UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report: May 12, 2016
(Date of earliest event reported)
Turtle Beach Corporation
(Exact name of registrant as specified in its charter)
Nevada | 001-35465 | 27-2767540 |
(State or other jurisdiction of incorporation or organization) | (Commission File Number) | (I.R.S. Employer Identification Number) |
12220 Scripps Summit Drive, Suite 100
San Diego, California 92131
(Address of principal executive offices)
(888) 496-8001
(Registrant’s telephone number, including area code)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Item 7.01. Regulation FD Disclosure
Investor Presentation
Certain information concerning our business and financial results can be currently accessed on our website, http://corp.turtlebeach.com/investor-relations under the heading “Investor Presentations.” Representatives of the Company expect to use this presentation, in whole or in part, and possibly with modifications, periodically in connection with conferences and presentations to investors, analysts and others. Portions of the presentation are attached hereto as Exhibit 99.1.
The investor presentation includes financial information not prepared in accordance with generally accepted accounting principles (“Non-GAAP Financial Measures”). A reconciliation of the Non-GAAP Financial Measures included in the presentation to financial information prepared in accordance with generally accepted accounting principles (“GAAP”), as required by Regulation G, appears in Appendix A to the presentation. The information contained in the presentation is summary information that is intended to be considered in the context of the Company’s Securities and Exchange Commission (“SEC”) filings and other public announcements that it may make, by press release or otherwise, from time to time. The Company undertakes no duty or obligation to publicly update or revise the information contained in the presentation or this report, although it may do so from time to time as its management believes is warranted. Any such updating may be made through the filing of other reports or documents with the SEC, through press releases or through other public disclosure.
The information in this report is being furnished pursuant to Item 7.01 and shall not be deemed to be “filed” for purposes of Section 17 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, nor shall it be deemed to be incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act.
Item 9.01 — Financial Statements and Exhibits
(d) Exhibits
Exhibit No. | Description |
99.1 | Turtle Beach Corporation Investor Presentation |
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
TURTLE BEACH CORPORATION | |||
Date: | May 12, 2016 | By: | /S/ JOHN T. HANSON |
John T. Hanson Chief Financial Officer, Treasurer and Secretary | |||
N A S D A Q : H E A R Safe Harbor Statement Forward-Looking Information This presentation includes “forward-looking statements” within the meaning of the federal securities laws. These forward-looking statements are statements that are not historical facts including statements about our beliefs and expectations and statements containing the words “may,” “could,” “would,” “should,” “believe,” “expect,” “anticipate,” “plan,” “estimate,” “target,” “project,” “intend,” “foresee,” and similar expressions. There are a number of risks and uncertainties that could cause actual results to differ materially from the forward-looking statements made herein. A discussion of some of these risks and uncertainties that could cause Turtle Beach Corporation’s results to differ materially from those described in the forward-looking statements include but are not limited to, for example, the application of quarter-end and year-end accounting procedures and adjustments, other developments that may arise between the date of this presentation and the time that financial results for the first quarter ended March 31, 2016 are finalized, statements regarding market opportunities, future products and anticipated future financial and operating performance and results, including estimates for growth, and the other factors discussed in our public filings, including the section entitled “Risk Factors” in Turtle Beach’s most recent Annual Report on Form 10-K, Quarterly Report on Form 10-Q and other periodic reports filed with the SEC and available on the SEC’s website, www.sec.gov. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this presentation. Turtle Beach Corporation undertakes no obligation to publicly release any revision to its forward-looking statements to reflect events or circumstances after the date of this presentation. This presentation also contains trademarks and trade names that are property of their respective owners. Non-GAAP Financial Measures This presentation contains certain financial measures, including adjusted EBITDA, that the Securities and Exchange Commission defines as "non-GAAP financial measures." This non-GAAP financial measure, as calculated by the Company, is not necessarily comparable to similarly titled measures reported by other companies. Additionally, this non-GAAP financial measures is not a measurement of financial performance or liquidity under GAAP and should not be considered an alternative to the Company’s other financial information determined under GAAP. Management believes that this non-GAAP financial measure, when read in conjunction with the Company's reported results, can provide useful supplemental information for investors analyzing period to period comparisons of the Company's results. “Adjusted EBITDA” is defined by the Company as net income (loss) before interest, taxes, depreciation and amortization, stock-based compensation (non-cash), and certain special items that we believe are not representative of core operations. The Adjusted EBITDA outlook for the second quarter and full year 2016, have not been reconciled to our net loss outlook for the same periods because certain items that would impact interest expense, provision for income taxes and stock-based compensation, which are reconciling items between net loss and Adjusted EBITDA, cannot be reasonably predicted. 1 © 2016 Turtle Beach Corporation. All Rights Reserved.
