IMMR filing — read by section

Item 8. Financial Statements and Supplementary Data

Item 8 . Financial Statements and Supplementary Data 

 IMMERSION CORPORATION 

 INDEX TO CONSOLIDATED FINANCIAL STATEMENTS 

 ​ ​

 Page 

 Report of Plante & Moran, PLLC, Independent Registered Public Accounting Firm (PCAOB ID 166 ) 
 46 

 Consolidated Balance Sheets as of December 31, 2023, and 2022 
 47 

 Consolidated Statements of Income and Comprehensive Income for the Years Ended December 31, 2023, and 2022 
 48 

 Consolidated Statements of Stockholders’ Equity for the Years Ended December 31, 2023, and 2022 
 49 

 Consolidated Statements of Cash Flows for the Years Ended December 31, 2023, and 2022 
 50 

 Notes to Consolidated Financial Statements 
 52 
 
 45 
 
 Table of Contents 
 
 Report of Independent Registered Public Accounting Firm 

 To the Stockholders and Board of Directors 

 Immersion
Corporation 

 Opinion on the Financial
Statements 

 We have audited the accompanying consolidated balance
sheet of Immersion Corporation and its subsidiaries (the “Company”) as of
December 31, 2023 and 2022; the related consolidated statements of income and
comprehensive income, stockholders' equity, and cash flows for the years ended
December 31, 2023 and 2022; and the related notes (collectively referred to as
the “financial statements”). In our opinion, the financial statements referred
to above present fairly, in all material respects, the financial position of
the Company as of December 31, 2023 and 2022, and the results of its operations
and its cash flows for the years ended December 31, 2023 and 2022 in conformity
with accounting principles generally accepted in the United States of America. 

 Basis for Opinion 

 The Company's management is responsible for these
financial statements. Our responsibility is to express an opinion on the
Company’s financial statements based on our audit. We are a public accounting
firm registered with the Public Company Accounting Oversight Board (United
States) (PCAOB) and are required to be independent with respect to the Company
in accordance with the U.S. federal securities laws and the applicable rules
and regulations of the Securities and Exchange Commission and the PCAOB. 

 We conducted our audit in accordance with the
standards of the PCAOB. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether the financial statements are
free of material misstatement, whether due to error or fraud. The Company is
not required to have, nor were we engaged to perform, an audit of its internal
control over financial reporting. As part of our audit, we are required to
obtain an understanding of internal control over financial reporting but not for
the purpose of expressing an opinion on the effectiveness of the Company's
internal control over financial reporting. Accordingly, we express no such
opinion. 

 Our audit included performing procedures to assess
the risks of material misstatement of the financial statements, whether due to
error or fraud, and performing procedures that respond to those risks. Such
procedures included examining, on a test basis, evidence regarding the amounts
and disclosures in the financial statements. Our audit also included evaluating
the accounting principles used and significant estimates made by management, as
well as evaluating the overall presentation of the financial statements. We
believe that our audits provide a reasonable basis for our opinion. 

 Critical Audit Matters 

 The critical audit matters communicated below are
matters arising from the current period audit of the financial statements that
were communicated or required to be communicated to the audit committee and
that (1) relates to accounts or disclosures that are material to the financial
statements and (2) involved our especially challenging, subjective, or complex
judgments. The communication of critical audit matters does not alter in any
way our opinion on the financial statements, taken as a whole, and we are not,
by communicating the critical audit matters below, providing a separate opinion
on the critical audit matters or on the accounts or disclosures to which they
relate. 

 Contingencies – Refer to Note 5 to the
financial statements 

 Critical Audit Matter Description 

 As described in Note 5 to the consolidated financial statements,
the Company is currently involved in certain legal and regulatory proceedings
with the South Korean tax authorities regarding withholdings taxes imposed on
LG Electronics Inc. (“LGE”) for failing to withhold taxes on royalty payments
made to the Company. Pursuant to contractual agreements with LGE, the Company
provided deposits representing the amount of such withholding tax that was
imposed on LGE of approximately $7.2 million. The Company has recognized a
liability for an uncertain tax position against the deposit of approximately
$1.0 million for a net long-term deposit asset of approximately $6.2 million.

We identified the valuation of the Company's deposits for the Korean
withholding tax legal matter as a critical audit matter. The principal
considerations for our determination include the higher level of auditor
judgement in assessing the probability of a favorable outcome (technical merits
of the position including how tax law, statues, regulations and case law impact
management's judgements), estimated final tax assessment, and realizability of
deposit assets.

 How the Critical Audit Matter Was
Addressed in the Audit 

 The primary audit procedures related to testing the valuation of
the deposits related to the Korean tax withholding matter included the
following, among others:

 · 
 We obtained an understanding of the process and evaluated the
design of internal controls relating to management’s determination of the
probability of a favorable outcome, estimated final tax assessment, and
realizability of deposit assets. 

 · 
 We agreed deposits made to supporting documentation. 

 · 
 We obtained and evaluated the response letters from external and
internal counsel to our audit inquiry letters. 

 · 
 We read relevant correspondence the Company received from South
Korean taxing authorities provided by management. 

 · 
 We reviewed South Korean administrative practices and precedents
as sources of tax authority. 

 · 
 We read relevant documents the Company has filed with the South
Korean courts and related counterparty filings. 

 · 
 We reviewed similarities between the LGE case and other tax
withholding cases the Company has litigated in South Korea. 

 · 
 We evaluated the reasonableness of management's process for
identifying and assessing a potential unfavorable outcome. 

 · 
 We evaluated the reasonableness of management’s accrual of
additional withholding tax liability. 

 · 
 We evaluated the sufficiency of the Company's legal and regulatory
proceedings disclosures in the consolidated financial statements. 

 /s/ Plante & Moran, PLLC 

 We have served as the Company’s
auditor since 2022. 

 Denver Colorado 

 March 11, 2024 

 46 
 
 Table of Contents 
 
 FINANCIAL INFORMATION 

 IMMERSION CORPORATION 

 CONSOLIDATED BALANCE SHEETS 

 (In thousands) 

 December 31, 2023 
 
 December 31, 2022 

 ASSETS 

 Current assets: 
 
 Cash and cash equivalents 
 $ 
 56,071 
 
 $ 
 48,820 
 
 Investments-current 
 104,291 
 
 100,918 
 
 Accounts and other receivables, net 
 2,241 
 
 1,235 
 
 Prepaid expenses and other current assets 
 9,847 
 
 9,347 
 
 Total current assets 
 172,450 
 
 160,320 
 
 Property and equipment, net 
 211 
 
 293 
 
 Investments-noncurrent 
 33,350 
 
 17,040 
 
 Long-term deposits 
 6,231 
 
 4,324 
 
 Deferred tax assets 
 3,343 
 
 7,217 
 
 Other assets 
 146 
 
 916 
 
 Total assets 
 $ 
 215,731 
 
 $ 
 190,110 
 
 LIABILITIES AND STOCKHOLDERS’ EQUITY 

 Current liabilities: 
 
 Accounts payable 
 $ 
 47 
 
 $ 
 86 
 
 Accrued compensation 
 3,127 
 
 2,029 
 
 Deferred revenue - current 
 4,239 
 
 4,766 
 
 Other current liabilities 
 11,900 
 
 11,044 
 
 Total current liabilities 
 19,313 
 
 17,925 
 
 Deferred revenue-noncurrent 
 8,390 
 
 12,629 
 
 Other noncurrent liabilities 
 4,926 
 
 1,856 
 
 Total liabilities 
 32,629 
 
 32,410 
 
 Commitments and contingencies (Note 5 ) 
 
 Stockholders’ equity: 
 
 Common stock and additional paid-in capital – $ 0.001 par value; 100,000,000 shares authorized; 47,636,273 and 46,974,629 shares issued, respectively; 31,528,977 and 32,247,047 shares outstanding, respectively 
 322,182 
 
 322,714 
 
 Accumulated other comprehensive income 
 1,702 
 
 202 
 
 Accumulated deficit 
 ( 36,040 
 ) 
 
 ( 70,016 
 ) 

 Treasury stock at cost: 16,107,296 and 14,727,582 shares, respectively 
 ( 104,742 
 ) 
 
 ( 95,200 
 ) 

 Total stockholders’ equity 
 183,102 
 
 157,700 
 
 Total liabilities and stockholders’ equity 
 $ 
 215,731 
 
 $ 
 190,110 
 
 See accompanying Notes to Consolidated Financial Statements. 

