following table summarizes the valuation of the identifiable intangible assets acquired in the iDisplay Acquisition and the estimate of their respective useful lives as of the Closing Date, including subsequent measurement period adjustments:

(In thousands)

Patent portfolio

Supplier relationships

Developed technology

Total identifiable intangible assets

The fair value of patent portfolio was estimated using the relief from royalty approach and the economic useful life was determined based on the average product life cycle of the products manufactured by iDisplay.

The supplier relationships intangible asset represents the value assigned to the relationship iDisplay had established over the years with a broad network of suppliers and OEMs that have been crucial to the quality and magnitude of iDisplay manufacturing capability.

The fair value of supplier relationships was estimated using the multi-period excess earnings approach and the economic useful life was determined to be aligned with the estimated useful life of the developed technology acquired from iDisplay.

The developed technology intangible asset represents unpatented propriety technologies, such as hardware designs and architectures and process technologies used in the on-going research and design of the products manufactured by iDisplay.

The fair value of developed technology was estimated using the income approach and the economic useful life was based on the technology cycle of the products manufactured, as well as the cash flows anticipated over the forecasted periods.

The valuations of the intangible assets were calculated with the assistance of a third-party valuation firm.

The fair values of these intangibles were valued based on long-term cash flow projections, which we consider to be Level 3 inputs.

These intangibles 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.

Amortization of patent portfolio and supplier relationships is included in cost of revenue and amortization of developed technology is included in product development expense in our consolidated statements of operations.

Acquisition-related costs

We incurred acquisition-related costs of approximately $ 0.5 million and $ 0.6 million for the year ended December 31, 2022 and 2021, respectively.

These costs are recorded in sales, general and administrative expenses in the consolidated statement of operations.

Unaudited Pro-forma Financial Information

Pro forma financial information is not included because the effects of the acquisition are not material to our consolidated statements of operations for 2021.

Goodwill and Intangible Assets

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Non-competition agreements

Supplier relationship

Total finite-life intangibles

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Accounts receivable

Allowance for credit losses

Due from Factor

Allowance for doubtful accounts

Accounts receivable, net

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Accrued reserves for sales returns

Accrued payroll and related expenses

Accrued freight expenses

Operating lease liabilities, current

Accrued payroll and related expenses

Contract liabilities

Income tax payable

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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 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 %.

The Revolver initially bore 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 3.5 %, or (b) the greater of (i) LIBOR and (ii) 1.0 %, plus a margin of 4.5 %.

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.

debt maturing within one year, net

Long-term debt, net

First and Second Lien Credit and Guaranty Agreement (Extinguished in 2021 and 2020, respectively)

In August 2017, we entered into a syndicated First Lien Credit and Guaranty Agreement (“First Lien”) with various financial institutions, initially providing a $ 235 million term loan (“First Lien Term Loan”) with a maturity date of August 28, 2024 , and a $ 50 million revolving line-of-credit (“Revolver”) with a maturity date of August 28, 2022 .

Subsequently, we entered into several amendments to the First Lien and the principal amount of the First Lien was increased by $ 240 million, in aggregate, primarily to fund various business acquisitions and operational needs.

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.

Further we made voluntary prepayments of $ 80.8 million in 2020 and $ 78.3 million in 2021 through September 2021, without paying any premium or penalty.

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.

The Second Lien Term Loan initially carried interest at a base rate equal to that of the First Lien loan, plus a margin of 7.25 % for base rate loans and 8.25 % for Eurodollar loans.

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 %.

In August 2017, we also entered into a syndicated Second Lien Credit and Guaranty Agreement (“Second Lien”) with various financial institutions, initially providing a $ 65 million term loan (“Second Lien Term Loan”), with a maturity date of August 28, 2025 .

Subsequently, we entered into an amendment to the Second Lien reducing the principal amount to $ 50 million.

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 First Lien Term Loan and Revolver carried interest at a rate equal to our election (as defined in the First Lien) plus a margin ranging from 2.75 % to 3.25 % for base rate loans and ranging from 3.75 % to 4.25 % for Eurodollar loans, based on our net leverage ratio.

The Second Lien Term Loan carried interest at a base rate equal to that of the First Lien, plus a margin of 7.50 % for base rate loans and 8.50 % for Eurodollar loans.

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.

