IMMERSION CORP (IMMR)

CIK: 0001058811. SIC: 3577 Computer Peripheral Equipment, NEC. Latest 10-K as of: 2026-03-12.

SIC breadcrumb: Manufacturing > Industrial And Commercial Machinery And Computer Equipment > SIC 3577 Computer Peripheral Equipment, NEC

SEC company page: https://www.sec.gov/edgar/browse/?CIK=1058811. Latest filing source: 0001193125-26-102681.

Selected Fundamentals

Financials

Annual standardized facts from SEC companyfacts as of latest extracted filing date 2026-03-12. Source: https://data.sec.gov/api/xbrl/companyfacts/CIK0001058811.json. Derived margins, ratios, and free cash flow are computed from the extracted annual SEC facts.

Flow metrics use full-year FY periods from 10-K/10-K/A filings; balance-sheet metrics use FY-end instants. Free cash flow = operating cash flow - capital expenditures. Missing metrics are omitted rather than fabricated.

Ratios

ROE and ROA use period-end equity/assets. Liabilities / equity uses total liabilities divided by stockholders' equity. Current ratio uses current assets divided by current liabilities when both are reported.

Financial Charts

Quarterly

Quarterly standardized facts from SEC companyfacts as of latest extracted filing date 2026-05-04. Source: https://data.sec.gov/api/xbrl/companyfacts/CIK0001058811.json.

Flow metrics use discrete quarter-length periods from 10-Q/10-Q/A filings. Q4 revenue and net income are derived only when annual FY and nine-month YTD facts exist for the same fiscal year; derived Q4 values are labeled. EPS Q4 is not derived.

Quarterly Charts

Macro Cross-References

• CPIAUCSL - Consumer Price Index for All Urban Consumers: All Items in U.S. City Average
• UNRATE - Unemployment Rate
• FEDFUNDS - Federal Funds Effective Rate
• CES0500000003 - Average Hourly Earnings of All Employees, Total Private
• DFEDTARU - Federal Funds Target Range - Upper Limit
• DFEDTARL - Federal Funds Target Range - Lower Limit
• DGS3MO - Market Yield on U.S. Treasury Securities at 3-Month Constant Maturity
• DGS2 - Market Yield on U.S. Treasury Securities at 2-Year Constant Maturity
• DGS10 - Market Yield on U.S. Treasury Securities at 10-Year Constant Maturity
• DGS30 - Market Yield on U.S. Treasury Securities at 30-Year Constant Maturity
• T10Y2Y - 10-Year Treasury Constant Maturity Minus 2-Year Treasury Constant Maturity
• CPILFESL - Consumer Price Index for All Urban Consumers: All Items Less Food and Energy
• CPIUFDSL - Consumer Price Index for All Urban Consumers: Food
• CPIENGSL - Consumer Price Index for All Urban Consumers: Energy
• CUSR0000SAH1 - Consumer Price Index for All Urban Consumers: Shelter
• PCEPI - Personal Consumption Expenditures: Chain-type Price Index
• PCEPILFE - Personal Consumption Expenditures Excluding Food and Energy: Chain-type Price Index
• PPIACO - Producer Price Index by Commodity: All Commodities
• T10YIE - 10-Year Breakeven Inflation Rate
• U6RATE - Total Unemployed, Plus All Marginally Attached Workers Plus Total Employed Part Time for Economic Reasons
• PAYEMS - All Employees, Total Nonfarm
• CIVPART - Labor Force Participation Rate
• EMRATIO - Employment-Population Ratio
• UNEMPLOY - Unemployed
• CE16OV - Employment Level
• ICSA - Initial Claims
• JTSJOL - Job Openings: Total Nonfarm
• JTSQUR - Quits: Total Nonfarm
• GDPC1 - Real Gross Domestic Product
• A191RL1Q225SBEA - Real Gross Domestic Product: Percent Change from Preceding Period
• INDPRO - Industrial Production: Total Index
• TCU - Capacity Utilization: Total Index
• HOUST - New Privately-Owned Housing Units Started: Total Units
• PERMIT - New Privately-Owned Housing Units Authorized in Permit-Issuing Places: Total Units
• RSAFS - Advance Retail Sales: Retail Trade
• PCE - Personal Consumption Expenditures
• DSPIC96 - Real Disposable Personal Income
• PSAVERT - Personal Saving Rate
• M2SL - M2
• BOPGSTB - U.S. International Trade in Goods and Services: Balance
• MSPUS - Median Sales Price of Houses Sold for the United States
• HSN1F - New One Family Houses Sold: United States
• RHORUSQ156N - Homeownership Rate in the United States
• TTLCONS - Total Construction Spending: Total Construction in the United States
• RRVRUSQ156N - Rental Vacancy Rate in the United States
• TOTALSL - Total Consumer Credit Owned and Securitized
• REVOLSL - Revolving Consumer Credit Owned and Securitized
• DRCCLACBS - Delinquency Rate on Credit Card Loans, All Commercial Banks
• GDP - Gross Domestic Product
• GPDI - Gross Private Domestic Investment
• GCE - Government Consumption Expenditures and Gross Investment
• PCEC - Personal Consumption Expenditures
• NETEXP - Net Exports of Goods and Services
• GFDEBTN - Federal Debt: Total Public Debt
• GFDEGDQ188S - Federal Debt: Total Public Debt as Percent of Gross Domestic Product
• FYFSD - Federal Surplus or Deficit
• FGRECPT - Federal Government Current Receipts
• FGEXPND - Federal Government: Current Expenditures
• MANEMP - All Employees, Manufacturing
• USCONS - All Employees, Construction
• USTRADE - All Employees, Retail Trade
• USFIRE - All Employees, Financial Activities
• USGOVT - All Employees, Government
• AWHAETP - Average Weekly Hours of All Employees, Total Private
• DGORDER - Manufacturers' New Orders: Durable Goods
• NEWORDER - Manufacturers' New Orders: Nondefense Capital Goods Excluding Aircraft
• BUSINV - Total Business Inventories
• EXPGS - Exports of Goods and Services
• IMPGS - Imports of Goods and Services
• IR - Import Price Index (End Use): All Commodities
• PPIFIS - Producer Price Index by Commodity: Final Demand

Latest quarter (10-Q)

Latest 10-Q source: 0001193125-26-201951.

