Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2017 | Oct. 31, 2017 | |
Document And Entity Information | ||
Entity Registrant Name | Turtle Beach Corporation | |
Entity Central Index Key | 1,493,761 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Smaller Reporting Company | |
Document Type | 10-Q | |
Document Period End Date | Sep. 30, 2017 | |
Document Fiscal Year Focus | 2,017 | |
Document Fiscal Period Focus | Q3 | |
Amendment Flag | false | |
Entity Common Stock, Shares Outstanding | 49,386,006 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets (unaudited) - USD ($) $ in Thousands | Sep. 30, 2017 | Dec. 31, 2016 |
Current Assets: | ||
Cash and cash equivalents | $ 473 | $ 6,183 |
Accounts receivable, net | 24,588 | 54,633 |
Inventories | 45,869 | 21,698 |
Prepaid expenses and other current assets | 4,956 | 4,121 |
Total Current Assets | 75,886 | 86,635 |
Property and equipment, net | 4,427 | 4,311 |
Intangible assets, net | 1,484 | 1,618 |
Deferred Tax Assets, Net of Valuation Allowance, Noncurrent | 126 | 543 |
Other assets | 1,146 | 1,693 |
Total Assets | 83,069 | 94,800 |
Current Liabilities: | ||
Revolving credit facilities | 24,793 | 35,905 |
Term loan | 4,814 | 2,647 |
Accounts payable | 29,996 | 11,927 |
Other current liabilities | 12,110 | 16,414 |
Total Current Liabilities | 71,713 | 66,893 |
Loans Payable, Noncurrent | 7,238 | 10,442 |
Series B redeemable preferred stock | 18,547 | 17,480 |
Subordinated Long-term Debt, Noncurrent | 20,051 | 17,881 |
Other liabilities | 2,239 | 2,800 |
Total Liabilities | 119,788 | 115,496 |
Stockholders' Equity (Deficit) | ||
Common stock, $0.001 par value - 100,000,000 shares authorized; 49,386,006 and 49,251,336 shares issued and outstanding as of June 30, 2017 and December 31, 2016, respectively | 49 | 49 |
Additional paid-in capital | 147,802 | 146,615 |
Accumulated deficit | (184,279) | (166,800) |
Accumulated other comprehensive loss | (291) | (560) |
Total Stockholders' Equity (Deficit) | (36,719) | (20,696) |
Total Liabilities and Stockholders' Equity (Deficit) | $ 83,069 | $ 94,800 |
Condensed Consolidated Balance3
Condensed Consolidated Balance Sheets (unaudited) (Parenthetical) - $ / shares | Sep. 30, 2017 | Dec. 31, 2016 |
Stockholders' Equity (Deficit) | ||
Preferred stock par value (in dollars per share) | $ 0 | $ 0 |
Preferred stock shares authorized | 0 | 0 |
Preferred stock shares issued | 0 | 0 |
Preferred stock shares outstanding | 0 | 0 |
Common stock par value (in dollars per share) | $ 0.001 | $ 0.001 |
Common stock shares authorized | 100,000,000 | 100,000,000 |
Common stock shares issued | 49,386,806 | 49,251,336 |
Common stock shares outstanding | 49,386,806 | 49,251,336 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations (unaudited) - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Income Statement [Abstract] | ||||
Net Revenue | $ 35,975 | $ 38,384 | $ 69,439 | $ 91,774 |
Cost of Revenue | 23,437 | 34,457 | 48,384 | 79,372 |
Gross Profit | 12,538 | 3,927 | 21,055 | 12,402 |
Operating expenses: | ||||
Selling and marketing | 5,586 | 7,016 | 15,564 | 19,737 |
Research and development | 1,336 | 2,637 | 4,423 | 6,701 |
General and administrative | 3,499 | 4,591 | 11,740 | 15,161 |
Impairment of Intangible Assets, Finite-lived | 0 | 32,084 | 0 | 63,236 |
Restructuring Charges | 241 | 339 | 509 | 564 |
Total operating expenses | 10,662 | 46,667 | 32,236 | 105,399 |
Operating loss | 1,876 | (42,740) | (11,181) | (92,997) |
Interest expense | 2,042 | 1,866 | 5,717 | 5,331 |
Other non-operating expense (income), net | (252) | 326 | (517) | 1,395 |
Loss before income tax expense | 86 | (44,932) | (16,381) | (99,723) |
Income tax expense (benefit) | 578 | (133) | 1,098 | (340) |
Net loss | $ (492) | $ (44,799) | $ (17,479) | $ (99,383) |
Net loss per share: | ||||
Basic (in dollars per share) | $ (0.01) | $ (0.91) | $ (0.35) | $ (2.05) |
Diluted (in dollars per share) | $ (0.01) | $ (0.91) | $ (0.35) | $ (2.05) |
Weighted average number of shares: | ||||
Basic (in shares) | 49,386 | 49,230 | 49,328 | 48,371 |
Diluted (in shares) | 49,386 | 49,230 | 49,328 | 48,371 |
Condensed Consolidated Stateme5
Condensed Consolidated Statements of Comprehensive Income (Loss) Statement - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Statement of Comprehensive Income [Abstract] | ||||
Net loss | $ (492) | $ (44,799) | $ (17,479) | $ (99,383) |
Foreign currency translation adjustment | 111 | 1 | 269 | (69) |
Other comprehensive income (loss) | 111 | 1 | 269 | (69) |
Comprehensive loss | $ (381) | $ (44,798) | $ (17,210) | $ (99,452) |
Condensed Consolidated Stateme6
Condensed Consolidated Statements of Cash Flows (unaudited) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2017 | Sep. 30, 2016 | |
CASH FLOWS FROM OPERATING ACTIVITIES | ||
Net loss | $ (17,479) | $ (99,383) |
Adjustments to reconcile net loss to net cash provided by operating activities: | ||
Depreciation and amortization | 3,000 | 4,185 |
Amortization of intangible assets | 259 | 4,028 |
Amortization of debt financing costs | 1,181 | 957 |
Stock-based compensation | 1,187 | 3,222 |
Accrued interest on Series B redeemable preferred stock | 1,067 | 989 |
Paid in kind interest | 1,844 | 1,585 |
Deferred income taxes | 417 | (485) |
Reversal of sales returns reserve | (2,209) | (4,931) |
Provision for Doubtful Accounts | 49 | 105 |
Provision for obsolete inventory | 1,914 | 9,628 |
Impairment of Intangible Assets, Finite-lived | 0 | 63,236 |
Changes in operating assets and liabilities: | ||
Accounts receivable | 32,205 | 33,564 |
Inventories | (26,085) | (28,975) |
Accounts payable | 17,537 | 20,796 |
Prepaid expenses and other assets | (733) | (1,465) |
Income taxes payable | 669 | 81 |
Other liabilities | (5,532) | (4,020) |
Net cash provided by operating activities | 9,291 | 3,117 |
CASH FLOWS FROM INVESTING ACTIVITIES | ||
Purchase of property and equipment | (2,584) | (2,260) |
Net cash used for investing activities | (2,584) | (2,260) |
CASH FLOWS FROM FINANCING ACTIVITIES | ||
Borrowings on revolving credit facilities | 98,165 | 131,810 |
Repayment of revolving credit facilities | (109,277) | (137,964) |
Repayment of capital leases | (4) | (31) |
Repayment of term loan | (1,443) | (3,610) |
Proceeds from Issuance of Common Stock | 0 | 5,968 |
Debt financing costs | 0 | (805) |
Net cash used for financing activities | (12,559) | (4,632) |
Effect of exchange rate changes on cash and cash equivalents | 142 | (62) |
Net decrease in cash and cash equivalents | (5,710) | (3,837) |
Cash and cash equivalents, beginning of period | 6,183 | 7,114 |
Cash and cash equivalents, end of period | 473 | |
SUPPLEMENTAL DISCLOSURE OF INFORMATION | ||
Cash paid for interest | 1,364 | 1,474 |
Cash paid for income taxes | $ 0 | $ 0 |
Condensed Consolidated Stateme7
Condensed Consolidated Statement of Stockholders' Equity Statement - 9 months ended Sep. 30, 2017 - USD ($) $ in Thousands | Total | Common stock | Additional Paid-in Capital | Retained Earnings | Accumulated Other Comprehensive Income |
Beginning balance, shares at Dec. 31, 2016 | 49,251,000 | ||||
Beginning balance at Dec. 31, 2016 | $ (20,696) | $ 49 | $ 146,615 | $ (166,800) | $ (560) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Net loss | (17,479) | (17,479) | |||
Other comprehensive income | $ 269 | 269 | |||
Stock options exercised and related tax activity, shares | 0 | ||||
Share-based compensation | $ 1,187 | 1,187 | |||
Ending balance, shares at Sep. 30, 2017 | 49,386,000 | ||||
Ending balance at Sep. 30, 2017 | $ (36,719) | $ 49 | $ 147,802 | $ (184,279) | $ (291) |
Background and Basis of Present
Background and Basis of Presentation | 9 Months Ended |
Sep. 30, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Background and Basis of Presentation | Background and Basis of Presentation Organization Turtle Beach Corporation (“Turtle Beach” or the “Company”), headquartered in San Diego, California and incorporated in the state of Nevada in 2010, is a premier audio technology company with expertise and experience in developing, commercializing and marketing innovative products across a range of large addressable markets under the Turtle Beach® and HyperSound® brands. Turtle Beach is a worldwide leading provider of feature-rich headset solutions for use across multiple platforms, including video game and entertainment consoles, handheld consoles, personal computers, tablets and mobile devices. HyperSound technology is an innovative patent-protected sound technology that delivers immersive, directional audio offering unique potential benefits in a variety of commercial settings and consumer devices. VTB Holdings, Inc. (“VTBH”), the parent holding company of the headset business, was incorporated in the state of Delaware in 2010 with operations principally located in Valhalla, New York. Voyetra Turtle Beach, Inc. (“VTB”) was incorporated in the state of Delaware in 1975. In October 2012, VTB acquired Lygo International Limited (“Lygo”), a private limited company organized under the laws of England and Wales, which was subsequently renamed Turtle Beach Europe Limited (“TB Europe”). 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, 2016 Condensed Consolidated Balance Sheet has been derived from the Company's most recent audited financial statements included in its Annual Report on Form 10-K. These financial statements should be read in conjunction with the annual financial statements and the notes thereto included in our Annual Report on Form 10-K filed with the SEC on March 8, 2017 (“Annual Report”) that contains information useful to understanding the Company's businesses and financial statement presentations. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 9 Months Ended |
Sep. 30, 2017 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | Summary of Significant Accounting Policies The preparation of consolidated annual and quarterly financial statements in conformity with generally accepted accounting principles 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 our 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. Recent Accounting Pronouncements In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers , which requires entities to recognize revenue in a way that depicts the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled to in exchange for those goods or services. The new guidance also requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments and assets recognized from costs incurred to obtain or fulfill a contract. In July 2015, the FASB deferred the effective date of the standard by one year to annual reporting periods beginning after December 15, 2017 and interim periods within those annual periods. Based on our initial assessment, we do not believe the standard will materially impact our recognition of revenue from our headset business. The new standard will require certain price concessions and right of return arrangements to be recorded as part of the transaction price determination. The Company has identified, and is in the process of implementing, appropriate changes to its business processes, systems and controls to support recognition and disclosure under the new standard. The Company will adopt the new standard on January 1, 2018 under the the modified retrospective method of adoption, reflecting the cumulative effect of initially applying the new standard to revenue recognition in the first quarter of 2018. In February 2016, the FASB issued ASU No. 2016-02, Leases , that introduces the recognition of a right-of-use asset, which is an asset that represents the lessee’s right to use, or control the use of, a specified asset for the lease term and, a lease liability, which is a lessee’s obligation to make lease payments arising from a lease, measured on a discounted basis for all leases (with the exception of short-term leases). The guidance will be effective for public companies for annual reporting periods beginning after December 15, 2018, and interim periods within those fiscal years with early adoption permitted. The Company has not yet selected a transition method or determined the effect on its consolidated financial statements. In March 2016, the FASB issued ASU No. 2016-09, Compensation—Stock Compensation , which requires excess tax benefits and tax deficiencies, which arise due to differences between the measure of compensation expense and the amount deductible for tax purposes, to be recorded directly through earnings as a component of income tax expense. Previously, these differences were generally recorded in additional paid-in capital and thus had no impact on net income. Additionally, this guidance permits entities to make an accounting policy election for the impact of forfeitures on the recognition of expense for share-based payment awards. Forfeitures can be estimated, as allowed under previous standards, or recognized when they occur. The standard was effective for interim and annual reporting periods beginning after December 15, 2016. The Company adopted this standard on January 1, 2017 and the standard did not have a material impact on its consolidated financial statements. In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230) , which attempts to reduce the existing diversity in practice with respect to reporting the following eight specific cash flow issues: debt prepayment or debt extinguishment costs; settlement of zero-coupon debt instruments or other debt instruments with coupon interest rates that are insignificant in relation to the effective interest rate of the borrowing; contingent consideration payments made after a business combination; proceeds from the settlement of insurance claims; proceeds from the settlement of corporate-owned life insurance policies (including bank-owned life insurance policies); distributions received from equity method investees; beneficial interests in securitization transactions; and separately identifiable cash flows and application of the predominance principle. This guidance will be effective for the Company on January 1, 2018. The Company does not believe the guidance will have a material impact on its consolidated financial statements. In May 2017, the FASB issued ASU 2017-09, Compensation - Stock Compensation (Topic 718): Scope of Modification Accounting to provide clarity and reduce diversity in practice and cost and complexity when applying the guidance to a change to the terms or conditions of a share-based payment award. The amendments state that an entity will not have to account for the effects of a modification if: (i) the fair value of the modified award is the same immediately before and after the modification; (ii) the vesting conditions of the modified award are the same immediately before and after the modification; and (iii) the classification of the modified award as either an equity instrument or liability instrument is the same immediately before and after the modification. The amendments in this update are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2017. Early adoption is permitted, including adoption in any interim period. The adoption of this guidance is not expected to have a material impact upon our financial condition or results of operations. |
