Switch to a Licensing
Model Intended to Allow Continued Pursuit of
Multiple Market
Opportunities with Reduced Spending
Piper Jaffray
Continues Exploration of Strategic Options for HyperSound
San Diego, CA – September 26, 2016 – Turtle Beach Corporation (NASDAQ: HEAR), a leading audio technology company, has started the process of restructuring its HyperSound directed audio business in an effort to reduce costs and align spending with revenues.
Actions have been taken to significantly reduce HyperSound operating expenses going into
October and monthly net cash burn is expected to be below $350,000 by January
2017. This excludes corporate allocations, which are expected to be phased out
and redistributed to the headset business by year end. Turtle Beach is targeting
to be net cash burn breakeven with respect to its HyperSound segment by the end of the second quarter of 2017.
The Company intends to continue pursuing multiple
opportunities for its groundbreaking HyperSound
technology, while evolving the business to a licensing model. This is expected
to require less capital while still allowing for revenue generating
opportunities, including:
·
Retail
sales of HyperSound Clear™ 500P. The Company’s
test pilot at the major consumer electronics retailer in the Chicago area is
off to a positive start, which is expected to help demonstrate sales potential
to prospective licensees.
·
HyperSound’s newly revealed potential to alleviate Tinnitus symptoms.
FDA clearance was received in August and the Company is in discussions with
multiple hearing healthcare providers.
·
HyperSound commercial retail display sales. This product area
continues to generate consistent monthly sales with a solid pipeline of
opportunities.
·
Licensing
the technology for HyperSound Glass and
other applications. The Company is in discussions with multiple potential
licensees.
“As
indicated in our most recent earnings call, we are committed to reducing the net
cash burn at HyperSound, and we have
taken steps to better align costs with our revenue,” said Juergen Stark, CEO, Turtle Beach Corporation. “This
is an important step toward achieving our goal of getting HyperSound to net cash burn breakeven by the end of Q2 2017. We
will continue to seek revenue opportunities for this amazing technology, but in
a way that preserves our capital and underscores the strong sales and profit
growth of our headset business.”
Stark
continued: “The process of evaluating strategic alternatives for HyperSound will continue under the
management of Piper Jaffray. We believe the streamlining of HyperSound offers more alternatives in the
current process. In addition, a licensing model allows for a broader range of potential
licensees to use HyperSound for a
specific application without taking on markets that may be outside of their
expertise.”
“By
reducing spending at HyperSound,” concluded
Stark, “we believe the strength of our core headset business will become even more
apparent to the investment community.”
About Turtle Beach
Corporation
Turtle
Beach Corporation (http://corp.turtlebeach.com)
designs innovative, market-leading audio products for the consumer, healthcare
and commercial sectors. Under its award-winning Turtle Beach
brand (www.turtlebeach.com),
the Company has been the clear market share leader for the past five-plus years
with its wide selection of acclaimed gaming headsets for use with Xbox One
and PlayStation®4, as well as personal computers and mobile/tablet
devices. Under the HyperSound brand (www.hypersound.com),
the Company markets pioneering directed audio solutions that have applications
in hearing healthcare, digital signage and kiosks and consumer electronics. The
Company’s shares are traded on the NASDAQ Exchange under the symbol: HEAR.
Cautionary
Note on Forward-Looking Statements
This press release
includes forward-looking information and statements within the meaning of the
federal securities laws. Except for historical information contained in this
release, statements in this release may constitute forward-looking statements
regarding assumptions, projections, expectations, targets, intentions or
beliefs about future events. Statements containing the words “may”, “could”,
“would”, “should”, “believe”, “expect”, “anticipate”, “plan”, “estimate”,
“target”, “project”, “intend” and similar expressions constitute
forward-looking statements. Forward-looking statements involve known and
unknown risks and uncertainties, which could cause actual results to differ
materially from those contained in any forward-looking statement. Forward-looking
statements are based on management’s current belief, as well as assumptions
made by, and information currently available to, management.
While the Company
believes that its expectations are based upon reasonable assumptions, there can
be no assurances that its goals and strategy will be realized. Numerous
factors, including risks and uncertainties, may affect actual results and may
cause results to differ materially from those expressed in forward-looking
statements made by the Company or on its behalf. Some of these factors include,
but are not limited to, risks related to the Company’s liquidity, the
substantial uncertainties inherent in the acceptance of existing and future
products, the difficulty of commercializing and protecting new technology, the
impact of competitive products and pricing, general business and economic
conditions, risks associated with the expansion of our business including the
implementation of any businesses we acquire, our indebtedness, the outcome of
our HyperSound strategic review process and other factors discussed in our
public filings, including the risk factors included in the Company’s most recent Annual Report
on Form 10-K and the Company’s other periodic reports. Except as
required by applicable law, including the securities laws of the United States
and the rules and regulations of the Securities and Exchange Commission, the
Company is under no obligation to publicly update or revise any forward-looking
statement after the date of this release whether as a result of new
information, future developments or otherwise.
All trademarks are the property of their respective owners.
###
For
Media/PR Information, Contact:
MacLean
Marshall
PR/Communications
Director
Turtle
Beach Corp.
858.914.5093
maclean.marshall@turtlebeach.com
For
Investor Information, Contact:
Cody
Slach
Investor
Relations
Liolios
949.574.3860
hear@liolios.com