Extracted structurally from real Item 2 body heading to real Item 3/4 boundary. Published MD&A gate trimmed front/tail over-capture. Confidence: high. Filing date: 2026-05-04. Report date: 2026-01-31.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

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,” “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, filed with the Securities and Exchange Commission (the “SEC”) on March 12, 2026, as amended on March 13, 2026, Part I, Item 1A, “Risk Factors” in Barnes & Noble Education’s Annual Report on Form 10-K for the fiscal year ended May 3, 2025 filed with the SEC on December 23, 2025, and in Part II, Item 1A, “Risk Factors” of this Quarterly Report on Form 10-Q.

Any forward-looking statements made by us in this report speak only as of the date of this report, and we do not intend to update these forward-looking statements after the filing of this report, unless required to do so by applicable law or regulation. You are urged to review carefully and consider our various disclosures in this report and in our other reports publicly disclosed or filed with the SEC that attempt to advise you of the risks and factors that may affect our business.

COMPANY OVERVIEW

Description of Business

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, mobile entertainment, console gaming, and automotive.

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. Business Combination 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.

Following June 10, 2024, we operate our business in two operating segments: Immersion and Barnes & Noble Education.

The financial information presented in this Quarterly Report on Form 10-Q includes the financial information of Barnes & Noble Education for the 39 weeks ended January 31, 2026 and for the period from June 10, 2024 to January 31, 2025.

38

Restatement of Previously Issued Consolidated Financial Statements

The following discussion reflects the restatement of the Company’s previously-issued consolidated interim financial information, as disclosed in Note 20. Restatement of Quarterly Financial Information (Unaudited) in the Company’s Annual Report on Form 10-K for the fiscal year ended April 30, 2025. Also, see Note 3. Restatement of Previously-Issued Financial Statements in Notes to the Condensed Consolidated Financial Statements in Part 1, Item 1 of this Quarterly Report on Form 10-Q. There have been no additional restatements or revisions to previously issued financial statements since the filing of the Company’s Annual Report on Form 10-K for the fiscal year ended April 30, 2025.

RESULTS OF OPERATIONS

Three Months Ended January 31,

Nine Months Ended January 31,

2026

2025

2026

2025

 (in thousands)

As Restated

As Restated

REVENUES

Immersion

Royalty and license

$

3,396

$

8,437

$

13,028

$

70,989

Barnes & Noble Education

Product and other

471,825

419,663

1,344,215

1,109,455

Rental income

43,267

43,162

103,451

90,556

515,092

462,825

1,447,666

1,200,011

Total revenues

518,488

471,262

1,460,694

1,271,000

COST OF SALES (excludes depreciation and amortization expense)

Barnes & Noble Education

Product and other cost of sales

401,367

328,980

1,117,052

872,704

Rental cost of sales

24,212

25,516

57,223

51,180

425,579

354,496

1,174,275

923,884

OPERATING EXPENSES

Immersion

Selling and administrative expenses

2,585

5,010

9,229

22,586

Barnes & Noble Education

Selling and administrative expenses

72,546

71,498

217,633

180,544

Depreciation and amortization expense

10,676

9,951

31,560

24,627

Impairment loss

1,018

1,247

1,018

1,247

Other (income) expense

1,099

(6,178

)

8,291

(1,114

)

85,339

76,518

258,502

205,304

Total operating expenses

87,924

81,528

267,731

227,890

Operating Income (Loss)

4,985

35,238

18,688

119,226

Interest income and other income (expense), net

(4,435

)

14,803

7,849

29,039

Interest expense

3,968

4,167

9,766

11,081

Income (Loss) Before Income Taxes

(3,418

)

45,874

16,771

137,184

Income tax benefit (expense)

(6,715

)

(2,644

)

(13,738

)

(17,367

)

Net Income (Loss)

$

(10,133

)

$

43,230

$

3,033

$

119,817

Immersion

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, mobile entertainment, console gaming, and automotive. 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.

39

As of January 31, 2026, the Company and its wholly-owned subsidiaries held more than 400 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 January 31, 2026 and 2025 (in thousands, except for percentages):

Three Months Ended January 31,

Nine Months Ended January 31,

2026

2025

$

Change

%

Change

2026

2025

$

Change

%

Change

As Restated

As Restated

REVENUES

Fixed fee license revenue

$

734

$

5,754

$

(5,020

)

(87

)%

$

2,206

$

61,756

$

(59,550

)

(96

)%

Per-unit royalty revenue

2,662

2,683

(21

)

(1

)%

10,822

9,233

1,589

17

%

3,396

8,437

(5,041

)

(60

)%

13,028

70,989

(57,961

)

(82

)%

Selling and administrative expenses

2,585

5,010

(2,425

)

(48

)%

9,229

22,586

(13,357

)

(59

)%

Operating Income (Loss)

$

811

$

3,427

$

(2,616

)

(76

)%

$

3,799

$

48,403

$

(44,604

)

(92

)%

Revenues

Immersion generates revenue primarily from fixed-fee license agreements and per-unit royalty arrangements. Royalty and license revenue includes per-unit royalties based on licensees’ usage or net sales, as well as fixed license fees for the Company’s intellectual property and software.

Fixed-fee license revenue decreased by $5.0 million for the three months ended January 31, 2026, compared with the same period in the prior year, primarily due to lower automotive license revenue. The prior-year quarter included a one-time perpetual license agreement that did not recur in the current-year quarter. For the nine months ended January 31, 2026, fixed-fee license revenue decreased by $59.6 million compared with the same period in the prior year, primarily due to four one-time perpetual license agreements in gaming, mobility, and automotive applications executed in the prior-year period, with no comparable agreements in the current-year period.

Per-unit royalty revenue was relatively flat for the three months ended January 31, 2026, compared with the same period in the prior year. For the nine months ended January 31, 2026, per-unit royalty revenue increased by $1.6 million compared with the same period in the prior year, driven by higher business levels from multiple customers in gaming, mobility, and other applications, as well as contributions from three new customers in other applications, partially offset by lower year-over-year royalty-generating activity from multiple other customers.

For the three months ended January 31, 2026, revenue generated in Asia, North America, and Europe represented 75%, 22%, and 3% of total revenue, respectively, compared with 31%, 9%, 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%, 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.

