IMMR 10-K & 10-Q changes, risk factors and insider trading

The current global economic conditions and political climate could materially hurt our business in a number of ways, including longer sales and renewal cycles, exchange rate volatility, delays in adoption of our products or technologies or those of our customers, increased risk of competition, higher taxes and tariffs on goods incorporating outour technologies, higher overhead costs as a percentage of revenue, delays in signing or failing to sign customer agreements or signing customer agreements with reduced royalty rates. In addition, our customers, potential customers, and business partners would likely face similar challenges, which could materially and adversely affect the level of business they conduct with us or the sales volume of products that include our technology.

Our royalties from licenses and therefore the growth of our business,business are dependent, in part, on the success of our customers’ products that incorporate our haptic patents. Many of the industries we license into are highly competitive. Our existing customers have in the past decided and may decide in the future to exit these industries and focus their resources on industries we do not license into or where we have achieved less market penetration. For example, on April 5, 2021, LGE announced that it would wind down and close its mobile business unit by July 31, 2021. The discontinuation of such product lines by our customers has resulted in and may in the future result in lower shipments of products that incorporate our haptic patents which in turn has had and may continue to have a material adverse effect on our business, financial condition and results of operations.

If we believe that a third party is required, but has declined, to license our intellectual property in order to manufacture, sell, offer for sale, import or use products, we have in the past and may in the future commence legal or administrative action against such third party. In some cases, we have and may become party to legal proceedings in which we are adverse to companies that have significantly greater financial resources than us. We anticipate that currently pending and any future legal proceedings will continue to be costly, especially in cases where our adverse parties have access to relatively more significant resources. Since there can be no assurance that we will be successful or be able to recovercover the costs we incur in connection with the legal proceedings (including outside counsel fees), as we incur additional legal costs, the cash available for other parts of our business may decrease. In addition, litigation could lead to counterclaims, adverse rulings affecting our patents, and could harm our relationship with our customers and potential customers, who may postpone licensing decisions pending the outcome of the litigation or dispute, or who may choose not to adopt our technologies. Although protecting our intellectual property is a fundamental part of our business, at times, our legal proceedings have diverted, and could continue to divert,divert the efforts and attention of some of our key management and personnel away from our licensing transactions and other aspects of our business. As a result, until such time as it is resolved or concluded, litigation, arbitration and administrative proceedings could cause our technology to be perceived as less valuable in the marketplace, which could reduce our sales and adversely affect our business. Further, any unfavorable outcome could adversely affect our business. For additional background on our pending litigation, please see PartNote I19. Commitments and Contingencies of the Notes to the Consolidated Financial Statements under Item 38 Legalof Proceedings.this Annual Report on Form 10-K.

Additionally, from time to time, we enter into license agreements with our licensees pursuant to which we may agree to indemnify a customer for certain taxes imposed on the customer by an applicable tax authority and related expense. We have received requests from certain licensees requesting that we reimburse them for certain tax liabilities. For example, since October 16, 2017, we have ongoing disputes related to LGE’s request that we reimburse LGE with respect to withholding tax imposed on LGE by the Korean tax authorities following an investigation where the tax authority determined that LGE failed to withhold on LGE’s royalty payments to Immersion Software Ireland from 2012 to 2014. For additional background on this matter, please see PartNote I,19. Commitments and Contingencies of the Notes to the Consolidated Financial Statements under Item 38 Legalof Proceedings.this ForAnnual additional backgroundReport on thisForm matter, please see Part I, Item 3 Legal Proceedings.10-K.

In addition, since we derive a significant portion of our revenues from licenses and royalties from our haptic patents in foreign countries, our ability to maintain and grow our revenue in foreign countries, such as China, will depend in part on our ability to obtain additional patent rights in these countries and our ability to effectively enforce such patents and contractual rights in these countries, which is uncertain. Our technology licenses with customers in foreign countries subject us to an increased risk of theft of our technology. It may be more difficult for us to protect our IP in foreign countries, and as a result foreign counterparties may be more likely to steal our know-how, reverse engineerengineering our software, or infringe our patents.

Because we have a fixed payment license with Microsoft, our royalty revenue from licensing in the gaming market and other consumer markets has previously declined and may further do so if Microsoft increases its volume of sales of touch-enabled products at the expense of our other licensees.

We have established corporate social responsibility programs aligned with sound environmental, social and governance principles. These programs reflect our current initiatives and are not guarantees that we will be able to achieve them. Our ability to successfully execute these initiatives and accurately report our progress presents numerous operational, financial, legal, reputational and other risks, many of which are outside our control, and all of which could have a material negative impact on our business. Additionally, the implementation of these initiatives imposeimposes additional costs on us. If our ESG initiatives fail to satisfy investors, customers, partners and our other stakeholders, our reputation, our ability to license technology and sell services to customers, our ability to attract or retain employees, and our attractiveness as an investment, business partner or acquirer could be negatively impacted. Similarly, our failure or perceived failure to pursue or fulfill our goals, targets and objectives or to satisfy various reporting standards within the timelines we announce, or at all, could also have similar negative impacts and expose us to government enforcement actions and private litigation.

We have concluded that our internal control over financial reporting and our disclosure controls and procedures were not effective as of April 30, 20252026 due to a material weakness.weaknesses. If we fail to establish and maintain proper and effective internal controls, our ability to produce accurate financial statements on a timely basis could be impaired, which would adversely affect our consolidated operating results, our ability to operate our business and our stock price.

Management does not expect that our disclosure controls and procedures and internal controls over financial reporting will prevent all errors or fraud. A control system is designed to give reasonable, but not absolute, assurance that the objectives of the control system are met. In addition, any control system reflects resource constraintsconstraints, and the benefits of controls must be considered relative to their costs. Inherent limitations of a control system may include: judgments in decision making may be faulty, breakdowns can occur simply because of error or mistakemistake, and controls can be circumvented by collusion or management override. Due to the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and may not be detected.