N A S D A Q : H E A R Who We Are Turtle Beach is a premier audio innovation company with a 40-year legacy of creating new audio categories Longstanding, #1 brand for gaming headsets with 42% share of the U.S. market1 Positioned for renewed revenue and profit growth as major industry product cycle continues We have created an entirely new audio market for directional sound with HyperSound Clear™ 500P HyperSound Clear 500P product launched in Q4-15 and is targeted at the $5B hearing health market 2 1) Based on U.S. NPD Market data, revenue share for 2015.
N A S D A Q : H E A R Headsets HyperSound Overview Market share leader with large, loyal customer base Breakthrough audio technology that allows directed placement of sound Markets Catalysts Well-positioned product portfolio for new gen consoles Launched HyperSound Clear 500P into the $5B hearing health market in Q4-15 FY16 Financial Profile ► $160-$170M in revenues ► New gen up ~20% over 2015 ► ~30% gross margins ► $5-$7M in revenues ► Significant growth with full rollout ► 40-50% target gross margins¹ Leading Gaming Headset Business & Transformational New Directed Audio Technology 3 Console Gaming PC Gaming Healthcare Commercial Consumer Licensing Mobile 1) Target gross margins (excluding amortization) at full run rate in Q4 2016. ™
N A S D A Q : H E A R 2016 Management Objectives Significantly improve profitability of headset business (~5X EBITDA improvement) Drive overall growth, offsetting expected $20M+ YoY decline in old gen revenues with new gen increases Continue to improve headset gross margins to achieve ~30% for the year Improve international performance in spite of strong dollar impact Manage OpEx to improve headset adjusted EBITDA to ~$12M (~5x increase) Move HyperSound business towards cash flow breakeven Prove success in the hearing healthcare channel – happy consumers, productive offices Grow revenues to $5-$7M by scaling healthcare channel in U.S. and Europe Continue to drive additional advancements in technology and HyperSound intellectual property Manage spend carefully to have HyperSound adjusted EBITDA loss of less than $12M Targeting positive consolidated adjusted EBITDA of $0-$2M for 2016 4
N A S D A Q : H E A R 1) Guidance updated and effective on May 10, 2016. 2) Delta reflects midpoint of the outlook. 2016 Outlook1 5 ($ in millions) Old New % ∆² Management Commentary Revenue: New Gen $140-$145 $147-$153 5% 18-23% growth from 2015 Old Gen $8-$10 $8-$10 - 60-70% decline from 2015 Other $5-$7 $5 (17)% Opportunity for international growth Total Headset $153-$162 $160-$170 5% Strong new gen growth combined with old gen drop HyperSound $7-$10 $5-$7 (29)% Slower than expected ramp, lower spend on sales & marketing Consolidated $160-$172 $165-$175 2% 1-8% growth from 2015 Gross Margins Headsets ~30% ~30% - +400 basis points over 2015 HyperSound 40%-50% by Q4 40%-50% by Q4 - By Q4-16 as revenues ramp (cash margin excluding amortization) Adjusted EBITDA: Headsets ~$9 ~$12 33% ~5X increase over 2015 HyperSound Investment <$14 <$12 14% Modest reduction from 2015 reflecting revenue and OpEx growth Consol. Adj. EBITDA ~$(5) $0-$2 NA $11M+ increase from 2015
N A S D A Q : H E A R Gaming Headsets