Operating Expenses

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

Three Months Ended January 31,

$

%

Nine Months Ended January 31,

$

%

2026

2025

Change

Change

2026

2025

Change

Change

As Restated

As Restated

Selling and administrative expense

$

2,585

$

5,010

$

(2,425

)

(48

)%

$

9,229

$

22,586

$

(13,357

)

(59

)%

Selling and administrative expenses primarily consist of employee compensation and benefits (including stock‑based compensation), legal and other professional fees, external patent related legal costs, office expenses, travel, and facilities costs.

For the three months ended January 31, 2026, sell

[Excerpt truncated for page length; source filing is linked above.]

Latest 10-K MD&A

Extracted from Item 7 to the first post-MD&A boundary after HTML sanitization. Confidence: high. Filing date: 2026-03-12. Report date: 2025-04-30.

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

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 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, compared to the calendar year ended December 31, 2023 as well as discussion of the results for the four months ended April 30, 2024. 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.

The Company has restated its previously-issued unaudited interim financial statements for the unaudited fiscal quarterly periods ended January 31, 2025, October 31, 2024, and calendar quarter ended June 30, 2024, contained in our Quarterly Reports on Form 10-Q. Detailed restatements of the Company’s condensed consolidated quarterly financial statements are provided in “Note 20. Restatement of Quarterly Financial Information (Unaudited)” of the Notes to the Consolidated Financial Statements under Item 8 of this Form 10-K.

RESULTS OF OPERATIONS

(in thousands)

Fiscal Year Ended April 30,

2025

Four Months Ended April 30,

2024

Calendar Year

Ended December 31,

2023

REVENUES:

Immersion

Royalty and license

$

74,073

$

45,782

$

33,919

Barnes & Noble Education

Product and other

1,342,437

—

—

Rental income

139,366

—

—

1,481,803

—

—

Total revenues

1,555,876

45,782

33,919

COST OF SALES (excludes depreciation and amortization expense):

Barnes & Noble Education

Product and other cost of sales

1,048,829

—

—

Rental cost of sales

75,346

—

—

Total cost of sales

1,124,175

—

—

OPERATING EXPENSES

Immersion

Selling and administrative expenses

25,757

29,749

15,992

Barnes & Noble Education:

Selling and administrative expenses

252,754

—

—

Depreciation and amortization expense

35,274

—

—

Impairment loss

1,247

—

—

Restructuring and other charges (credits)

(1,351

)

—

—

287,924

—

—

Total operating expenses

313,681

29,749

15,992

Operating Income (Loss)

118,020

16,033

17,927

Interest and other income (expense), net

15,533

8,543

24,988

Interest expense

14,261

—

—

Income (Loss) Before Income Taxes

119,292

24,576

42,915

Income tax benefit (expense)

(25,710

)

(6,799

)

(8,939

)

Net Income (Loss)

$

93,582

$

17,777

$

33,976

45

Immersion

The following summarizes our results of operation for the periods ended (in thousands, except for percentages):

Fiscal Year Ended April 30,

2025

Four Months Ended April 30,

2024

Calendar Year

Ended December 31,

2023

$

 Change

%

 Change

Revenues:

Fixed fee license revenue

$

62,519

$

39,131

$

5,421

$

57,098

1053

%

Per-unit royalty revenue

11,554

6,651

28,498

(16,944

)

(59

)%

Total revenues

74,073

45,782

33,919

40,154

118

%

Selling and administrative expenses

25,757

29,749

15,992

9,765

61

%

Operating Income (Loss)

$

48,316

$

16,033

$

17,927

$

30,389

170

%

Revenues

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 increased by $57.1 million for the fiscal year ended April 30, 2025, compared to the calendar year ended December 31, 2023, primarily due to $53.8 million increase in Mobile license revenue representing one time perpetual license agreements entered into during the fiscal year ended April 30, 2025.

Fixed fee license revenue primarily consisted of $38.2 million of Gaming license revenue for the four months ended April 30, 2024.

Per‑unit royalty revenue decreased by $(16.9) million, or (59)%, for the fiscal year ended April 30, 2025, compared to the calendar year ended December 31, 2023, primarily due to a general decrease in the per unit royalty licensing. This decrease was across all markets served including $(7.9) million of mobility licensees, $(4.7) million of automotive licensees, $(2.9) million of gaming licensees, and $(1.1) million of commercial licensees.

Per‑unit royalty revenue primarily consisted of $3.1 million related to mobility licensees for the four months ended April 30, 2024.

Geographically, 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, represented 87%, 8%, and 5%, respectively, of our total revenue as compared to 74%, 17%, and 9%, respectively, for the calendar year ended December 31, 2023.

46

Selling and administrative expenses

The following presents the Selling and administrative expenses for the periods ended (in thousands, except for percentages):

Fiscal Year Ended April 30,

2025

Four Months Ended April 30,

2024

Calendar Year

Ended December 31,

2023

$

Change

%

Change

Selling and administrative expenses

$

25,757

$

29,749

$

15,992

$

9,765

61

%

Immersion’s selling and administrative expenses primarily consisted of employee compensation and benefits including stock-based compensation, legal and other professional fees, external legal costs for patents, office expense, travel, and facilities costs.

Selling and administrative expenses increased $9.8 million for the fiscal year ended April 30, 2025, as compared to the calendar year ended December 31, 2023, primarily due to a $6.6 million increase in compensation, benefits, and other personnel related costs and a $4.7 million increase in legal costs related to the settlement of patent litigation. The increase in compensation, benefits and other personnel related costs is largely attributable to higher stock-based compensation expense resulting from new equity grants partially offset by a decrease in variable compensation.

Selling and administrative expenses primarily consisted of legal costs of $21.8 million and compensation, benefits and other personnel related costs of $6.8 million for the four months ended April 30, 2024.

Barnes & Noble Education

The following summarizes Barnes & Noble Education’s results of operations for the period (in thousands):

From

June 10, 2024

to April 30, 2025

REVENUES

Product and other

$

1,342,437

Rental income

139,366

Total revenue

1,481,803

COST OF SALES (excluding depreciation and amortization expense):

Product and other cost of sales

1,048,829

Rental cost of sales

75,346

Total cost of sales

1,124,175

OPERATING EXPENSES

Selling and administrative expenses

252,754

Depreciation and amortization expense

35,274

Impairment loss

1,247

Restructuring and other charges (credits)

(1,351

)

Total operating expenses

287,924

Operating Income (Loss)

$

69,704

Revenues

Barnes & Noble Education primarily derives its revenues from sale of course materials, which include new, used, rental 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.

