What changed in this filing

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Item 1. Financial Statements

2022-08-08 compared with 2022-05-04 · 143 added, 94 removed, 334 unchanged (42% of the section changed)

3 unchanged sentences

Three Months Ended

Six Months Ended

(in thousands, except per-share data)

17 unchanged sentences

Three Months Ended

Six Months Ended

(in thousands)

6 unchanged sentences

Turtle Beach Corporation

Condensed Consolidated Balance Sheets

Condensed Consolida ted Balance Sheets

(in thousands, except par value and share amounts)

7 unchanged sentences

Intangible assets, net

LIABILITIES AND STOCKHOLDERS’ EQUITY

LIABILITIES AND STOCKHOLDERS’

Current Liabilities:

7 unchanged sentences

Commitments and Contingencies

Stockholders’ Equity

Stockholders’

Common stock, $ 0.001 par value - 25,000,000 shares authorized;

16,244,625 and 16,168,147 shares issued and outstanding as of March 31, 2022 and December 31, 2021, respectively

16,526,393 and 16,168,147 shares issued and outstanding as of June 30, 2022 and December 31, 2021, respectively

Additional paid-in capital

1 unchanged sentence

Accumulated other comprehensive income (loss)

Total Stockholders’ Equity

Total Liabilities and Stockholders’ Equity

Total Stockholders’

Total Liabilities and Stockholders’

See accompanying Notes to the Condensed Consolidated Financial Statements (unaudited)

Turtle Beach Corporation

Condensed Consolidated Statements of Cash Flows

Three Months Ended

March 31, 2022

March 31, 2021

Condensed Consolidated S tatements of Cash Flows

Six Months Ended

June 30, 2022

June 30, 2021

(in thousands)

32 unchanged sentences

Cash paid for interest

Cash paid for income taxes

Cash paid (received) for income taxes

See accompanying Notes to the Condensed Consolidated Financial Statements (unaudited)

Turtle Beach Corporation

Condensed Consolidated Statement of Stockholders ’ Equity (Deficit)

Condensed Consolidated Statement o f Stockholders ’

Equity (Deficit)

Comprehensive

7 unchanged sentences

Balance at March 31, 2022

Other comprehensive loss, net of tax

Issuance of restricted stock

Stock options exercised

Stock-based compensation

Balance at June 30, 2022

Comprehensive

8 unchanged sentences

Balance at March 31, 2021

Other comprehensive income, net of tax

Issuance of restricted stock

Repurchase of common stock and retirement of related treasury shares

Stock options exercised

Stock-based compensation

Balance at June 30, 2021

See accompanying Notes to the Condensed Consolidated Financial Statements (unaudited)

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Background and Basis of Presentation

Turtle Beach Corporation (“Turtle Beach” or the “Company”), headquartered in White Plains, New York and incorporated in the state of Nevada in 2010, is a premier audio and gaming technology company with expertise and experience in developing, commercializing and marketing innovative products across a range of large addressable markets under the Turtle Beach®, ROCCAT® and Neat Microphones® brands.

Turtle Beach is a worldwide leader of feature-rich headset solutions for use across multiple platforms, including video game and entertainment consoles, handheld consoles, personal computers (“PC”), tablets and mobile devices.

Turtle Beach Corporation (“Turtle Beach”

or the “Company”), headquartered in White Plains, New York and incorporated in the state of Nevada in 2010, is a premier audio and gaming technology company with expertise and experience in developing, commercializing and marketing innovative products across a range of large addressable markets under the Turtle Beach®, ROCCAT® and Neat Microphones® brands.

ROCCAT is a gaming keyboards, mice and other accessories brand focused on the PC peripherals market.

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VTB Holdings, Inc.

(“VTBH”), a wholly-owned subsidiary of Turtle Beach Corporation and the owner of Voyetra Turtle Beach, Inc.

(“VTB”), was incorporated in the state of Delaware in 2010.

VTB, the owner of Turtle Beach Europe Limited (“TB Europe”), was incorporated in the state of Delaware in 1975 with operations principally located in White Plains, New York.

(“VTBH”), a wholly-owned subsidiary of Turtle Beach Corporation and the owner of Voyetra Turtle Beach, Inc.

(“VTB”), was incorporated in the state of Delaware in 2010.

VTB, the owner of Turtle Beach Europe Limited (“TB Europe”), was incorporated in the state of Delaware in 1975 with operations principally located in White Plains, New York.