Fair Value Measurement
Fair Value Measurement | 9 Months Ended |
Sep. 30, 2017 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurement | Fair Value Measurement The Company follows a three-level fair value hierarchy that prioritizes the inputs used to measure fair value. This hierarchy requires entities to maximize the use of observable inputs and minimize the use of unobservable inputs. 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. 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, and debt instruments. As of September 30, 2017 and December 31, 2016 , there were no outstanding financial assets and liabilities recorded at fair value on a recurring basis and 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 at September 30, 2017 and December 31, 2016 : September 30, 2017 December 31, 2016 Reported Fair Value Reported Fair Value (in thousands) Financial Assets and Liabilities: Cash and cash equivalents $ 473 $ 473 $ 6,183 $ 6,183 Credit Facility 24,793 24,793 35,905 35,905 Term Loans 12,924 12,575 14,367 14,281 Subordinated Debt 21,247 21,403 19,403 18,569 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 and Term Loan Due 2018 equals fair value as the stated interest rate approximates market rates currently available to the Company, which are considered Level 2 inputs. The fair values of our Term Loan Due 2019 and Subordinated Debt are based upon an estimated market value calculation that factors principal, time to maturity, interest rate and current cost of debt, which is considered a Level 3 input. |
Allowance for Sales Return
Allowance for Sales Return | 9 Months Ended |
Sep. 30, 2017 | |
Allowance for Sales Returns [Abstract] | |
Allowance for Sales Returns | Allowance for Sales Returns The following table provides the changes in our sales return reserve, which is classified as a reduction of accounts receivable: Three Months Ended Nine Months Ended September 30, September 30, 2017 2016 2017 2016 (in thousands) Balance, beginning of period $ 2,153 $ 579 $ 4,591 $ 6,268 Reserve accrual 2,146 2,807 4,228 7,341 Recoveries and deductions, net (1,917 ) (2,049 ) (6,437 ) (12,272 ) Balance, end of period $ 2,382 $ 1,337 $ 2,382 $ 1,337 |
Composition of Certain Financia
Composition of Certain Financial Statement Items | 9 Months Ended |
Sep. 30, 2017 | |
Condensed Consolidated Balance Sheet Components [Abstract] | |
Composition of Certain Financial Statement Items | Composition of Certain Financial Statement Items Inventories Inventories consist of the following: September 30, 2017 December 31, 2016 (in thousands) Raw materials $ 1,842 $ 1,680 Finished goods 44,027 20,018 Total inventories $ 45,869 $ 21,698 Property and Equipment, net Property and equipment, net, consists of the following: September 30, 2017 December 31, 2016 (in thousands) Machinery and equipment $ 1,359 $ 1,321 Software and software development 383 383 Furniture and fixtures 400 288 Tooling 2,043 1,581 Leasehold improvements 1,271 1,247 Demonstration units and convention booths 10,652 8,172 Total property and equipment, gross 16,108 12,992 Less: accumulated depreciation and amortization (11,681 ) (8,681 ) Total property and equipment, net $ 4,427 $ 4,311 Other Current Liabilities Other current liabilities consist of the following: September 30, 2017 December 31, 2016 (in thousands) Accrued vendor expenses $ 1,839 $ 4,735 Accrued royalty 2,485 3,370 Accrued employee expenses 1,580 2,791 Accrued expenses 6,206 5,518 Total other current liabilities $ 12,110 $ 16,414 |
Goodwill and Other Intangible A
Goodwill and Other Intangible Assets | 9 Months Ended |
Sep. 30, 2017 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill and Other Intangible Assets | Goodwill and Other Intangible Assets At acquisition, the Company estimates and records the fair value of purchased intangible assets. The fair values of these intangible assets are estimated based on our assessment. Goodwill is the excess of the purchase price over the fair value of identifiable net assets acquired in business combinations. Goodwill and certain other intangible assets having indefinite lives are not amortized to earnings, but instead are subject to periodic testing for impairment. Intangible assets determined to have definite lives are amortized over their remaining useful lives. We assess the impairment of long-lived assets, intangibles assets and goodwill whenever events or changes in circumstances indicate that full recoverability of net asset balances through future cash flows is in question. Goodwill and indefinite-lived intangible assets are assessed at least annually, but also whenever events or changes in circumstances indicate the carrying values may not be recoverable. Factors that could trigger an impairment review include: (a) significant underperformance relative to historical or projected future operating results; (b) significant changes in the manner of use of the acquired assets or the strategy for our overall business; (c) significant negative industry or economic trends; (d) significant decline in our stock price for a sustained period; and (e) a decline in our market capitalization below net book value. Acquired Intangible Assets Acquired identifiable intangible assets, and related accumulated amortization, as of September 30, 2017 and December 31, 2016 consist of: September 30, 2017 Gross Carrying Value Accumulated Amortization Asset Impairment Net Book Value (in thousands) Customer relationships $ 5,796 $ 4,064 $ — $ 1,732 Foreign Currency (933 ) (685 ) — (248 ) Total Intangible Assets $ 4,863 $ 3,379 $ — $ 1,484 December 31, 2016 Gross Carrying Value Accumulated Amortization Asset Impairment Net Book Value (in thousands) Customer relationships $ 5,796 $ 3,737 $ — $ 2,059 Non-compete agreements 177 177 — — In-process Research and Development 27,100 4,074 23,026 — Developed technology 8,880 802 8,078 — Trade names 170 92 78 — Patent and trademarks 967 65 902 — Foreign Currency (1,294 ) (853 ) — (441 ) Total Intangible Assets $ 41,796 $ 8,094 $ 32,084 $ 1,618 In October 2012, VTB acquired Lygo, subsequently renamed TB Europe Ltd. The acquired intangible asset related to customer relationships is being amortized over an estimated useful life of thirteen years with the amortization being included within sales and marketing expense. In January 2014, the merger between VTBH and Turtle Beach (f/k/a Parametric Sound Corporation) was completed. The acquired intangible assets relating to developed technology, customer relationships and trade name were subject to amortization over their respective useful lives. In September 2016, we recorded an impairment charge related to the total remaining acquired intangible assets value. Amortization expense related to definite lived intangible assets of $0.1 million and $0.3 million was recognized for the three and nine months ended September 30, 2017 , respectively, and $1.4 million and $4.0 million for the three and nine months ended September 30, 2016 , respectively. As of September 30, 2017 , estimated annual amortization expense related to definite lived intangible assets in future periods is as follows: (in thousands) 2017 $ 109 2018 366 2019 307 2020 258 2021 217 Thereafter 475 Total $ 1,732 |
Credit Facilities and Long-Term
Credit Facilities and Long-Term Debt | 9 Months Ended |
Sep. 30, 2017 | |
Debt Disclosure [Abstract] | |
Credit Facilities and Long-Term Debt | Credit Facilities and Long-Term Debt September 30, 2017 December 31, 2016 (in thousands) Revolving credit facility, maturing March 2019 $ 24,793 $ 35,905 Term Loan Due 2018 2,564 3,632 Term Loan Due 2019 10,360 10,735 Less unamortized deferred financing fees 872 1,278 Total Term Loans 12,052 13,089 Subordinated notes - related party 21,247 19,403 Less unamortized debt discount 1,196 1,522 Total Subordinated notes 20,051 17,881 Total outstanding debt 56,896 66,875 Less: current portion of revolving line of credit (24,793 ) (35,905 ) Less: current portion of term loans (4,814 ) (2,647 ) Total noncurrent portion of long-term debt $ 27,289 $ 28,323 Total interest expense, inclusive of amortization of deferred financing costs, on long-term debt obligations was $1.5 million and $4.2 million , respectively, for the three and nine months ended September 30, 2017 and, $1.3 million and $3.9 million , respectively, for the three and nine months ended September 30, 2016 . This includes related party interest of $0.6 million and $1.8 million for the three and nine months ended September 30, 2017 , respectively, and $0.5 million and $1.6 million for the three and nine months ended September 30, 2016 , respectively, in connection with the subordinated notes. Amortization of deferred financing costs was $0.4 million and $1.2 million or the three and nine months ended September 30, 2017 , respectively, $0.3 million and $1.0 million for the three and nine months ended September 30, 2016 , respectively. Revolving Credit Facility On March 31, 2014, Turtle Beach and certain of its subsidiaries entered into a new asset-based revolving credit 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 loan and security agreement. The Credit Facility, which expires on March 31, 2019 , provides for a line of credit of up to $60 million inclusive of a sub-facility limit of $10 million for TB Europe, a wholly owned subsidiary of Turtle Beach. The Credit Facility may be used for working capital, the issuance of bank guarantees, letters of credit and other corporate purposes. The maximum credit availability for loans and letters of credit under the Credit Facility is governed by a borrowing base determined by the application of specified percentages to certain eligible assets, primarily eligible trade accounts receivable and inventories, and is subject to discretionary reserves and revaluation adjustments. 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 1.00% to 1.50% for U.S. base rate loans and between 2.00% to 2.50% for U.S. LIBOR loans and U.K. loans. As of September 30, 2017 , interest rates for outstanding borrowings were 6.24% for base rate loans and 3.21% for LIBOR rate loans. 