In connection with the prepayments of the First and Second Lien Term Loan in 2020 and 2021, we have recorded losses on extinguishment of debt of $ 4.9 million and $ 4.1 million for the 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 .

On September 3, 2021, we entered into a 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.

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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.

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 Term Loan and Revolving Facility under the Credit Agreement initially carried interest at the Company’s election at 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.

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.

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

On June 30, 2022, we entered into a First Amendment of the Credit Agreement (“First Amendment”), which among other changes resulted in the Bloomberg Short-Term Bank Yield Index rate (“BSBY”) being utilized as a replacement rate for LIBOR.

Consequently, following the First Amendment, the Term Loan and Revolving Facility will each bear interest at the Company’s election at either (a) BSBY plus a percentage spread (ranging from 1.25 % to 2.25 %) based on our total net leverage ratio, or (b) the base rate (as 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 BSBY plus 1.0 %) plus a percentage spread (ranging from 0.25 % to 1.25 %) based on our total net leverage ratio.

In addition, pursuant to the First Amendment, the maximum permitted Consolidated Total Net Leverage Ratio (as defined in the Credit Agreement) was also amended to increase to 3.50 to 1.0 between the quarters ending September 30, 2022 through and including March 31, 2023, and such ratio will revert to 3.00 to 1.00 from the quarter ended June 30, 2023 and each quarter thereafter, provided that, upon the occurrence of a Qualified Acquisition (as defined in the Credit Agreement), such ratio can be increased to 3.50 to 1.0 temporarily provided all the requirements set forth in the Credit Agreement are met.

On September 29, 2022, we entered into an accounts receivable Factoring Agreement with a Factor.

See Note 7 “Balance Sheet Components – Accounts Receivable, Net” for additional information on the Factoring Agreement.

In connection with the Factoring Agreement, we also entered into (i) a Second Amendment (“Second Amendment”) to the Credit Agreement to permit the transactions contemplated by the Factoring Agreement and (ii) an Assignment of Factoring Proceeds and Intercreditor Agreement with the Factor and the administrative agent under the Credit Agreement to establish the respective rights of the Factor and the Credit Agreement Agent in and to the related factoring collateral.

On November 28, 2022, we entered into a Third Amendment ( “Third Amendment”) to the Credit Agreement which provides for, among other things, (i) a decrease in the required minimum Consolidated Interest Coverage Ratio (as defined in the Credit Agreement) to 2.50 to 1.00 for the quarters ending on and after March 31, 2023 through and including December 31, 2023, (ii) an increase in the maximum permitted Consolidated Total Net Leverage Ratio (as defined in the Credit Agreement) to 3.75 to 1.00 for the quarters ending December 31, 2022 and March 31, 2023, stepping down to 3.50 to 1.00 for the quarter ending June 30, 2023, and 3.25 to 1.00 for the quarters ending September 30, 2023 and December 31, 2023, and (iii) a modified pricing grid providing for an increased margin (ranging from (x) 1.50 % per annum to 3.25 % per annum for loans bearing interest at the Bloomberg Short-Term Bank Yield (“BSBY”) rate, and (y) 0.50 % per annum to 2.25 % per annum for loans bearing interest at the base rate, in each case

depending on the Company’s Consolidated Total Net Leverage Ratio) for the period of December 31, 2022 through December 31, 2023.

The First, Second and Third Amendment were all accounted for as debt modifications.

As of December 31, 2022, we had no outstanding balance under the Revolving Facility.

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The estimated fair value of our Term Loan as of December 31, 2022, which we have classified as a Level 2 financial instrument, was approximately $ 241.5 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):

The effective interest rate inclusive of the debt discount and debt issuance costs for the Term Loan was approximately 3.3 % and 1.4 % for the years ended December 31, 2022 and 2021, respectively.

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

Year Ended December 31,

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Amortization of debt discount and issuance cost

Total interest expense recognized

Interest income

Total interest expense, net

The estimated future principal payments under our total long-term debt as of December 31, 2022 are as follows (in thousands):

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Letters of Credit

The letters of credit outstanding, in aggregate, was $ 0.5 million and $ 2.0 million as of December 31, 2021 and 2020, respectively.

The letters of credit outstanding, in aggregate, was nil and $ 0.5 million as of December 31, 2022 and 2021, respectively.