47

Cost of sales

Barnes & Noble Education cost of sales primarily includes costs such as merchandise costs, textbook rental amortization, warehouse costs related to inventory management and order fulfillment, insurance, certain payroll costs, and management service agreement costs, including rent expense, related to Barnes & Noble Education’s college and university contracts and other facility related expenses.

Selling and administrative expenses

Barnes & Noble Education selling and administrative expenses consist primarily of store payroll and store operating expenses. Selling and administrative expenses also include long-term incentive plan compensation expense and general office expenses, such as merchandising, procurement, field support, and finance and accounting.

Depreciation and amortization

Barnes & Noble Education depreciation and amortization expense consisted primarily of depreciation and amortization expense for property and equipment and intangible assets.

Impairment

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.

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

Fiscal Year Ended April 30,

2025

Four Months Ended April 30,

2024

Calendar Year Ended December 31,

2023

$

Change

%

Change

Operating Income (Loss)

$

118,020

$

16,033

$

17,927

$

100,093

558

%

Interest and other income (expense), net

15,533

8,543

24,988

(9,455

)

(38

)%

Interest expense

14,261

—

—

14,261

NM

Income (Loss) Before Income Taxes

119,292

24,576

42,915

76,377

178

%

Income tax benefit (expense)

(25,710

)

(6,799

)

(8,939

)

(16,771

)

188

%

Net Income (Loss)

$

93,582

$

17,777

$

33,976

$

59,606

175

%

Interest and other income (expense), net

Interest 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 and other income (expense), net decreased $(9.5) million for the fiscal year ended April 30, 2025, compared to the calendar year ended December 31, 2023, primarily driven by a $(11.4) million decrease in net gains from investments in marketable equity securities primarily due to unrealized losses on a few investments compared to appreciations in the prior period; partially offset by a $1.9 million increase in interest income.

Interest and other income (expense), net primarily consisted of $5.3 million in net gains from investments in marketable equity securities for the four months ended April 30, 2024.

Interest expense

Interest expenses primarily consisted of interest charges related to Barnes & Noble Education’s credit facility. Interest expense increased due to the consolidation of Barnes & Noble Education effective June 10, 2024. Prior to June 10, 2024, the Company had no outstanding debt obligations.

48

Income tax benefit (expense)

The changes for Immersion and Barnes & Noble Education’s provision for income taxes are described below:

Immersion

Provision for income taxes for the fiscal year ended April 30, 2025, 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 higher U.S. taxable income which was a result of higher U.S. passive income.

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

In the event that we determine the deferred tax assets are realizable based on an assessment of relevant factors, an adjustment to the valuation allowance may increase income in the period such determination is made. The valuation allowance does not impact our ability to utilize the underlying net operating loss carryforwards.

We also maintain liabilities for uncertain tax positions. As of April 30, 2025, we had unrecognized tax benefits under ASC 740 Income Taxes of approximately $12.7 million, all of the $12.7 million could be payable in cash. In addition, interest and penalty of $0.6 million could also be payable in cash in relation to unrecognized tax benefits. The total amount of unrecognized tax benefits that would affect our effective tax rate, if recognized, is $13.3 million. We account for interest and penalties related to uncertain tax positions as a component of income tax provision. We do not expect to have any significant changes to unrecognized tax benefits during the next twelve months.

Barnes & Noble Education

Barnes & Noble Education recorded an income tax provision of $6.4 million on pre-tax loss of $55.4 million during the period of June 10, 2024 to April 30, 2025, which represented an effective income tax rate of (11.5)%.

In assessing the realizability of the deferred tax assets, management considered whether it is more likely than not that some or all of the deferred tax assets would be realized. As of April 30, 2025, Barnes & Noble Education determined that it was more likely than not that it would not realize all deferred tax assets and its tax rate for the current fiscal year reflects this determination. Barnes & Noble Education will continue to evaluate this position.

LIQUIDITY AND CAPITAL RESOURCES

As discussed in Note 2. Basis of Presentation and Summary of Significant Accounting Policies, due to their nonhomogeneous operations, our Consolidated Balance Sheet at April 30, 2025, and Consolidated Statement of Operations for the fiscal year ended April 30, 2025, separately present the operating assets, liabilities, and operations of Immersion’s business from the operating assets, liabilities, and operations of Barnes & Noble Education'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, 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, Immersion had $63.6 million in cash and cash equivalents, and less derivative instruments had $92.9 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 Other income (expense), net on the Consolidated Statements of Operations. Unrealized gains and losses on marketable equity securities are reported as 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.

49

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, Barnes & Noble Education had $9.1 million of cash on hand and $19.7 million of restricted cash, including $17.3 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 provide additional flexibility for future working capital needs. See Long-term borrowings discussion below for additional information.

On September 19, 2024, Barnes & Noble Education entered into the September ATM Sales Agreement with BTIG under which Barnes & Noble Education sold the maximum of $40.0 million of BNED Common Stock from time to time at a weighted-average price of $10.06 per share and received $39.2 million in proceeds, net of commissions. BTIG, as the sales agent, sold the shares based upon Barnes & Noble Education’s instructions (including as to price, time or size limits or other customary parameters or conditions). Barnes & Noble Education paid BTIG a commission of 2% of the gross sales proceeds of BNED Common Stock sold under the September ATM Sales Agreement. Barnes & Noble Education was not obligated to make any sales of BNED Common Stock under the September ATM Sales Agreement.

On December 20, 2024, Barnes & Noble Education entered into the December ATM Sales Agreement, under which Barnes & Noble Education sold the maximum of $40.0 million of BNED Common Stock from time to time at a weighted-average price of $10.42 per share and received $39.2 million in proceeds, net of commissions. BTIG, as the sales agent, sold the shares based upon Barnes & Noble Education’s instructions (including as to price, time or size limits or other customary parameters or conditions). Barnes & Noble Education paid BTIG a commission of 2% of the gross sales proceeds of BNED Common Stock sold under the December ATM Sales Agreement. Barnes & Noble Education was not obligated to make any sales of BNED Common Stock under the December ATM Sales Agreement. During the third quarter of Fiscal 2025, Barnes & Noble Education issued and sold the maximum aggregate offering of $40.0 million of BNED Common Stock under the December ATM Sales Agreement, at a weighted-average price of $10.42 per share and received $39.2 million in proceeds, net of commissions.