WeIn the past we have not been in compliance with SEC reporting requirements and Nasdaq continued listing rules. If we are unable to remain in compliance with SEC reporting requirements and Nasdaq continued listing rules, there may be a material adverse effect on the Company and our stockholders.

On September 8, 2025, the Board concluded that the Company’s previously-issued unaudited condensed consolidated financial statements for the fiscal third quarter and nine months ended January 31, 2025, the fiscal second quarter and six months ended October 31, 2024, and the calendar second quarter and six months ended June 30, 2024, contained in its Quarterly Reports on Form 10-Q (the “Restated Periods”), as well as its disclosures related to such financial statements, including any reports, earnings releases, and investor presentations, and related communications issued by or on behalf of the Company with respect to the Restated Periods (the “Previously-Issued Financial Information”), should no longer be relied upon. Accordingly, the Annual Report on Form 10-K for the fiscal year ended April 30, 2025 (“FY 2025 Form 10-K”) included the restatement of our previously-issued unaudited condensed consolidated financial statements and related disclosures for the Restated Periods (the “Restatement”). Due to the delays in filing our periodic reports with the SEC, as a result of Barnes & Noble Education’s investigation and the Restatement, we failed to timely file our AnnualFY Report on2025 Form 10-K for the fiscal year ended April 30, 2025,10-K, and our Quarterly Reports on Form 10-Q for the fiscal quarters ended July 31, 2025 and2025, October 31, 2025.2025 and January 31, 2026. As a result, we havewere not been in compliance with the reporting requirements of the Exchange Act,Act and have received notices of noncompliance from Nasdaq regarding our failure to comply with the Nasdaq continued listing requirements. Although we are actively working to regainregained compliance through the filing of our restateddelayed financial statementsreports and otherendeavor delayedto reports,satisfy the requirements of the Exchange Act and Nasdaq continued listing requirements, there is no assurance that we will timely regain and maintain compliance. If we are unable to maintain our listing on Nasdaq, it could materially adversely affect the liquidity and trading price of our common stock, reduce our access to the capital markets, and impair our ability to attract and retain employees, customers, and suppliers.

Our failure to prepare and timely file our periodic reports with the SEC limits our access to the public markets to raise debt or equity capital,capital and may impact our ability to obtain alternative financing.

Barnes & Noble Education has concluded that its internal control over financial reporting and its disclosure controls and procedures were not effective as of May 3,2, 20252026 due to material weaknesses, which hascould adversely affected its ability to report its financial results in a timely and accurate manner and could have a material adverse impact on its business and financial condition.

Barnes & Noble Education is required to evaluate the effectiveness of its disclosure controls and procedures and its internal control over financial reporting on a periodic basis and publicly disclose the results of these evaluations and related matters in accordance with the requirements of Section 404 of the Sarbanes-Oxley Act of 2002. As described in Barnes & Noble Education’s Annual Report on Form 10-K for its fiscal year ended May 3,2, 2025,2026, itits hasremediation identifiedof material weaknesses in internal controls over financial reporting.reporting first identified in connection with the audit of its fiscal year 2025 financial results have not yet been fully completed or tested by Barnes & Noble Education, and therefore, remain outstanding. As a result of these material weaknesses, Barnes & Noble Education’s management concluded that its internal control over financial reporting and disclosure controls and procedures were not effective as of May 3,2, 2025.2026.

Barnes & Noble Education ishas engaged in developingdeveloped and implementingimplemented aits remediation plan, as described in Part II - Item 9A. Controls and Procedures of its Annual Report on Form 10-K for its fiscal year ended May 3,2, 2025,2026, designed to address the material weaknesses, but itsBarnes & Noble Education’s remediation efforts are not complete and are ongoing.ongoing, and must be tested by Barnes & Noble Education before such weaknesses can be deemed to no longer exist. Although Barnes & Noble isEducation workingcontinues to remedy the ineffectiveness of its internal control over financial reporting, there can be no assurance as to when the remediation plan will be fully developed, when it will be fully implemented, or the aggregate cost of implementation. Until this remediation plan is fully implemented,implemented; Barnes & Noble EducationEducation’s management will continue to devote time and attention to these efforts. If Barnes & Noble Education does not complete its remediation in a timely fashion, or at all, or if itsBarnes & Noble Education’s remediation plan is inadequate, there will continue to be an increased risk that itBarnes & Noble Education’s will be unable to timely file future periodic reports with the SEC and that itsBarnes & Noble Education’s future consolidated financial statements could contain errors that will be undetected, which would in turn would adversely effect the timely filings and accuracy of the Company’s financial statements.undetected. If Barnes & Noble Education is unable to report its results in a timely and accurate manner, its stock may be delisted from the New York Stock Exchange (the “NYSE”) and itBarnes & Noble Education will not be able to comply with the applicable covenants in its financing arrangements, including ourits credit agreement.agreement, as described in Barnes & Noble Education’s Annual Report on Form 10-K for its fiscal year ended May 2, 2026. In addition, Barnes & Noble Education could be subject to regulatory investigations and penalties or stockholder litigation. Any of these risks could have a material adverse impact on Barnes & Noble Education’s business and financial condition.condition and the fair market value of Immersion’s investment in Barnes & Noble Education.