 47 
 
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 IMMERSION CORPORATION 

 CONSOLIDATED STATEMENTS OF INCOME 

 AND COMPREHENSIVE INCOME 

 (In thousands, except per share amounts) 

 Years Ended December 31, 

 2023 
 
 2022 

 Revenues: 
 
 Royalty and license 
 $ 
 33,781 
 
 $ 
 38,178 

 Development, services, and other 
 
 138 
 
 283 
 
 Total revenues 
 
 33,919 
 
 38,461 
 
 Operating expenses: 
 
 Sales and marketing 
 
 1,751 
 
 1,219 
 
 Research and development 
 
 281 
 
 1,380 
 
 General and administrative 
 
 13,960 
 
 11,442 
 
 Total operating expenses 
 
 15,992 
 
 14,041 
 
 Operating income 
 
 17,927 
 
 24,420 
 
 Interest and other income (loss), net 
 
 24,988 
 
 2,545 
 
 Income before benefit from (provision for) income taxes 
 
 42,915 
 
 26,965 
 
 Benefit from (provision for) income taxes 
 
 ( 8,939 
 ) 
 
 3,699 
 
 Net income 
 
 $ 
 33,976 
 
 $ 
 30,664 
 
 Basic net income per share 
 $ 
 1.05 
 
 $ 
 0.92 
 
 Shares used in calculating basic net income per share 
 
 32,214 
 
 33,280 
 
 Diluted net income per share 
 
 $ 
 1.04 
 
 $ 
 0.92 
 
 Shares used in calculating diluted net income per share 
 
 32,536 
 
 33,508 
 
 Deferred gains (losses) on available-for-sale marketable debt securities 
 
 1,200 
 
 $ 
 ( 944 
 ) 

 Realized losses on available-for-sale marketable debt securities reclassified to net income 
 
 300 
 
 $ 
 734 
 
 Total comprehensive income 
 
 $ 
 35,476 
 
 $ 
 30,454 
 
 See accompanying Notes to Consolidated Financial Statements. 

 48 
 
 Table of Contents 
 
 IMMERSION CORPORATION 

 CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY 

 (In thousands, except number of shares) 

 Common Stock and
Additional Paid-In Capital 
 
 Accumulated
Other
Comprehensive
Income (Loss) 
 
 Accumulated
Deficit 
 
 Treasury Stock 
 
 Total
Stockholders’
Equity 

 Shares 
 
 Amount 
 
 Shares 
 
 Amount 
 
 Balances at December 31, 2021 
 46,534,198 
 
 $ 
 323,296 
 
 $ 
 412 
 
 $ 
 ( 100,680 
 ) 
 
 12,143,433 
 
 $ 
 ( 81,733 
 ) 
 
 $ 
 141,295 
 
 Net income 
 — 
 
 — 
 
 — 
 
 30,664 
 
 — 
 
 — 
 
 30,664 
 
 Unrealized losses on available-for-sale securities, net of taxes 
 — 
 
 — 
 
 ( 210 
 ) 
 
 — 
 
 — 
 
 — 
 
 ( 210 
 ) 

 Stock repurchases 
 
 — 
 
 — 
 
 — 
 
 — 
 
 2,542,065 
 
 ( 13,238 
 ) 
 
 ( 13,238 
 ) 

 Release of restricted stock units and awards net of shares withheld for tax liabilities 
 398,152 
 
 — 
 
 — 
 
 — 
 
 42,084 
 
 ( 229 
 ) 
 
 ( 229 
 ) 

 Issuance of stock for ESPP purchase 
 11,416 
 
 51 
 
 — 
 
 — 
 
 — 
 
 — 
 
 51 
 
 Shares issued to an employee in lieu of cash compensation 
 30,863 
 
 157 
 
 — 
 
 — 
 
 — 
 
 — 
 
 157 
 
 Shares issued in connection with public offering, net of offering costs 
 — 
 
 5 
 
 — 
 
 — 
 
 — 
 
 — 
 
 5 
 
 Stock-based compensation 
 — 
 
 3,417 
 
 — 
 
 — 
 
 — 
 
 — 
 
 3,417 
 
 Cash dividend declared 
 — 
 
 ( 4,212 
 ) 
 
 — 
 
 — 
 
 — 
 
 — 
 
 ( 4,212 
 ) 

 Balances at December 31, 2022 
 46,974,629 
 
 322,714 
 
 202 
 
 ( 70,016 
 ) 
 
 14,727,582 
 
 ( 95,200 
 ) 
 
 157,700 
 
 Net income 
 — 
 
 — 
 
 — 
 
 33,976 
 
 — 
 
 — 
 
 33,976 
 
 Unrealized gains on available-for-sale securities, net of taxes 
 — 
 
 — 
 
 1,500 
 
 — 
 
 — 
 
 — 
 
 1,500 
 
 Stock repurchases 
 — 
 
 — 
 
 — 
 
 — 
 
 1,217,774 
 
 ( 8,302 
 ) 
 
 ( 8,302 
 ) 

 Release of restricted stock units and awards net of shares withheld for tax liabilities 
 558,313 
 
 — 
 
 — 
 
 — 
 
 161,940 
 
 ( 1,240 
 ) 
 
 ( 1,240 
 ) 

 Proceeds from stock options exercises 
 21,222 
 
 160 
 
 — 
 
 — 
 
 — 
 
 — 
 
 160 
 
 Issuance of stock for ESPP purchase 
 1,298 
 
 6 
 
 — 
 
 — 
 
 — 
 
 — 
 
 6 
 
 Shares issued to an employee in lieu of cash compensation 
 80,811 
 
 595 
 
 — 
 
 — 
 
 — 
 
 — 
 
 595 
 
 Cash dividend declared 
 — 
 
 ( 4,688 
 ) 
 
 — 
 
 — 
 
 — 
 
 — 
 
 ( 4,688 
 ) 

 Stock-based compensation 
 — 
 
 3,395 
 
 — 
 
 — 
 
 — 
 
 — 
 
 3,395 
 
 Balances at December 31, 2023 
 47,636,273 
 
 $ 
 322,182 
 
 $ 
 1,702 
 
 $ 
 ( 36,040 
 ) 
 
 16,107,296 
 
 $ 
 ( 104,742 
 ) 
 
 $ 
 183,102 
 
 See accompanying Notes to Consolidated Financial Statements. 