Basis of Presentation

The accompanying interim condensed consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) and, in the opinion of management, reflect all adjustments (which include normal recurring adjustments) considered necessary for a fair presentation of the financial position, results of operations, and cash flows for the periods presented.

All intercompany accounts and transactions have been eliminated in consolidation.

Certain information and footnote disclosures, normally included in annual financial statements prepared in accordance with U.S.

generally accepted accounting principles (“GAAP”), have been condensed or omitted pursuant to those rules and regulations.

The Company believes that the disclosures made are adequate to make the information presented not misleading.

The results of operations for the interim periods are not necessarily indicative of the results of operations for the entire fiscal year.

The December 31, 2021 Condensed Consolidated Balance Sheet has been derived from the Company’s audited financial statements included in its Annual Report on Form 10-K filed with the SEC on March 2, 2022 (“Annual Report”).

These financial statements should be read in conjunction with the annual financial statements and the notes thereto included in the Annual Report that contains information useful to understanding the Company’s businesses and financial statement presentations.

Use of estimates :

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Future actual results could differ materially from these estimates.

The novel coronavirus (“COVID-19”) pandemic has disrupted worldwide economic markets and the extent to which COVID-19 continues to affect the Company’s business, results of operations and financial condition will depend on future developments, which are highly uncertain and difficult to predict.

We continue to actively monitor and assess the impact of the pandemic on our business, operations, and financial condition.

Summary of Significant Accounting Policies

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

GAAP requires management to make estimates and assumptions that affect the reported amount of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the Company’s consolidated financial statements, and the reported amounts of revenue and expenses during the reporting periods.

The preparation of consolidated annual and quarterly financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amount of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the Company’s consolidated financial statements, and the reported amounts of revenue and expenses during the reporting periods.

The Company can give no assurance that actual results will not differ from those estimates.

There have been no material changes to the critical accounting policies and estimates from the information provided in Note 1 of the notes to our consolidated financial statements in our Annual Report.

There have been no material changes to the significant accounting policies and estimates from the information provided in Note 1 of the notes to our consolidated financial statements in our Annual Report.

Fair Value Measurement

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The three levels of inputs used to measure fair value are as follows:

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

Level 2 — Observable inputs other than quoted prices included in Level 1, such as quoted prices for markets that are not active, or other inputs that are observable or can be corroborated by observable market data.

Level 3 — Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

Level 1 —

Quoted prices in active markets for identical assets or liabilities.

Level 2 —

Observable inputs other than quoted prices included in Level 1, such as quoted prices for markets that are not active, or other inputs that are observable or can be corroborated by observable market data.

Level 3 —

Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

This includes certain pricing models, discounted cash flow methodologies and similar techniques that use significant unobservable inputs.

Financial instruments consist of cash and cash equivalents, accounts receivable, accounts payable, debt instruments and certain warrants.

As of March 31, 2022 and December 31, 2021, the Company had not elected the fair value option for any financial assets and liabilities for which such an election would have been permitted .

The following is a summary of the carrying amounts and estimated fair values of our financial instruments as of March 31, 2022 and December 31, 2021 .

March 31, 2022

As of June 30, 2022 and December 31, 2021 , the Company had not elected the fair value option for any financial assets and liabilities for which such an election would have been permitted.

The following is a summary of the carrying amounts and estimated fair values of our financial instruments as of June 30, 2022 and December 31, 2021.

June 30, 2022

December 31, 2021

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Cash and cash equivalents

Revolving credit facility

Cash equivalents are stated at amortized cost, which approximates fair value as of the consolidated balance sheet dates, due to the short period of time to maturity;

and accounts receivable and accounts payable are stated at their carrying value, which approximates fair value due to the short time to the expected receipt or payment.

The carrying value of the Credit Facility equals fair value as the stated interest rate approximates market rates currently available to the Company, which is considered a Level 2 input.

Allowance for Sales Returns

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Three Months Ended

Six Months Ended

(in thousands)

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(in thousands)

Accrued royalty

Accrued legal

Accrued marketing

Accrued employee expenses

Accrued royalty

Accrued freight

Accrued marketing

Accrued expenses

2 unchanged sentences

Acquired Intangible Assets

Acquired identifiable intangible assets, and related accumulated amortization, as of March 31, 2022 and December 31, 2021 consist of:

March 31, 2022

Acquired identifiable intangible assets, and related accumulated amortization, as of June 30, 2022 and December 31, 2021 consist of:

June 30, 2022

(in thousands)

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The respective acquired intangible assets relating to developed technology, customer relationships and trade names are subject to amortization.