We cannot assure you that Barnes & Noble Education will not discover additional deficiencies in its internal control over financial reporting. Moreover, as discussed in the following risk factor, because of the inherent limitations of any control system, material misstatements due to error or fraud may not be prevented or detected on a timely basis, or at all. FurtherPrior to May 3, 2025, Barnes & Noble Education had been a non-accelerated filer under the Exchange Act and continuedwas determinationsnot thatrequired thereto arecomply deficiencies inwith the effectivenessauditor attestation requirements of Section 404(b) of the Sarbanes-Oxley Act of 2002 (the Sarbanes-Oxley Act). Therefore, Barnes & Noble Education’s internal controlcontrols over financial reporting couldfor resultthe prior periods did not receive the level of review provided by the process relating to the auditor attestation included in anotherannual restatementreports of ourissuers consolidatedthat financialare statements, cause Barnes & Noble Educationsubject to fail to meet its reporting obligations, reduce its ability to obtain financing, negatively affect investor confidence in Barnes & Noble Education’s management and the accuracyauditor ofattestation our financial statements and disclosures, or result in adverse publicity and concerns from investors, any of which could have a negative effect on the price of Barnes & Noble Education’s common stock, subject Barnes & Noble Education to regulatory investigations and penalties or stockholder litigation, and materially adversely impact its business, financial condition, results of operations and cash flows.requirements.

Barnes & Noble Education’s management does not expect that its disclosure controls and procedures and internal controls over financial reporting will prevent all errors or fraud. A control system is designed to give reasonable, but not absolute, assurance that the objectives of the control system are met. In addition, any control system reflects resource constraintsconstraints, and the benefits of controls must be considered relative to their costs. Inherent limitations of a control system may include: judgments in decision making may be faulty, breakdowns can occur simply because of error or mistakemistake, and controls can be circumvented by collusion or management override. Due to the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and may not be detected by Barnes & Noble Education or reported to us by Barnes & Noble Education in a timely manner.

Barnes & Noble Education’s past failure to prepare and timely file its periodic reports with the SEC limits its access to the public markets to raise debt or equity capital, may impact its ability to obtain alternative financing, and could have negative consequences under the terms of its existing credit agreements.

the timing of introductions and market acceptance of new technologies and products and product enhancements by us, our licensees, our competitors, or their competitors; and errors in our licensees’ royalty reports, and corrections and true-ups to royalty payments and royalty rates from prior periods.

Factors beyond our control can significantly influence the value of the marketable securities in which we invest and can cause potential adverse changes to the value of these marketable securities. Relevant factors include, but are not limited to, fluctuations in market price, and changes in our own analysis of the value of the security or instability in the financial markets. Any of the foregoing factors could cause other-than-temporary impairment in future periods and result in realized losses. The process for determining whether impairment is other-than-temporary usually requires difficult, subjective judgments about the future financial performance of the issuer. Because of changing economic and market conditions and the financial condition of issuers of the marketable securities, we may recognize realized and/or unrealized losses in future periods, which could have an adverse effect on our financial condition and results of operations.

Historically, the digital or alternative currency markets hashave been characterized by more price volatility, less liquidity, and lower trading volumes compared to sovereign currencies markets, as well as relative anonymity, a developing regulatory landscape, susceptibility to market abuse and manipulation, and various other risks inherent in its entirely electronic, virtual form and decentralized network. During times of market instability, we may not be able to sell any of these currencies that we hold at reasonable prices or at all. As a result, any digital or alternative currencies that we may purchase may not be able to serve as a source of liquidity for us to the same extent as cash and cash equivalents. If we are unable to sell any digital or alternative currencies that we hold, or if we are forced to sell any of these currencies that we may hold at a significant loss, in order to meet our working capital requirements, our business and financial condition could be negatively impacted.

We have established stock repurchase programs in the past, and on December 29, 2022, our Board approved a stock repurchase program of up to $50 million of our common stock for a period of up to twelve months, which the Board subsequently extended to December 29, 2026. Any stock repurchases may be made through open market and privately negotiated transactions, at such times and in such amounts as our management deems appropriate, including pursuant to one or more Rule 10b5-1 trading plans adopted in accordance with Rule 10b5-1 of the Exchange Act. Any repurchases by us pursuant to our stock repurchase program could affect our stock price and add volatility. Additionally, the Board authorized the use of any derivative or similar instrument to effect stock repurchase transactions, including without limitation, accelerated share repurchase contracts, equity forward transactions, equity option transactions, equity swap transactions, cap transactions, collar transactions, naked put options, floor transactionstransactions, or other similar transactions or any combination of the foregoing transactions. There can be no assurance that any repurchases will be made under any program, nor is there any assurance that a sufficient number of shares of our common stock will be repurchased to satisfy the market’s expectations. Furthermore, there can be no assurance that any repurchases conducted under any plan will be made at the best possible price. The existence of our stock repurchase program could also cause our stock price to be higher than it would be in the absence of such a program and could potentially reduce the market liquidity for our stock. Additionally, we are permitted to and could discontinue any stock repurchase program at any time and any such discontinuation could cause the market price of our stock to decline.

Provisions in our charter documentsdocuments, Rights Agreement, and Delaware law could prevent or delay a change in control, which could reduce the market price of our common stock.

The following discussion should be read in conjunction with the Consolidated Financial Statements and Notes to the Consolidated Financial Statements, which are included in this Annual Report on Form 10-K in Item 8 and the information set forth in Part I, “Item 1A. Risk Factors.” The following sections include a discussion of results for the fiscal year ended April 30, 2025,2026, compared to the calendarfiscal year ended December 31, 2023 as well as discussion of the results for the four months ended April 30, 2024.2025. The discussion contains forward-looking statements as well as estimates regarding market an industry data, which involve risks, uncertainties, and assumptions. See discussion over “Forward-Looking Statements” for additional information.

Immersion’s revenue is primarily derived from fixed fee license agreements and per-unit royalty agreements. Royalty and license revenue is composed of per unit royalties earned based on usage or net sales by licensees and fixed payment license fees charged for our IP and software.

Fixed fee license revenue increaseddecreased by $57.1$(59.6) millionmillion, or (95)% for the fiscal year ended April 30, 2025,2026, compared to the calendarfiscal year ended DecemberApril 31,30, 2023,2025, primarily due to $53.8$(44.1) million increasedecrease in Mobile license revenue representingand $(10.4) million decrease in Gaming revenue related to one time perpetual license agreements entered into during the fiscal year ended April 30, 2025.