 49 
 
 Table of Contents 
 
 IMMERSION CORPORATION 

 CONSOLIDATED STATEMENTS OF CASH FLOWS 

 (In thousands) 

 Years Ended December 31, 
 
 2023 
 
 2022 

 Cash flows provided by (used in) operating activities: 
 
 Net income 
 $ 
 33,976 
 
 $ 
 30,664 
 
 Adjustments to reconcile net income to net cash and cash equivalents provided by operating activities: 
 
 Depreciation of property and equipment 
 67 
 
 140 
 
 Reduction in carrying value of right of use assets 
 324 
 
 672 
 
 Stock-based compensation 
 3,395 
 
 3,417 
 
 Net (gain) loss on investment in marketable securities 
 ( 12,153 
 ) 
 
 7,884 
 
 Net gains on derivative instruments 
 ( 4,645 
 ) 
 
 ( 4,831 
 ) 

 Foreign currency transaction (gains) losses 
 ( 43 
 ) 
 
 145 
 
 Deferred income taxes 
 3,528 
 
 ( 5,101 
 ) 

 Shares issued to an employee in lieu of cash compensation 
 595 
 
 157 
 
 Other noncash 
 ( 262 
 ) 
 
 23 
 
 Changes in operating assets and liabilities: 
 
 Accounts and other receivables 
 ( 1,006 
 ) 
 
 735 
 
 Prepaid expenses and other current assets 
 ( 500 
 ) 
 
 4,085 
 
 Long-term deposits 
 ( 1,850 
 ) 
 
 5,196 
 
 Other assets 
 446 
 
 1,226 
 
 Accounts payable 
 ( 41 
 ) 
 
 84 
 
 Accrued compensation 
 1,098 
 
 1,474 
 
 Other current liabilities 
 ( 1,035 
 ) 
 
 ( 3,196 
 ) 

 Deferred revenue 
 ( 4,766 
 ) 
 
 ( 4,130 
 ) 

 Other long-term liabilities 
 3,472 
 
 1,502 
 
 Net cash and cash equivalents provided by operating activities 
 20,600 
 
 40,146 
 
 Cash flows provided by (used in) investing activities: 
 
 Purchases of marketable securities and other investments 
 ( 177,331 
 ) 
 
 ( 151,306 
 ) 

 Proceeds from sale or maturities of marketable securities and other investments 
 171,804 
 
 119,714 
 
 Proceeds from sale of derivative instruments 
 21,944 
 
 16,265 
 
 Payments for settlement of derivative instruments 
 ( 13,019 
 ) 
 
 ( 14,052 
 ) 

 Other investing activities 
 — 
 
 ( 26 
 ) 

 Net cash and cash equivalents provided by (used in) investing activities 
 3,398 
 
 ( 29,405 
 ) 

 Cash flows provided by (used in) financing activities: 
 
 Dividends payments to stockholders 
 ( 7,409 
 ) 
 
 — 
 
 Payment for purchases of treasury stock 
 ( 8,264 
 ) 
 
 ( 13,238 
 ) 

 Shares withheld to cover payroll taxes 
 ( 1,240 
 ) 
 
 ( 229 
 ) 

 Proceeds from stock options exercises 
 160 
 
 — 
 
 Other financing activities 
 6 
 
 56 
 
 Net cash and cash equivalents used in financing activities 
 ( 16,747 
 ) 
 
 ( 13,411 
 ) 

 Net decrease in cash and cash equivalents 
 7,251 
 
 ( 2,670 
 ) 

 Cash and cash equivalents: 
 
 Beginning of period 
 48,820 
 
 51,490 
 
 End of period 
 $ 
 56,071 
 
 $ 
 48,820 
 
 See accompanying Notes to Consolidated Financial Statements. 

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 IMMERSION CORPORATION 

 CONSOLIDATED STATEMENTS OF CASH FLOWS 

 (In thousands) 

 Years Ended December 31, 

 2023 
 
 2022 

 Supplemental disclosure of cash flow information: 
 
 Cash paid for income taxes 
 $ 
 1,794 
 
 $ 
 1,408 
 
 Supplemental disclosure of non-cash investing, and financing activities: 
 
 Dividends declared but not yet paid 
 $ 
 1,490 
 
 $ 
 4,212 
 
 Leased assets obtained in exchange for new operating lease liabilities 
 $ 
 — 
 
 $ 
 120 
 
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 Table of Contents 

 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 

 1. SIGNIFICANT ACCOUNTING POLICIES 

 Description of Business 

 Immersion Corporation (the “Company”, “Immersion”, “we” or “us”) was incorporated in 1993 in California and reincorporated in Delaware in 1999 . We focus on the creation, design, development, and licensing of innovative haptic technologies that allow people to use their sense of touch more fully as they engage with products and experience the digital world around them. We offer licenses for our patented technology to our customers. 
 
 Principles of Consolidation and Basis of Presentation 

 The accompanying consolidated financial statements include the accounts of Immersion and our wholly-owned subsidiaries. All intercompany accounts, transactions, and balances have been eliminated in consolidation. 
 
 Reclassification 

 Certain prior year amounts have been reclassified to conform with the current year presentation. 

 Restatement of Prior Year's Balance Sheets 

 In 2023 , we reclassified $ 1.4 million income tax liabilities from Other current liabilities to Other noncurrent liabilities on the Consolidated Balance Sheets as of December 31, 2022. We determined that this error is immaterial to the financial statements taken as a whole. 
 
 Use of Estimates 
 
 The preparation of consolidated financial statements in conformity with the generally accepted accounting principles in the United States ("GAAP") requires estimates and assumptions that affect the amounts reported in the consolidated financial statements and the accompanying notes. Actual results may differ materially from these estimates on an ongoing basis, we evaluate our estimates, including those related to revenue recognition, fair value of financial instruments, income taxes, long-term deposits for withholding taxes and stock-based compensation. We base our estimates on historical experience and on various other assumptions that are believed to be reasonable, the results of which form the basis for making judgments about the carrying values of assets and liabilities. 
 
 Foreign Currency Translation 
 
 The functional currency of our foreign subsidiaries is U.S. dollars. Gains and losses from the remeasurement financial statements of the foreign subsidiaries into the U.S. dollars and from foreign currency transactions are reported as Other income (expense), net in our Consolidated Statements of Income and Other Comprehensive Income. 
 
 Revenue Recognition 

 Our revenue is primarily derived from fixed fee license agreements and per-unit royalty agreements, along with less significant revenue earned from development, services and other revenue. 

 Fixed fee license revenue 

 We recognize revenue from a fixed fee license agreement when we have satisfied our performance obligations, which typically occurs upon the transfer of rights to our technology upon the execution of the license agreement. However, in certain contracts, we grant a license to our existing patent portfolio at the inception of the license agreement as well as rights to the portfolio as it evolves throughout the contract term. For such arrangements, we have concluded that there are two separate performance obligations: 

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 • 
 Performance Obligation A: Transfer of rights to our patent portfolio as it exists when the contract is executed; 

 • 
 Performance Obligation B: Transfer of rights to our patent portfolio as it evolves over the term of the contract, including access to new patent applications that the licensee can benefit from over the term of the contract. 
 
 If a fixed fee license agreement contains only Performance Obligation A, we recognize the revenue from the agreement at the inception of the contract. For fixed fee license agreements that contain both Performance Obligation A and B, we allocate the transaction price based on the standalone price for each of the two performance obligations. We use a number of factors primarily related to the attributes of our patent portfolio to estimate standalone prices related to Performance Obligation A and B. Once the transaction price is allocated, the portion of the transaction price allocable to Performance Obligation A is recognized in the period the license agreement is signed and the customer can benefit from rights provided in the contract. The portion allocable to Performance Obligation B is recognized on a straight-line basis over the contract term which best represents the ongoing and continuous nature of the patent prosecution process. For such contracts, a contract liability account is established and included within Deferred revenue-current and Deferred Revenue-noncurrent on the Consolidated Balance Sheet s. As the rights and obligations in a contract are interdependent, contract assets and contract liabilities that arise in the same contract are presented on a net basis. 

 Some of our license agreements contain fixed fees related to past infringements. Such fixed fees are recognized as revenue or recorded as a deduction to our operating expense in the quarter the license agreement is signed. 

 Payments for fixed fee license contracts typically are due in full within 30 - 45 days from execution of the contract. From time to time, we enter into a fixed fee license contract with payments due in a number of installments payable throughout the contract term. In such cases, we determine if a significant financing component exists and if it does, we will recognize more or less revenue and corresponding interest expense or income, as appropriate. 

 Per-unit Royalty revenue 

 We record per-unit royalty revenue in the same period in which the licensee’s underlying sales occur. When we do not receive the per-unit licensee royalty reports for sales during a given quarter within the time frame that allows us to adequately review the reports and include the actual amounts in our quarterly results for such quarter, we accrue the related revenue based on estimates of our licensees’ underlying sales, subject to certain constraints on our ability to estimate such amounts. We develop such estimates based on a combination of available data including, but not limited to, approved customer forecasts, a look back at historical royalty reporting for each of our customers, and industry information available for the licensed products. 