Amortization expense related to definite lived intangible assets was $ 0.3 million for each of the three months ended March 31, 2022 and March 31, 2021.

As of March 31, 2022, estimated annual amortization expense related to definite lived intangible assets in future periods is as follows:

Amortization expense related to definite lived intangible assets of $ 0.3 million and $ 0.6 million was recognized for the three and six months ended June 30, 2022, respectively, and $ 0.3 million and $ 0.6 million was recognized for the three and six months ended June 30, 2021, respectively.

As of June 30, 2022, estimated annual amortization expense related to definite lived intangible assets in future periods is as follows:

(in thousands)

There were no changes in the carrying values of goodwill for the three months ended March 31, 2022 from the balance as of December 31, 2021.

There were no changes in the carrying values of goodwill for the three months ended June 30, 2022 from the balance as of December 31, 2021 .

Revolving Credit Facility and Long-Term Debt

The Company had no outstanding balance related to its revolving credit facility as of March 31, 2022 and December 31, 2021.

Total interest expense, inclusive of amortization of deferred financing costs, on long-term debt obligations was $ 0.1 million for each of the three months ended March 31, 2022 and March 31, 2021.

Amortization of deferred financing costs was $ 47,000 for each of the three months ended March 31, 2022 and March 31, 2021.

(in thousands)

Revolving credit facility, maturing March 2024

Total interest expense, inclusive of amortization of deferred financing costs, on long-term debt obligations was $ 0.1 million and $ 0.2 million for the three and six months ended June 30, 2022, respectively, and $ 0.1 million and $ 0.2 million for the three and six months ended June 30, 2021, respectively.

Amortization of deferred financing costs was $ 47 thousand and $ 94 thousand for the three and six months ended June 30, 2022 and $ 47 thousand and $ 95 thousand for the three and six months ended June 30, 2021, respectively.

Revolving Credit Facility

On December 17, 2018, Turtle Beach and certain of its subsidiaries entered into an amended and restated loan, guaranty and security agreement (“Credit Facility”) with Bank of America, N.A.

(“Bank of America”), as Agent, Sole Lead Arranger and Sole Bookrunner, which replaced the then existing asset-based revolving loan agreement.

On December 17, 2018, Turtle Beach and certain of its subsidiaries entered into an amended and restated loan, guaranty and security agreement (“Credit Facility”) with Bank of America, N.A.

(“Bank of America”), as Agent, Sole Lead Arranger and Sole Bookrunner, which replaced the then existing asset-based revolving loan agreement.

The Credit Facility, which expires on March 5, 2024 , provides for a line of credit of up to $ 80 million inclusive of a sub-facility limit of $ 12 million for TB Europe, a wholly-owned subsidiary of Turtle Beach.

In addition, the Credit Facility provides for a $ 40 million accordion feature and the ability to increase the borrowing base with a “first-in, last-out” loan (a “FILO Loan”) of up to $ 6.8 million.

In addition, the Credit Facility provides for a $ 40 million accordion feature and the ability to increase the borrowing base with a “first-in, last-out”

loan (a “FILO Loan”) of up to $ 6.8 million.

On May 31, 2019, the Company amended the Credit Facility to provide for, amongst other items, (i) the addition of TBC Holding Company LLC, a wholly-owned subsidiary of VTB, as an obligor and (ii) the ability to make investments in TB Germany GmbH, a wholly-owned subsidiary of TB Europe, of up to $ 4 million in connection with the acquisition of the business of ROCCAT and up to an additional $ 4 million annually.

1 unchanged sentence

The Credit Facility may be used for working capital, the issuance of bank guarantees, letters of credit and other corporate purposes.

In the second quarter of 2022, the Company accessed the Credit Facility as a result of increased inventory levels driven by global supply chain delays as well as lower retail channel inventory levels.

Amounts outstanding under the Credit Facility bear interest at a rate equal to either a rate published by Bank of America or the LIBOR rate, plus in each case, an applicable margin, which is between 0.50 % to 1.25 % for base rate loans and between 1.25 % to 2.00 % for U.S.

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In addition, Turtle Beach is required to pay a commitment fee on the unused revolving loan commitment at a rate ranging from 0.25 % to 0.50 % and letter of credit fees and agent fees.