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. If certain availability thresholds are not met, meaning that the Company does not have receivables and inventory which are eligible to borrow on under the Credit Facility in excess of amounts borrowed, the Credit Facility requi res the Company and its restricted subsidiaries to maintain a fixed charge coverage ratio. The fixed charge ratio is defined as the ratio, determined on a consolidated basis for the most recent four fiscal quarters, of (a) EBITDA minus capital expenditures, excluding those financed through other instruments, and cash taxes paid, and (b) Fixed Charges defined as the sum of cash interest expense plus scheduled principal payments. The current fixed charge coverage ratio of at least 1.15 to 1.00 on the last day of each month will become effective again after the Company has complied with such ratio for six consecutive months. The Credit Facility also contains affirmative and negative covenants that, subject to certain exceptions, limit our ability to take certain actions, including our 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. On October 31, 2016, in connection with the HyperSound business restructuring, the Company amended certain provisions to provide, among other things, that (i) the existing loan availability blocks be permanently reduced during certain specified periods, (ii) replaced certain financial covenants determined on a segment-by-segment basis by amended EBITDA levels for the Headset business beginning with the month ended October 31, 2016, (iii) the Company maintain revised cash flow levels, in the aggregate and with respect to its HyperSound segment, during each rolling four week period beginning with the period ended October 31, 2016 through December 31, 2018 and September 30, 2017, respectively, and (iv) in the event the Company’s availability is less than certain specified amounts, obtain additional funding from the issuance of a subordinated promissory note provided by SG VTB (the “Promissory Note”). As of September 30, 2017 , the Company was in compliance with all financial covenants, as amended, and excess borrowing availability was approximately $12.5 million , net of the outstanding Term Loan Due 2018 (as defined below) that is considered to be an additional outstanding amount under the Credit Facility. Term Loans Term Loan Due 2018 On December 29, 2014, the Company amended the Credit Facility with Bank of America to enter in to an additional loan (the “Term Loan Due 2018”) for the repayment of $7.7 million of then existing subordinated debt and accrued interest. The Term Loan Due 2018 resulted in modified financial covenants while it is outstanding, will bear interest at a rate of LIBOR for the applicable interest period plus 5% and will be repaid in equal monthly installments beginning on April 1, 2015 and ending on October 1, 2018, reflecting a six month waiver. Amounts so repaid are recognized by lowering the balance of the term loan tranche and increasing the lower interest rate base revolver amount, with no net impact on borrowing availability. Term Loan Due 2019 On July 22, 2015, the Company and its subsidiaries, entered into a term loan, guaranty and security agreement (the “Term Loan Due 2019”) with Crystal Financial LLC, as agent, sole lead arranger and sole bookrunner, Crystal Financial SPV LLC and the other persons party thereto (“Crystal”), which provides for an aggregate term loan commitment of $15 million that bears interest at a rate per annum equal to the 90-day LIBOR rate plus 10.25% . Under the terms of the Term Loan Due 2019, the Company is required to make payments of interest in arrears on the first day of each month beginning August 1, 2015 and will repay the principal in monthly payments beginning January 1, 2016, inclusive of a nine month waiver, with a final payment on June 28, 2019 , the maturity date. The Term Loan Due 2019 is secured by a security interest in substantially all of the Company and each of its subsidiaries' working capital assets and is subject to the first-priority lien of Bank of America, as agent, under the Credit Facility, other than with respect to equipment, fixtures, real property interests, intellectual property, intercompany property, intercompany indebtedness, equity interest in their subsidiaries, and certain other assets specified in an inter-creditor agreement between Bank of America and Crystal. The Company and its subsidiaries are required to comply with various customary covenants including, (i) maintaining minimum EBITDA (as defined in the Term Loan Due 2019) in each trailing twelve month period beginning August 31, 2015, (ii) maintaining a Consolidated Leverage Ratio (as defined in the Term Loan Due 2019) to be measured on the last day of each month while the term loans are outstanding of no more than 5.75 :1 beginning December 31, 2015 with periodic step-downs to 3.00 :1 on January 31, 2018, (iii) not making capital expenditures in excess of $5 million in each of the years ending December 31, 2016, 2018 and 2019 and in excess of $5.5 million in the year ending December 31, 2017, (iv) restrictions on the Company’s and its subsidiaries ability to prepay its subordinated notes, pay dividends, incur debt, create or suffer liens and engage in certain fundamental transactions and (v) an obligation to provide certain financial and other information. The agreement permits certain equity holders of the Company to contribute funds to the Company to cure certain financial covenant defaults. The Term Loan Due 2019 contains customary representations, mandatory prepayment events and events of default, including defaults triggered by the failure to make payments when due, breaches of covenants and representations, material impairment in the perfection of Crystal’s security interest in the collateral and events related to bankruptcy and insolvency of the Company and its subsidiaries. Upon an event of default, Crystal may declare all outstanding obligations immediately due and payable (along with a prepayment fee), a default rate of an additional 2.0% may be applied to amounts outstanding and may take other actions including collecting or taking such other action with respect to the collateral pledged in connection with the term loan. On October 31, 2016, in connection with the recently announced HyperSound business restructuring, the Company amended certain provisions to provide, among other things, that (i) the existing loan availability blocks be permanently reduced during certain specified periods, (ii) replaced certain financial covenants determined on a segment-by-segment basis by amended EBITDA levels for the Headset business beginning with the month ended October 31, 2016, (iii) the Company maintain revised cash flow levels, in the aggregate and with respect to its HyperSound segment, during each rolling four week period beginning with the period ended October 31, 2016 through December 31, 2018 and September 30, 2017, respectively, and (iv) in the event the Company’s availability is less than certain specified amounts, obtain additional funding from the issuance of a subordinated promissory note provided by SG VTB (the “Promissory Note”). As of September 30, 2017 , the Company was in compliance with all the amended financial covenants. Subordination Agreement On November 16, 2015, as a condition precedent to the Company's lenders permitting the Company to enter into certain subordinated notes, the Company entered into a subordination agreement with and between Bank of America and Crystal, pursuant to which the parties agreed that the Company's obligations under any such notes would be subordinate in right of payment to the payment in full of all the Company’s obligations under the Credit Facility and Term Loan Due 2019. Subordinated Notes - Related Party O n April 23, 2015, the Company issued a $5.0 million subordinated note (the “April Note”) to SG VTB Holdings, LLC, the Company’s largest stockholder (“SG VTB”). The April Note was issued with an interest rate of (i) 10% per annum for the first year and (ii) 20% per annum for all periods thereafter, with interest accruing and being added to the principal amount of the note quarterly. On May 13, 2015, the Company issued subordinated notes (the “May Notes”) with an aggregate principal amount of $3.8 million to SG VTB, and a trust affiliated with Ronald Doornink, the Chairman of the Company's board of directors (the “Board”). The May Notes were issued with an interest rate of 10% per annum until the maturity date of the May Notes (which was August 13, 2015 but could be extended up to two additional 90 day periods upon the written agreement of the Company and the noteholder), with interest accruing and being added to the principal amount of the May Notes quarterly. Following the maturity date, the interest rate would have increased to 20% per annum. On June 17, 2015, the Company issued a subordinated note (the “June Note”) with an aggregate principal amount of $3.0 million to SG VTB. The June Note was issued at an interest rate of 10% per annum until the maturity date of the June Note (which was September 17, 2015 but could be extended up to two additional 90 day periods upon the written agreement of the Company and the noteholder), with interest accruing and being added to the principal amount of the June Note quarterly. Following the maturity date, the interest rate would have increased to 20% per annum. In addition, the Company had the option to request that SG VTB make, in SG VTB’s sole discretion, additional advances from time to time up to an aggregate principal amount of $15.0 million . Prior to the amendment (see below), following an additional advance of $6.0 million on July 8, 2015, $9.0 million was outstanding under the June Note. Concurrently with the completion of the Term Loan Due 2019, the Company amended and restated each of its outstanding subordinated notes (the “Amended Notes”). The obligations of the Company under the Amended Notes are subordinate and junior to the prior payment of amounts due under the Credit Facility and Term Loan Due 2019. In addition, the stated maturity date of the Amended Notes was extended to September 29, 2019 , subject to acceleration in certain circumstances, such as a change of control in the Company. The Amended Notes bear interest at a rate per annum equal to LIBOR plus 10.5% and shall be paid-in-kind by adding the amount to the principal amount due. Further, as consideration for the concessions in the Amended Notes, the Company issued warrants to purchase 1.7 million of the Company’s common stock at an exercise price of $2.54 per share. On November 16, 2015, the Company issued a $2.5 million subordinated note (the “November Note”) to SG VTB, the proceeds of which, as set forth in the amendment to the Term Loan Due 2019, were applied against the outstanding balance of the Term Loan Due 2019. The November Note will bear interest at a rate of 15% per annum until its maturity date, which is September 29, 2019 , and is subordinated to all senior debt of the Company. In consideration of the credit extended under the November Note, VTB and VTBH entered into a Third Lien Continuing Guaranty, (as amended, the “Third Lien Guaranty”), under which they guarantee and promise to pay to Stripes, any and all obligations of the Company under the November Note. To secure our obligations under the November Note and the Third Lien Guaranty, the Company entered into a Third Lien Security Agreement, dated as of November 16, 2015, pursuant to which Stripes was granted a security interest upon all property of the VTB and VTBH until the payment in full of the Subordinated Note or the release of the guarantee or collateral, as applicable. Concurrent with entering into the November Note and Third Lien Guaranty, the Company also issued to SG VTB a warrant to purchase 1.4 million shares of the Company’s common stock at an exercise price of $2.00 per share. On October 31, 2016, in connection with certain amendments to the Credit Facility and Term Loan Due 2019, the Company and SG VTB entered into the Promissory Note, which states that in the event the Company’s availability under the Credit Facility is less than certain specified amounts, the Company may, upon request, at any time until September 29, 2019 require that SG VTB provide a $2 million subordinated loan. Upon issuance, the loan would bear interest at a rate of either (i) LIBOR plus 10.5% per annum or (ii) 12.0% , dependent upon the Company’s compliance with certain financial covenants and would be subordinated to all senior debt of the Company. In addition, under the terms of the Promissory Note, if and when the funding occurs, as additional consideration the Company would issue to SG VTB a warrant, exercisable for a period of ten years beginning on the date of issuance, to purchase an amount of shares of the Company’s common stock equal to 2.4% of the Company’s then fully diluted shares outstanding at an exercise price equal to the closing price on that date. The warrant would not entitle the holder to any voting rights or other rights as a stockholder of the Company prior to exercise. SG VTB is an affiliate of Stripes Group LLC (“Stripes”), a private equity firm focused on internet, software, healthcare IT and branded consumer products businesses. Kenneth A. Fox, one of our directors, is the managing general partner of Stripes and the sole manager of SG VTB and Ronald Doornink, our Chairman of the Board, is an operating partner of Stripes. |
Income Taxes
Income Taxes | 9 Months Ended |