 As a result of accruing per-unit royalty revenue for the quarter based on such estimates, adjustments will be required in the following quarter to true up revenue to the actual amounts reported by its licensees. In 2023 , we recorded $ 0.4 million, $ 0.3 million, $ 0.5 million and $ 0.8 million adjustments to increase royalty revenue in the first, second, third and fourth quarters, respectively. In 2022 , we recorded $ 0.3 million, $ 0.5 million and $ 0.5 million adjustments to increase royalty revenue in the first, second and fourth quarters, respectively. In the third quarter of 2022 , we recorded adjustments of $ 0.2 million to decrease royalty revenue. 

 Certain of our per-unit royalty agreements contain minimum royalty provisions which sets forth minimum amounts to be received by us during the contract term. Under Accounting Standard Codification 606 , Revenue from Contracts with Customers , (“ASC 606 ”), minimum royalties are considered a fixed transaction price to which we have a right once all other performance obligations, if any, are satisfied. We recognize all minimum royalties as revenue at the inception of the license agreement, or in the period in which all remaining revenue recognition criteria have been met. We account for the unbilled minimum royalties as contract assets as Prepaid and other current assets and Other assets, net on our Consolidated Balance Sheets , and the balance of such contract assets will be reduced by the actual royalties to be reported by the licensee during the contract term until fully utilized, after which point any excess per-unit royalties reported are recognized as revenue. As the rights and obligations in a contract are interdependent, contract assets and contract liabilities that arise in the same contract are presented on a net basis. 
 
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 Payments of per-unit royalties typically are due within 30 to 60 days from the end of the quarter in which the underlying sales took place. 

 Development, services, and other revenue 

 As the performance obligation related to our development, service and other revenue is satisfied over a period of time, we recognize such revenue evenly over the period of performance obligations, which is generally consistent with the contractual term. 

 Deferred Revenue 

 Deferred revenue consists of amounts that have been invoiced or paid but have not been recognized as revenue. The amounts are primarily derived from our fixed license fee agreements under which we are obliged to transfer both rights to our patent portfolio that exists when the contract is executed and rights to its patent portfolio as it evolves over the contract term. 

 Deferred revenue that will be recognizable during the succeeding 12 -month period is recorded as Deferred Revenu e- current , and the remaining deferred revenue is recorded as D eferred revenue noncurrent on the Consolidated Balance Sheets . 
 
 Fair Value Measurement 

 We measure the fair value of financial assets as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. We use the GAAP fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. This hierarchy requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The three levels of the fair value hierarchy are as follows: 

 Level 1 — Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets. 

 Level 2 — O bservable inputs other than quoted prices included in Level 1 , such as quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable market data. 

 Level 3 — Unobservable inputs for the asset or liability, which include assumptions market participants would use in pricing the asset or liability. 
 
 Cash Equivalents 

 We consider all highly liquid instruments with an original maturity of 90 days or less at the date of purchase to be cash equivalents. 

 Certificates of deposit 

 Certificate of deposits are reported at fair value and classified as current or noncurrent assets based on their initial maturity days at purchase. Certificates of deposit with original maturity days of 90 days or less are reported as cash equivalents, between 91 days and 1 year are reported as Investment- current . Certificates of deposit with longer than 1 -year remaining term are reported as Investments-noncurrent on the Consolidated Balance Sheets . 
 
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 Investments in Marketable Securities 

 Equity Securities 

 We hold marketable equity investments over which we do not have a controlling interest or significant influence. Our investments in marketable equity securities are classified based on the nature of the securities and their availability for use in current operations. 

 As of December 31, 2023 our marketable equity securities primarily consisted of mutual funds and corporate common and preferred stocks. Marketable equity investments are reported as Investment-current on the Consolidated Balance Sheets . They are measured using quoted prices in active markets with changes recorded in Other income (expense), net on the Consolidated Statements of Income and Other Comprehensive Income. 

 Debt Securities 

 Debt securities primarily consist of investments in corporate bonds and U.S. treasury securities and are classified and accounted for as available-for-sale at the time of purchase. We report marketable debt securities as either Investments-current or Investments-noncurrent on our Consolidated Balance Sheets based on each instrument’s underlying contractual maturity date and management's intended holding period. 

 Unrealized gains on available-for-sale securities are included in Accumulated other Comprehensive income on the Consolidated Balance Sheets , except for credit-related impairment losses for available-for-sale debt securities. Available-for-sale securities in an unrealized loss position are written down to its fair value with the corresponding charge recorded in Interest and other income (loss), net, on our Consolidated Statement of Income and Comprehensive Income, if it is more likely than not that we will be required to sell the security before recovery of its amortized cost basis, or we have the intention to sell the security. Credit-related impairment losses, not to exceed the amount that fair value is less than the amortized cost basis, are recognized through an allowance for credit losses with changes in the allowance for credit losses recorded in Interest and other income (loss), net in the Consolidated Statements of Income and Comprehensive Income . As of December 31, 2023, we have determined it is more likely than not we will hold the securities until maturity or a recovery of the cost basis for all our available-for-sale debt securities with unrealized loss positions. 

 We elected to exclude the applicable accrued interest from both the fair value and amortized cost basis. Applicable accrued interest, net of the allowance for credit losses (if any), of $ 0.4 million and $ 0.2 million, is recorded in Accounts and other receivables on the Consolidated Balance Sheets as of December 31, 2023 and 2022 , respectively. 

 Realized gains and losses from the sales of available-for-sale debt securities are determined based on the specific identification method and are reported in Interest and other income (loss), net in the Consolidated Statements of Income and Comprehensive Income . 
 
 Derivative Financial Instruments 

 We invest in derivatives that are not designated as hedging instruments and which consist of call and put options. When we sell call or put options, the premium received is reported as Other current liabilities on our Consolidated Balance Sheets . When we purchase put or call options, the premium paid is reported as Investments-current on our Consolidated Balance Sheets . The carrying value of these options is adjusted to the fair value, measured using the practical expedient of the midpoint of the bid-ask spread, at the end of each reporting period until the options expire. Gains and losses recognized from the periodic adjustments to fair value are recognized as Interest and other income (loss ), net on our Consolidated Statements of Income and Comprehensive Income . 
 
 Accounts and Other Receivables 

 Accounts and other receivables are primarily comprised of trade receivables that are recorded at the invoiced amount, net of an allowance for credit losses. Such accounts receivable have been reduced by an allowance for credit losses, which is our best estimate of the amount of probable credit losses in our existing accounts receivable. We assess our allowance for credit losses on trade receivables by taking into consideration information about past events, such as our historical trend of write-offs, forecasts of future economic conditions, and customer-specific circumstances, such as bankruptcies and disputes. Expense for credit losses on trade receivables is recorded in operating expenses on our Consolidated Statements of Income and Comprehensive Income . The allowance for doubtful accounts as of December 31, 2023 and 2022 was not material. 
 
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 Leases 
 
 We lease our office space under lease arrangements with expiration dates on or before April 25, 2024. Operating leases are accounted for as right-of-use (“ROU”) assets and lease liability obligations in our Consolidated Balance Sheets under Other assets , net, Other current liabilities and Other long-term liabilities , respectively. ROU assets and lease liabilities are recognized at lease commencement date based on the present value of lease payments over the lease term. We elect to combine lease and non-lease components and account for them as a single lease component. As our leases typically do not provide an implicit rate, we estimate our incremental borrowing rate based on the information available at the commencement date in determining the present value of lease payments. ROU assets also include any lease payments made and exclude lease incentives and direct costs. Lease expense is recognized on a straight-line basis over the lease term. We elected to not present leases with an initial term of 12 months or less on our Consolidated Balance Sheets . Variable lease payments primarily include reimbursements of costs incurred by lessors for common area maintenance and utilities and are expensed as incurred and are not included within the ROU asset and lease liability calculation. 
 
 Research and Development 
 
 Research and development expenses primarily consisted of personnel-related costs, including payroll and stock-based compensation, outside consulting expenses and allocations of corporate overhead expenses. Research and development costs are expensed as incurred. 
 