As of March 31, 2022, interest rates for outstanding borrowings were 4.00 % for base rate loans and 3.00 % for LIBOR rate loans.

As of March 31, 2022, there were no outstanding borrowings under the Credit Facility.

The Company is subject to quarterly financial covenant testing if certain availability thresholds are not met or certain other events occur (as defined in the Credit Facility).

As of June 30, 2022, interest rates for outstanding borrowings were 5.25 % for base rate loans and 3.00 % for LIBOR rate loans.

The Company and the administrative agent entered into an amendment to the Credit Facility (the "LIBOR Transition Amendment") to replace the LIBOR rate as a reference rate available for use in the computation of interest under the Credit Agreement in favor of (i) the Applicable Rate (as defined in the Credit Facility) plus Sterling Overnight Index Average (“SONIA”) or the Euro Interbank Offered Rate (“EURIBOR”).

The Company expects to enter into an additional agreement to finalize the transition of the U.S.

LIBOR rate prior its expiration on June 30, 2023.

The Company is subject to quarterly financial covenant testing if certain availability thresholds are not met or certain other events occur (as set forth in the Credit Facility).

At such times, the Credit Facility requires the Company and its restricted subsidiaries to maintain a fixed charge coverage ratio of at least 1.00 to 1.00 as of the last day of each fiscal quarter.

The Credit Facility also contains affirmative and negative covenants that, subject to certain exceptions, limit our ability to take certain actions, including the Company’s ability to incur debt, pay dividends and repurchase stock, make certain investments and other payments, enter into certain mergers and consolidations, engage in sale leaseback transactions and transactions with affiliates, and encumber and dispose of assets.

Obligations under the Credit Facility are secured by a security interest and lien upon substantially all of the Company’s assets.

As of March 31, 2022, the Company was in compliance with all financial covenants under the Credit Facility, as amended, and excess borrowing availability was approximately $ 48.7 million.

Obligations under the Credit Facility are secured by a security interest and lien upon substantially all of the Company’s assets.

As of June 30, 2022, the Company was in compliance with all financial covenants under the Credit Facility, as amended, and excess borrowing availability was approximately $ 22.0 million.

In order to determine the quarterly provision for income taxes, the Company uses an estimated annual effective tax rate, which is based on expected annual income and statutory tax rates in the various jurisdictions.

1 unchanged sentence

Certain significant or unusual items are separately recognized as discrete items in the period during which they occur and can be a source of variability in the effective tax rates from quarter to quarter.

The following table presents the Company’s income tax expense and effective income tax rate:

Three Months Ended

Six Months Ended

(in thousands)

1 unchanged sentence

Effective income tax rate

Income tax benefit for the three months ended March 31, 2022 was $ 2.6 million at an effective tax rate of 29.0 % and income tax expense for the three months ended March 31, 2021 was $ 2.8 million at an effective tax rate of 23.8 %.

The effective tax rate for the three months ended March 31, 2022 was primarily impacted by certain non-deductible costs and state income tax expense, offset by the deduction for foreign derived intangible income and stock option exercises.

The Company is subject to income taxes domestically and in various foreign jurisdictions.

Income tax benefit for the three months ended June 30, 2022 was $ 4.7 million at an effective tax rate of 21.0 % and income tax benefit for the six months ended June 30, 2022 was $ 7.4 million at an effective tax rate of 23.3 % .

Income tax benefit for the three months ended June 30, 2021 was $ 1.3 million at an effective tax rate of ( 295.6 %) and income tax expense for the six months ended June 30, 2021 was $ 1.5 million at an effective tax rate of 12.3 % .

The effective tax rate for the three and six months ended June 30, 2022 was primarily impacted by the deduction for stock option exercises, offset by certain non-deductible costs and state income tax expense.

Significant judgment is required in evaluating uncertain tax positions and determining the provision for income taxes.

1 unchanged sentence

Interest and penalties associated with income tax matters are included in the provision for income taxes in the condensed consolidated statements of operations.

As of March 31, 2022, the Company had uncertain tax positions of $ 3.8 million, inclusive of $ 1.1 million of interest and penalties.

As of June 30, 2022, the Company had uncertain tax positions of $ 3.8 million , inclusive of $ 1.1 million of interest and penalties.

The Company has determined that a valuation allowance is not needed against the deferred tax asset as of June 30, 2022, with the exception of net operating losses for certain separate state filings.