Barnes & Noble Education believes that its future cash from operations, access to borrowings under the credit facility, and short-term vendor financing will provide adequate resources to fund its operating and financing needs for the next twelve months and beyond. To the extent that available funds are insufficient to fund its future activities, Barnes & Noble Education may need to raise additional funds through public or private financing of debt or equity. Barnes & Noble Education’s access to, and the availability of, financing in the future will be impacted by many factors, including the liquidity of the overall capital markets and the current state of the economy. There can be no assurances that Barnes & Noble Education will have access to capital markets on acceptable terms.

We will continue to protect and defend our extensive IP portfolio, which can result in the use of cash in the event of litigation.

At the date of this Annual Report on Form 10-K, the Company believes we have sufficient capital resources to meet our working capital needs for the next twelve months and beyond.

Cash and cash equivalents, Investments-current, and Restricted cash

At April 30, 2025, our cash and cash equivalents and investments-current totaled $161.4 million, a $1.0 million increase from $160.4 million at December 31, 2023. In addition, as of April 30, 2025, we had restricted cash of $19.7 million, comprised of $17.3 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.

50

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

Fiscal Year Ended April 30,

2025

Four Months Ended April 30,

2024

Calendar Year Ended December 31,

2023

Net cash provided by (used in) operating activities

$

(57,576

)

$

31,603

$

20,600

Net cash provided by (used in) investing activities

3,375

1,456

3,398

Net cash provided by (used in) financing activities

60,953

(3,609

)

(16,747

)

Net cash provided by (used in) operating activities

Our operating activities primarily consists of net income adjusted for certain non-cash 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, and the effect of changes in operating assets and liabilities.

Net cash provided by (used in) operating activities was $(57.6) million for the fiscal year ended April 30, 2025, a $(78.2) million decrease compared to the calendar year ended December 31, 2023. This cash decrease was primarily attributable to a $(203.0) million decrease from changes in operating assets and liabilities primarily due to the consolidation of the Barnes & Noble Education balance sheet at April 30, 2025 compared to the Immersion balance sheet at December 31, 2023, partially offset by $59.6 million increase from changes in net income and a $65.2 million increase from non-cash items.

Net cash provided by (used in) operating activities was $31.6 million for the four months ended April 30, 2024.

Net cash provided by (used in) investing activities

Our investing activities primarily represent Immersion transactions that consist of purchases of marketable securities and other investments and proceeds from disposal of marketable securities and other investments; proceeds from issuance of derivative instruments; payments made to settle derivative instruments; payment for business acquisitions, net of cash acquired. The purchase of property and equipment and proceeds from disposals of property and equipment were related to Barnes & Noble Education.

Net cash provided by (used in) investing activities for the fiscal year ended April 30, 2025, was $3.4 million, primarily consisting of $138.9 million in cash provided by proceeds from selling marketable securities and derivatives, partially offset by $(102.0) 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 $(11.2) million in purchase of property and equipment.

Net cash provided by (used in) investing activities during the four months ended April 30, 2024 was $1.5 million primarily consisting of $65.1 million in proceeds from selling marketable securities and derivatives partially offset by a $63.6 million in cash used to purchase marketable securities and in the settlement of derivative instruments.

Net cash provided by (used in) financing activities

Our financing activities were primarily related to Barnes & Noble Education and primarily consist of cash proceeds from issuance of common stock and proceeds from and repayments of credit facility. 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, was $61.0 million primarily consisting of $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 $(3.7) million in shares withheld for payroll taxes.

Net cash provided by (used in) financing activities during the four months April 30, 2024 was $3.6 million consisting of $3.0 million in dividend payments, and $0.6 million in shares withheld to cover payroll taxes.

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

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Dividend Payments

The following table summarizes the dividend payment activity for the fiscal year ended April 30, 2025, the four months ended April 30, 2024, and the calendar year ended December 31, 2023:

Announcement

Date

Dividend

Type

Amount

per Share

Record

Date

Payment

 Date

November 14, 2022

Quarterly

$

0.030

January 15, 2023

January 30, 2023

December 29, 2022

Special

0.100

January 15, 2023

January 30, 2023

February 21, 2023

Quarterly

0.030

April 13, 2023

April 28, 2023

May 10, 2023

Quarterly

0.030

July 13, 2023

July 28, 2023

August 11, 2023

Quarterly

0.030

October 16, 2023

October 27, 2023

November 13, 2023

Quarterly (increased)

0.045

January 14, 2024

January 25, 2024

March 7, 2024

Quarterly

0.045

April 12, 2024

April 19, 2024

May 8, 2024

Quarterly

0.045

July 8, 2024

July 26, 2024

August 20, 2024

Quarterly

0.045

October 4, 2024

October 18, 2024

November 8, 2024

Special

0.245

January 10, 2025

January 24, 2025

March 10, 2025

Quarterly

0.045

April 14, 2025

April 25, 2025

October 8, 2025

Quarterly

0.045

October 20, 2025

October 31, 2025

December 8, 2025

Quarterly (increased)

0.075

January 19, 2026

January 30, 2026

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 adjust or withdraw the quarterly dividend in future periods as it reviews our capital allocation strategy from time-to-time.

Immersion Stock Repurchases

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 transactions 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, the Company repurchased 310,643 shares of our common stock for $2.4 million at an average purchase price of $7.64 per share. As of April 30, 2025, the Company has $39.4 million available for repurchase under the December 2022 Stock Repurchase Program.

Barnes & Noble Education Stock Repurchases

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 Fiscal 2025, Barnes & Noble Education did not purchase shares under the stock repurchase program. As of April 30, 2025, 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.

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Restated ABL Credit Facility

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

Maturity Date

April 30, 2025

Restated ABL Facility

June 9, 2028

$

103,098

Balance Sheet Classification:

Short-term borrowings

$

—

Long-term borrowings

103,098

Total Long-term borrowings

$

103,098

On the Closing Date, Barnes & Noble Education amended, restated, and extended the maturity of its existing asset-based credit facility with Bank of America, N.A., as administrative agent, collateral agent, and swing line lender, and other lenders from time to time party thereto (such amended and restated credit facility, the “Restated ABL Facility”). Pursuant to the Restated ABL Facility, the lenders thereunder have committed to provide a four-year asset-backed revolving credit facility in an aggregate committed principal amount of up to $325 million. The Restated ABL Facility has a maturity date of June 9, 2028. Barnes & Noble Education has interest only obligations until June 9, 2028, at which time the total principal is due and payable.