Sep. 30, 2017 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes In order to determine the quarterly provision for income taxes, we use an estimated annual effective tax rate (“ETR”), which is based on expected annual income and statutory tax rates in the various jurisdictions. However, to the extent that application of the estimated annual effective tax rate is not representative of the quarterly portion of actual tax expense expected to be recorded for the year, we determine the quarterly provision for income taxes based on actual year-to-date income (loss). Certain significant or unusual items are separately recognized as discrete items in the quarter during which they occur and can be a source of variability in the effective tax rates from quarter to quarter. The following table presents our income tax expense (benefit) and effective income tax rate: Three Months Ended Nine Months Ended September 30, September 30, 2017 2016 2017 2016 (in thousands) Income tax expense (benefit) $ 578 $ (133 ) $ 1,098 $ (340 ) Effective income tax rate 672.1 % 0.3 % (6.7 )% 0.3 % Income tax expense for the three and nine months ended September 30, 2017 was $0.6 million at an effective tax rate of 672.1% and $1.1 million at an effective tax rate of (6.7)% , respectively. Income tax benefit for the three and nine months ended September 30, 2016 was $(0.1) million at an effective tax rate of 0.3% and $(0.3) million at an effective tax rate of 0.3% , respectively. The effective tax rate was primarily impacted by the full valuation allowance on domestic earnings, foreign entity tax benefits and certain state tax expense. At December 31, 2016 , the Company had $49.0 million of net operating loss carryforwards and $21.0 million of state net operating loss carryforwards, which will begin to expire in 2029. An ownership change occurred on January 15, 2014 as a result of the Merger, and $12.7 million of federal net operating losses included in the above are pre-change losses subject to Section 382 of the Internal Revenue Code of 1986, as amended. The Company believes, based on the estimated Section 382 limitation and the net operating loss carryforward period, that the pre ownership change net operating losses can be fully utilized in future years if there is sufficient taxable income in such carryforward period. The Company is subject to income taxes domestically and in various foreign jurisdictions. Significant judgment is required in evaluating uncertain tax positions and determining its provision for income taxes. The Company recognizes only those tax positions that meet the more-likely-than-not recognition threshold, and establishes tax reserves for uncertain tax positions that do not meet this threshold. Interest and penalties associated with income tax matters are included in the provision for income taxes in the condensed consolidated statement of operations. As of September 30, 2017 , the Company had uncertain tax positions of $2.2 million , inclusive of $0.7 million of interest and penalties. The Company files U.S., state and foreign income tax returns in jurisdictions with various statutes of limitations. The federal tax years open under the statute of limitations are 2013 through 2015, and the state tax years open under the statute of limitations are 2012 through 2015. The Company was notified by the IRS of an examination covering our fiscal year end 2015 federal income tax return, which is currently in the discovery phase. |
Stock-Based Compensation
Stock-Based Compensation | 9 Months Ended |
Sep. 30, 2017 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Stock-Based Compensation | 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 comprised as follows: Three Months Ended Nine Months Ended September 30, September 30, 2017 2016 2017 2016 (in thousands) Cost of revenue $ 20 $ 152 $ (66 ) $ 398 Selling and marketing 18 40 74 50 Research and development 68 138 188 424 General and administrative 264 687 991 2,350 Total stock-based compensation $ 370 $ 1,017 $ 1,187 $ 3,222 The following table presents the stock activity and the total number of shares available for grant as of September 30, 2017 : (in thousands) Balance at December 31, 2016 2,261 Options granted (705 ) Restricted Stock granted (167 ) Forfeited/Expired shares added back 1,098 Balance at September 30, 2017 2,487 Stock Option Activity Options Outstanding Number of Shares Underlying Outstanding Options Weighted-Average Exercise Price Weighted-Average Remaining Contractual Term Aggregate Intrinsic Value (In years) Outstanding at December 31, 2016 6,381,447 1.90 7.37 20,033 Granted 704,865 0.93 Exercised — — Forfeited (1,053,683 ) 2.22 Outstanding at September 30, 2017 6,032,629 1.73 6.75 2,543 Vested and expected to vest at September 30, 2017 6,022,628 1.74 6.75 2,543 Exercisable at September 30, 2017 3,886,414 1.76 6.68 2,100 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. The options generally vest as specified in the option agreements subject to acceleration in certain circumstances. In the event participants in the 2013 Plan cease to be employed or engaged by the Company, then all of the options would be forfeited if they are not exercised within 90 days. Forfeitures on option grants are estimated at 10% for non-executives and 0% for executives based on evaluation of historical and expected future turnover. Stock-based compensation expense was recorded net of estimated forfeitures, such that expense was recorded only for those stock-based awards expected to vest. The Company reviews this assumption periodically and will adjust it if it is not representative of future forfeiture data and trends within employee types (executive vs. non-executive). 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. There were no option exercises during the nine months ended September 30, 2017 . The Company uses the Black-Scholes option-pricing model to estimate the fair value of options granted as of the grant date. The following are assumptions for the nine months ended September 30, 2017 . Expected term (in years) 6.1 Risk-free interest rate 1.9% - 2.1% Expected volatility 40.1% - 41.1% Dividend rate 0% Each of these inputs is subjective and generally requires significant judgment to determine. The weighted average grant date fair value of options granted during the nine months ended September 30, 2017 was $0.39 . The total estimated fair value of employee options vested during the nine months ended September 30, 2017 was $1.2 million . As of September 30, 2017 , total unrecognized compensation cost related to non-vested stock options granted to employees was $1.3 million , which is expected to be recognized over a remaining weighted average vesting period of 2.6 years . Restricted Stock Activity Shares Weighted Average Grant Date Fair Value Per Share Nonvested restricted stock at December 31, 2016 135,705 1.84 Granted 166,665 0.90 Vested (91,002 ) 2.06 Forfeited (43,903 ) 1.16 Nonvested restricted stock at September 30, 2017 167,465 0.96 As of September 30, 2017 , total unrecognized compensation cost related to the nonvested restricted stock awards granted to be recognized over a remaining weighted average vesting period of 0.5 years was minimal. Stock Warrants In connection with and as consideration for the concessions in the Amended Notes, the Company issued to SG VTB and a trust affiliated with Ronald Doornink warrants to purchase 1.7 million shares of the Company’s common stock at an exercise price of $2.54 per share. The warrants are exercisable for a period of five years beginning on the date of issuance, July 22, 2015. The exercise price and the number of shares of Common Stock purchasable are subject to adjustment and do not carry any voting rights or other rights as a stockholder of the Company prior to exercise. The shares issuable upon exercise are also subject to the “demand” and “piggyback” registration rights set forth in the in the Company’s Stockholder Agreement, dated August 5, 2013, as amended July 10, 2014. In connection with the November Note, the Company issued a warrant to purchase 1.4 million shares of the Company’s common stock at an exercise price of $2.00 per share to SG VTB. The exercise price and the number of shares are subject to standard anti-dilution adjustments and do not carry any voting rights as a stockholder of the Company prior to exercise. The warrant is exercisable for a period of ten years beginning on the date of issuance and does not entitle the holder to any voting rights or other rights as a stockholder of the Company prior to exercise. The warrants entitle the holder to purchase a stated amount of shares of common stock at a fixed exercise price that are not puttable (either the warrant or the shares) to the Company or redeemable for cash, and as such are classified within equity. Series B Redeemable Preferred Stock In September 2010, VTBH issued 1,000,000 shares of its Series B Redeemable Preferred Stock with a fair value of $12.4 million . The Series B Redeemable Preferred Stock is required to be redeemed on the earlier of September 28, 2030, or the occurrence of a liquidation event at its original issue price of $12.425371 per share plus any accrued but unpaid dividends. The redemption value was $18.5 million and $17.5 million as of September 30, 2017 and December 31, 2014, respectively. On February 18, 2015, the holder of the Series B Redeemable Preferred Stock, filed a complaint in Delaware Chancery Court alleging breach of contract against VTBH. According to the complaint, the Merger purportedly triggered a contractual obligation for VTBH to redeem the stock. Refer to Note 12 , “Commitments and Contingencies” for further information. Phantom Equity Activity In November 2011, VTBH adopted a 2011 Phantom Equity Appreciation Plan (the “Appreciation Plan”) that covers certain employees, consultants, and directors of VTBH (“Participants”) who are entitled to phantom units, as applicable, pursuant to the provisions of their respective award agreements. The Appreciation Plan is shareholder-approved, which permits the granting of phantom units to VTBH’s Participants of up to 1,500,000 units. These units are not exercisable or convertible into shares of common stock but give the holder a right to receive a cash bonus equal to the appreciation in value between the exercise price and value of common stock at the time of a change in control event as defined in the plan. As of September 30, 2017 and December 31, 2016 , 714,347 phantom units at a weighted-average exercise price of $0.93 had been granted and were outstanding. Because these phantom units are not exercisable or convertible into common shares, said amounts and exercise prices were not subject to the exchange ratio provided by the Merger agreement. As of September 30, 2017 , compensation expense related to the Appreciation Plan units remained unrecognized because as of those dates a change in control, as defined in the plan, had not occurred and is not probable to occur. In July 2015, the Appreciation Plan was terminated as to new grants, but vested and unvested phantom units will continue. |
Net Loss Per Share
Net Loss Per Share | 9 Months Ended |
Sep. 30, 2017 | |
Earnings Per Share [Abstract] | |
Net Loss Per Share | Net Loss Per Share The following table sets forth the computation of basic and diluted net loss per share of common stock attributable to common stockholders: Three Months Ended Nine Months Ended September 30, September 30, 2017 2016 2017 2016 (in thousands, except per-share data) Net Loss $ (492 ) $ (44,799 ) $ (17,479 ) $ (99,383 ) Weighted average common shares outstanding — Basic 49,386 49,230 49,328 48,371 Plus incremental shares from assumed conversions: Dilutive effect of stock options — — — — Weighted average common shares outstanding — Diluted 49,386 49,230 49,328 48,371 Net loss per share: Basic $ (0.01 ) $ (0.91 ) $ (0.35 ) $ (2.05 ) Diluted $ (0.01 ) $ (0.91 ) $ (0.35 ) $ (2.05 ) Incremental shares from stock options and restricted stock awards are computed by the treasury stock method. The weighted average shares listed below were not included in the computation of diluted earnings per share because to do so would have been anti-dilutive for the periods presented or were otherwise excluded under the treasury stock method. The treasury stock method calculates dilution assuming the exercise of all in-the-money options and vesting of restricted stock, reduced by the repurchase of shares with the proceeds from the assumed exercises, unrecognized compensation expense for outstanding awards and the estimated tax benefit of the assumed exercises. Three Months Ended Nine Months Ended September 30, September 30, 2017 2016 2017 2016 (in thousands) Stock options 6,133 6,758 6,287 6,321 Warrants 3,059 3,068 3,061 3,072 Unvested restricted stock awards 167 136 137 115 Total 9,359 9,962 9,485 9,508 |
Segment and Geographical Inform
Segment and Geographical Information | 9 Months Ended |
Sep. 30, 2017 | |
Segment Reporting [Abstract] | |
Geographical Information | Geographic Information The following tables show our net revenues, operating income and total assets by our reporting segments: Three Months Ended Nine Months Ended September 30, September 30, 2017 2016 2017 2016 Net Revenues (in thousands) Headset $ 35,947 $ 38,283 $ 69,291 $ 91,172 HyperSound 28 101 148 602 Total $ 35,975 $ 38,384 $ 69,439 $ 91,774 Operating Income (Loss) Headset $ 1,819 $ 1,710 $ (9,779 ) $ (7,971 ) HyperSound 57 (44,450 ) (1,402 ) (85,026 ) Total $ 1,876 $ (42,740 ) $ (11,181 ) $ (92,997 ) Interest Expense $ 2,042 $ 1,866 $ 5,717 $ 5,331 Other non-operating expense (income), net $ (252 ) $ 326 (517 ) 1,395 Earnings (loss) before income tax $ 86 $ (44,932 ) $ (16,381 ) $ (99,723 ) September 30, December 31, Total Assets (in thousands) Headset $ 83,029 $ 94,081 HyperSound (1) 27,918 31,233 Eliminations (27,878 ) (30,514 ) Total $ 83,069 $ 94,800 (1) At September 30, 2017, HyperSound assets excluding eliminations, totaled less than $0.1 million. The following table represents total net revenues based on where customers are physically located: Three Months Ended Nine Months Ended September 30, September 30, 2017 2016 2017 2016 (in thousands) North America $ 23,320 $ 28,063 $ 47,371 $ 69,679 United Kingdom 5,204 3,142 9,182 9,073 Europe 5,947 5,477 9,884 9,326 International 1,504 1,702 3,002 3,696 Total net revenues $ 35,975 $ 38,384 $ 69,439 $ 91,774 |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended |
Sep. 30, 2017 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies Litigation 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) 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. 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 cases 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. The California plaintiffs dismissed their action without prejudice, and sought to intervene in the Nevada action, which was granted. Subsequent to the intervention, the plaintiffs filed a third amended complaint, which made essentially the same allegations as prior complaints and sought monetary damages. On June 20, 2014, VTBH and the Company moved to dismiss the action, but that motion was denied on August 28, 2014. That denial is currently under review by the Nevada Supreme Court, which held a hearing on the Company's petition for review on September 1, 2015. After the hearing, the Nevada Supreme Court requested supplemental briefing, which the parties completed on October 13, 2015. The Nevada Supreme Court also invited the Business Law Section of the Nevada State Bar to submit an amicus brief by December 3, 2015 and briefing was completed on that date. 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 did provide a limited basis upon which plaintiffs could seek to amend their complaint. The schedule for such amendment, if any, has not been set. Dr. John Bonanno Complaint: On February 18, 2015, Dr. John Bonanno, a minority shareholder of VTBH, filed a complaint in Delaware Chancery Court alleging breach of contract against VTBH. According to the complaint, the Merger purportedly triggered a contractual obligation for VTBH to redeem Dr. Bonanno's stock. Dr. Bonanno requests a declaratory judgment stating that he is entitled to damages including a redemption of his stock for the redemption value of $15.1 million (equal to the original issue price of his stock plus accrued dividends) as well as other costs and expenses. On February 8, 2016, the Delaware Chancery Court granted VTBH's motion to dismiss for improper venue, and Dr. Bonnano's complaint was dismissed without prejudice. In January of 2017, Dr. Bonanno filed a complaint in New York state court alleging breach of contract against VTBH and seeking a declaratory judgment that he is entitled to damages and specific performance, including redemption of his stock. The Company answered the complaint on March 7, 2017. At the order of the Court, the parties filed cross-motions for summary judgment on March 31, 2017, on the sole question of whether the Merger was a defined event in the purported contract entitling Dr. Bonnano to redemption of his shares. The cross-motions for summary judgment were fully briefed and heard on July 6, 2017. On September 1, 2017, the Court denied Defendant’s motion for summary judgment and granted Plaintiff’s motion for partial summary judgment. On October 5, 2017, a status conference was held that set a pre-trial schedule such that all merits and expert discovery will conclude on May 3, 2018 and a trial readiness conference will be held on May 4, 2018. On October 11, 2017, Defendant filed a motion to reargue plaintiff’s motion for summary judgment in the trial court, specifically seeking clarification that Defendant’s affirmative defenses to liability remain available. On the same day, Defendant filed a notice of appeal of the Court’s decision on summary judgment in its entirety. The plaintiff’s ability to recover any damages is subject to certain limitations, including, but not limited to, legally available funds. VTBH maintains that the Merger did not trigger any obligation to redeem Mr. Bonanno's preferred stock. Commercial Dispute : On July 20, 2016, Bigben Interactive S.A. (“BigBen”) filed a statement of claim before the Regional Court of Berlin, Germany against VTB, which statement of claim was formally serviced upon VTB on June 28, 2017. The statement of claim alleges that VTB’s termination of a distribution agreement by and between BigBen and VTB breached the terms thereof and was invalid, and that BigBen is entitled to damages amounting to damages amounting to €5.0 million plus accrued interests thereon plus certain additional damages as a result of such invalid termination. VTB filed its statement of defense with the court on September 21, 2017. VTB maintains that its termination of the agreement was valid and that BigBen’s claims against it are without merit. VTB's statement of defense was submitted to the plaintiff and the court has granted the option to submit a further written statement in reply to the statement of defense. The Company will continue to vigorously defend itself in the foregoing matters. However, litigation and investigations are inherently uncertain. Accordingly, the Company cannot predict the outcome of these matters. The Company has not recorded any accrual at September 30, 2017 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. Warranties We warrant our products against certain manufacturing and other defects. These product warranties are provided for specific periods of time depending on the nature of the product. Warranties are generally fulfilled by replacing defective products with new products. The following table provides the changes in our product warranties, which are included in accrued liabilities: Three Months Ended Nine Months Ended September 30, September 30, 2017 2016 2017 2016 (in thousands) Warranty, beginning of period $ 529 $ 717 $ 639 $ 580 Warranty costs accrued 59 195 173 672 Settlements of warranty claims (109 ) (162 ) (333 ) (502 ) Warranty, end of period $ 479 $ 750 $ 479 $ 750 XO FOUR Stealth Product Recall: I n August 2015, the Company received a limited number of reports from consumers and retailers that certain EAR FORCE ® XO FOUR Stealth headsets appeared to have a white substance or spots on the ear pads. Upon receiving the reports, the Company promptly stopped shipping any units of the XO FOUR Stealth headsets and notified our retail customers to stop sales pending the results of the Company’s investigation. An outside laboratory engaged by the Company identified the substance as mold. In cooperation with the U.S. Consumer Product Safety Commission (“CPSC”), the Company is voluntarily recalling certain units of the headsets. As of September 30, 2017 and the date of this report, the Company has not received notice of any law suits against the Company in connection with the recall and is working with the contract manufacturer to collect reimbursement for certain related costs. On February 3, 2016, the Company notified CPSC promptly upon discovery that a vendor had mistakenly shipped certain recalled headsets to fill online orders. The Company has attempted to notify directly each of the affected purchasers to instruct them to participate in the recall. By letter dated August 23, 2017, CPSC staff notified the Company that the staff does not intend to seek penalties against the Company at this time for the post-recall sale, offer for sale or distribution in commerce of recalled headsets. |
Summary of Significant Accoun20
Summary of Significant Accounting Policies (Policies) | 9 Months Ended |
Sep. 30, 2017 | |
Accounting Policies [Abstract] | |
Basis of Accounting | 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, 2016 Condensed Consolidated Balance Sheet has been derived from the Company's most recent audited financial statements included in its Annual Report on Form 10-K. These financial statements should be read in conjunction with the annual financial statements and the notes thereto included in our Annual Report on Form 10-K filed with the SEC on March 8, 2017 (“Annual Report”) that contains information useful to understanding the Company's businesses and financial statement presentations. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers , which requires entities to recognize revenue in a way that depicts the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled to in exchange for those goods or services. The new guidance also requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments and assets recognized from costs incurred to obtain or fulfill a contract. In July 2015, the FASB deferred the effective date of the standard by one year to annual reporting periods beginning after December 15, 2017 and interim periods within those annual periods. Based on our initial assessment, we do not believe the standard will materially impact our recognition of revenue from our headset business. The new standard will require certain price concessions and right of return arrangements to be recorded as part of the transaction price determination. The Company has identified, and is in the process of implementing, appropriate changes to its business processes, systems and controls to support recognition and disclosure under the new standard. The Company will adopt the new standard on January 1, 2018 under the the modified retrospective method of adoption, reflecting the cumulative effect of initially applying the new standard to revenue recognition in the first quarter of 2018. In February 2016, the FASB issued ASU No. 2016-02, Leases , that introduces the recognition of a right-of-use asset, which is an asset that represents the lessee’s right to use, or control the use of, a specified asset for the lease term and, a lease liability, which is a lessee’s obligation to make lease payments arising from a lease, measured on a discounted basis for all leases (with the exception of short-term leases). The guidance will be effective for public companies for annual reporting periods beginning after December 15, 2018, and interim periods within those fiscal years with early adoption permitted. The Company has not yet selected a transition method or determined the effect on its consolidated financial statements. In March 2016, the FASB issued ASU No. 2016-09, Compensation—Stock Compensation , which requires excess tax benefits and tax deficiencies, which arise due to differences between the measure of compensation expense and the amount deductible for tax purposes, to be recorded directly through earnings as a component of income tax expense. Previously, these differences were generally recorded in additional paid-in capital and thus had no impact on net income. Additionally, this guidance permits entities to make an accounting policy election for the impact of forfeitures on the recognition of expense for share-based payment awards. Forfeitures can be estimated, as allowed under previous standards, or recognized when they occur. The standard was effective for interim and annual reporting periods beginning after December 15, 2016. The Company adopted this standard on January 1, 2017 and the standard did not have a material impact on its consolidated financial statements. In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230) , which attempts to reduce the existing diversity in practice with respect to reporting the following eight specific cash flow issues: debt prepayment or debt extinguishment costs; settlement of zero-coupon debt instruments or other debt instruments with coupon interest rates that are insignificant in relation to the effective interest rate of the borrowing; contingent consideration payments made after a business combination; proceeds from the settlement of insurance claims; proceeds from the settlement of corporate-owned life insurance policies (including bank-owned life insurance policies); distributions received from equity method investees; beneficial interests in securitization transactions; and separately identifiable cash flows and application of the predominance principle. This guidance will be effective for the Company on January 1, 2018. The Company does not believe the guidance will have a material impact on its consolidated financial statements. In May 2017, the FASB issued ASU 2017-09, Compensation - Stock Compensation (Topic 718): Scope of Modification Accounting to provide clarity and reduce diversity in practice and cost and complexity when applying the guidance to a change to the terms or conditions of a share-based payment award. The amendments state that an entity will not have to account for the effects of a modification if: (i) the fair value of the modified award is the same immediately before and after the modification; (ii) the vesting conditions of the modified award are the same immediately before and after the modification; and (iii) the classification of the modified award as either an equity instrument or liability instrument is the same immediately before and after the modification. The amendments in this update are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2017. Early adoption is permitted, including adoption in any interim period. The adoption of this guidance is not expected to have a material impact upon our financial condition or results of operations. |
Fair Value Measurement Fair Val
Fair Value Measurement Fair Value Measurement (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | |
Fair Value, by Balance Sheet Grouping [Table Text Block] | The following is a summary of the carrying amounts and estimated fair values of our financial instruments at September 30, 2017 and December 31, 2016 : September 30, 2017 December 31, 2016 Reported Fair Value Reported Fair Value (in thousands) Financial Assets and Liabilities: Cash and cash equivalents $ 473 $ 473 $ 6,183 $ 6,183 Credit Facility 24,793 24,793 35,905 35,905 Term Loans 12,924 12,575 14,367 14,281 Subordinated Debt 21,247 21,403 19,403 18,569 |
Allowance for Sales Return (Tab
Allowance for Sales Return (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Allowance for Sales Returns [Abstract] | |