This analysis is performed on a quarterly basis and includes an evaluation of all positive and negative evidence to determine whether it is more-likely-than-not that the deferred tax assets will be realizable.

This is based on generating earnings and taxable income in recent years, no tax attributes on hand that are at risk of expiring in the near future nor is there any history of expiring attributes, the cyclical nature of our business, and projections of future taxable income.

In the event that actual results differ from these estimates, the Company may need to modify the level of valuation allowance which could materially impact our business, financial condition and results of operations.

The Company is subject to income taxes domestically and in various foreign jurisdictions.

The Company files U.S., state and foreign income tax returns in jurisdictions with various statutes of limitations.

1 unchanged sentence

Stock-Based Compensation

Total estimated stock-based compensation expense for employees and non-employees, related to all of the Company’s stock-based awards, was as follows:

Three Months Ended

Six Months Ended

(in thousands)

4 unchanged sentences

Total stock-based compensation

The following table presents the stock activity and the total number of shares available for grant as of March 31, 2022:

The following table presents the stock activity and the total number of shares available for grant as of June 30, 2022:

(in thousands)

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Restricted Stock Granted

Forfeited/Expired restricted stock added back

Balance at March 31, 2022

Restricted Stock Forfeited

Performance Shares Unearned

Performance Shares Granted

Balance at June 30, 2022

Stock Option Activity

4 unchanged sentences

Options Forfeited

Outstanding at March 31, 2022

Vested and expected to vest at March 31, 2022

Exercisable at March 31, 2022

Outstanding at June 30, 2022

Vested and expected to vest at June 30, 2022

Exercisable at June 30, 2022

Stock options are time-based and the majority are exercisable within 10 years of the date of grant, but only to the extent they have vested.

6 unchanged sentences

Aggregate intrinsic value represents the difference between the estimated fair value of the underlying common stock and the exercise price of outstanding, in-the-money options.

The aggregate intrinsic value of options exercised was $ 0.5 million for the three months ended March 31, 2022.

The aggregate intrinsic value of options exercised was $ 0.8 million for the six months ended June 30, 2022.

The Company uses the Black-Scholes option-pricing model to estimate the fair value of options granted as of the grant date.

There were no new options granted during the three months ended March 31, 2022.

The total estimated fair value of employee options vested during the three months ended March 31, 2022 was $ 3.1 million.

As of March 31, 2022, total unrecognized compensation cost related to non-vested stock options granted to employees was $ 2.5 million, which is expected to be recognized over a remaining weight average vesting period of 1.8 years.

There were no new options granted during the six months ended June 30, 2022.

The total estimated fair value of employee options vested during the six months ended June 30, 2022 was $ 3.5 million .

As of June 30, 2022, total unrecognized compensation cost related to non-vested stock options granted to employees was $ 2.0 million , which is expected to be recognized over a remaining weighted average vesting period of 1.6 years.

Restricted Stock Activity

1 unchanged sentence

Shares forfeited

Nonvested restricted stock at March 31, 2022

As of March 31, 2022 , total unrecognized compensation cost s related to the nonvested restricted stock awards was $ 10.2 million , which will be recognized over a remaining weighted average vesting period of 2.3 years .

Nonvested restricted stock at June 30, 2022

As of June 30, 2022, total unrecognized compensation costs related to the nonvested restricted stock awards was $ 17.6 million , which will be recognized over a remaining weighted average vesting period of 2.5 years.

Performance-Based Restricted Share Units

As of March 31, 2022, the Company had 134,000 performance-based restricted share units outstanding.

As of June 30, 2022 , the Company had 256,342 performance-based restricted share units outstanding, including 167,000 issued in 2022.

The vesting of performance-based restricted share units is determined over a three-year period based on (i) the amount by which revenue growth exceeds a defined baseline market growth each year and (ii) the achievement of specified tiers of adjusted EBITDA as a percentage of net revenue each year, with the ability to earn and vest into such units ranging from 0 % to 200 %.

In 2021, 37,507 performance-based restricted share units vested related to the Company's achievement of these performance measures.