During the period from June 10, 2024 to April 30, 2025, Barnes & Noble Education borrowed $836.2 million and repaid $834.3 million under the Restated ABL Facility, with $103.1 million of outstanding borrowings under the Restated ABL Facility as of April 30, 2025. As of April 30, 2025, Barnes & Noble Education issued $0.6 million in letters of credit under the Restated ABL Facility.

As of April 30, 2025, Barnes & Noble Education was in compliance with all debt covenants under the Credit Agreement. See Note 10. Debt in the Notes to the Consolidated Financial Statements under Item 8 of this Form 10-K for additional information.

Income Tax Implications on Liquidity

As of April 30, 2025, Barnes & Noble Education recognized a current income tax receivable for net operating loss carrybacks in Prepaid expenses and other current assets on the Consolidated Balance Sheet. Barnes & Noble Education received a final $2.7 million refund (including $0.3 million in interest) during the fiscal year ended April 30, 2025. See Note 16. Income Taxes in the Notes to the Consolidated Financial Statements under Item 8 of this Form 10-K for additional information.

Contractual Obligations

The following summarizes Immersion’s contractual obligations as of April 30, 2025 (in millions):

Payments Due By Period

Less Than

1-3

3-5

More than

Total

1 Year

Years

Years

5 Years

New Credit Facility

$

103.1

$

—

$

—

$

103.1

$

—

Lease obligations (excluding imputed interest)

199.0

70.0

64.8

45.6

18.6

Purchase obligations

16.3

10.0

4.2

2.1

—

Total

$

318.4

$

80.0

$

69.0

$

150.8

$

18.6

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CRITICAL ACCOUNTING ESTIMATES

The Company’s consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). The preparation of these consolidated financial statements and related disclosures in conformity with U.S. GAAP and our discussion and analysis of the Company’s financial condition and operating results require management to make judgments, assumptions, and estimates that affect the amounts reported. See Note 2. Basis of Presentation and Summary of Significant Accounting Policies in the Notes to the Consolidated Financial Statements under Item 8 of this Form 10-K, which describes the significant accounting policies and methods used in the preparation of our consolidated financial statements. On an ongoing basis, we evaluate our estimates and assumptions, including those related to revenue recognition, marketable securities and derivative instruments, income taxes, and contingencies. We base our estimates and assumptions on historical experience and on various other factors that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates and assumptions.

Business Combination

The results of a business acquired in a business combination are included in our consolidated financial statements from the date of the acquisition. Purchase accounting results in assets and liabilities of an acquired business being recorded at their estimated fair values on the acquisition date, which may be considered preliminary and subject to adjustment during the measurement period, which is up to one year from the acquisition date. Any excess consideration over the fair value of assets acquired and liabilities assumed is recognized as goodwill

We perform valuations of assets acquired and liabilities assumed and allocate the purchase price to the respective assets and liabilities. Determining the fair value of assets acquired and liabilities assumed requires significant judgment and estimates, including the selection of valuation methodologies, estimates of future revenue, costs and cash flows, discount rates, royalty rates, EBITDA margins, and selection of comparable companies. We engage the assistance of third-party valuation specialists in concluding fair value measurements in connection with determining fair values of assets acquired and liabilities assumed in a business combination. The resulting fair values and useful lives assigned to acquisition-related intangible assets impact the amount and timing of future amortization expense.

These estimates are inherently uncertain and unpredictable, and if different estimates were used the purchase price for the acquisition could be allocated to the acquired assets and liabilities differently from the allocation that we have made. In addition, unanticipated events and circumstances may occur, which may affect the accuracy or validity of such estimates, and if such events occur, we may be required to record a charge against the value ascribed to an acquired asset, an increase in the amounts recorded for assumed liabilities, or an impairment of some or all of the goodwill.

Goodwill recognized in connection with our acquisition of Barnes & Noble Education was $69.2 million. Barnes & Noble Education is a separate reporting unit, and all goodwill was allocated to this reporting unit. Goodwill is not amortized but reviewed for impairment at least annually at year-end, and when triggering events occur between annual impairment tests. See Note 8. Goodwill and Intangible Assets in the Notes to the Consolidated Financial Statements under Item 8 of this Form 10-K for additional information.

The identified intangible assets arising from the Barnes & Noble acquisition were trade names and customer relationships with $95.0 million in aggregate fair value. We determined the fair values of the acquired intangible assets using an income approach with estimated indefinite useful life for the trade name and 13 years for customer relationships. The noncontrolling interest in Barnes & Noble Education was valued based on the closing price of Barnes & Noble Education’s common stock at June 10, 2024. We evaluate our intangible assets for indications of impairment whenever events or changes in circumstances indicate that the carrying value may not be recoverable. Factors that could trigger an impairment analysis include significant under-performance relative to historical or projected future results of operations, significant changes in the manner of our use of the acquired assets, or the strategy for our overall business or significant negative industry or economic trends. If this evaluation indicates that the value of the intangible asset may be impaired, we assess the likelihood of recoverability of the net carrying value of the asset over its remaining useful life. If this assessment indicates that the intangible asset is not recoverable based on the estimated undiscounted future cash flows of the intangible asset over its remaining useful life, we reduce the net carrying value of the related intangible asset to an estimated fair value.

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Barnes & Noble Education

Revenue Recognition and Deferred Revenue

Product sales and rentals

The majority of Barnes & Noble Education’s revenue is derived from the sale of products through its bookstore locations, including virtual bookstores, and its bookstore affiliated e-commerce websites, and contains a single performance obligation. Revenue from sales of products is recognized at the point in time when control of the products is transferred to its customers in an amount that reflects the consideration it expects to be entitled to in exchange for the products. See Note 5. Revenue in the Notes to the Consolidated Financial Statements under Item 8 of this Form 10-K for additional information.

Retail product revenue is recognized when the customer takes physical possession of its products, which occurs either at the point of sale for products purchased at physical locations or upon receipt of Barnes & Noble Education’s products by customers for products ordered through its websites and virtual bookstores. Wholesale product revenue is recognized upon shipment of physical textbooks at which point title passes and risk of loss is transferred to the customer. Additional revenue is recognized for shipping charges billed to customers and shipping costs are accounted for as fulfillment costs within cost of goods sold.