 Legal Proceedings and Litigations 

 We are involved in legal proceedings on an ongoing basis. If we believe that a loss arising from such matters is probable and can be reasonably estimated, we accrue the estimated loss in our Consolidated Financial Statement s. If only a range of estimated losses can be determined, we accrue an amount within the range that, in our judgment, reflects the most likely outcome; if none of the estimates within that range is a better estimate than any other amount, we accrue the low end of the range. 
 
 Patent Defense Costs 

 Costs associated with patent applications, patent prosecution, patent defense and the maintenance of patents are charged to expense as incurred. 
 
 Income Taxes 

 We use the asset and liability method of accounting for income taxes. Under this method, income tax expense is recognized for the amount of taxes payable or refundable for the current year. In addition, deferred tax assets and liabilities are recognized for the expected future tax consequences of temporary differences between the financial reporting and tax bases of assets and liabilities, and for operating losses and tax credit carryforwards. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized and are reversed at such a time that realization is believed to be more-likely-than-not. 
 
 Stock-based Compensation 
 
 We recognize stock-based compensation cost for shares, net of estimated forfeiture over the requisite service period of the award, which is the vesting period. We use the Black-Scholes Merton option pricing model to determine the fair value of stock options and employee stock purchase plan shares. We estimate the fair value of market-performance based stock options and restricted stock units using a Monte Carlo simulation model which requires the input of assumptions, including expected term, stock price volatility and the risk-free rate of return. In addition, judgment is also required in estimating the number of stock-based awards that are expected to be forfeited. Forfeitures are estimated based on historical experience at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. 
 
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 Concentrations of Credit Risk and Significant Customers 

 Our financial instruments that are exposed to concentrations of credit risk consist primarily of cash and cash equivalents, marketable securities, and accounts and other receivables. Deposits held by banks may exceed the amount of insurance provided on such deposits. Generally, these deposits may be redeemed upon demand. 

 We are subject to a concentration of revenues given certain key licensees that contributed a significant portion of our total revenues. See Note 11 . Segment Reporting, Geographic Information and Significant Customers of the Notes to Consolidated Financial Statements for more details on customer revenue concentration. 
 
 We license technology primarily to companies in North America, Europe, and Asia. To reduce credit risk, management performs periodic credit evaluations of the financial conditions of our customer. We periodically evaluate potential credit losses to ensure adequate reserves are maintained, but historically we have not experienced any significant losses related to individual customers or groups of customers in any particular industry or geographic area. As such, our reserves for credit losses for the years ended December 31, 2023 and December 31, 2022 were not material due to our customers' low credit risk. 
 
 Certain Significant Risks and Uncertainties 
 
 We operate in multiple industries and our operations can be affected by a variety of factors. For example, management believes that changes in any of the following areas could have a negative effect on our future financial position and results of operations: 

 · Our competition and the market in which we operate; our customers and suppliers; 

 · Our revenue, trends related thereto and the recognition and components thereof; 

 · Our costs and expenses, 

 · Our investment of surplus funds and sales of marketable securities ; 

 · S easonality 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 IP; 

 · Expiration of haptic technology patents; 

 · Changes in or obsolescence of licensed technology; 

 · Our employees; 

 · Capital expenditures and the sufficiency of our capital resources; 

 · Unrecognized tax benefits 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; and 

 · Our plans related to and the impact of current and future litigation and arbitration; 
 
 Segment Information 

 We operate as one operating segment because our Chief Executive Officer, as our chief operating decision maker (“CODM”), reviews financial information, on a consolidated basis for purposes of making decisions regarding allocating resources and assessing performance. 

 The CODM approves budgets and allocates resources to and assesses our business performance using information about our revenue and operating loss. There is only one segment that is reported to management. 
 
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 Recent Account Pronouncements Not Yet Adopted 

 In December 2023, the Financial Accounting Standard Board (“FASB”) issued ASU No. 2023 - 09 : Income Taxes (Topic 740 ): Improvements to Income Tax Disclosures that requires entities to disclose additional information about federal, state, and foreign income taxes primarily related to the income tax rate reconciliation and income taxes paid. The new standard also eliminates certain existing disclosure requirements related to uncertain tax positions and unrecognized deferred tax liabilities. The guidance will be effective for the fiscal year beginning January 1, 2025. The guidance does not affect recognition or measurement in our consolidated financial statements. We are evaluating the impact of this amendment on our consolidated financial statements. 
 
 2. REVENUE RECOGNITION 
 Disaggregated Revenue 

 The following table presents the disaggregation of our revenue for the years ended December 31, 2023 , and 2022 (in thousands): 

 Years Ended 
 December 31, 
 
 2023 
 
 2022 
 
 Fixed fee license revenue 
 $ 
 5,283 
 
 $ 
 11,953 

 Per-unit royalty revenue 
 
 28,498 
 
 26,225 

 Total royalty and license revenue 
 
 33,781 
 
 38,178 

 Development, services, and other revenue 
 
 138 
 
 283 

 Total revenues 
 
 $ 
 33,919 
 
 $ 
 38,461 
 
 Contract Assets 

 As of December 31, 2023 , 2022 and 2021 , we had contract assets of $ 7.7 million, $ 7.7 million and $ 12.4 million included within Prepaid expenses and other current asset s, respectively. As of December 31, 2023 , 2022 and 2021 , $ 0.1 million and $ 0.5 million and $ 1.7 million included within Other assets on the Consolidated Balance Sheets, respectively. 

 Total contract assets decreased by $ 0.7 million from January 1, 2023 to December 31, 2023 , primarily due to actual royalties billed during the year. Contract assets decreased by $ 5.9 million from January 1, 2022 to December 31, 2022 , primarily due to actual royalties billed and the reduction in contact assets balance following our settlement agreement with Marquardt GmbH . 

 Deferred Revenue 

 Based on contracts signed and payments received as of December 31, 2023 , we expect to recognize $ 12.6 million in revenue related to Performance Obligation B under our fixed fee license agreements, which are satisfied over time, including $ 9.6 million over one to three years and $ 3.0 million over more than three years. 

 As of December 31, 2022 , total deferred revenue was $ 17.4 million, of which $ 4.8 million was recognized during the year ended December 31, 2023. 

 As December 31, 2021 , total deferred revenue was $ 21.5 million, of which $ 4.9 million was recognized during 2022 . In 2022 , we recorded a $ 0.8 million increase in deferred revenue as a result of a new contract with a customer. 
 
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 3 . INVESTMENTS AND FAIR VALUE MEASUREMENTS 
 Marketable Securities 

 We invest surplus funds in excess of operational requirements in a diversified portfolio of marketable securities, with the objectives of delivering competitive returns, maintaining a high degree of liquidity, and seeking to avoid the permanent impairment of principal. We periodically evaluate the need for an allowance for credit losses on investment securities available-for-sale on at least a quarterly basis, and more frequently when economic or market conditions warrant such an evaluation. 