Schedule of allowances for sales returns | The following table provides the changes in our sales return reserve, which is classified as a reduction of accounts receivable: Three Months Ended Nine Months Ended September 30, September 30, 2017 2016 2017 2016 (in thousands) Balance, beginning of period $ 2,153 $ 579 $ 4,591 $ 6,268 Reserve accrual 2,146 2,807 4,228 7,341 Recoveries and deductions, net (1,917 ) (2,049 ) (6,437 ) (12,272 ) Balance, end of period $ 2,382 $ 1,337 $ 2,382 $ 1,337 |
Composition of Certain Financ23
Composition of Certain Financial Statement Items (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Condensed Consolidated Balance Sheet Components [Abstract] | |
Schedule of inventory | Inventories consist of the following: September 30, 2017 December 31, 2016 (in thousands) Raw materials $ 1,842 $ 1,680 Finished goods 44,027 20,018 Total inventories $ 45,869 $ 21,698 |
Schedule of property and equipment | Property and equipment, net, consists of the following: September 30, 2017 December 31, 2016 (in thousands) Machinery and equipment $ 1,359 $ 1,321 Software and software development 383 383 Furniture and fixtures 400 288 Tooling 2,043 1,581 Leasehold improvements 1,271 1,247 Demonstration units and convention booths 10,652 8,172 Total property and equipment, gross 16,108 12,992 Less: accumulated depreciation and amortization (11,681 ) (8,681 ) Total property and equipment, net $ 4,427 $ 4,311 |
Other Current Liabilities [Table Text Block] | Other current liabilities consist of the following: September 30, 2017 December 31, 2016 (in thousands) Accrued vendor expenses $ 1,839 $ 4,735 Accrued royalty 2,485 3,370 Accrued employee expenses 1,580 2,791 Accrued expenses 6,206 5,518 Total other current liabilities $ 12,110 $ 16,414 |
Goodwill and Other Intangible24
Goodwill and Other Intangible Assets (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Finite-Lived Intangible Assets [Line Items] | |
Schedule of Intangible Assets | Acquired identifiable intangible assets, and related accumulated amortization, as of September 30, 2017 and December 31, 2016 consist of: September 30, 2017 Gross Carrying Value Accumulated Amortization Asset Impairment Net Book Value (in thousands) Customer relationships $ 5,796 $ 4,064 $ — $ 1,732 Foreign Currency (933 ) (685 ) — (248 ) Total Intangible Assets $ 4,863 $ 3,379 $ — $ 1,484 December 31, 2016 Gross Carrying Value Accumulated Amortization Asset Impairment Net Book Value (in thousands) Customer relationships $ 5,796 $ 3,737 $ — $ 2,059 Non-compete agreements 177 177 — — In-process Research and Development 27,100 4,074 23,026 — Developed technology 8,880 802 8,078 — Trade names 170 92 78 — Patent and trademarks 967 65 902 — Foreign Currency (1,294 ) (853 ) — (441 ) Total Intangible Assets $ 41,796 $ 8,094 $ 32,084 $ 1,618 |
Schedule of Finite-Lived Intangible Assets, Future Amortization Expense | As of September 30, 2017 , estimated annual amortization expense related to definite lived intangible assets in future periods is as follows: (in thousands) 2017 $ 109 2018 366 2019 307 2020 258 2021 217 Thereafter 475 Total $ 1,732 |
Credit Facilities and Long-Te25
Credit Facilities and Long-Term Debt (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Debt Disclosure [Abstract] | |
Schedule of Long-Term Debt Instruments | September 30, 2017 December 31, 2016 (in thousands) Revolving credit facility, maturing March 2019 $ 24,793 $ 35,905 Term Loan Due 2018 2,564 3,632 Term Loan Due 2019 10,360 10,735 Less unamortized deferred financing fees 872 1,278 Total Term Loans 12,052 13,089 Subordinated notes - related party 21,247 19,403 Less unamortized debt discount 1,196 1,522 Total Subordinated notes 20,051 17,881 Total outstanding debt 56,896 66,875 Less: current portion of revolving line of credit (24,793 ) (35,905 ) Less: current portion of term loans (4,814 ) (2,647 ) Total noncurrent portion of long-term debt $ 27,289 $ 28,323 |
Income Taxes (Tables)
Income Taxes (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Income Tax Disclosure [Abstract] | |
Schedule of income tax benefit | The following table presents our income tax expense (benefit) and effective income tax rate: Three Months Ended Nine Months Ended September 30, September 30, 2017 2016 2017 2016 (in thousands) Income tax expense (benefit) $ 578 $ (133 ) $ 1,098 $ (340 ) Effective income tax rate 672.1 % 0.3 % (6.7 )% 0.3 % |
Stock-Based Compensation (Table
Stock-Based Compensation (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Stock-based compensation cost | Total estimated stock-based compensation expense for employees and non-employees, related to all of the Company's stock-based awards, was comprised as follows: Three Months Ended Nine Months Ended September 30, September 30, 2017 2016 2017 2016 (in thousands) Cost of revenue $ 20 $ 152 $ (66 ) $ 398 Selling and marketing 18 40 74 50 Research and development 68 138 188 424 General and administrative 264 687 991 2,350 Total stock-based compensation $ 370 $ 1,017 $ 1,187 $ 3,222 |
Stock activity and total number of shares available for grant | The following table presents the stock activity and the total number of shares available for grant as of September 30, 2017 : (in thousands) Balance at December 31, 2016 2,261 Options granted (705 ) Restricted Stock granted (167 ) Forfeited/Expired shares added back 1,098 Balance at September 30, 2017 2,487 |
Stock option activity | Options Outstanding Number of Shares Underlying Outstanding Options Weighted-Average Exercise Price Weighted-Average Remaining Contractual Term Aggregate Intrinsic Value (In years) Outstanding at December 31, 2016 6,381,447 1.90 7.37 20,033 Granted 704,865 0.93 Exercised — — Forfeited (1,053,683 ) 2.22 Outstanding at September 30, 2017 6,032,629 1.73 6.75 2,543 Vested and expected to vest at September 30, 2017 6,022,628 1.74 6.75 2,543 Exercisable at September 30, 2017 3,886,414 1.76 6.68 2,100 |
Schedule of weighted-average assumptions | The following are assumptions for the nine months ended September 30, 2017 . Expected term (in years) 6.1 Risk-free interest rate 1.9% - 2.1% Expected volatility 40.1% - 41.1% Dividend rate 0% |
Restricted stock awards | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Stock option activity | Shares Weighted Average Grant Date Fair Value Per Share Nonvested restricted stock at December 31, 2016 135,705 1.84 Granted 166,665 0.90 Vested (91,002 ) 2.06 Forfeited (43,903 ) 1.16 Nonvested restricted stock at September 30, 2017 167,465 0.96 |
Net Loss Per Share (Tables)
Net Loss Per Share (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Earnings Per Share [Abstract] | |
Schedule of computation of basic and diluted net (loss) income per share of common stock | The following table sets forth the computation of basic and diluted net loss per share of common stock attributable to common stockholders: Three Months Ended Nine Months Ended September 30, September 30, 2017 2016 2017 2016 (in thousands, except per-share data) Net Loss $ (492 ) $ (44,799 ) $ (17,479 ) $ (99,383 ) Weighted average common shares outstanding — Basic 49,386 49,230 49,328 48,371 Plus incremental shares from assumed conversions: Dilutive effect of stock options — — — — Weighted average common shares outstanding — Diluted 49,386 49,230 49,328 48,371 Net loss per share: Basic $ (0.01 ) $ (0.91 ) $ (0.35 ) $ (2.05 ) Diluted $ (0.01 ) $ (0.91 ) $ (0.35 ) $ (2.05 ) |
Schedule of antidilutive securities excluded from computation of diluted net income per share of common stock | Three Months Ended Nine Months Ended September 30, September 30, 2017 2016 2017 2016 (in thousands) Stock options 6,133 6,758 6,287 6,321 Warrants 3,059 3,068 3,061 3,072 Unvested restricted stock awards 167 136 137 115 Total 9,359 9,962 9,485 9,508 |
Segment and Geographical Info29
Segment and Geographical Information (Tables) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Segment Reporting Information [Line Items] | ||||
Other Nonoperating Income (Expense) | $ 252 | $ (326) | $ 517 | $ (1,395) |
Operating Income (Loss) | 1,876 | (42,740) | (11,181) | (92,997) |
Interest expense | 2,042 | 1,866 | 5,717 | 5,331 |
Income (Loss) from Continuing Operations before Equity Method Investments, Income Taxes, Extraordinary Items, Noncontrolling Interest | $ 86 | $ (44,932) | $ (16,381) | $ (99,723) |
Reconciliation of Assets from Segment to Consolidated [Table Text Block] | September 30, December 31, Total Assets (in thousands) Headset $ 83,029 $ 94,081 HyperSound (1) 27,918 31,233 Eliminations (27,878 ) (30,514 ) Total $ 83,069 $ 94,800 | |||
Schedule of Segment Reporting Information, by Segment [Table Text Block] | The following tables show our net revenues, operating income and total assets by our reporting segments: Three Months Ended Nine Months Ended September 30, September 30, 2017 2016 2017 2016 Net Revenues (in thousands) Headset $ 35,947 $ 38,283 $ 69,291 $ 91,172 HyperSound 28 101 148 602 Total $ 35,975 $ 38,384 $ 69,439 $ 91,774 Operating Income (Loss) Headset $ 1,819 $ 1,710 $ (9,779 ) $ (7,971 ) HyperSound 57 (44,450 ) (1,402 ) (85,026 ) Total $ 1,876 $ (42,740 ) $ (11,181 ) $ (92,997 ) Interest Expense $ 2,042 $ 1,866 $ 5,717 $ 5,331 Other non-operating expense (income), net $ (252 ) $ 326 (517 ) 1,395 Earnings (loss) before income tax $ 86 $ (44,932 ) $ (16,381 ) $ (99,723 ) | |||
Schedule of total revenues based on where customers are physically located | The following table represents total net revenues based on where customers are physically located: Three Months Ended Nine Months Ended September 30, September 30, 2017 2016 2017 2016 (in thousands) North America $ 23,320 $ 28,063 $ 47,371 $ 69,679 United Kingdom 5,204 3,142 9,182 9,073 Europe 5,947 5,477 9,884 9,326 International 1,504 1,702 3,002 3,696 Total net revenues $ 35,975 $ 38,384 $ 69,439 $ 91,774 |
Commitment and Contingencies (T
Commitment and Contingencies (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Commitments and Contingencies Disclosure [Abstract] | |
Schedule of Product Warranty Liability | The following table provides the changes in our product warranties, which are included in accrued liabilities: Three Months Ended Nine Months Ended September 30, September 30, 2017 2016 2017 2016 (in thousands) Warranty, beginning of period $ 529 $ 717 $ 639 $ 580 Warranty costs accrued 59 195 173 672 Settlements of warranty claims (109 ) (162 ) (333 ) (502 ) Warranty, end of period $ 479 $ 750 $ 479 $ 750 |
Background and Basis of Prese31
Background and Basis of Presentation(Details) - shares | Sep. 30, 2017 | Dec. 31, 2016 |
Business Acquisition [Line Items] | ||
Common stock shares authorized | 100,000,000 | 100,000,000 |
Fair Value Measurement (Details
Fair Value Measurement (Details) - USD ($) $ in Thousands | Sep. 30, 2017 | Dec. 31, 2016 |
Reported Value Measurement [Member] | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Cash and Cash Equivalents, Fair Value Disclosure | $ 473 | $ 6,183 |
Estimate of Fair Value Measurement [Member] | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Cash and Cash Equivalents, Fair Value Disclosure | 473 | 6,183 |
Loans Payable [Member] | Reported Value Measurement [Member] | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Debt Instrument, Fair Value Disclosure | 12,924 | 14,367 |
Loans Payable [Member] | Estimate of Fair Value Measurement [Member] | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Debt Instrument, Fair Value Disclosure | 12,575 | 14,281 |
Subordinated Debt [Member] | Reported Value Measurement [Member] | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Debt Instrument, Fair Value Disclosure | 21,247 | 19,403 |
Subordinated Debt [Member] | Estimate of Fair Value Measurement [Member] | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Debt Instrument, Fair Value Disclosure | 21,403 | 18,569 |
Revolving credit facility, maturing March 2019 | Line of Credit [Member] | Reported Value Measurement [Member] | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Debt Instrument, Fair Value Disclosure | 24,793 | 35,905 |
Revolving credit facility, maturing March 2019 | Line of Credit [Member] | Estimate of Fair Value Measurement [Member] | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Debt Instrument, Fair Value Disclosure | $ 24,793 | $ 35,905 |
Allowance for Sales Return (Det
Allowance for Sales Return (Details) - Allowance for Sales Returns - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Movement in Valuation Allowances and Reserves [Roll Forward] | ||||
Sales returns reserve, beginning balance | $ 2,153 | $ 579 | $ 4,591 | $ 6,268 |
Reserve accrual | 2,146 | 2,807 | 4,228 | 7,341 |
Valuation Allowances and Reserves, Deductions | (1,917) | (2,049) | (6,437) | (12,272) |
Sales returns reserve, ending balance | $ 2,382 | $ 1,337 | $ 2,382 | $ 1,337 |
Composition of Certain Financ34
Composition of Certain Financial Statement Items Inventory (Details) - USD ($) $ in Thousands | Sep. 30, 2017 | Dec. 31, 2016 |
Condensed Consolidated Balance Sheet Components [Abstract] | ||
Raw materials | $ 1,842 | $ 1,680 |
Finished goods | 44,027 | 20,018 |
Total inventories | $ 45,869 | $ 21,698 |
Composition of Certain Financ35
Composition of Certain Financial Statement Items Property and equipment (Details) - USD ($) $ in Thousands | Sep. 30, 2017 | Dec. 31, 2016 |
Property, Plant and Equipment [Line Items] | ||
Total property and equipment, gross | $ 16,108 | $ 12,992 |
Less: accumulated depreciation and amortization | (11,681) | (8,681) |
Total property and equipment, net | 4,427 | 4,311 |
Machinery and equipment | ||