Revenue from the sale of digital textbooks, which contains a single performance obligation, is recognized upon the delivery of the digital content as product revenue in Barnes & Noble Education's consolidated financial statements. A software feature is embedded within the content of Barnes & Noble Education’s digital textbooks, such that upon expiration of the term the customer is no longer able to access the content. While the sale of the digital textbook allows the customer to access digital content for a fixed period of time, once the digital content is delivered to the customer, our performance obligation is complete.

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 our consolidated financial statements. Rental periods are typically for a single semester and are always less than one year in duration. Barnes & Noble Education offers a buyout option to allow the purchase of a rented physical textbook at the end of the rental period if the customer desires to do so. It records the buyout purchase when the customer exercises and pays the buyout option price which is determined at the time of the buyout. In these instances, Barnes & Noble Education accelerates any remaining deferred rental revenue at the point of sale.

Revenue recognized for Barnes & Noble Education’s BNC First Day® offerings is consistent with Barnes & Noble Education's policies outlined above for product, digital and rental sales, net of an anticipated opt-out or return provision. Given the growth of BNC First Day® programs, the timing of cash collection from our school partners may shift to periods subsequent to when the revenue is recognized. When a school adopts our BNC First Day® affordable access to course material program offerings, cash collection from the school generally occurs after the institution's drop/add dates, which is later in the working capital cycle, particularly in Barnes & Noble Education's third quarter given the timing of the Spring Term and our quarterly reporting period, as compared to direct-to-student point-of-sale transactions where cash is generally collected during the point-of-sale transaction or within a few days from the credit card processor.

Barnes & Noble Education estimates returns based on an analysis of historical experience. A provision for anticipated merchandise returns is provided through a reduction of sales and cost of goods sold in the period that the related sales are recorded.

For sales and rentals involving third-party products, Barnes & Noble Education evaluate whether it is acting as a principal or an agent. Barnes & Noble Education’s determination is based on their evaluation of whether it controls the specified goods or services prior to transferring them to the customer. There are significant judgments involved in determining whether Barnes & Noble Education controls the specified goods or services prior to transferring them to the customer including whether Barnes & Noble Education has the ability to direct the use of the good or service and obtain substantially all of the remaining benefits from the good or service. For those transactions where Barnes & Noble Education is the principal, it records revenue on a gross basis, and for those transactions where it is an agent to a third-party, Barnes & Noble Education records revenue on a net basis.

Barnes & Noble Education recognizes revenue commissions from logo general merchandise sales, which are fulfilled by Lids and Fanatics, on a net basis in our consolidated financial statements.

Barnes & Noble Education does not have gift cards or customer loyalty programs. Barnes & Noble Education does not treat any promotional offers as expenses. Sales tax collected from Barnes & Noble Education’s customers is excluded from reported revenues. Barnes & Noble Education's payment terms are generally 30 days and do not extend beyond one year.

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Service and other revenue

Service and other revenue is primarily derived from brand marketing services which includes promotional activities and advertisements within Barnes & Noble Education’s physical bookstores and web properties performed on behalf of third-party customers, shipping and handling, non-return rental penalty fees, and revenue from other programs.

Merchandise Inventories

Merchandise inventories, which consist of finished goods, are stated at the lower of cost or market. Market value of Barnes & Noble Education’s inventory, which is all purchased finished goods, is determined based on its estimated net realizable value, which is generally the selling price less normally predictable costs of disposal and transportation.

Cost is determined primarily by the retail inventory method for Barnes & Noble Education’s retail business. Barnes & Noble Education’s textbook and trade book inventories, for Barnes & Noble Education’s retail and wholesale businesses, are valued using the LIFO method. During the fiscal year ended April 30, 2025, Barnes & Noble Education recorded a LIFO adjustment in the amount of $6.4 million.

Reserves for non-returnable inventory represent write-downs that reduce the cost basis of the asset. These write-downs are based on Barnes & Noble Education’s history of liquidating non-returnable inventory. Reserve calculations are sensitive to certain assumptions, including markdowns and inventory aging. Barnes & Noble Education does not believe there is a reasonable likelihood that there will be a material change in the future estimates or assumptions used to calculate the non-returnable inventory reserve. However, if assumptions based on Barnes & Noble Education’s history of liquidating non-returnable inventory are incorrect, Barnes & Noble Education may be exposed to losses or gains that could be material. A 10% change in actual non-returnable inventory would have affected pre-tax earnings by approximately $5.6 million in fiscal year 2025.

For physical bookstores, Barnes & Noble Education also estimates and accrues shortage for the period between the last physical count of inventory and the balance sheet date. Shortage rates are estimated and accrued based on historical rates and can be affected by changes in merchandise mix and changes in actual shortage trends. Barnes & Noble Education does not believe there is a reasonable likelihood that there will be a material change in the future estimates or assumptions used to calculate shortage rates. However, if Barnes & Noble Education’s estimates regarding shortage rates are incorrect, Barnes & Noble Education may be exposed to losses or gains that could be material. A change of 10 basis points of actual shortage rates would not have a material impact on pre-tax earnings in fiscal year ended April 30, 2025.

Impairment of Long-Lived Assets

As of April 30, 2025, the Company’s long-lived assets include Property and equipment, net; Operating lease right-of-use assets; and Intangible assets, net of $95.8 million, $155.3 million, and $91.6 million, respectively, on the Consolidated Balance Sheets.

We review our long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable and consider market participants in accordance with Accounting Standards Codification (“ASC”) 360-10, Accounting for the Impairment or Disposal of Long-Lived Assets. We evaluate the long-lived assets of the reporting units for impairment at the lowest asset group level for which individual cash flows can be identified. When evaluating long-lived assets for potential impairment, we first compare the carrying amount of the asset group to the estimated future undiscounted cash flows. The impairment loss calculation compares the carrying amount of the assets to the fair value based on estimated discounted future cash flows. If required, an impairment loss is recorded for that portion of the asset’s carrying value in excess of fair value.

During the fiscal year ended April 30, 2025, Barnes & Noble Education evaluated certain of its store-level long-lived assets for impairment. Based on the results of the impairment tests, Immersion’s basis in Barnes & Noble Education’s long lived recognized an impairment loss (non-cash) of $1.2 million (both pre-tax and after-tax), comprised of $0.6 million and $0.6 million of Operating lease right-of-use assets and Property and equipment, net, respectively, on the Consolidated Statement of Operations.