Per‑unit royalty revenue decreasedincreased by $(16.9)$1.4 million, or (59)%,12%, for the fiscal year ended April 30, 2025,2026, compared to the calendarfiscal year ended DecemberApril 31,30, 2023,2025. primarilyThis dueincrease towas adriven generalby decrease in the per unithigher royalty licensing.revenue Thisfrom decreasemobility waslicensees acrossof all markets served including $(7.9)$0.9 million ofand mobilitycommercial licensees, $(4.7) millionlicensees of automotive$0.5 licensees, $(2.9) million of gaming licensees, and $(1.1) million of commercial licensees.million.

Geographically, Immersion’s revenues have historically been concentrated in Asia, primarily in Japan and Korea. The geographic distribution of revenues for Asia, Europe, and North America for the fiscal year ended April 30, 2025,2026, represented 87%,73%, 8%,2%, and 5%,25%, respectively, of our total revenue as compared to 74%,87%, 17%,8%, and 9%,5%, respectively, for the calendarfiscal year ended DecemberApril 31,30, 2023.2025.

Selling and administrative expenses increaseddecreased $9.8by $(13.6) million for the fiscal year ended April 30, 2025,2026, as compared to the calendarfiscal year ended DecemberApril 31,30, 2023,2025, primarily due to a $6.6$(7.2) million increasedecrease in compensation, benefits, and other personnel related costs and a $4.7$(6.0) million increasedecrease in legal costs related to the settlement of patent litigation. The increasedecrease in compensation, benefitsbenefits, and other personnel related costs is largely attributable to higher stock-based compensation expense resultingand fromhigher newvariable equity grants partially offset by a decreasecompensation in variablefiscal compensation.year 2025.

Barnes & Noble Education primarily derives its revenues from the sale of course materials, which include new, used, rentalrental, and digital textbooks. Additionally, at college and university bookstores which Barnes & Noble Education operates, it sells general merchandise, including emblematic apparel and gifts, trade books, computer products, school and dorm supplies, convenience and cafe items and graduation products. Barnes & Noble Education’s rental income is primarily derived from the rental of physical textbooks. Barnes & Noble Education also derives revenue from other sources, such as sales of bookstore management, hardware and point-of-sale software, and other services.

For the period from June 10, 2024 to April 30, 2025, Barnes & Noble Education’s impairment expense did not have a material impact on operations during the period from June 10, 2024 to April 30, 2025.operations.

The following table summarizes the consolidated Interest income and other income (expense), net; Interest expense; and Income tax benefit (expense) for the periodsfiscal years ended (in thousands, except for percentages):

Interest income and other income (expense), net consists primarily of interest and dividend income from cash and cash equivalents and marketable debt and equity securities, realized and unrealized gains (losses) on our marketable equity securities and derivative instruments, and realized gains (losses) on our marketable debt securities.

Interest income and other income (expense), net decreased $(9.53.2) million for the fiscal year ended April 30, 2025,2026, compared to the calendarfiscal year ended DecemberApril 31,30, 2023,2025, primarily driven by a $(11.43.3) million decrease in netinterest gainsincome fromduring investmentsthe incurrent marketable equity securities primarilyperiod due to unrealizedless lossesinvestment onin afixed few investmentssecurities compared to appreciations in the prior period; partially offset by a $1.9 million increase in interest income.period.

Interest expenses primarily consisted of interest charges related to Barnes & Noble Education’s credit facility. Interest expense increaseddecreased $(2.1) million primarily due to lower borrowings, lower interest rates, and a decrease in the consolidationamortization of Barnesdeferred &financing Noble Education effective June 10, 2024. Prior to June 10, 2024, the Company had no outstanding debt obligations.costs.

Provision for income taxes for the fiscal year ended April 30, 2025,2026, resulted primarily from estimated domestic and foreign taxes included in the calculation of the effective tax rate. We maintain no valuation allowance against our U.S. federal deferred tax assets and maintain a valuation allowance against certain our U.S. state and Canadian federal deferred tax assets. The change in the estimated effective tax rate was mainly driven by higherforeign U.S.withholding taxable income which was a result of higher U.S. passive income.taxes.

The year-over-year change in provision for income taxes resulted primarily from foreign withholding taxes and the change in income from continuing operations across various tax jurisdictions.

Barnes & Noble Education recorded an income tax provision of $6.4$3.0 million on pre-tax lossincome of $55.4$9.9 million during the periodfiscal ofyear June 10, 2024 toended April 30, 2025,2026, which represented an effective income tax rate of (11.5)%.29.8%.

As discussed in Note 2. Basis of Presentation and Summary of Significant Accounting Policies, due to their nonhomogeneous operations, our Consolidated Balance SheetSheets at April 30, 2026 and 2025, and Consolidated Statement of Operations for the fiscal yearyears ended April 30, 2026 and 2025, separately present the operating assets, liabilities, and operations of Immersion’s business from the operating assets, liabilities, and operations of Barnes & Noble Education'sEducation’s business.

In analyzing the Company’s ability to generate and obtain adequate amounts of cash to meet its requirements and plans for the next 12 months and separately in the long-term beyond the next 12 months it is important to highlight the two operating segments are not legally or contractually bound to each other. All of the assets of Barnes & Noble Education, reported on the Consolidated Balance Sheet,Sheets, can be used only to settle obligations of Barnes & Noble Education. None of the liabilities of Barnes & Noble Education have recourse to the general credit of Immersion.

Immersion’s cash and cash equivalents, investments-current, and investments-noncurrent consist primarily of money-market funds, investments in marketable equity and debt securities, and investments in U.S. treasury securities. As of April 30, 2025,2026, Immersion had $63.6$129.9 million in cash and cash equivalents, and less derivative instruments had $92.9$42.2 million in current and non-current investments. All marketable securities are stated at fair value. Realized gains and losses on marketable equity securities and marketable debt securities are recorded in OtherInterest income and other income (expense), net on the Consolidated Statements of Operations. Unrealized gains and losses on marketable equity securities are reported as OtherInterest income and other income (expense), net on our Consolidated Statement of Operations. Unrealized gains and losses on marketable debt securities reported as a component of Accumulated other comprehensive income on our Consolidated Balance Sheets.