Property, Plant and Equipment [Line Items] | ||
Total property and equipment, gross | 1,359 | 1,321 |
Software and software development | ||
Property, Plant and Equipment [Line Items] | ||
Total property and equipment, gross | 383 | 383 |
Furniture and fixtures | ||
Property, Plant and Equipment [Line Items] | ||
Total property and equipment, gross | 400 | 288 |
Tooling | ||
Property, Plant and Equipment [Line Items] | ||
Total property and equipment, gross | 2,043 | 1,581 |
Leasehold improvements | ||
Property, Plant and Equipment [Line Items] | ||
Total property and equipment, gross | 1,271 | 1,247 |
Demonstration units and convention booths | ||
Property, Plant and Equipment [Line Items] | ||
Total property and equipment, gross | $ 10,652 | $ 8,172 |
Composition of Certain Financ36
Composition of Certain Financial Statement Items Other Liabilities (Details) - USD ($) $ in Thousands | Sep. 30, 2017 | Dec. 31, 2016 |
Condensed Consolidated Balance Sheet Components [Abstract] | ||
Accrued Vendor Expenses, Current | $ 1,839 | $ 4,735 |
Accrued Royalties, Current | 2,485 | 3,370 |
Employee-related Liabilities, Current | 1,580 | 2,791 |
Other Accrued Liabilities, Current | 6,206 | 5,518 |
Other current liabilities | $ 12,110 | $ 16,414 |
Goodwill and Other Intangible37
Goodwill and Other Intangible Assets (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | Dec. 31, 2016 | |
Schedule of Goodwill, Finite and Indefinite-lived Intangible Assets [Line Items] | |||||
Amortization of intangible assets | $ 100 | $ 1,400 | $ 259 | $ 4,028 | |
Finite-lived Intangible Assets [Roll Forward] | |||||
Total intangible assets, gross carrying value | 4,863 | 4,863 | $ 41,796 | ||
Finite-lived intangible assets, accumulated amortization | 3,379 | 3,379 | 8,094 | ||
Intangible, Impaired, Accumulated Impairment Loss | 0 | 0 | 32,084 | ||
Total intangible assets, net book value | 1,484 | 1,484 | 1,618 | ||
Total | 1,732 | 1,732 | |||
Foreign Currency [Member] | |||||
Finite-lived Intangible Assets [Roll Forward] | |||||
Finite-lived intangible assets, gross carrying value | (933) | (933) | (1,294) | ||
Finite-lived intangible assets, accumulated amortization | (685) | (685) | (853) | ||
Intangible, Impaired, Accumulated Impairment Loss | 0 | 0 | 0 | ||
Total | (248) | (248) | (441) | ||
Customer relationships | |||||
Finite-lived Intangible Assets [Roll Forward] | |||||
Finite-lived intangible assets, gross carrying value | 5,796 | 5,796 | 5,796 | ||
Finite-lived intangible assets, accumulated amortization | 4,064 | 4,064 | 3,737 | ||
Intangible, Impaired, Accumulated Impairment Loss | 0 | 0 | 0 | ||
Total | $ 1,732 | $ 1,732 | 2,059 | ||
Non-compete agreements | |||||
Finite-lived Intangible Assets [Roll Forward] | |||||
Finite-lived intangible assets, gross carrying value | 177 | ||||
Finite-lived intangible assets, accumulated amortization | 177 | ||||
Intangible, Impaired, Accumulated Impairment Loss | 0 | ||||
Total | 0 | ||||
In-process research and development (IPR&D) | |||||
Finite-lived Intangible Assets [Roll Forward] | |||||
Finite-lived intangible assets, gross carrying value | 27,100 | ||||
Finite-lived intangible assets, accumulated amortization | 4,074 | ||||
Intangible, Impaired, Accumulated Impairment Loss | 23,026 | ||||
Total | 0 | ||||
Developed technology | |||||
Finite-lived Intangible Assets [Roll Forward] | |||||
Finite-lived intangible assets, gross carrying value | 8,880 | ||||
Finite-lived intangible assets, accumulated amortization | 802 | ||||
Intangible, Impaired, Accumulated Impairment Loss | 8,078 | ||||
Total | 0 | ||||
Trade name | |||||
Finite-lived Intangible Assets [Roll Forward] | |||||
Finite-lived intangible assets, gross carrying value | 170 | ||||
Finite-lived intangible assets, accumulated amortization | 92 | ||||
Intangible, Impaired, Accumulated Impairment Loss | 78 | ||||
Total | 0 | ||||
Patent and trademarks | |||||
Finite-lived Intangible Assets [Roll Forward] | |||||
Finite-lived intangible assets, gross carrying value | 967 | ||||
Finite-lived intangible assets, accumulated amortization | 65 | ||||
Intangible, Impaired, Accumulated Impairment Loss | 902 | ||||
Total | $ 0 |
Goodwill and Other Intangible38
Goodwill and Other Intangible Assets - Estimated Future Amortization Expense (Details) $ in Thousands | Sep. 30, 2017USD ($) |
Finite-Lived Intangible Assets, Amortization Expense, Maturity Schedule [Abstract] | |
2,014 | $ 109 |
2,015 | 366 |
2,016 | 307 |
2,017 | 258 |
2,018 | 217 |
Thereafter | 475 |
Total | $ 1,732 |
Goodwill and Other Intangible39
Goodwill and Other Intangible Assets - Additional Disclosures (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Finite-Lived Intangible Assets [Line Items] | ||||
Amortization of intangible assets | $ 100 | $ 1,400 | $ 259 | $ 4,028 |
Acquisition of Lygo International Limited | Customer relationships | ||||
Finite-Lived Intangible Assets [Line Items] | ||||
Useful life | 13 years |
Credit Facilities and Long-Te40
Credit Facilities and Long-Term Debt (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | Dec. 31, 2016 | Jul. 22, 2015 | |
Debt Instrument [Line Items] | ||||||
Total outstanding debt | $ 56,896,000 | $ 56,896,000 | $ 66,875,000 | |||
Total noncurrent portion of long-term debt | 27,289,000 | 27,289,000 | 28,323,000 | |||
Interest Expense, Debt | 1,500,000 | $ 1,300,000 | 4,200,000 | $ 3,900,000 | ||
Interest Expense, Related Party | 600,000 | 500,000 | 1,800,000 | 1,600,000 | ||
Amortization of debt financing costs | 400,000 | $ 325,000 | 1,181,000 | $ 957,000 | ||
Revolving credit facilities | Revolving credit facility, maturing March 2019 | ||||||
Debt Instrument [Line Items] | ||||||
Total outstanding debt | 24,793,000 | 24,793,000 | 35,905,000 | |||
Current maturities of outstanding debt | (24,793,000) | (24,793,000) | (35,905,000) | |||
Term Loan Due 2018 [Member] | ||||||
Debt Instrument [Line Items] | ||||||
Total outstanding debt | 2,564,000 | 2,564,000 | 3,632,000 | |||
Loans Payable | ||||||
Debt Instrument [Line Items] | ||||||
Total outstanding debt | 12,052,000 | 12,052,000 | 13,089,000 | |||
Current maturities of outstanding debt | (4,814,000) | (4,814,000) | (2,647,000) | |||
Term Loan Due 2019 | ||||||
Debt Instrument [Line Items] | ||||||
Total outstanding debt | 10,360,000 | 10,360,000 | 10,735,000 | $ 15,000,000 | ||
Unamortized Debt Issuance Expense | 872,000 | 872,000 | 1,278,000 | |||
Subordinated Debt | ||||||
Debt Instrument [Line Items] | ||||||
Total outstanding debt | 21,247,000 | 21,247,000 | 19,403,000 | |||
Debt Instrument, Unamortized Discount | 1,196,000 | 1,196,000 | 1,522,000 | |||
Notes Payable, Other Payables [Member] | ||||||
Debt Instrument [Line Items] | ||||||
Total outstanding debt | $ 20,051,000 | $ 20,051,000 | $ 17,881,000 |
Credit Facilities and Long-Te41
Credit Facilities and Long-Term Debt - Credit Facility (Details) | 9 Months Ended | ||
Sep. 30, 2017USD ($) | Mar. 16, 2015 | Dec. 29, 2014USD ($) | |
Line of Credit Facility [Line Items] | |||
Expiration date | Mar. 31, 2019 | ||
Revolving credit facility, maturing March 2019 | |||
Line of Credit Facility [Line Items] | |||
Maximum borrowing capacity | $ 60,000,000 | ||
Remaining borrowing capacity | $ 12,500,000 | ||
Debt Instrument, Covenant, Current Fixed Charge Ratio Required, Minimum | 1.15 | ||
Revolving credit facility, maturing March 2019 | Minimum | |||
Line of Credit Facility [Line Items] | |||
Unused commitment fee, percent | 0.25% | ||
Revolving credit facility, maturing March 2019 | Maximum | |||
Line of Credit Facility [Line Items] | |||
Unused commitment fee, percent | 0.50% | ||
Revolving credit facility, maturing March 2019 | Base rate | |||
Line of Credit Facility [Line Items] | |||
Basis spread on variable rate | 6.24% | ||
Revolving credit facility, maturing March 2019 | Base rate | Minimum | |||
Line of Credit Facility [Line Items] | |||
Basis spread on variable rate | 1.00% | ||
Revolving credit facility, maturing March 2019 | Base rate | Maximum | |||
Line of Credit Facility [Line Items] | |||
Basis spread on variable rate | 1.50% | ||
Revolving credit facility, maturing March 2019 | London Interbank Offered Rate (LIBOR) [Member] | |||
Line of Credit Facility [Line Items] | |||
Basis spread on variable rate | 3.21% | ||
Revolving credit facility, maturing March 2019 | London Interbank Offered Rate (LIBOR) [Member] | Minimum | |||
Line of Credit Facility [Line Items] | |||
Basis spread on variable rate | 2.00% | ||
Revolving credit facility, maturing March 2019 | London Interbank Offered Rate (LIBOR) [Member] | Maximum | |||
Line of Credit Facility [Line Items] | |||
Basis spread on variable rate | 2.50% | ||
Revolving credit facility, maturing March 2019 | UK Borrower | |||
Line of Credit Facility [Line Items] | |||
Maximum borrowing capacity | $ 10,000,000 | ||
Loans Payable | |||
Line of Credit Facility [Line Items] | |||
Debt Instrument, Amended Credit Agreement, Principal Amount Permitted to be Repaid | $ 7,700,000 | ||
Loans Payable | London Interbank Offered Rate (LIBOR) [Member] | |||
Line of Credit Facility [Line Items] | |||
Basis spread on variable rate | 5.00% |
Credit Facilities and Long-Te42
Credit Facilities and Long-Term Debt - Subordinated Note (Details) - USD ($) $ / shares in Units, shares in Millions | Jul. 22, 2015 | Aug. 13, 2015 | Sep. 30, 2017 | Apr. 21, 2016 | Dec. 31, 2016 | Nov. 30, 2015 | Nov. 16, 2015 | Jul. 08, 2015 | Apr. 23, 2015 |
Line of Credit Facility [Line Items] | |||||||||
Risk-free interest rate, minimum | 1.90% | ||||||||
Total outstanding debt | $ 56,896,000 | $ 66,875,000 | |||||||
Subordinated Debt | |||||||||
Line of Credit Facility [Line Items] | |||||||||
Total outstanding debt | $ 21,247,000 | $ 19,403,000 | |||||||
Chief Executive Officer, Director, and Shareholder | VTB Holdings, Inc | Issuance Of Debt, April Notes [Member] | |||||||||
Line of Credit Facility [Line Items] | |||||||||
Related Party Transaction, Rate, Initial Period | 10.00% | ||||||||
Related Party Transaction, Rate, Subsequent Period | 20.00% | ||||||||
Chief Executive Officer, Director, and Shareholder | VTB Holdings, Inc | Issuance Of Debt, May Notes [Member] | |||||||||
Line of Credit Facility [Line Items] | |||||||||
Related Party Transaction, Rate, Initial Period | 10.00% | ||||||||
Related Party Transaction, Rate, Subsequent Period | 20.00% | ||||||||
Chief Executive Officer, Director, and Shareholder | Subordinated Debt | VTB Holdings, Inc | |||||||||
Line of Credit Facility [Line Items] | |||||||||
Debt Instrument, Maturity Date | Sep. 29, 2019 | ||||||||
Chief Executive Officer, Director, and Shareholder | Subordinated Debt | VTB Holdings, Inc | Issuance Of Debt, April Notes [Member] | |||||||||
Line of Credit Facility [Line Items] | |||||||||
Debt Instrument, Face Amount | $ 5,000,000 | ||||||||
Chief Executive Officer, Director, and Shareholder | Subordinated Debt | VTB Holdings, Inc | Issuance Of Debt, May Notes [Member] | |||||||||
Line of Credit Facility [Line Items] | |||||||||
Debt Instrument, Face Amount | 3,800,000 | ||||||||
Debt Instrument, Maturity Date | Aug. 13, 2015 | ||||||||
Chief Executive Officer, Director, and Shareholder | Subordinated Debt | VTB Holdings, Inc | Issuance Of Debt, June Notes [Member] | |||||||||
Line of Credit Facility [Line Items] | |||||||||
Debt Instrument, Face Amount | $ 3,000,000 | ||||||||
Debt Instrument, Maturity Date | Sep. 17, 2015 | ||||||||
hear_Debt Instrument, Maximum Capacity | $ 15,000,000 | ||||||||
Total outstanding debt | $ 9,000,000 | ||||||||
Chief Executive Officer, Director, and Shareholder | Subordinated Debt | VTB Holdings, Inc | Issuance Of Debt, Additional June Notes [Member] | |||||||||
Line of Credit Facility [Line Items] | |||||||||
Debt Instrument, Face Amount | $ 6,000,000 | ||||||||
Chief Executive Officer, Director, and Shareholder | Subordinated Debt | VTB Holdings, Inc | Issuance Of Debt, November Notes [Member] | |||||||||
Line of Credit Facility [Line Items] | |||||||||
Debt Instrument, Face Amount | $ 2,500,000 | ||||||||
Debt Instrument, Interest Rate, Stated Percentage | 15.00% | ||||||||
Chief Executive Officer, Director, and Shareholder | Promissory Note [Member] | VTB Holdings, Inc | Issuance Of Debt, November Notes [Member] | |||||||||
Line of Credit Facility [Line Items] | |||||||||
Debt Instrument, Face Amount | $ 2,000,000 | ||||||||
Debt Instrument, Interest Rate, Stated Percentage | 12.00% | ||||||||
London Interbank Offered Rate (LIBOR) [Member] | Chief Executive Officer, Director, and Shareholder | Subordinated Debt | VTB Holdings, Inc | |||||||||
Line of Credit Facility [Line Items] | |||||||||
Basis spread on variable rate | 10.50% | ||||||||
London Interbank Offered Rate (LIBOR) [Member] | Chief Executive Officer, Director, and Shareholder | Promissory Note [Member] | VTB Holdings, Inc | |||||||||
Line of Credit Facility [Line Items] | |||||||||
Basis spread on variable rate | 10.50% | ||||||||
VTB Holdings, Inc | |||||||||
Line of Credit Facility [Line Items] | |||||||||
Class of Warrant or Right, Outstanding | 1.7 | 1.4 | |||||||
Class of Warrant or Right, Exercise Price of Warrants or Rights | $ 2.54 | $ 2 |
Credit Facilities and Long-Te43
Credit Facilities and Long-Term Debt - Deferred Financing Costs, Invoice Factoring and Subordinated Notes (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Debt Instrument [Line Items] | ||||
Amortization of debt financing costs | $ 400 | $ 325 | $ 1,181 | $ 957 |