N A S D A Q : H E A R 42% 2015 U.S. Gaming Headset Market Share1 Dominant Gaming Audio Provider with Leading Market Share #1 gaming headset provider for Xbox and PlayStation 42% of U.S. market in 2015 (42% in Q1 2016)1 45% of U.K. market in 2015 (46% in Q1 2016)2 Completely transitioned portfolio from old gen (Xbox 360 & PlayStation 3) to new gen (Xbox One & PlayStation 4) from 2013 to 2015 New gen headset revenues increased 24% in 2015, 64% in Q1 2016 vs. 2015 Xbox One: 4 of the top 5 headsets and the top selling 3rd party headset in 20151 PlayStation 4: 3 of the top 5 headsets and the top selling 3rd party headset in 20151 7 1) Video Games POS Monthly Update, The NPD Group, Inc. (US data). 2) Gfk/Gfk Chart-Track.
N A S D A Q : H E A R 3.0 11.5 22.1 34.6 47.7 60.0 4.6 18.8 36.3 55.3 74.9 94.6 0M 20M 40M 60M 80M 100M 120M 2013 2014 2015 2016E 2017E 2018E Xbox One PS4 0M 20M 40M 60M 80M 100M 120M 2013 2014 2015 2016E 2017E 2018E (# of consoles) New Gen Console Growth 36M 94M 22M 60M Sources: DFC Intelligence Forecasts: Worldwide Console Forecast, May 2015. Cumulative Sales (Current 2018 est.) Platform Cumulative Console Sales (in millions) Cumulative new gen console sales totaled 58M as of 12/31/15 New gen console sales are up over 40% vs. old gen at same time in cycle Over 30M new gen consoles expected to be sold worldwide in 2016 New gen cumulative console sales projected to exceed 150M worldwide in 2018 New Gen: Xbox One, PS4 Old Gen: Xbox360, PS3 8 Active Installed Base of Consoles (in millions) (# of consoles)
N A S D A Q : H E A R Retail ASP <$50 $50 - $99 $100 - $200 >$200 Console PS4 Xbox One PS4 Xbox One PS4 Xbox One PS4 Xbox One TOTAL Recon 60P Recon 50P P4c Recon 50X Recon 30X Stealth 400 PX22 XO4 Stealth XO1 Stealth 500P Stealth 420X XO7 Pro Elite 800 Stealth 500X Elite 800X 16 PX24 Sony Silver Wired Gold Wireless 2 Microsoft XB1 Chat XB1 Stereo 2 Astro A40 + M80 A40 + MixAmp A50 A40 + MixAmp A50 5 PDP LVL 5+ LVL 3 LVL 1 LVL 3 LVL 1 AG 9 AG 9 LVL 5+ 8 Mad Catz Kaiken Kama Kaiken Kama Kunai 5 We Cover All Key Price Points – More Than Any Competitor 9
N A S D A Q : H E A R We Have Differentiated Technology… Advanced Chat Chat technology like noise gate, chat boost, variable microphone monitor Bluetooth Dual-pairing Bluetooth in most wireless headsets for chat, mobile gaming, audio calls and music streaming DTS Headphone:X 1st gaming headsets with DTS 7.1 surround sound to provide incredibly accurate and immersive directional sound Digital Signal Processing (DSP) Game audio and chat presets that can be customized using a new mobile app Active Noise Cancellation 1st gaming headset to use noise cancellation for both inbound audio and outbound chat Superhuman Hearing™ Provides a competitive advantage by making important, quiet sounds louder and easier to hear 10
N A S D A Q : H E A R Strong Retail Presence Great Partnerships 12,000+ Interactive Displays Sample retailers …And Strong Distribution 11 Product sales in over 40 countries with over 280,000 points of distribution Partnerships with industry leading brands Market leader in deploying interactive gaming headset displays
N A S D A Q : H E A R PC Gaming International Headset Growth Opportunities 12 Approximately $400M market globally1 Launched eight new SKUs in 2014 and 2015 Launched PC gaming accessories via a partner in 2014 including: Keyboards Mice Mouse pads PC gaming more popular than console gaming in markets like Germany, China and other parts of Asia2 Leveraging expanded portfolio as a growth platform in Germany and China Sample PC Products 1) The NPD Group, IDC and Company Estimates. 2) Newzoo 2015 Global Games Market Report Premium.