Net Income (Loss) Per Share

The following table sets forth the computation of basic and diluted net income per share of common stock attributable to common stockholders:

The following table sets forth the computation of basic and diluted net income (loss) per share of common stock attributable to common stockholders:

Three Months Ended

Six Months Ended

(in thousands, except per-share data)

Net income (loss)

Weighted average common shares outstanding — Basic

Weighted average common shares outstanding —

Plus incremental shares from assumed conversions:

2 unchanged sentences

Dilutive effect of warrants

Weighted average common shares outstanding — Diluted

Weighted average common shares outstanding —

Net income (loss) per share:

3 unchanged sentences

Three Months Ended

Six Months Ended

(in thousands)

4 unchanged sentences

Three Months Ended

Six Months Ended

(in thousands)

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The Company is subject to various legal proceedings and claims that arise in the ordinary course of its business.

Although the amount of any liability that could arise with respect to these actions cannot be determined with certainty, in the Company’s opinion, any such liability will not have a material adverse effect on its consolidated financial position, consolidated results of operations or liquidity.

Shareholders Class Action :

On August 5, 2013, VTBH and the Company (f/k/a Parametric Sound Corporation) announced that they had entered into the Merger Agreement pursuant to which VTBH would acquire an approximately 80 % ownership interest and existing shareholders would maintain an approximately 20 % ownership interest in the combined company (the “Merger”).

Following the announcement, several shareholders filed class action lawsuits in California and Nevada seeking to enjoin the Merger.

The plaintiffs in each case alleged that members of the Company’s Board of Directors breached their fiduciary duties to the shareholders by agreeing to a merger that allegedly undervalued the Company.

VTBH and the Company were named as defendants in these lawsuits under the theory that they had aided and abetted the Company’s Board of Directors in allegedly violating their fiduciary duties.

The plaintiffs in both cases sought a preliminary injunction seeking to enjoin closing of the Merger, which, by agreement, was heard by the Nevada court with the California plaintiffs invited to participate.

On December 26, 2013, the court in the Nevada case denied the plaintiffs’ motion for a preliminary injunction.

On December 26, 2013, the court in the Nevada case denied the plaintiffs’

motion for a preliminary injunction.

Following the closing of the Merger, the Nevada plaintiffs filed a second amended complaint, which made essentially the same allegations and sought monetary damages as well as an order rescinding the Merger.

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On June 20, 2014, VTBH and the Company moved to dismiss the action, but that motion was denied on August 28, 2014.

On September 14, 2017, a unanimous en banc panel of the Nevada Supreme Court granted defendants’ petition for writ of mandamus and ordered the trial court to dismiss the complaint but provided a limited basis upon which plaintiffs could seek to amend their complaint.

Plaintiffs amended their complaint on December 1, 2017 to assert the same claims in a derivative capacity on behalf of the Company, as a well as in a direct capacity, against VTBH, Stripes Group, LLC, SG VTB Holdings, LLC, and the former members of the Company’s Board of Directors.

On September 14, 2017, a unanimous en banc panel of the Nevada Supreme Court granted defendants’

petition for writ of mandamus and ordered the trial court to dismiss the complaint but provided a limited basis upon which plaintiffs could seek to amend their complaint.

All defendants moved to dismiss this amended complaint on January 2, 2018, and those motions were denied on March 13, 2018.

Defendants petitioned the Nevada Supreme Court to reverse this ruling on April 18, 2018.

On June 15, 2018, the Nevada Supreme Court denied defendants’ writ petition without prejudice.

On June 15, 2018, the Nevada Supreme Court denied defendants’

writ petition without prejudice.

The district court subsequently entered a pretrial schedule and set trial for November 2019.

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A final hearing was held on May 18, 2020, wherein the Court approved the settlement and entered final judgment.

On May 22, 2020, PAMTP LLC, which purports to hold the claims of eight shareholders who opted out of the class settlement described above, brought suit against the Company, the Company’s CEO, Juergen Stark, Stripes Group, LLC, SG VTB Holdings, LLC, Kenneth Fox, and former members of the Company’s Board of Directors in Nevada state court.

Plantiff has filed a notice of their intent to appeal the judgment.

This opt-out action asserts the same direct claims that were asserted by the class of shareholders described above.

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The case was tried in August 2021 and all defendants, including the Company, prevailed on all counts with final judgment entered in their favor on September 3, 2021.

Plaintiff has filed a notice of their intent to appeal the judgment.

Defendants have pending motions to obtain their costs and fees in successfully defending against the claims, which were heard in December 2021.

Employment Litigation:

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The complaint alleges claims including wrongful termination, retaliation and various other provisions of the California Labor Code.

