HyperSound Business
HyperSound technology is a pioneering audio solution that projects sound in a highly directional manner. HyperSound directs a beam of
audio to targeted listeners in a specific spot, delivering an immersive,
3D-like
audio experience as well as benefits for people with hearing loss. We have also developed and patented the capability to created
directed audio from a transparent speaker using a set of layered materials on glass. The technology has applications in multiple verticals including retail displays where isolated audio is desired, personal or business audio where a
directed beam of audio offers privacy benefits, and living room audio solutions for people with hearing loss.
Our business model for
HyperSound has evolved into a licensing strategy, focusing on out licenses to companies in the retail aspect for more precise marketing. In October 2017, we signed a licensing contract with Waves Systems to incorporate HyperSound technology for
customer contact points such as retail point of sales, kiosks, digital signage, wayfinding, museum exhibits, meeting halls and more.
Corporate
Information
Turtle Beach Corporation was incorporated in the state of Nevada in 2010 and is headquartered in San Diego, California.
Our stock is traded on the Nasdaq Global Market under the symbol HEAR.
VTB Holdings, Inc. (
VTBH
), our
subsidiary and the parent holding company of Voyetra Turtle Beach, Inc. (
VTB
), and Turtle Beach Europe Limited, together the historical headset business, was incorporated in the state of Delaware in 2010 with operations
principally located in Valhalla, New York. VTB was incorporated in the state of Delaware in 1975.
We maintain our principal executive
offices at 11011 Via Frontera, Suite A/B, San Diego, California 92127. Our telephone number there is (888)
496-8001.
The address of our website is
corp.turtlebeach.com
. The information set forth on, or
connected to, our website is expressly not incorporated by reference into, and does not constitute a part of, this prospectus.
Summary of Exchange
Agreement and Private Placement
On April 23, 2018, we entered into (i) an Exchange Agreement (the
Exchange
Agreement
) with certain funds affiliated with AWM Investment Company, Inc. (the
Special Situations Funds
) and 180 Degree Capital Corp. (
180 Capital
) and (ii) a Settlement Agreement (the
Settlement Agreement
) with Dr. John Bonanno (
Dr.
Bonanno
), a former holder of Series B Preferred Stock of VTBH (the
Series B Preferred Stock
). The transactions
contemplated by the Exchange Agreement, the Settlement Agreement and the Sale Agreement (as defined below) shall be referred to herein as the
Private Placement
.
Pursuant to the Exchange Agreement, and in connection with the transactions contemplated by the Settlement Agreement and the Sale Agreement,
the Company agreed to exchange the Series B Preferred Stock held by the Special Situations Funds and 180 Capital for (i) an aggregate of 1,307,143 shares of Common Stock and (ii) Warrants exercisable for an aggregate of 550,000 shares
of Common Stock. The Exchange Agreement also includes the other terms and conditions of the exchange, as well as representations and warranties, covenants and conditions customary in agreements of this type.
Pursuant to the Settlement Agreement, Special Situations Funds and 180 Capital agreed to purchase the Series B Preferred Stock pursuant to a
privately negotiated purchase and sale agreement with Dr. Bonanno (the
Sale Agreement
) and the Company agreed to waive its right of first refusal with respect to the Series B Preferred Stock in connection with the Sale
Agreement. In addition, pursuant to the Settlement Agreement, Dr. Bonanno agreed to discontinue certain previously disclosed claims and actions against the Company related to the Series B Preferred Stock, as well as to provide a release of the
Company with respect to all such claims and any other claims related to Dr. Bonannos ownership or disposition of the Series B Preferred Stock. In connection with and as consideration thereof, the Company agreed to pay Dr. Bonanno a
cash sum of $950,000 for attorneys fees and to
settle non-redemption claims
in connection with the matter, and to pay an additional $1,250,000 if a change of control transaction meeting certain
specified requirements is consummated within three years of the date of the Settlement Agreement.