N A S D A Q : H E A R PC Gaming International Headset Growth Opportunities 13 China represents long-term growth opportunity for console and PC gaming headsets 446M Chinese gamers2 China represents <2% of our annual revenues today China has lifted video game console ban Turtle Beach first-to-market with Xbox One gaming headsets, planning to begin sales efforts in 2016-2017 when console sales ramp Expect to initiate modest investment in 2016 to begin China growth efforts 1) Newzoo 2015 Global Games Market Report Premium. 2) CGA, Newzoo China vs. US report Aug 2015. $13.1B $15.2B $5.0B $7.0B 2014 2015 Chinese Games Market Sales Forecast¹ All Other Game Segments Computer Games $18.1B $22.2B
N A S D A Q : H E A R HyperSound – A New Sound Delivery Mechanism How does HyperSound technology work? Thin panels produce directional audio within an ultrasound beam, masking ambient noise Q4-15 launch into $5B hearing health market1 via HyperSound Clear 500P product HyperSound Clear 500P TV audio solution improves the listening experience and speech intelligibility for individuals with mild to severe hearing loss HyperSound technology shown to be effective in commercial markets requiring directed sound (as demonstrated by national kiosk rollout at Best Buy) Future opportunities in consumer markets and licensing agreements 15 How HyperSound Clear 500P Works Traditional Audio HyperSound Audio Beams 1) Johns Hopkins School of Medicine, Nov 2011. World Health Organization, 2013.
N A S D A Q : H E A R HyperSound Clear 500P improves the listening experience and speech intelligibility for individuals with hearing loss HyperSound Clear 500P – Entering a $5 Billion Hearing Health Market 16 1) Johns Hopkins School of Medicine, Nov 2011. World Health Organization, 2013. 2) The Hearing Review, Tech Topic, Oct 2015. 3) Patient Preferences of 58 adult participants after two minute demonstration of HyperSound Clear 500P at conclusion of their audiologist appointment for a Directed Audio Solution, Hearing Review, 2015. 360 Million or 5% of the World’s Population Suffer from Hearing Loss¹ 48M in U.S. 312M Internationally Global hearing health market size estimated at $5B1 35-40% of people 65+ suffer from hearing loss¹ ~13M hearing aids are sold annually¹ Potential complementary and incremental revenue stream for audiologists given low conversion rates on hearing aids ~4% in ages 50-59² ~22% in ages 80+² Two successful patient preference studies of HyperSound Clear 500P completed3 79% said HyperSound Clear 500P improved their ability to hear and understand speech 69% said they would either maybe, probably or definitely purchase
N A S D A Q : H E A R 1) Approximate units of hearing aids sold via this channel. Channel Landscape Market Size (est.) Retail Channel U.S. Hearing Health Market Structure & Channel Approach 17 Independent & Buying Groups Retail Store Front Veterans Admin. Direct to Consumer 8,000 POS (Points of Sale) 1.2M Units¹ 4,000 POS 750K Units¹ 800 POS 725K Units¹ 300 POS 450K Units¹ • Initial channel focus for HyperSound Clear represents ~90%+ of the points of sale •We’ve already signed ~45% of overall points of sale = Signed deals
