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Acquisitions | 9 Months Ended
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Sep. 30, 2024
Business Combinations [Abstract] |
Acquisitions | Note 3. Acquisitions On March 13, 2024, the Company acquired all the issued and outstanding equity of Performance Designed Products, LLC (“PDP”) for consideration that included cash and common stock. PDP was a privately held gaming accessories leader that designs and distributes video game accessories, including controllers, headsets, power supplies, cases, and other accessories. As a result of the acquisition, the Company will strengthen its leadership position in hardware gaming accessories and expand its product portfolio. Consideration for the Transaction consisted of the issuance of 3.45 million shares of Company common stock and approximately $78.9 million in cash, subject to customary post-closing adjustments for working capital, closing cash, closing debt and closing third party expenses. On a fully-diluted basis, issued stock represented approximately 16.4% of the total issued and outstanding shares of the Company as of the closing date. The fair value of the 3.45 million common shares issued as part of the consideration was determined on the basis of the closing market price of the Company’s common shares on the acquisition date, or $11.03 per share. As a result, the total preliminary purchase consideration was $116.9 million, partially funded by borrowing on the new term loan facility (see Note 8). Additionally, the Company recognized $9.8 million of acquisition-related costs that were expensed during the nine months ended September 30, 2024. The following table summarizes preliminary allocation of the consideration transferred to the assets acquired and liabilities assumed at the acquisition date:
(In thousands) |  | Amount |
Cash |  |  | 1,562 |
Accounts Receivable |  |  | 22,026 |
Inventory |  |  | 21,423 |
Prepaid and Other Current Assets |  |  | 2,168 |
Property, Plant & Equipment |  |  | 1,161 |
Other Assets |  |  | 3,478 |
Intangible Assets |  |  | 47,769 |
Accounts Payable |  |  | (12,716 | )
Accrued Liabilities |  |  | (6,352 | )
Lease Payable |  |  | (2,726 | )
Deferred Tax Liability |  |  | (6,898 | )
Total identifiable net assets |  |  | 70,895 |
Goodwill |  |  | 46,014 |
Total consideration paid |  | $ | 116,909 |
The fair values assigned to PDP’s assets and liabilities are provisional and were determined based on preliminary estimates and assumptions that management believes are reasonable. The preliminary purchase price allocation is subject to further refinement and may require significant adjustments to arrive at the final purchase price allocation. The final determination of the fair value of certain assets and liabilities will be completed as soon as the necessary information is available, but no later than one year from the acquisition date. During the three months ended September 30, 2024, the Company recognized measurement period adjustments primarily to establish preliminary values for the opening balance sheet of the net assets acquired including intangibles assets, which also resulted in a reduction in goodwill from the previously reported preliminary amount. The goodwill from the acquisition, which is fully deductible for tax purposes, consists largely of synergies and economies of scale expected from adding the operations of PDP's and the Company’s existing business and supply channels. The preliminary fair value of PDP’s identifiable intangible assets was determined primarily using the “income approach,” which requires a forecast of all expected future cash flows either through the use of the multi-period excess earnings method or the relief-from-royalty method. Such forecasts are based on inputs that are unobservable and significant to the overall fair value measurement, and as such, are classified as Level 3 inputs (see Note 4). Some of the more significant assumptions inherent in the development of intangible asset values include: the amount and timing of projected future cash flows, the discount rate selected to measure the risks inherent in the future cash flows, the assessment of the intangible asset’s life cycle, as well as other factors. The following table summarizes the preliminary allocation of purchase consideration to identifiable intangible assets:
(In thousands) |  | Life |  | Amount |
Tradenames |  | 7 Years |  | $ | 15,607 |
Customer relationships |  | 6 Years |  |  | 4,456 |
Developed technology |  | 6 Years |  |  | 27,706 |
Total |  |  |  | $ | 47,769 |
PDP's net revenue included in the Company’s consolidated results was $26.7 million and $54.4 million for the three and nine months ended September 30, 2024, respectively. PDP’s net income included in the Company’s consolidated resu lts for the same period was not material. Pro Forma Financial Information (Unaudited) The following table reflects the unaudited pro forma operating results of the Company for the three and nine months ended September 30, 2024 and 2023, which give effect to the acquisition of PDP as if it had occurred on January 1, 2023.
|  | Three Months Ended |  |  | Nine Months Ended |
|  | September 30, |  |  | September 30, |  |  | September 30, |  |  | September 30, |
|  | 2024 |  |  | 2023 |  |  | 2024 |  |  | 2023 |
|  | (in thousands) |
Net revenue |  | $ | 94,363 |  |  | $ | 81,410 |  |  | $ | 246,707 |  |  | $ | 219,724 |
Net income (loss) |  | $ | 3,153 |  |  | $ | (12,052 | ) |  | $ | (3,912 | ) |  | $ | (44,817 | )
The pro forma results are based on assumptions that the Company believes are reasonable under the circumstances. The pro forma results are not necessarily indicative of the operating results that would have occurred had the acquisition been effective January 1, 2023, nor are they intended to be indicative of results that may occur in the future.

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- Definition The entire disclosure for a business combination (or series of individually immaterial business combinations) completed during the period, including background, timing, and recognized assets and liabilities. The disclosure may include leverage buyout transactions (as applicable). + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Topic 805 -SubTopic 20 -Name Accounting Standards Codification -Section 50 -Paragraph 5 -Subparagraph (b) -Publisher FASB -URI https://asc.fasb.org/1943274/2147479907/805-20-50-5 Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef -Topic 805 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org/805/tableOfContent + Details
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