 Marketable securities as of December 31, 2023 and December 31, 2022 consisted of the following (in thousands): 

 December 31, 2023 
 
 Cost or Amortized Cost 
 
 Unrealized Gains 
 
 Unrealized Losses 
 
 Fair Value 
 
 Marketable equity securities 
 
 Equity securities 
 $ 
 59,228 
 
 $ 
 7,896 
 
 $ 
 ( 4,146 
 ) 
 
 $ 
 62,978 
 
 Marketable debt securities 
 
 U.S. treasury securities 
 53,662 
 
 1,307 
 
 ( 3 
 ) 
 
 54,966 
 
 Corporate bonds 
 19,422 
 
 472 
 
 ( 197 
 ) 
 
 19,697 
 
 Total marketable debt securities 
 
 73,084 
 
 1,779 
 
 ( 200 
 ) 
 
 74,663 
 
 $ 
 132,312 
 
 $ 
 9,675 
 
 $ 
 ( 4,346 
 ) 
 
 $ 
 137,641 
 
 December 31, 2022 
 
 Cost or Amortized Cost 
 
 Unrealized Gains 
 
 Unrealized Losses 
 
 Fair Value 
 
 Marketable equity securities 
 
 Mutual funds 
 $ 
 26,352 
 
 $ 
 — 
 
 $ 
 ( 3,143 
 ) 
 
 $ 
 23,209 
 
 Equity securities 
 53,273 
 
 2,776 
 
 ( 5,836 
 ) 
 
 50,213 
 
 Total marketable equity securities 
 79,625 
 
 2,776 
 
 ( 8,979 
 ) 
 
 73,422 
 
 Marketable debt securities 
 
 U.S. treasury securities 
 25,640 
 
 182 
 
 ( 24 
 ) 
 
 25,798 
 
 Corporate bonds 
 13,496 
 
 48 
 
 ( 106 
 ) 
 
 13,438 
 
 Total marketable debt securities 
 
 39,136 
 
 230 
 
 ( 130 
 ) 
 
 39,236 
 
 $ 
 118,761 
 
 $ 
 3,006 
 
 $ 
 ( 9,109 
 ) 
 
 $ 
 112,658 
 
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 The amortized costs and fair value of marketable debt securities, by contractual maturity, as of December 31, 2023 and December 31, 2022 (in thousands) are as follows: 

 December 31, 2023 
 
 Amortized
Cost 
 
 Fair 
Value 
 
 Less than 1 year 
 $ 
 40,129 
 
 $ 
 41,313 
 
 1 to 5 years 
 32,955 
 
 33,350 
 
 Total 
 $ 
 73,084 
 
 $ 
 74,663 
 
 December 31, 2022 
 
 Amortized
Cost 
 
 Fair
Value 
 
 Less than 1 year 
 $ 
 22,014 
 
 $ 
 22,196 
 
 1 to 5 years 
 12,086 
 
 11,973 
 
 More than 5 years 
 5,036 
 
 5,067 
 
 Total 
 $ 
 39,136 
 
 $ 
 39,236 
 
 As of December 31, 2023, the fair value of available-for-sale debt securities in unrealized loss position for corporate bonds and U.S. treasury securities were $ 7.1 million and $ 2.7 million, respectively, with an aggregated loss of $ 0.2 million. As of December 31, 2022, the fair value of available-for-sale debt securities in unrealized loss position for corporate bonds and U.S. treasury securities were $ 13.3 million and $ 2.7 million, respectively, with an aggregated loss of $ 0.3 million. For all available-for-sale debt securities that were in unrealized loss positions, we have determined that it is more likely than not we will hold the securities until maturity or a recovery of the cost basis. We had no credit-related impairment loss as of December 31, 2023 and 2022 . 

 Derivative Financial Instruments 

 Our derivative instruments consisted of written put options sold at their fair value as of the balance sheet dates. These derivative instruments are reported as Other current liabilities on our Consolidated Balance Sheets as of December 31, 2023 and December 31, 2022 (in thousands): 
 
 December 31, 2023 
 
 Cost 
 
 Unrealized Gains 
 
 Fair Value 
 
 Derivative instruments 
 $ 
 8,797 
 
 $ 
 ( 867 
 ) 
 
 $ 
 7,930 
 
 $ 
 8,797 
 
 $ 
 ( 867 
 ) 
 
 $ 
 7,930 
 
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 December 31, 2022 
 
 Cost 
 
 Unrealized Losses 
 
 Fair Value 
 
 Derivative instruments 
 $ 
 2,987 
 
 $ 
 662 
 
 $ 
 3,649 
 
 $ 
 2,987 
 
 $ 
 662 
 
 $ 
 3,649 
 
 A summary of realized and unrealized gains and losses from our equity securities and derivative instruments are as follows (in thousands): 

 Years Ended December 31, 

 2023 
 
 2022 
 
 Net unrealized gains (losses) recognized on marketable equity securities 
 $ 
 9,952 
 
 $ 
 ( 4,533 
 ) 

 Net realized gains (losses) recognized on marketable equity securities 
 
 1,901 
 
 ( 4,085 
 ) 

 Net realized gains recognized on derivative instruments 
 
 3,219 
 
 5,493 
 
 Net unrealized gains (losses) recognized on derivative instruments 
 
 1,426 
 
 ( 662 
 ) 

 Net realized gains recognized on marketable debt securities 
 
 300 
 
 734 
 
 Total net gains (losses) recognized in interest and other income (loss), net 
 
 $ 
 16,798 
 
 $ 
 ( 3,053 
 ) 
 
 Fair Value Measurements 

 Our financial instruments measured at fair value on a recurring basis consisted of money-market funds, mutual funds, equity securities, corporate debt securities and derivatives. Equity securities are classified within Level 1 of the fair value hierarchy as they are valued based on quoted market price in an active market. Corporate debt securities and derivative instruments are valued based on quoted prices in markets that are less active, broker or dealer quotations, or alternative pricing sources with reasonable levels of price transparency are generally classified within Level 2 of the fair value hierarchy. 

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 Financial instruments valued based on unobservable inputs which reflect the reporting entity’s own assumptions or data that market participants would use in valuing an instrument are generally classified within Level 3 of the fair value hierarchy. We did not hold Level 3 financial instruments as of December 31, 2023 and December 31, 2022 

 Financial instruments measured at fair value on a recurring basis as of December 31, 2023 and December 31, 2022 are classified based on the valuation technique in the table below (in thousands): 

 December 31, 2023 
 
 Fair Value Measurements Using 
 
 Quoted Prices
 in Active
Markets for
Identical Assets
(Level 1 ) 
 
 Significant
Other
Observable
Inputs
(Level 2 ) 
 
 Significant
Unobservable
Inputs
(Level 3 ) 
 
 Total 
 
 Assets: 
 
 U.S. treasury securities 
 $ 
 54,966 
 
 $ 
 — 
 
 $ 
 — 
 
 $ 
 54,966 
 
 Equity securities 
 62,977 
 
 — 
 
 — 
 
 62,977 
 
 Corporate bonds 
 — 
 
 19,697 
 
 — 
 
 19,697 
 
 Total assets at fair value 
 $ 
 117,943 
 
 $ 
 19,697 
 
 $ 
 — 
 
 $ 
 137,640 
 
 Liabilities 
 
 Derivative instruments 
 $ 
 — 
 
 $ 
 7,930 
 
 $ 
 — 
 
 $ 
 7,930 
 
 Total liabilities at fair value 
 $ 
 — 
 
 $ 
 7,930 
 
 $ 
 — 
 
 $ 
 7,930 
 
 December 31, 2022 
 
 Fair Value Measurements Using 
 
 Quoted Prices
 in Active
Markets for
Identical Assets
(Level 1 ) 
 
 Significant
Other
Observable
Inputs
(Level 2 ) 
 
 Significant
Unobservable
Inputs
(Level 3 ) 
 
 Total 
 
 Assets: 
 
 Certificates of deposit 
 $ 
 — 
 
 $ 
 5,300 
 
 $ 
 — 
 
 $ 
 5,300 
 
 U.S. treasury securities 
 
 25,798 
 
 — 
 
 — 
 
 25,798 
 
 Mutual funds 
 
 23,209 
 
 — 
 
 — 
 
 23,209 
 
 Equity securities 
 50,213 
 
 — 
 
 — 
 
 50,213 
 
 Corporate bonds 
 — 
 
 13,438 
 
 — 
 
 13,438 
 
 Total assets at fair value 
 $ 
 99,220 
 
 $ 
 18,738 
 
 $ 
 — 
 
 $ 
 117,958 
 
 Liabilities 
 
 Derivative instruments 
 $ 
 — 
 
 $ 
 3,649 
 
 $ 
 — 
 
 $ 
 3,649 
 
 Total liabilities at fair value 
 $ 
 — 
 
 $ 
 3,649 
 
 $ 
 — 
 
 $ 
 3,649 
 
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 If quoted prices for identical instruments are available in an active market, debt securities are classified within Level 1 of the fair value hierarchy. If quoted prices for identical instruments in active markets are not available, fair values are estimated using quoted prices of similar instruments and are classified within Level 2 of the fair value hierarchy. To date, all of our debt securities can be valued using one of these two methodologies. 