N A S D A Q : H E A R HyperSound Clear 500P For Hearing Market: Our Strategy Hire Leader: Former president/CEO of two large hearing aid companies hired in 2014 to lead HyperSound Get Clearance for Medical Device: FDA 510(k) clearance in Feb 2014 allows us to market the product “to improve clarity and comprehension of sounds with or without use of hearing aids” Commercialize Product: Two years of product development completed with shipments started late Oct 2015 Sell as Hearing Product: Now sold through hearing health care professionals for MSRP of $1,675 and programmable for specific user’s hearing profile Set-up Sales Channel: Signed channel relationships giving us access to 5,600+ prospective hearing health offices and retail locations in the U.S. – representing ~45% of total distribution points Scale Manufacturing: Partnered with leading electronics manufacturer, Foxconn, and producing in Mexico 18
N A S D A Q : H E A R 0 20 40 60 80 100 120 140 160 180 200 Nov Dec Jan Feb Mar Apr # of Off ic es Fully Active Stocked HyperSound Clear 500P Initial Channel Ramp Progress We are in early stage of rollout to hearing healthcare offices, pursuing careful approach to ensure success Offices require training and visits to become fully active (which has taken more time than expected) Certain fully active offices have experienced sales conversion rates of 20+% during product demonstration events Product survey results from initial set of consumer users are very positive (4.6+ star ratings)1 Launched in European market March 2016 19 Small, growing number of fully active offices driving sell-through Early Purchaser Survey Results¹: 1) Company conducted initial sample phone survey of 12 consumer purchasers and may not be indicative of each listener’s experience. (4.6/5) Improvement in Speech Clarity (4.7/5) Ease of Use (4.7/5) Overall Satisfaction
N A S D A Q : H E A R Commercial Potential Growth Opportunities for HyperSound Technology 20 1) POPAI | HyperSound In-Store Research Report, Jun 2015. 2) BUNN Research, Jan 2014. 3) Self-Service Markets: ATMs, Kiosks, Vending Machines, BCC Research, Mar 2011. Pre-defined sound zones for in-store promotional, informational, beaconing and way-finding messages Deployed in Nov 2014 to ~1,000 Best Buy stores in Activision Call of Duty® retail displays HyperSound/Kiosk pairing has shown a 28% sales increase in a retail environment1 Audio for interactive kiosks and displays 20M digital signs currently in North America2 34M ATMs, vending machines and self-services kiosks in N. America at the end of 20153 2.5M self-service kiosks in 20152 Consumer & Licensing Immersive, directed 3D audio presents consumer opportunities for: Home theater systems and sound bars Desktop and gaming speakers Other potential consumer audio opportunities Potential licensing market opportunities include: Automotive and other transportation markets Government and military applicants Displays and televisions
N A S D A Q : H E A R 26 28 35 59 20 68 86 108 Jan 2013 Jan 2014 Jan 2015 Mar 2016¹ Pending Issued Headset innovations: Audio processing Gaming specific features HyperSound innovations: Emitter construction Ultrasound and emitter electronics Digital signal processing techniques 121 96 46 167 Strong & Rapidly Growing Patent Portfolio 21 1) As of March 31, 2016.