No amounts have been drawn upon the letters of credit for all periods presented.

Legal Proceedings

We may from time to time be involved in various claims and legal proceedings of a character normally incident to the ordinary course of business.

Litigation can be expensive and disruptive to normal business operations, and the results of complex legal proceedings are difficult to predict, and our view of these matters may change in the future as the litigation and events related thereto unfold.

We expense legal fees as incurred and we record a provision for contingent losses when it is both probable that a liability has been incurred and the amount of the loss can be reasonably estimated.

Based on currently available information, we believe there are no existing claims or proceedings that are likely to have a material adverse effect on our financial position, or the outcome of these matters is currently not determinable.

An unfavorable outcome to any legal matter, if material, could have an adverse effect on our operations or financial position, liquidity of results of operations.

Indemnification

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There were no shares of preferred stock outstanding as of December 31, 2022 and 2021.

Shelf-Registration Statement

On July 22, 2022, we filed a shelf registration statement on Form S-3 with the SEC, which was declared effective August 1, 2022 (the “2022 Shelf Registration Statement”).

The 2022 Shelf Registration Statement registered securities to be offered by us, in an amount up to $ 300.0 million, including common stock, preferred stock and warrants.

In addition, the 2022 Shelf Registration Statement registered 54,179,559 shares of common stock held by the selling securityholders named in the 2022 Shelf Registration Statement.

We will not receive any of the proceeds from the sale of the shares registered by the selling securityholders.

In November 2022, we issued 4,545,455 shares of common stock at a price of $ 16.50 per share in a registered underwritten public offering pursuant to the 2022 Shelf Registration Statement.

Following the partial exercise in December 2022 by the underwriters of their option to purchase additional shares, we issued an additional 500,000 shares.

The total proceeds from the underwritten public offering, net of underwriting discounts, commission and offering expenses, were approximately $ 81.0 million.

Equity Incentive Plans and Stock-Based Compensation

Equity Incentive Plans

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 ”).

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

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

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

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Incentive stock options may be granted only to employees.

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

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

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.

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.

According to the provisions in the 2020 Plan, in March 2021 and May 2022, our Board approved an annual increase in the shares of common stock reserved for issuance by 3,677,385 shares and 3,780,412 shares, respectively.

As of December 31, 2022, there were 8,509,813 shares reserved for future issuance under 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.

RSUs have no exercise price.

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.

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

Stock options expire ten years from date of grant.

Employee Stock Purchase Plan

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

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

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.

According to the provisions in the ESPP, in March 2021 and May 2022, our Board approved an annual increase in the shares of common stock reserved for issuance by 919,346 shares and 945,103 shares, respectively.

The ESPP is offered twice a year with periods beginning on January 1st and July 1st.

As of December 31, 2022, there were 2,405,734 shares reserved for future issuance under the ESPP.

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The weighted-average grant date fair value per share for RSUs granted in years ended December 31, 2022, 2021 and 2020 was $ 18.63 , $ 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.

The total fair value of RSUs vested in the years ended December 31, 2022 and 2021 was $ 4.5 million, $ 1.4 million and $ 0.1 million, respectively.

Stock-based Compensation

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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.

Income tax benefits (expense) related to stock-based compensation expense

Total stock-based compensation expense capitalized in assets 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):

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1.67% - 2.93%

0.05% - 1.34%

0.27% - 1.80%

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:

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38.7% - 54.5%

43.2% - 45.1%

Dividend yield

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0.19% - 2.52%

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.

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Net income (loss)

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

Net income attributable to noncontrolling interest

Net income (loss) attributable to Corsair Gaming, Inc.

Change in redemption value of redeemable noncontrolling interest

Net income (loss) attributable to common stockholders of Corsair Gaming, Inc.

Basic weighted-average shares outstanding

Effect of dilutive securities

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

Net income (loss) per share:

Total diluted weighted-average shares outstanding

Net income (loss) per share attributable to common stockholders of Corsair Gaming, inc.