Barnes & Noble Education’s primary sources of cash are net cash flows from operating activities, funds available under its Credit Agreement, BNED Common stock sold under the ATM Sales Agreement, and short-term vendor financing. Barnes & Noble Education’s liquidity is highly dependent on the seasonal nature of its business, particularly with respect to course material sales, as sales are generally highest in the second and third fiscal quarters, when college students purchase textbooks for the upcoming Fall and Spring semesters, respectively. As of April 30, 2025,2026, Barnes & Noble Education had $9.1$8.4 million of cash on hand and $19.7$19.8 million of restricted cash, including $17.3$17.4 million related to segregated funds for commission due to Lids for logo merchandise sales as per the “Lids”, and together with Fanatics relationship (“F /L Relationship”) -related agreements.

On June 10, 2024, Barnes & Noble Education completed the Transactions, which included: (i) a Private Investment; (ii) a Rights Offering; (iii) a Term Loan Debt Conversion; and (iv) a A&R Agreement, to substantially deleverage its consolidated balance sheet. These transactions also raised additional capital for repayment of indebtedness and provideprovided additional flexibility for future working capital needs. See Long-term borrowings discussion below for additional information.

At April 30, 2025,2026, our cash and cash equivalents and investments-current totaled $161.4$180.5 million, a $1.0$19.1 million increase from $160.4$161.4 million at DecemberApril 31,30, 2023.2025. In addition, as of April 30, 2025,2026, we had restricted cash of $19.7$19.8 million, comprised of $17.3$17.4 million in Prepaid expenses and other current assets on the Consolidated Balance Sheets primarily related to segregated funds for commission due to Lids for logo merchandise sales as per the Lids service provider merchandising agreement and $2.4 million in Other assets - noncurrent on the Consolidated Balance Sheets related to amounts held in trust for future employee benefit plan distributions.

The following summarizes select cash flow information for the periodsfiscal years ended (in thousands):

Our operating activities primarily consists of net income adjusted for certain non-cashnoncash items including depreciation and amortization, stock-based compensation expense, severance expense, impairment loss, loss on disposal of property plant and equipment, deferred income taxes, net (gains) losses on investments in marketable securities, income tax expense related to write-down of long-term deposits and the effect of changes in operating assets and liabilities.

Net cash provided by (used in) operating activities was $(57.6)$59.1 million for the fiscal year ended April 30, 2025,2026, a $(78.2)$116.6 million decreaseincrease compared to the calendarfiscal year ended DecemberApril 31,30, 2023.2025. This cash decreaseincrease was primarily attributable to a $(203.0)$196.1 million decreaseincrease from changes in operating assets and liabilities primarily due to favorable changes in working capital, including a $196.7 million favorable change in accounts payable and accrued liabilities, primarily reflecting the consolidationtiming of the Barnes & Noble Education balance sheet at April 30, 2025 comparedpayments to thevendors Immersionfor balanceinventory sheetpurchases atand Decemberoperating 31,expenses 2023,and a $4.9 million increase of changes in non cash items, partially offset by $59.6$84.4 million increasedecrease from changes in net income and a $65.2 million increase from non-cash items.income.

Net cash provided by (used in) investing activities for the fiscal year ended April 30, 2025,2026 was $3.4$51.5 million, primarily consisting of $138.9$143.1 million in cash provided by proceeds from selling marketable securities and derivatives, partially offset by $(102.075.4) million in cash used to purchase marketable securities and the settlement of derivative instruments; $(31.4) million of cash used in business acquisition, net of cash acquired; and $(11.216.2) million in purchase of property and equipment.

Net cash provided by (used in) investing activities duringfor the fourfiscal monthsyear ended April 30, 20242025 was $1.5$3.4 millionmillion, primarily consisting of $65.1$138.9 million in cash provided by proceeds from selling marketable securities and derivativesderivatives, partially offset by a $63.6$(102.0) million in cash used to purchase marketable securities and in the settlement of derivative instruments.instruments; $(31.4) million of cash used in business acquisition, net of cash acquired; and $(11.2) million in purchases of property and equipment.

Our financing activities were primarily related to Barnes & Noble Education and primarily consistconsisted of cash proceeds from issuance of common stock andstock, proceeds from and repayments of credit facility.facility, payment of deferred financing costs and equity issuance costs. Other financing activities related to Immersion included dividend payments, shares withheld to cover payroll taxes, and cash paid for repurchases of our common stock.

Net cash provided by (used in) financing activities for the fiscal year ended April 30, 2025,2026 was $61.0$(44.8) million primarily consisting of $836.2$812.9 million proceeds from borrowing under Barnes & Noble Education’s credit facilityfacility, andmore $78.1 million in proceeds from sale of BNED Common Stock, net of commissions and equity issuance costs, partiallythan offset by $(834.3845.0) million debt repayment, $(12.98.1) million in dividend payments, and $(3.72.3) million in shares withheld for payroll taxes.taxes, and $(1.9) million in payment of deferred financing costs.

Net cash provided by (used in) financing activities duringfor the fourfiscal monthsyear ended April 30, 20242025 was $3.6$61.0 million primarily consisting of $3.0$836.2 million proceeds from borrowing under Barnes & Noble Education’s credit facility and $78.1 million in proceeds from sale of BNED Common Stock, net of commissions and equity issuance costs, partially offset by $(834.3) million debt repayment, $(12.9) million in dividend payments, and $0.6$(3.7) million in shares withheld to coverfor payroll taxes.