N A S D A Q : H E A R Financial Summary
N A S D A Q : H E A R Balance Sheet Highlights Revolver typically peaks in Q4 and lowest in Q1 after holiday receipts In Feb 2016, raised $6.2M in net proceeds (over 50% purchased by insiders), stabilizing liquidity Accounts payable down 30% to $12.5M @ Mar 31, 2016 Cash + AR - AP = $6.5M @ Mar 31, 2016 ($9M higher YoY) $44.6M federal, $20.6M state net operating losses @ Dec 31, 2015 offset taxable income (not scheduled to expire until 2029) Key Stats 23 Sources: S&P Capital IQ, company filings. 1) As of March 31, 2016. 2) Includes SG VTB Holdings (Stripes Group LLC, a private equity fund and our largest shareholder) and trusts affiliated with Ron Doornink, the Company’s chairman of the board. 3) Non-callable, due in October 2030, and has 8% per annum PIK interest. Trading Data (@ May 6, 2016) Stock Price $0.95 Market Capitalization $46.8M 52 Wk. Low/High $0.85/$3.72 Avg. Daily Vol. (3 mo) 98.0K Public Float 25% Primary Shares¹ 49.2M SG VTB Holdings & Affiliates¹ 21.5M Retired Founders of Turtle Beach¹ 11.0M Options/Restricted Stock¹ 5.2M Warrants¹ 3.1M Fully Diluted Shares¹ 57.5M Capitalization @ 12-31-15 @ 3-31-16 Cash & Equivalents $7.1M $3.2M Debt Revolver (asset-based loan) $32.5M $0.5M Term Loans $18.4M $17.2M Subordinated Notes² $17.2M $17.8M Total Debt $68.1M $35.5M Series B - Preferred Stock³ $16.1M $16.5M
N A S D A Q : H E A R $M $1M $2M $3M $4M $5M $6M Q2-'15 Q3-'15 Q4-'15 Q1-'16 2016E² $5M ~$0.3M ~$0.5M ~$0.2M ~$0.1M Headset Revenue Growth Revenue Growth Profile 24 Revenue Profile Over Time New gen sales up 24% from 2014 to 2015, up 64% in Q1-16 YoY Old gen sales declined ~$40M to under 12% of revenues in Q4 2015 2015 and YTD 2016 retail sell- through outpaced sales, leading to lower channel inventory New gen revenue expected to increase 18-23% in 2016² Old gen revenue expected to decline 60-70% in 2016² HyperSound Clear 500P launched in Q4-15 and expected to reach $5-$7M in revenues for 2016 Note: Old gen, new gen revenue splits are approximations. 1) Strong dollar and rapid drop in old gen significantly reduced revenues from 2014 to 2015. 2) Guidance updated and effective on May 10, 2016 Expected HyperSound Growth 2013 2014 2015¹ 2016E² New Gen Old Gen Other HyperSound $178M $186M $162.7M $165-175M 1 0 0 %
N A S D A Q : H E A R Q2 2016 Outlook¹ 25 Q2-16 YoY ∆ Management Commentary Revenue $25M 11% Strong start to 2016 in headsets and upcoming product launches driving strong outlook Gross Margin ~15% Roughly flat New gen headsets carry higher gross margin, offset by HyperSound amortization Adj. EBITDA $(6)M 27% Reduced OpEx to more than offset increased HyperSound investments EPS $(0.23) Flat 23% YoY excluding $3.1M tax benefit in Q2-15 1) Guidance updated and effective on May 10, 2016.