Credit Facilities and Long-Te44
Credit Facilities and Long-Term Debt - Term Loan Due 2019 (Details) | Jul. 22, 2015USD ($) | Sep. 30, 2017USD ($) | Sep. 30, 2016USD ($) | Dec. 31, 2016USD ($) |
Line of Credit Facility [Line Items] | ||||
Total outstanding debt | $ 56,896,000 | $ 66,875,000 | ||
Repayments of Notes Payable | 1,443,000 | $ 3,610,000 | ||
Term Loan Due 2019 | ||||
Line of Credit Facility [Line Items] | ||||
Total outstanding debt | $ 15,000,000 | $ 10,360,000 | $ 10,735,000 | |
Debt Instrument, Maturity Date | Jun. 28, 2019 | |||
London Interbank Offered Rate (LIBOR) [Member] | Term Loan Due 2019 | ||||
Line of Credit Facility [Line Items] | ||||
Basis spread on variable rate | 10.25% | |||
Additional Default Rate [Member] | Term Loan Due 2019 | ||||
Line of Credit Facility [Line Items] | ||||
Basis spread on variable rate | 2.00% | |||
Year Ended December 31, 2015 [Member] | Term Loan Due 2019 | ||||
Line of Credit Facility [Line Items] | ||||
Debt Instrument, Covenant, Consolidated Leverage Ratio | 5.75 | |||
Year Ended December 31, 2017 [Member] | Term Loan Due 2019 | ||||
Line of Credit Facility [Line Items] | ||||
Debt Instrument, Covenant, Consolidated Leverage Ratio | 3 | |||
hear_Capital Expenditures, Maximum | $ 6,000,000 | |||
Years Ended December 31, 2016, 2017, 2018, 2019 [Member] | Term Loan Due 2019 | ||||
Line of Credit Facility [Line Items] | ||||
hear_Capital Expenditures, Maximum | $ 5,000,000 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Operating Loss Carryforwards [Line Items] | ||||
Income tax expense (benefit) | $ 578 | $ (133) | $ 1,098 | $ (340) |
Effective tax rate | 672.10% | 0.30% | (6.70%) | 0.30% |
Unrecognized Tax Benefits, Inclusive of Interest and Penalties | $ 2,200 | $ 2,200 | ||
Interest and penalties | 700 | 700 | ||
2029 [Member] | ||||
Operating Loss Carryforwards [Line Items] | ||||
Operating Loss Carryforwards | 49,000 | 49,000 | ||
State and Local Jurisdiction [Member] | 2029 [Member] | ||||
Operating Loss Carryforwards [Line Items] | ||||
Operating Loss Carryforwards | 21,000 | 21,000 | ||
Domestic Tax Authority [Member] | 2029 [Member] | ||||
Operating Loss Carryforwards [Line Items] | ||||
Operating Loss Carryforwards | $ 12,700 | $ 12,700 |
Stock-Based Compensation - Stoc
Stock-Based Compensation - Stock-based Compensation Expense (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | Dec. 31, 2016 | |
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | |||||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Number | 6,032,629 | 6,032,629 | 6,381,447 | ||
Stock-based compensation | $ 370 | $ 1,017 | $ 1,187 | $ 3,222 | |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Forfeitures in Period | 1,053,683 | ||||
Forfeited/Expired shares added back | 1,098,000 | ||||
Cost of revenue | |||||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | |||||
Stock-based compensation | 20 | 152 | $ (66) | 398 | |
Selling and marketing | |||||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | |||||
Stock-based compensation | 18 | 40 | 74 | 50 | |
Research and development | |||||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | |||||
Stock-based compensation | 68 | 138 | 188 | 424 | |
General and administrative | |||||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | |||||
Stock-based compensation | $ 264 | $ 687 | $ 991 | $ 2,350 |
Stock-Based Compensation - Shar
Stock-Based Compensation - Shares Available for Grant (Details) | 9 Months Ended |
Sep. 30, 2017shares | |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Shares Available for Grant [Roll Forward] | |
Balance, beginning of period (in shares) | 2,261,000 |
Options granted | (704,865) |
RSAs granted (in shares) | (167,000) |
Forfeited/Expired shares added back | 1,098,000 |
Balance, end of period (in shares) | 2,487,000 |
Stock-Based Compensation - St48
Stock-Based Compensation - Stock Option Activity (Details) - USD ($) | 9 Months Ended | 12 Months Ended | |
Sep. 30, 2017 | Dec. 31, 2014 | Dec. 31, 2016 | |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding [Roll Forward] | |||
Outstanding beginning of period (in shares) | 6,381,447 | ||
Options granted | 704,865 | ||
Exercised (in shares) | 0 | ||
Forfeited (in shares) | (1,053,683) | ||
Outstanding end of period (in shares) | 6,032,629 | ||
Vested and expected to vest (in shares) | 6,022,628 | ||
Exercisable (in shares) | 3,886,414 | ||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Exercise Price [Abstract] | |||
Outstanding beginning of period (in dollars per share) | $ 1.90 | ||
Granted (in dollars per share) | 0.93 | ||
Exercised (in dollars per share) | 0 | ||
Forfeited (in dollars per share) | 2.22 | ||
Outstanding end of period (in dollars per share) | 1.73 | ||
Vested and expected to vest (in dollars per share) | 1.74 | ||
Exercisable (in dollars per share) | $ 1.76 | ||
Outstanding, weighted average remaining contractual term | 6 years 9 months | 7 years 4 months 15 days | |
Vested and expected to vest, weighted average remaining contractual term | 6 years 9 months | ||
Exercisable, weighted average remaining contractual term | 6 years 8 months 5 days | ||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Additional Disclosures [Abstract] | |||
Outstanding, intrinsic value | $ 2,543 | $ 20,033 | |
Vested and expected to vest, intrinsic value | 2,543 | ||
Exercisable, intrinsic value | $ 2,100 | ||
Stock options | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Employee Service Share-based Compensation, Nonvested Awards, Compensation Cost Not yet Recognized, Period for Recognition | 2 years 7 months |
Stock-Based Compensation - Weig
Stock-Based Compensation - Weighted-Average Assumptions (Details) | 9 Months Ended |
Sep. 30, 2017 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Risk-free interest rate, minimum | 1.90% |
Risk-free interest rate, maximum | 2.10% |
Expected volatility, minimum | 40.10% |
Expected volatility, maximum | 41.10% |
Expected dividend rate | 0.00% |
Minimum | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Expected term (in years) | 6 years 18 days |
Maximum | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Expected term (in years) | 6 years 1 month 18 days |
Stock-Based Compensation - RSA
Stock-Based Compensation - RSA Activity (Details) | 9 Months Ended |
Sep. 30, 2017$ / sharesshares | |
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number of Shares [Roll Forward] | |
Granted (in shares) | 167,000 |
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Weighted Average Grant Date Fair Value [Abstract] | |
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Forfeitures, Weighted Average Grant Date Fair Value | $ / shares | $ 1.16 |
Restricted stock awards | |
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number of Shares [Roll Forward] | |
Outstanding beginning of period (in shares) | 135,705 |
Granted (in shares) | 166,665 |
Vested (in shares) | (91,002) |
Outstanding end of period (in shares) | 167,465 |
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Weighted Average Grant Date Fair Value [Abstract] | |
Outstanding beginning of period (in dollars per share) | $ / shares | $ 1.84 |
Granted (in dollars per share) | $ / shares | 0.90 |
Outstanding end of period (in dollars per share) | $ / shares | $ 0.96 |
Employee Service Share-based Compensation, Nonvested Awards, Compensation Cost Not yet Recognized, Period for Recognition | 6 months |
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Vested in Period, Weighted Average Grant Date Fair Value | $ / shares | $ 2.06 |
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Forfeited in Period | (43,903) |
Stock-Based Compensation (Detai
Stock-Based Compensation (Details Narrative) - USD ($) $ / shares in Units, $ in Thousands | 1 Months Ended | 9 Months Ended | |||
Sep. 30, 2010 | Sep. 30, 2017 | Dec. 31, 2016 | Nov. 30, 2015 | Jul. 22, 2015 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Award expiration period | 10 years | ||||
Forfeiture Period after Ending Employment | 90 days | ||||
Options exercised, intrinsic value | $ 0 | ||||
Weighted average grant date fair value of options granted (in dollars per share) | $ 0.39 | ||||
Estimated grant date fair value of options vested | $ 1,200 | ||||
Total unrecognized compensation cost related to stock options | 1,300 | ||||
Series B redeemable preferred stock | $ 18,547 | $ 17,480 | |||
Phantom equity | 2011 Phantom Equity Appreciation Plan | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Share authorized (in shares) | 1,500,000 | ||||
Shares granted and outstanding (in shares) | 714,347 | ||||
Weighted average exercise price of options granted and outstanding (in dollars per share) | $ 0.93 | ||||
VTB Holdings, Inc | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Class of Warrant or Right, Outstanding | 1,400,000 | 1,700,000 | |||
Class of Warrant or Right, Exercise Price of Warrants or Rights | $ 2 | $ 2.54 | |||
Series B Redeemable Preferred Stock | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Shares issued | 1,000,000 | ||||
Fair value of shares issued | $ 12,400 | ||||
Par value (in dollars per share) | $ 12.425371 | ||||
Non-Executives [Member] | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Forfeiture rate | 10.00% | ||||
Executive Officer [Member] | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Forfeiture rate | 0.00% |
Net Loss Per Share - Computatio
Net Loss Per Share - Computation of Basic and Diluted Earnings per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Basic and diluted: | ||||
Net loss | $ (492) | $ (44,799) | $ (17,479) | $ (99,383) |
Basic: | ||||
Weighted-average common shares outstanding, basic (in shares) | 49,386 | 49,230 | 49,328 | 48,371 |
Dilutive effect of stock options | 0 | 0 | 0 | 0 |
Diluted: | ||||
Weighted-average common shares outstanding, diluted (in shares) | 49,386 | 49,230 | 49,328 | 48,371 |
Net loss per share: | ||||
Basic (in dollars per share) | $ (0.01) | $ (0.91) | $ (0.35) | $ (2.05) |
Diluted (in dollars per share) | $ (0.01) | $ (0.91) | $ (0.35) | $ (2.05) |
Net Loss Per Share - Antidiluti
Net Loss Per Share - Antidilutive Securities (Details) - shares shares in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Antidilutive securities excluded from computation of earnings per share | 9,359 | 9,962 | 9,485 | 9,508 |
Stock options | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Antidilutive securities excluded from computation of earnings per share | 6,133 | 6,758 | 6,287 | 6,321 |
Warrants | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Antidilutive securities excluded from computation of earnings per share | 3,059 | 3,068 | 3,061 | 3,072 |
Restricted stock awards | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Antidilutive securities excluded from computation of earnings per share | 167 | 136 | 137 | 115 |
Segment and Geographical Info54
Segment and Geographical Information - Revenues (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | Dec. 31, 2016 | |
Revenues from External Customers and Long-Lived Assets [Line Items] | |||||
Assets | $ 83,069 | $ 83,069 | $ 94,800 | ||
Revenues | 35,975 | $ 38,384 | 69,439 | $ 91,774 | |
Operating Income (Loss) | 1,876 | (42,740) | (11,181) | (92,997) | |
United States | |||||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||||
Revenues | 23,320 | 28,063 | 47,371 | 69,679 | |
Other | |||||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||||
Revenues | 1,504 | 1,702 | 3,002 | 3,696 | |
United Kingdom | |||||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||||
Revenues | 5,204 | 3,142 | 9,182 | 9,073 | |
Europe [Member] | |||||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||||
Revenues | 5,947 | 5,477 | 9,884 | 9,326 | |
Headset Business [Member] | |||||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||||
Assets | 83,029 | 83,029 | 94,081 | ||
Revenues | 35,947 | 38,283 | 69,291 | 91,172 | |
Operating Income (Loss) | 1,819 | 1,710 | (9,779) | (7,971) | |
HyperSound Business [Member] | |||||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||||
Assets | 27,918 | 27,918 | 31,233 | ||
Revenues | 28 | 101 | 148 | 602 | |
Operating Income (Loss) | 57 | $ (44,450) | (1,402) | $ (85,026) | |
Consolidation, Eliminations [Member] | |||||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||||
Assets | $ (27,878) | $ (27,878) | $ (30,514) |
Commitments and Contingencies (
Commitments and Contingencies (Details) - USD ($) $ in Thousands | Feb. 18, 2015 | Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | Aug. 05, 2013 |
Movement in Standard Product Warranty Accrual [Roll Forward] | ||||||
Warranty accrual, beginning balance | $ 529 | $ 717 | $ 639 | $ 580 | ||
Warranty costs accrued | 59 | 195 | 173 | 672 | ||
Settlements of warranty claims | (109) | (162) | (333) | (502) | ||
Warranty accrual, ending balance | $ 479 | $ 750 | $ 479 | $ 750 | ||
Merger of VTB Holdings, Inc. and Parametric Sound Corporation | VTB Holdings, Inc | ||||||
Business Acquisition [Line Items] | ||||||
Ownership percentage | 80.00% | |||||
Merger of VTB Holdings, Inc. and Parametric Sound Corporation | Parametric Sound Corporation | ||||||
Business Acquisition [Line Items] | ||||||
Ownership percentage | 20.00% | |||||
Pending Litigation [Member] | Bonanno vs. VTBH [Member] | ||||||
Movement in Standard Product Warranty Accrual [Roll Forward] | ||||||
Loss Contingency, Damages Sought, Value | $ 15,100 |