Total cash, cash equivalents, and short-term investmentsinvestments-current were $180.5 million and $161.4 million at April 30, 2026 and 2025, respectively, of which approximately $22.2%,4.0%, or $7.2 million and 22.2%, or $35.9 million, respectively, was held by our foreign subsidiaries and subject to repatriation tax effects.

Immersion Dividends Declared and Dividend Payments

The following table summarizes the dividend declaration and payment activity for the fiscal yearyears ended April 30, 2025, the four months ended April 30, 2024,2026 and the calendar year ended December 31, 20232025:

For the fiscal year ended April 30, 2025, the four months ended April 30, 2024, and the calendar year ended December 31, 2023, the total dividends paid were $12.9 million, $3.0 million, and $7.4 million, respectively. Future dividends will be subject to further review and approval by the Board in accordance with applicable law. The Board reserves the right to adjustdeclare, adjust, or withdraw the quarterly dividenddividends in future periods as it reviews ourthe Company’s capital allocation strategy from time-to-time.

On December 29, 2022, our Board approved a stock repurchase program of up to $50.0 million of our common stock for a period of up to twelve months (the “December 2022 Stock Repurchase Program”), which terminated and superseded the stock repurchase program that had been approved by the Board on February 23, 2022. Any stock repurchases may be made through open market and privately negotiated transactions, at such times and in such amounts as management deems appropriate, including pursuant to one or more Rule 10b5-1 trading plans adopted in accordance with Rule 10b5-1 of the Exchange Act. Additionally, the Board authorized the use of any derivative or similar instrument to effect stock repurchase transactions, including without limitation, accelerated share repurchase contracts, equity forward transactions, equity option transactions, equity swap transactions, cap transactions, collar transactions, naked put options, floor transactionstransactions, or other similar transactions or any combination of the foregoing transactions. The December 2022 Stock Repurchase Program was implemented as a method to return value to our stockholders. The timing, pricing and sizes of any repurchases will depend on a number of factors, including the market price of our common stock and general market and economic conditions. The December 2022 Stock Repurchase Program does not obligate us to repurchase any dollar amount or number of shares, and the program may be suspended or discontinued at any time. The program has been amended various times and the most recent amendment extended the expiration date to December 29, 2026.

During the fiscal year ended April 30, 2025,2026, the Company repurchased 310,6431,700 shares of our common stock for $2.4$10 millionthousand at an average purchase price of $7.64$6.30 per share. As of April 30, 2025,2026, the Company has $39.4$39.3 million available for repurchase under the December 2022 Stock Repurchase Program.

On December 14, 2015, Barnes & Noble Education’s Board of Directors authorized a stock repurchase program of up to $50 million, in the aggregate, of outstanding BNED Common Stock. The stock repurchase program is carried out at the direction of management (which may include a plan under Rule 10b5-1 of the Securities Exchange Act of 1934). During Fiscalfiscal years 2026 and 2025, Barnes & Noble Education did not purchase shares under the stock repurchase program. As of April 30, 2025,2026, approximately $26.7 million remains available under the stock repurchase program. During Fiscal 2025, Barnes & Noble Education purchased 429 shares outside of the stock repurchase program in connection with employee tax withholding obligations for vested stock awards.

The following summarizes Barnes & Noble Education’s outstanding borrowings at April 30, 2026 and 2025 (in thousands):

The following summarizes Immersion’s contractual obligations as of April 30, 20252026 (in millions):

This Management’s Discussion and Analysis of Financial Condition and Results of Operations includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). The forward-looking statements involve risks and uncertainties. Forward-looking statements are frequently identified by words such as “anticipates,” “believes,” “expects,” “intends,” “may,” “can,” “will,” “places,plans,” “estimates,” and other similar expressions. However, these words are not the only way we identify forward-looking statements. Examples of forward-looking statements include among other things, any expectations, projections, or other characterizations of future events, or circumstances, and include statements regarding: our strategy and our ability to execute our business plan; our competition and the market in which we operate; our customers and suppliers; our revenue and trends related thereto, and the recognition and components thereof; our costs and expenses, including capital expenditures; our investment of surplus funds and sales of marketable securities seasonality and demand; our investment in research and technology development; changes to general and administrative expenses; our foreign operations and the reinvestment of our earnings related thereto; our investment in and protection of our intellectual property (“IP”); our employees; capital expenditures and the sufficiency of our capital resources; unrecognized tax benefit and tax liabilities; the impact of changes in interest rates and foreign exchange rates, as well as our plans with respect to foreign currency hedging in general; changes in laws and regulations, including with respect to taxes; our plans and estimates related to and the impact of current and future litigation and arbitration and our dividend, stock repurchase and equity distribution programs.

Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict and many of which are outside our control. Actual results could differ materially from those projected in the forward-looking statements, and therefore, we caution you not to place undue reliance on these forward-looking statements. Important factors that could cause our actual results and financial condition to differ materially from those indicated in the forward-looking statements include, among others, the risk factors contained under Part I, Item 1A, “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended April 30, 2025,2026, filed with the Securities and Exchange Commission (the “SEC”) on MarchJuly 12, 2026, as amended on March 13,24, 2026, Part I, Item 1A, “Risk Factors” in Barnes & Noble Education’sEducation's Annual Report on Form 10-K for the fiscal year ended May 3,2, 20252026, filed with the SEC on DecemberJuly 23,9, 2025,2026, and in Part II, Item 1A, “Risk Factors” of this Quarterly Report on Form 10-Q.

Immersion Corporation (“Immersion”) was incorporated in 1993 in California and reincorporated in Delaware in 1999. In this Management’s Discussion and Analysis of Financial Condition and Results of Operations the terms “Company,” “us,” “we,” or “our” refer to Immersion and its consolidated subsidiaries. Immersion generates license and royalty revenues from a wide range of IP that more fully engage users’ sense of touch when operating digital devices. We focus on the following target application areas: mobile devices, wearables, consumer, mobile entertainment,entertainment and other content, console gaming, automotive, medical, and automotive.commercial.