Anti-dilutive potential common shares (1)

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

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

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

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Income (loss) before income tax

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

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

Year Ended December 31,

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Foreign taxes:

Income tax (expense) benefit

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):

Income tax benefit (expense)

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

Year Ended December 31,

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Research and development credits

Net operating loss

Tax impact from entity dissolution

Change in valuation allowance

Change in tax rate on deferred tax assets

Income tax (expense) benefit

Income tax benefit (expense)

The major drivers for the change in tax benefit (expense) in 2022 were the decrease in excess tax benefits from stock-based compensation because of a lower volume of options exercised by employees due to the decline in our stock price in 2022, and the change in the mix of income and losses in the various tax jurisdictions in which we operate.

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

statutory rate.

We were not subject to any tax holidays or tax holiday terminations subject to disclosure during these periods that impacted earnings per share.

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.

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statutory rate.

We were not subject to any tax holidays or tax holiday terminations subject to disclosure during these periods that impacted loss per share.

Deferred tax assets and liabilities comprise the following:

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Total deferred tax assets

Less valuation allowance

Valuation allowance

Deferred tax liabilities:

Intangible assets

Net deferred tax liabilities

Net deferred tax assets (liabilities)

We have established a valuation allowance of $ 1.3 million and $ 4.0 million as of December 31, 2022 and 2021, respectively, against our net deferred tax assets.

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Due to the anticipated future taxable income under the GILTI regime, we have released most of our valuation allowance except on $ 1.3 million of foreign tax credit carryovers for U.S.

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

federal purposes.

As of December 31, 2022, we had net operating loss carry forwards for federal, state and foreign tax purposes of $ 2.3 million, $ 28.2 million, and $ 33.0 million, respectively.

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federal government, various U.S.

states and foreign jurisdictions including China, France, Germany, Hong Kong, Luxembourg, Netherlands, Slovenia, Taiwan, United Kingdom and Vietnam.

states and foreign jurisdictions including Canada, China, France, Germany, Hong Kong, Japan, Luxembourg, Netherlands, Singapore, Slovenia, Taiwan, United Kingdom and Vietnam.

Our tax returns in the U.S., various U.S.

states and foreign jurisdictions remain open to examination from 2013 to 2021 .

Accumulated Other Comprehensive Income (Loss)

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

Accumulated foreign currency translation gain

Accumulated Other Comprehensive Loss

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

Accumulated foreign currency translation gain (loss), net of tax

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

Total Accumulated Other Comprehensive Income (Loss)

Total accumulated other comprehensive loss

Accumulated other comprehensive loss attributable to noncontrolling interest

Total accumulated other comprehensive loss attributable to Corsair Gaming, Inc.

Segment and Geographic Information

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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):

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

United States

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Present value of operating lease liabilities

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 .

Redeemable Noncontrolling Interest (“RNCI”)

Under the Shareholders Agreement between Corsair and the iDisplay Seller a put option was provided to the iDisplay Seller to transfer to Corsair (i) 14 % of their ownership interest in iDisplay upon the first anniversary of the Closing Date of the iDisplay Acquisition, and (ii) an additional 15 % of their ownership interest in iDisplay upon the second anniversary of the Closing Date.

The put option will expire after January 1, 2025 .

The exercise price of the put option is based on multiples of iDisplay’s historical TTM EBITDA less any debt.

The put option makes this portion of the noncontrolling interest redeemable and therefore, the RNCI are classified as temporary equity on our consolidated balance sheets and carried at the greater of the initial carrying amount, increased or decreased, for the RNCI share of comprehensive income (loss), contributions and distributions, or the redemption value.

The change in redemption value is recognized through retained earnings .

As of the Closing Date of the iDisplay Acquisition, the fair value of the total 49 % noncontrolling interest in iDisplay was estimated to be $ 29.6 million, of which $ 17.5 million is attributable to the 29 % RNCI and classified within temporary equity and $ 12.1 million is attributable to the 20 % noncontrolling interest classified within permanent equity on our consolidated balance sheets .

The following table presents the changes in RNCI for the period presented (in thousands):

Year Ended December 31, 2022

Balance at beginning of period

Initial carrying amount estimated at iDisplay's Closing Date

Share of net income

Share of other comprehensive loss

Dividend paid

Change in redemption value (1)

Balance at end of period

This amount represents a $ 6.5 million increase in redemption value over the carrying value for the year ended December 31, 2022.

This amount was recorded as an offset to retained earnings and increased the net loss attributable to common stockholders of Corsair Gaming, Inc.

used in the calculation of net loss per share for this period.

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