The fair value of the impaired long-lived assets was determined using an income approach (Level 3 input), using the Company’s best estimates of the amount and timing of future discounted cash flows, based on historical experience, market conditions, current trends and performance expectations. See Note 6. Investments and Fair Value Measurements in the Notes to the Consolidated Financial Statements under Item 8 of this Form 10-K for additional information.

56

The impairment analysis process requires significant estimation to determine recoverability of each asset group and to determine the fair value of asset groups that were not recoverable, as well as the fair values of certain operating right-of-use assets included within the asset groups that were not recoverable. The significant assumptions used included annual revenue growth rates, gross margin rates and the estimated relationship of selling and administrative costs to revenue used to estimate the projected cash-flow directly related to the future operation of the stores as well as the weighted average cost of capital used to calculate the fair value. Significant assumptions used to determine the fair values of certain operating right-of-use assets included the current market rent and discount rate. These assumptions are subjective in nature and are affected by expectations about future market or economic conditions.

We do not believe there is a reasonable likelihood that there will be a material change in the estimates or assumptions used to calculate long-lived asset impairment losses. However, if actual results are not consistent with estimates and assumptions used in estimating future cash flows and asset fair values, we may be exposed to losses that could be material. A 10% decrease in our estimated discounted cash flows would not have materially affected the results of our operations for the fiscal year ended April 30, 2025.

Income Taxes

Deferred income tax balances reflect the effects of temporary differences between the carrying amounts of assets and liabilities and their tax basis and are stated at enacted tax rates expected to be in effect when taxes are actually paid or recovered. Financial Accounting Standards Board guidance on accounting for income taxes requires that deferred tax assets be evaluated for future realization and reduced by a valuation allowance to the extent we believe a portion will not be realized. We consider many factors when assessing the likelihood of future realization of our deferred tax assets, including our recent earnings experience and expectations of future taxable income by taxing jurisdiction, the carryforward periods available to us for tax reporting purposes and other relevant factors. The actual realization of deferred tax assets may differ significantly from the amounts we have recorded. See Note 16. Income Taxes in the Notes to the Consolidated Financial Statements under Item 8 of this Form 10-K for additional information.

In applying ASC 740 to our Korean withholding tax exposure related to royalties from Samsung, management exercises significant judgment in evaluating the technical merits and sustainability of the underlying tax positions, including the interpretation of Korean domestic law and the Korea–U.S. tax treaty. The adverse Regional Tax Office Appeal decision in November 2025, and our resulting obligation to reimburse Samsung for approximately $9.7 million of withholding taxes, reflects a change in our assessment of the more‑likely‑than‑not outcome and required us to recognize the related tax expense and liability in fiscal 2026 rather than adjust our fiscal 2025 financial statements. Future developments in Korean administrative or judicial practice, or additional information about similar tax controversies, could require further adjustments to our income tax provision and related uncertain tax positions.

Recent Accounting Pronouncements

See Note 2. Basis of Presentation and Summary of Significant Accounting Policies of the Notes to the Consolidated Financial Statements under Item 8 of this Form 10-K for additional information regarding the effect of new accounting pronouncements on our Consolidated Financial Statements.

Restatement of Quarterly (Unaudited) Financial Information

As explained further in the Explanatory Note at the beginning of this Form 10-K, the Company has restated its previously-issued unaudited interim financial statements for the unaudited fiscal quarters ended January 31, 2025 and October 31, 2024; and the calendar quarter ended June 30, 2024; contained in our Quarterly Reports on Form 10-Q. Detailed restatements of the Company’s condensed consolidated quarterly financial statements are provided in Note 20. Restatement of Quarterly Financial Information (Unaudited) of the Notes to the Consolidated Financial Statements under Item 8 of this Form 10-K.

The following unaudited quarterly statements of operations for the quarterly periods ended January 31, 2025; October 31, 2024; and June 30, 2024; have been prepared on a basis consistent with our audited annual financial statements included in this Form 10-K and include, in our opinion, all normal recurring adjustments necessary for the fair presentation of the financial information contained in those statements. Our historical results are not necessarily indicative of the results that may be expected in the future. The following should be read in conjunction with our audited financial statements and the related notes included in this Form 10-K.

57

As Restated

(In thousands, except share data)

Quarter Ended January 31, 2025

Quarter Ended October 31, 2024

Quarter Ended June 30, 2024

Month Ended

July 31, 2024

REVENUES

Immersion

Royalty and license

$

8,437

$

14,127

$

48,460

$

1,900

Barnes & Noble Education

Product and other

419,663

559,674

45,073

85,045

Rental

43,162

42,448

1,948

2,998

462,825

602,122

47,021

88,043

Total revenues

471,262

616,249

95,481

89,943

COST OF SALES (excludes depreciation and amortization expense)

Barnes & Noble Education

Product and other cost of sales

328,980

436,859

36,866

69,999

Rental cost of sales

25,516

22,619

1,131

1,914

354,496

459,478

37,997

71,913

OPERATING EXPENSES

Immersion

Selling and administrative expenses

5,010

4,165

14,175

1,752

Barnes & Noble Education

Selling and administrative expenses

71,498

72,717

16,172

20,158

Depreciation and amortization expense

9,951

9,400

2,140

3,135

Impairment

1,247

—

—

—

Restructuring and other charges (credits)

(6,178

)

59

2,378

2,627

76,518

82,176

20,690

25,920

Total operating expenses

81,528

86,341

34,865

27,672

Operating Income (Loss)

35,238

70,430

22,619

(9,642

)

Interest and other income (expense), net

14,803

3,540

4,609

6,524

Interest expense

(4,167

)

(4,547

)

(901

)

(1,466

)

Income (Loss) Before Income Taxes

45,874

69,423

26,327

(4,584

)

Income tax benefit (expense)

(2,644

)

(5,036

)

(7,221

)

(3,200

)

Net Income (Loss)

43,230

64,387

19,106

(7,784

)

Less: Net income (loss) attributable to noncontrolling interest

19,169

33,583

(7,339

)

(7,538

)

Net Income (Loss) Attributable to Immersion Stockholders

$

24,061

$

30,804

$

26,445

$

(246

)

Earnings Per Common Share Attributable to Immersion Stockholders

Basic

$

0.74

$

0.95

$

0.83

$

(0.01

)

Diluted

$

0.73

$

0.93

$

0.81

$

(0.01

)

Weighted Average Common Shares Outstanding

Basic

32,294

32,222

31,879

31,970

Diluted

33,055

32,917

32,525

31,970