On June 10, 2024, we acquired a controlling interest in Barnes & Noble Education, Inc., a Delaware corporation (“Barnes & Noble Education”). Please refer to Note 4.3. Business Combination in the Company’s Annual Report on Form 10-K for the fiscal year ended April 30, 2026, for additional information. The financial results of Barnes & Noble Education have been included in our Condensed Consolidated Financial Statements from the acquisition date of June 10, 2024.

The financial information presented in this Quarterly Report on Form 10-Q includes the financial information of Barnes & Noble Education for the 3913 weeks ended JanuaryAugust 31,1, 2026 and forAugust the period from June 10, 2024 to January 31,2, 2025.

Immersion generates license and royalty revenue from a broad portfolio of intellectual property designed to enhance users’ sense of touch when interacting with digital devices. The Company focuses on the following target application areas: mobile devices, wearables, consumer, mobile entertainment,entertainment and other content, console gaming, automotive, medical, and automotive.commercial. The Company licenses its patented technology to customers that integrate the technology into their products to enhance functionality. These licenses allow customers to offer haptic-enabled devices, content, and other products, which they typically market under their own brand names.

As of JanuaryJuly 31, 2026, the Company and its wholly-owned subsidiaries held moreapproximately than 400300 issued or pending patents worldwide. These patents cover a broad range of digital technologies and methods for incorporating touch-related technology across hardware products and components, systems software, application software, and digital content.

The following is a summary of our results of operation for the three and nine months ended JanuaryJuly 31, 2026 and 2025 (in thousands, except for percentages):

For the three months ended JanuaryJuly 31, 2026, revenue generated in Asia, North America, Europe and EuropeAfrica, represented 75%,67%, 22%,29%, 1% and 3% of total revenue, respectively, compared with 31%,68%, 9%,5%, 27%, and 60%, respectively, in the prior-year period. For the nine months ended January 31, 2026, revenue generated in Asia, North America, and Europe represented 74%, 24%, and 2% of total revenue, respectively, compared with 88%, 4%, and 8%,0%, respectively, in the prior-year period. Revenue may vary significantly from period to period based on the timing of agreements and the geographic location of the contracting entity.

The following is a summary of operating expenses for the three and nine months ended JanuaryJuly 31, 2026 and 2025 (in thousands, except for percentages):

For the three months ended JanuaryJuly 31, 2026, selling and administrative expenses decreased by $2.4$0.2 million compared with the same prior year period primarily due to lower stock-based and variable compensation.

The strengths of Barnes & Noble Education’sits business include the ability to compete by developing new products and solutions to meet market needs, theits large operating footprint with direct access to students and faculty, theand well-established, deep relationships with academic partners and stable long-term contracts and the well-recognized brands. Barnes & Noble Education provides product and service offerings designed to address the most pressing issues in higher education, including affordable access, enhanced convenience and improved affordability through innovative course material delivery models designed to drive improved student experiences and outcomes. Barnes & Noble Education offers the BNC First Day® affordable access course material programs, consisting of First Day Complete and First Day, which provide faculty-required course materials on or before the first day of class at below market rates, as compared to the total retail price for the same course materials if purchased separately (a la carte), and students are billed the below market rate directly by the institution as a course charge or included in tuition. These programs have allowed Barnes & Noble Education to reverse historical long-term trends in course materials revenue declines, which has been observed at those schools where such programs have been adopted, and improve predictability of the future results. Barnes & Noble Education is moving quicklycontinues to acceleratesee thestrong BNCinstitutional interest in First Day Complete® and First Day® programsprograms, strategy.reflecting Institutionsan continuedongoing shift by colleges and universities toward affordable access course material models that increase student participation and improve access to adoptrequired BNCcourse First Day® programs during the first three quarters of fiscal 2026.materials.

Barnes & Noble Education expects to continue to introduce scalable and advanced solutions focused largely on the student and customer experience, expand the e-commerce capabilities and accelerate such capabilities through service providers, Fanatics Retail Group Fulfillment, LLC (“Fanatics”) and Fanatics Lids College, Inc. D/B/A “Lids” (“Lids”) (and together with Fanatics, referred to herein as the “F/L Relationship”), win new accounts, and expand the revenue opportunities through strategic relationships. Barnes & Noble Education expects gross comparable store general merchandise sales to increase over the long term, as the product assortments continue to emphasize and reflect changing consumer trends, and Barnes & Noble Education evolvesevolve the presentation concepts and merchandising of products in stores and online, which iswill expected tobe further enhanceenhanced and accelerateaccelerated through the F/L Relationship. Fanatics and Lids, acting on Barnes & Noble Education’s behalf as itsthe service providers, provide unparalleled product assortment, e-commerce capabilities and powerful digital marketing tools to drive increased value for customers and accelerate growth of the logo general merchandise business.

The Barnes & Noble brand (licensed from Barnes & Noble Education’sthe former parent corporation) along with the subsidiary brands, BNC and MBS, are synonymous with innovation in bookselling and campus retailing, and are widely recognized and respected brands in the United States. Barnes & Noble Education’sThe large college footprint, reputation, and credibility in the marketplace not only support the marketing efforts to universities, students, and faculty, but are also important to the relationship with leading publishers who rely on Barnes & Noble Education as one of their primary distribution channels.

For additional information related to the business of Barnes & Noble Education, see Part I - Item 1. Business in the Annual Report on Form 10-K for the fiscal year ended May 3,2, 2025,2026, filed with the SEC on DecemberJuly 23,9, 2025.2026.