 Our derivative financial instruments are classified within Level 2 of the fair value hierarchy because the valuation inputs are based on quoted prices and market observable data of similar instruments in active markets. 
 
 4. BALANCE SHEETS DETAILS 

 Cash and Cash Equivalents 

 Cash and cash equivalents were as follow (in thousands): 

 December 31, 2023 
 
 December 31, 2022 

 Cash 
 $ 
 14,840 
 
 $ 
 9,630 
 
 Money market funds 
 
 41,231 
 
 13,586 
 
 Certificates of deposit ( 1 ) 
 — 
 
 25,604 
 
 Cash and cash equivalents 
 $ 
 56,071 
 
 $ 
 48,820 
 
 ( 1 ) Represents certificates of deposit with initial maturity days of 90 days or less. 
 
 Investments-current 

 Investments - current were as follows (in thousands): 

 December 31, 2023 
 
 December 31, 2022 

 Certificates of deposit ( 2 ) 
 
 $ 
 — 
 
 $ 
 5,300 
 
 Equity marketable securities 
 62,978 
 
 73,422 
 
 U.S. treasury securities 
 41,313 
 
 22,196 
 
 Short-term investments 
 $ 
 104,291 
 
 $ 
 100,918 
 
 ( 2 ) Represents investments with remaining maturity days between 91 days and one year. 
 
 Accounts and Other Receivables, Net 

 Accounts and other receivables net, were as follows (in thousands): 

 December 31, 2023 
 
 December 31, 2022 

 Trade accounts receivables 
 $ 
 1,743 
 
 $ 
 1,003 
 
 Other receivables 
 498 
 
 232 
 
 Accounts and other receivables 
 $ 
 2,241 
 
 $ 
 1,235 
 
 Allowance for credit losses as of December 31, 2023 and December 31, 2022 were not material. 

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 Prepaid expenses and Other Current Assets 

 Prepaid expenses and other current assets were as follows (in thousands): 

 December 31, 2023 
 
 December 31, 2022 

 Prepaid expenses 
 $ 
 1,916 
 
 $ 
 1,576 
 
 Contract assets - current 
 7,740 
 
 7,671 
 
 Other current assets 
 191 
 
 100 
 
 Prepaid expenses and other current assets 
 $ 
 9,847 
 
 $ 
 9,347 
 
 Investments-noncurrent 

 Investments- noncurrent are as follows (in thousands): 

 December 31, 2023 
 
 December 31, 2022 

 U.S. treasury securities 
 $ 
 13,653 
 
 $ 
 3,602 
 
 Corporate bonds 
 19,697 
 
 13,438 
 
 Investments-noncurrent 
 $ 
 33,350 
 
 $ 
 17,040 
 
 Other Assets 

 Other assets are as follows (in thousands): 

 December 31, 2023 
 
 December 31, 2022 

 Contract assets - noncurrent 
 110 
 
 545 
 
 Lease right-of-use assets 
 36 
 
 360 
 
 Other assets 
 — 
 
 11 
 
 Total other assets 
 $ 
 146 
 
 $ 
 916 
 
 Other Current Liabilities 

 Other current liabilities are as follows (in thousands): 

 December 31, 2023 
 
 December 31, 2022 

 Derivative instruments 
 $ 
 7,930 
 
 $ 
 3,649 
 
 Lease liabilities -\current 
 39 
 
 486 
 
 Income taxes payable 
 1,730 
 
 1,279 
 
 Dividends payable 
 
 1,489 
 
 4,212 
 
 Other current liabilities 
 712 
 
 1,418 
 
 Total other current liabilities 
 $ 
 11,900 
 
 $ 
 11,044 
 
 As of December 31, 2023 and 2022 , total other noncurrent liability were $ 4.9 million and 1.9 million , respectively, primarily consisting of long-term deferred tax credits and liabilities. 

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 5. CONTINGENCIES 

 From time to time, we receive claims from third parties asserting that our technologies, or those of our licensees, infringe on the other parties’ intellectual property ( “ IP ”) rights. Management believes that these claims are without merit. Additionally, periodically, we are involved in routine legal matters and contractual disputes incidental to our normal operations. In management’s opinion, unless we disclosed otherwise, the resolution of such matters will not have a material adverse effect on our consolidated financial condition, results of operations, or liquidity. 
 
 In the normal course of business, we provide indemnification of varying scope to customers, most commonly to licensees in connection with licensing arrangements that include our IP, although these provisions can cover additional matters. Historically, costs related to these guarantees have not been significant, and we are unable to estimate the maximum potential impact of these guarantees on our future results of operations. 
 
 LGE Korean Withholding Tax Matter 

 On October 16, 2017, we received a letter from LG Electronics Inc. (“LGE”) requesting 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, a subsidiary of the Company, from 2012 to 2014 . Pursuant to an agreement reached with LGE, on April 8, 2020, we provided a provisional deposit to LGE in the amount of KRW 5,916,845,454 (approximately $ 5.0 million) representing the amount of such withholding tax that was imposed on LGE, which provisional deposit would be returned to us to the extent we ultimately prevail in the appeal in the Korean courts. In the second quarter of 2020 , we recorded this deposit in Long-term deposits on our Condensed Consolidated Balance Sheets . In the fourth quarter of 2021 , we recorded an impairment charge of $ 0.8 million related to the long-term deposits paid to LGE. 
 
 On November 3, 2017, on behalf of LGE, we filed an appeal with the Korea Tax Tribunal regarding their findings with respect to the withholding taxes related to the 2012 to 2017 period. The Korea Tax Tribunal hearing took place on March 5, 2019. On March 19, 2019, the Korea Tax Tribunal issued its ruling in which it decided not to accept our arguments with respect to the Korean tax authorities’ assessment of withholding tax and penalties imposed on LGE. On behalf of LGE, we filed an appeal with the Korea Administrative Court on June 10, 2019. We have had numerous hearings before the Korea Administrative Court in the years 2019 through 2022 . We had a hearing on April 27, 2023, and the Korea Administrative Court rendered a decision on this matter on June 8, 2023, in which it ruled that the withholding taxes and penalties which were imposed by the Korean tax authorities on LGE should be cancelled with litigation costs to be borne by the Korean tax authorities. In connection with the Korea Administrative Court’s decision, the Korean tax authorities filed an appeal on June 28, 2023 with the Seoul High Court to seek the cancellation of the lower court’s decision. The appellate case is in progress at the Seoul High Court and the first and the second hearings were taken place on November 30, 2023 and February 1, 2024, respectively. However, the next hearing will be set at a later date. 

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 On April 25, 2023, we received notice from LGE requesting us to reimburse LGE with respect to withholding tax imposed on LGE by the Korean tax authorities following a recent tax audit of LGE for the years 2018 through 2022 . Pursuant to an agreement reached with LGE, on June 2, 2023, we provided a provisional deposit to LGE in the amount of KRW 3,024,877,044 (approximately $ 2.3 million) representing the amount of such withholding tax that was imposed on LGE, which provisional deposit would be returned to us to the extent we ultimately prevail in the appeal in the Korean courts. In the second quarter of 2023 , we recorded this deposit in Long-term deposits on our Condensed Consolidated Balance Sheets . On June 29, 2023, on behalf of LGE, we filed an appeal with the Korea Tax Tribunal regarding their findings with respect to the withholding taxes related to the 2018 to 2022 period. On August 7, 2023, the Korean tax authority submitted its answer against the tax appeal. On September 8, 2023, on behalf of LGE, the Company submitted its rebuttal brief in response thereto. On September 25, 2023, Korean tax authority submitted an additional response brief, and on November 23, 2023, the Korea Tax Tribunal rendered a decision against LGE, dismissing the claims of the Company on the grounds that its claims are without merit. In response thereto, on behalf of LGE, we filed an appeal with the Korea Administrative Court on December 29, 2023. The first hearing date has not yet been set. As of December 31, 2023, we have accrued $ 0.3 million of withholding taxes, interest and penalties related to the 2018 to 2022 period for which the Korean tax authorities have assessed LGE. These withholding taxes had been reclassified and reported as an impairment reduction to the Long-term deposit made in the second quarter of 2023 in order to present the deposit at its estimated recoverable value. 
 
