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United States securities and exchange commission logo
September 20, 2023
John Hanson
Chief Financial Officer
Turtle Beach Corp
44 South Broadway
4th Floor
White Plains, NY 10601
Re: Turtle Beach Corp
Form 10-K for
Fiscal Year Ended December 31, 2022
Filed March 29,
2023
Form 8-K Filed
August 7, 2023
Response Dated
September 7, 2023
File No. 001-35465
Dear John Hanson:
We have reviewed your September 7, 2023 response to our comment
letter and have the
following comments. In some of our comments, we may ask you to provide
us with information
so we may better understand your disclosure.
Please respond to these comments within ten business days by
providing the requested
information or advise us as soon as possible when you will respond. If
you do not believe our
comments apply to your facts and circumstances, please tell us why in
your response.
After reviewing your response to these comments, we may have
additional
comments. Unless we note otherwise, our references to prior comments are
to comments in our
August 23, 2023 letter.
Form 10-K for Fiscal Year Ended December 31, 2022
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Results of Operations
Key Performance Indicators and Non-GAAP Measures, page 27
1.
We note your response
to prior comment 3 related to the adjustments titled Proxy context
and other. Please
address the following:
Describe to us in
more detail the facts and circumstances related to the proxy contest
John Hanson
FirstName LastNameJohn Hanson
Turtle Beach Corp
Comapany 20,
September NameTurtle
2023 Beach Corp
September
Page 2 20, 2023 Page 2
FirstName LastName
and related litigation.
Tell us the amounts included in the adjustment relating to (i)
legal fees, (ii) other
professional fees, (iii) employee and executive retention costs
and (iv) the settlement
of the intellectual property lawsuit in 2022. In addition,
separately describe to us in
sufficient detail the nature of each of these costs.
2. We have read your response to prior comments 3 and 9 related to the
Inventory and
component related reserves adjustments. Please describe to us in
detail the specific facts
and circumstances that resulted in the inventory impairments you
recorded in fiscal year
2022. In addition, specifically address the following:
Explain to us how pandemic-related global supply chain
disruptions resulted in your
recording an inventory impairment of $5.2 million. Identify the
type of inventory
items that you concluded were impaired.
Describe to us in detail the circumstances that led to, and the
nature of, the $4.4
million of costs written-off in 2022. Help us better understand
how pandemic
shortages resulted in various product redesigns that led to your
having to reserve
for unused components and unfulfilled purchase commitments. Tell
us about the
unfulfilled purchase commitments.
Tell us why purchasing and managing inventory levels and any
resulting inventory
impairments would not be considered a normal, recurring part of
your operations.
Explain to us in more detail why you believe these non-GAAP
adjustments are
consistent with the guidance in Question 100.01 of the Division
of Corporation
Finance's Compliance & Disclosure Interpretation on Non-GAAP
Financial
Measures.
Form 8-K Filed August 7, 2023
Exhibit 99.1, page E-10
3. We note your response to prior comment 6, where you indicate that you
reported the
valuation allowance against your U.S. deferred tax assets as a
non-GAAP adjustment as it
is a non-recurring, non-cash item and not indicative of the company
s overall
performance. You also indicate that since you expect to utilize these
deferred tax assets in
the future, you believe it is appropriate to adjust for the impact
that the valuation
allowance had on Adjusted Earnings and Non-GAAP Earnings (Loss)
measures. Please
address the following:
Considering the non-GAAP loss you reported in fiscal year 2022,
explain to us how
you determined that your evaluation of the positive and negative
evidence to support
realizability would be different on a non-GAAP basis such that
excluding the GAAP
tax valuation allowance in fiscal year 2022 would be appropriate.
Based on the minimal GAAP tax expenses you recorded during the
three and six
months ended June 30, 2023, tell us what the tax valuation
adjustments to the non-
John Hanson
Turtle Beach Corp
September 20, 2023
Page 3
GAAP measures in fiscal year 2023 represent, as they do not
appear to be eliminating
GAAP tax expenses.
You may contact Mindy Hooker at (202) 551-3732 or Martin James at (202)
551- 3671
with any questions.
FirstName LastNameJohn Hanson Sincerely,
Comapany NameTurtle Beach Corp
Division of
Corporation Finance
September 20, 2023 Page 3 Office of
Manufacturing
FirstName LastName