The complaint seeks unspecified economic and non-economic losses, as well as allegedly unpaid wages, unreimbursed business expenses statutory penalties, interest, punitive damages and attorneys’ fees.

The complaint seeks unspecified economic and non-economic losses, as well as allegedly unpaid wages, unreimbursed business expenses statutory penalties, interest, punitive damages and attorneys’

The Company filed a cross-complaint against the former employee on May 25, 2017 for certain activities related to his employment with the Company.

6 unchanged sentences

On November 24, 2020, ABP Technology Limited (ABP) issued a claim for trademark infringement in the High Court of England and Wales against Voyetra Turtle Beach, Inc.

(“VTB”) and Turtle Beach Europe Limited (“TBEU”) relating to the use by VTB and TBEU of the sign STEALTH on and in relation to gaming headsets in the UK.

VTB and TBEU filed and served a Defense to the claim on February 2, 2021.

1 unchanged sentence

The summary judgment application was heard by the Court in November 2021 and was dismissed.

The next stage in the main proceedings will be a Case Management Conference on June 13, 2022 at which the Court will give directions for each stage to trial.

The trial is expected to be set for late 2022/early 2023.

The next stage in the main proceedings will be a Case Management Conference on November 4, 2022 at which the Court will give directions for each stage to trial.

The trial is expected to be heard in April 2023.

Consumer Class Action :

On June 13, 2022, an individual filed a class action lawsuit against VTB in the United States District Court for the Central District of California.

The complaint alleges that VTB violated the Telephone Consumer Protection Act, 47 U.S.C.

§ 227(b), by sending marketing-related text messages to the plaintiff and other members of the public who have registered their telephone numbers on the national Do-Not-Call Registry.

The plaintiff seeks to represent a class of all persons in the United States whose telephone numbers were present on the national Do-Not-Call Registry and received text messages from VTB within the last four years.

The complaint seeks statutory damages and an order enjoining VTB from sending further text messages to telephone numbers listed on the national Do-Not-Call Registry.

VTB believes that the plaintiff consented to receive marketing-related text messages from VTB and maintains that it does not contact members of the public without their consent.

VTB has filed an initial response to the complaint.

The court has not yet set a trial date for this matter.

The Company will continue to vigorously defend itself in the foregoing unresolved matters.

1 unchanged sentence

Accordingly, the Company cannot predict the outcome of these matters.

The Company has not recorded any accrual at March 31, 2022 for contingent losses associated with these matters based on its belief that losses, while possible, are not probable.

The Company has not recorded any accrual at June 30, 2022 for contingent losses associated with these matters based on its belief that losses, while possible, are not probable.

Further, any possible range of loss cannot be reasonably estimated at this time.

The unfavorable resolution of these matters could have a material adverse effect on the Company’s business, results of operations, financial condition, or cash flows.

The Company is engaged in other legal actions, not described above, arising in the ordinary course of its business and, while there can be no assurance, believes that the ultimate outcome of these other legal actions will not have a material adverse effect on its business, results of operations, financial condition, or cash flows.

4 unchanged sentences

Three Months Ended

Six Months Ended

(in thousands)

6 unchanged sentences

The Company determines whether an arrangement is a lease at inception.

The Company leases office spaces that provide for future minimum rental lease payments under non-cancelable operating leases that have remaining lease terms of one year to nine year s, and do not contain any material residual value guarantees or material restrictive covenants.

The Company leases office spaces that provide for future minimum rental lease payments under non-cancelable operating leases that have remaining lease terms of one year to nine years , and do not contain any material residual value guarantees or material restrictive covenants.

The components of the right-of-use assets and lease liabilities were as follows:

Balance Sheet Classification

March 31, 2022

June 30, 2022

(in thousands)

7 unchanged sentences

Weighted-average discount rate

During the three months ended March 31, 2022, the Company recognized approximately $ 0.4 million of lease costs in operating expenses and approximately $ 0.2 million of operating cash flows from operating leases.

Approximate future minimum lease payments for the Company’s right of use assets over the remaining lease periods as of March 31, 2022, are as follows:

During the six months ended June 30, 2022, the Company recognized approximately $ 0.7 million of lease costs in operating expenses and approximately $ 0.5 million of operating cash flows from operating leases.

Approximate future minimum lease payments for the Company’s right of use assets over the remaining lease periods as of June 30, 2022, are as follows:

(in thousands)

2 unchanged sentences

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-Q

Item 1. Financial Statements