N A S D A Q : H E A R 1) Guidance updated and effective on May 10, 2016. 2) Delta reflects midpoint of the outlook. 2016 Outlook1 26 ($ in millions) Old New % ∆² Management Commentary Revenue: New Gen $140-$145 $147-$153 5% 18-23% growth from 2015 Old Gen $8-$10 $8-$10 - 60-70% decline from 2015 Other $5-$7 $5 (17)% Opportunity for international growth Total Headset $153-$162 $160-$170 5% Strong new gen growth combined with old gen drop HyperSound $7-$10 $5-$7 (29)% Slower than expected ramp, lower spend on sales & marketing Consolidated $160-$172 $165-$175 2% 1-8% growth from 2015 Gross Margins Headsets ~30% ~30% - +400 basis points over 2015 HyperSound 40%-50% by Q4 40%-50% by Q4 - By Q4-16 as revenues ramp (cash margin excluding amortization) Adjusted EBITDA: Headsets ~$9 ~$12 33% ~5X increase over 2015 HyperSound Investment <$14 <$12 14% Modest reduction from 2015 reflecting revenue and OpEx growth Consol. Adj. EBITDA ~$(5) $0-$2 NA $11M+ increase from 2015
N A S D A Q : H E A R Key Takeaways Longstanding, dominant market leader in console gaming headset market with technologically differentiated products Console market growing strongly post new platform launches late 2013 Company now completed successful portfolio transition for new Xbox and PlayStation consoles HyperSound Clear 500P launch into $5B hearing health category, creating strong growth opportunity HyperSound commercialization and new gen headset transition expected to meaningfully improve margins, profitability and cash flows 27
N A S D A Q : H E A R Contact Information Investor Relations: Media Contact: Cody Slach Maclean Marshall Liolios Turtle Beach Corporation 949.574.3860 858.914.5093 HEAR@Liolios.com Maclean.Marshall@turtlebeach.com www.turtlebeach.com www.hypersound.com C O M PA N Y W E B S I T E S www.turtlebeachcorp.com Contact Us 28
Appendix
N A S D A Q : H E A R Experienced Management Team Juergen Stark CEO • COO of Motorola Mobility’s mobile business • 10 years as principal at McKinsey & Company John Hanson CFO • EVP and CFO at Dialogic • CFO at One Communications Corp Rodney Schutt SVP, GM - HyperSound Richard Kuvalik CTO • 25+ years of experience in the hearing health & medical device industries • Past president/CEO of Luminetx, Aspyra, Unitron Hearing, and Widex Hearing, both leading hearing aid companies • 15+ years in consumer audio • Led peripheral products for PlayStation at Sony Rob Andris SVP, Global Supply Chain & Ops • VP, Global Supply Chain Operations, Hewlett Packard • 20 year, supply chain management, IBM, Cisco, HP Cris Keirn VP of Global Consumer Sales Andrew Lilien VP of Marketing Woody Norris Chief Scientist Megan Wynne General Counsel Scott Steele SVP of Product Development • 20+ years of brand, consumer and retail marketing experience • Past experience at ESPN, Fleer Trading Cards and National Media Group • 5 years with I-Flow, a Kimberly-Clark Health Care Company • 13 years with Morris Polich & Purdy law firm • Noted life-long inventor and entrepreneur • Lemelson-MIT Prize for the invention of HyperSound • 23 years of experience in technology product development • Founded Green Edge Technologies and served for 2 years as its CEO 30 • Led headset transition as VP of business planning & strategy • 17 years with Motorola in product management, operations, quality and customer relations
N A S D A Q : H E A R Experienced Board of Directors Laureen DeBuono Director Ken Fox Director William Keitel Director Dr. Andrew Wolfe, PhD Director Ron Doornink Chairman • Partner at leading CFO consulting services firm FLG Partners, LLC • Former President and CEO of Coapt Systems, Inc. • Former COO and CFO of hearing aid manufacturer ReSound Corp. • Managing partner of Stripes Group, LLC • Former Managing Director and co-founder of Internet Capital Group (NASDAQ: ICGE) • Co-founder of A-10 Capital and Sentinel Fund • Former CFO of Qualcomm Incorporated (NASDAQ: QCOM) • During his time at the company grew revenues from ~$800M to ~$25B • Held senior financial roles at Nortel (OTC: NRTLQ) and Pepsico (NYSE: PEP) • Founder and principal of Wolfe Consulting • Former Chief Technology Officer for SONICblue, Inc. • B.S.E.E. in Electrical Engineering and Computer Science, Johns Hopkins; Ph.D. in Computer Engineering, Carnegie Mellon • Former Chairman and CEO of Activision Publishing (NASDAQ: ATVI) • Operating partner of Stripes Group, LLC • Founder and principal of Erasmus Equity Investments Juergen Stark CEO and Director • COO of Motorola Mobility’s mobile business • 10 years as Principal at McKinsey & Company, Inc. • MBA, Harvard Business School; B.S. Aerospace, University of Michigan 31