Barnes & Noble Education’s business is highly seasonal, particularly with respect to textbook sales and rentals, with the major portion of sales and operating profit realized during the second and third fiscal quarters when college students generally purchase and rent textbooks for the upcoming semesters and lowest in the first and fourth fiscal quarters. Barnes & Noble Education’s quarterly results also may fluctuate depending on the timing of the start of the various schools’ semesters, as well as shifts in Barnes & Noble Education’s fiscal calendar dates. DuringThese shifts in timing may affect the current fiscal year, Barnes & Noble Education experienced a modest increase in the numbercomparability of academicour startresults periodsacross occurring in the 13 and 39 weeks ended January 31, 2026, compared to the prior year, primarily due to differences in the fiscal calendar week alignment year over year.periods.

Product sales are recognized when the customer takes physical possession of the products, which occurs either at the point of sale for products purchased at physical locations or upon receipt of the products by the customers for products ordered through Barnes & Noble Education’s websites and virtual bookstores. Revenue from the sale of digital textbooks, which contains a single performance obligation, is recognized upon delivery of the digital content as product revenue in the condensed consolidated financial statements. Revenue from the rental of physical textbooks is deferred and recognized over the rental period based on the passage of time commencing at the point of sale, when control of the product transfers to the customer and is recognized as rental income in the condensed consolidated financial statements. Rental revenue and margin dollars deferral from third fiscal quarter is higher compared to prior year due to the growth of the BNC First Day® programs. Depending on the product mix offered under the BNC First Day® offerings, revenue recognized is consistent with theour policies for product, digital and rental sales, net of an anticipated opt-out or return provision.

BarnesThe &sales Noble Educationare primarily derives its revenuesderived from the sale of course materials, which include new, used, rental and digital textbooks. Additionally, at collegetextbooks and university bookstores which Barnes & Noble Education operates, it sells general merchandise, including emblematic apparel and gifts, trade books, computer products, school and dorm supplies, convenience and cafe items and graduation products. Barnes & Noble Education’sThe rental income is primarily derived from the rental of physical textbooks. Barnes & Noble Education also derives revenue from other sources, such as sales of bookstoreinventory management, hardware and point-of-sale software, and other services.

Total revenue was $515.1$290.6 million for the three months ended JanuaryJuly 31, 2026, consisting of $471.8$276.9 million of product and other sales and $43.3$13.7 million of rental sales. Total revenue for the comparable prior year period was $462.8$288.2 million, including $419.7$274.2 million of product and other sales and $43.1$14.0 million of rental sales. The $52.3$2.4 million increase in revenue is primarily due to higher comparable store sales of $41.2$11.8 million and new store sales of $35.2$11.5 million, largely driven by a $71.3$10.3 million increase from BNC First Day® programs, partially offset by lower sales from closed stores of $16.2$18.0 million and lower$2.9 textbook rental deferralmillion of $9.4other million.sales declines.

Cost of sales was 82.6%81% of total revenue for the three months ended JanuaryJuly 31, 2026, has remained flat as a percent of revenue compared to 76.6%81% for the three months ended JanuaryJuly 31, 2025. The flat current year quarter netpercentage of cost increasecompared to the comparable period of the prior year was primarily due to reduced higher marginlease logoamortization andexpenses non-logo general merchandise sales and higher markdowns relateddue to closedunfavorable stores,lease partiallyadjustments offset by lower contract costs as a percentage of sales related to university contracts as a result of the shift to digital and First Day models and lower performing school contracts not renewed.

Selling and administrative expenses were $72.5$67.3 million for the three months ended JanuaryJuly 31, 2026, ana increasedecrease of $1.0$0.5 million compared to the three months ended JanuaryJuly 31, 2025. This increasedecrease was primarily due to higher payroll, incentive plan costs, and relatedlower operating expenses.expenses, including lower technology expenses, service charges, partially offset by incremental bad debt expense.

Barnes & Noble EducationEducation's depreciation and amortization expense consists primarily of depreciation of property and equipment and amortization of intangible assets.

Depreciation and amortization expense was $10.7$10.2 million for the three months ended JanuaryJuly 31, 2026, ana increasedecrease of $0.7$0.2 millionmillion, or relatively flat compared to the three months ended JanuaryJuly 31, 2025, driven mainly by capital additions and accelerated intangible amortization related to closed stores.2025.

During the three months ended JanuaryJuly 31, 2025,2026, theBarnes Company& Noble Education recognized other income, net of $6.2 million, primarily related to income of $7.6$0.7 million, comprised primarily of a $1.7 million relatedcash toreceipt from the terminationrelease of liabilitiesfunds associatedpreviously withheld ain frozenescrow retirementoffset benefitby plan.$0.5 million of legal and professional fees.

Interest income and other income (expense), net; Interest expenseexpense, net; and Income tax benefit (expense)

A summary of consolidated interest income and other income (expense), net, interest expense, and income taxes for the three and nine months ended JanuaryJuly 31, 2026 and 2025 are as follows (in thousands, except for percentages):

InterestImmersion's interest income and other income (expense), net consists primarily of interest and dividend income earned on cash and cash equivalents and marketable debt and equity securities; realized and unrealized gains and losses on marketable equity securities and derivative instruments; and realized gains and losses on marketable debt securities.instruments.

Interest income and other income (expense), net decreasedincreased by $19.2$7.4 million for the three months ended JanuaryJuly 31, 2026, compared with the corresponding period in the prior year. This decreaseincrease was driven primarily by ana $18.5$7.8 million unfavorablefavorable period-over-period change in realized and unrealized gains and losses on marketable equity securities and derivative instruments, from a $12.5$6.0 million net gain in the prior-year quarter to a $6.0$13.8 million net lossgain in the current quarter. The decreaseincrease was alsopartially attributableoffset toby $0.9reduction million of lowerin interest income,income by $0.2 million, primarily due to lower invested balances in fixed-income securities and lower interest rates.

NetBarnes & Noble Education's interest expenseexpense, net decreased by $1.3$1.0 million to $9.8$1.8 million during the ninethree months ended JanuaryJuly 31, 2026, from $11.1$2.8 million during the ninethree months ended JanuaryJuly 31, 2025. The decrease was primarily due to lower borrowings and lower interest rates.borrowings.