 In the event that we do not ultimately prevail in our appeal in the Korean courts with respect to this case, the applicable deposits included in Long-term deposits would be recorded as additional income tax expense on our Consolidated Statements of Income and Comprehensive Income , in the period in which we do not ultimately prevail. 

 Samsung Electronics Co. v. Immersion Corporation and Immersion Software Ireland Limited 

 On April 28, 2017, Immersion and Immersion Software Ireland Limited (collectively referred to as “Immersion” in this section) received a letter from Samsung Electronics Co. (“Samsung”) requesting that Immersion reimburse Samsung with respect to withholding tax and penalties imposed on Samsung by the Korean tax authorities following an investigation where the tax authority determined that Samsung failed to withhold taxes on Samsung’s royalty payments to Immersion Software Ireland from 2012 to 2016 . The Company was engaged in legal proceedings related to Samsung from 2017 through 2022 . In March 2022, as a result of a decision by the Korea Supreme Court, we were reimbursed by Samsung in an amount equal to KRW 6,088,855,388 (approximately $ 5 million) representing Korea national-level taxes, penalties and interest that were canceled by the Korea Supreme Court, which amount is net of $ 1.3 million of the impairment charge previously recorded in the fourth quarter of 2021 . 
 
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 Immersion Corporation vs. Meta Platforms, Inc., f/k/a Facebook, Inc. 

 On May 26, 2022, we filed a complaint against Meta Platforms, Inc. (formerly known as Facebook, Inc.) (“Meta”) in the United States District Court for the Western District of Texas. The complaint alleges that Meta’s augmented and virtual reality (“AR/VR”) systems, including the Meta Quest 2 , infringe six of our patents that cover various uses of haptic effects in connection with such AR/VR systems. We are seeking to enjoin Meta from further infringement and to recover a reasonable royalty for such infringement. 
 
 The complaint against Meta asserts infringement of the following patents: 

 • U.S. Patent No. 8,469,806 : “System and method for providing complex haptic stimulation during input of control gestures, and relating to control of virtual equipment” 

 • U.S. Patent No. 8,896,524 : “Context-dependent haptic confirmation system” 

 • U.S. Patent No. 9,727,217 : “Haptically enhanced interactivity with interactive content” 

 • U.S. Patent No. 10,248,298 : “Haptically enhanced interactivity with interactive content” 

 • U.S. Patent No. 10,269,222 : “System with wearable device and haptic output device” 

 • U.S. Patent No. 10,664,143 : “Haptically enhanced interactivity with interactive content” 
 
 Meta responded to the Company’s complaint on August 1, 2022. On September 12, 2022, Meta filed a motion to transfer the lawsuit to the Northern District of California or, in the alternative, to the Austin Division of the Western District of Texas. The Court denied Meta’s motion on May 30, 2023, and held the claim construction hearing on the same day. The Court adopted certain claim constructions during the hearing and issued a formal claim construction order consistent with those constructions on July 7, 2023. On August 2, 2023, Meta filed a mandamus petition asking the Federal Circuit to reverse the district court’s order on Meta’s transfer motion. Fact discovery closed on October 6, 2023. The Federal Circuit denied Meta’s mandamus petition on October 30, 2023. 

 On November 10, 2023, Immersion filed a separate action in the Western District of Texas against Meta directed to its newly launched Quest 3 product, asserting the following patents: 

 • U.S. Patent No. 8,469,806 : “System and method for providing complex haptic stimulation during input of control gestures, and relating to control of virtual equipment” 

 • U.S. Patent No. 9,727,217 : “Haptically enhanced interactivity with interactive content” 

 • U.S. Patent No. 10,248,298 : “Haptically enhanced interactivity with interactive content” 

 • U.S. Patent No. 10,269,222 : “System with wearable device and haptic output device” 

 • U.S. Patent No. 10,664,143 : “Haptically enhanced interactivity with interactive content” 

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 In addition, Meta filed inter partes reviews (“IPRs”), IPR 2023 - 00942 ; IPR 2023 - 00943 ; and IPR 2023 - 00944 on May 25, 2023. These are directed to U.S. Patent Nos. 8,469,806 ; 8,896,524 ; and 10,269,222 , respectively. The Company filed its response to IPR 2023 - 00942 and IPR 2023 - 0094 on September 8, 2023, and to IPR 2023 - 00944 on September 12, 2023. Meta filed IPR 2023 - 00945 ; IPR 2023 - 00946 ; and IPR 2023 - 00947 on May 26, 2023. These IPRs are directed to United States Patent Nos. 10,664,143 ; 9,727,217 ; and 10,248,298 , respectively. The Patent Trial and Appeal Board instituted review of IPR 2023 - 00942 on December 6, 2023; IPR 2023 - 00943 on December 6, 2023; IPR 2023 - 00944 on December 7, 2023; IPR 2023 - 00945 on December 6, 2023; IPR 2023 - 00946 on December 8, 2023; and IPR 2023 - 00947 on December 6, 2023. 

 On January 16, 2024, Immersion and Meta jointly moved to stay all deadlines in district court because they had arrived at a settlement in principle. On January 17, 2024, the Court stayed all deadlines. Under the Court’s order, the parties were to either move to dismiss the proceedings if they finalized the settlement agreement, or alternatively they were to provide the Court with a status update, by January 31, 2024. On February 9, 2024, we finalized a settlement agreement that resolved all district court and PTAB disputes. See Note 12 . Subsequent Event in the Notes to Consolidated Financial Statements for further information. 

 Immersion Corporation vs. Xiaomi Group 

 On or about March 3, 2023, we initiated patent infringement lawsuits against several companies of the Xiaomi-Group (the “Xiaomi-Group”) in Germany, France and India. We initiated lawsuits against Xiaomi-Group companies and their agents in the Düsseldorf Regional Court in Germany, the Tribunal judiciaire de Paris (Paris First Instance Civil Court) in France, and the High Court of Delhi, at New Delhi, in India. 

 The complaints allege that the Xiaomi-Group’s devices, including the Xiaomi 12 , infringe our patents that cover various uses of haptic effects in connection with such devices. We are seeking injunctions that would allow us to prohibit Xiaomi-Group from selling the infringing devices in Germany, France and India, as well as costs and damages as compensation for such infringement. 

 The complaints against the Xiaomi -Group assert infringement of the following patents: 

 • EP 2 463 752 B 1 (German part) titled “ Haptisches Feedback-System mit gespeicherten Effekten ” 

 • EP 2 463 752 B 1 (French part) titled “ Système de rendu haptique avec stockage d’effets ” 

 • IN 304 396 (India) titled “ Haptic Feedback System With Stored Effects” 

 On June 19, 2023, Xiaomi filed an initial response to the Company’s lawsuit in India. On July 7, 2023, the Indian litigation was listed before the Learned Joint Registrar (“JR”), Mr. Siddharth Mathur. The application seeking interim injunction will be heard on March 21, 2024. 

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 On July 11, 2023, in the German proceeding Xiaomi filed its nullity action in the German Federal Patent Court, which was served on Immersion on July 27, 2023. Immersion replied on October 27, 2023, and is awaiting Xiaomi’s response which is anticipated to be filed in late January or early February 2024, with a decision expected in March or April of 2024 . In the German infringement proceeding, Xiaomi’s statement of defense was due on October 25, 2023. Immersion’s reply was due on February 26, 2024. Xiaomi’s rejoinder is scheduled for July 25, 2024. The oral hearing is scheduled for August 29, 2024. 

 Xiaomi had until December 21, 2023 to reply to Immersion’s writ of summons in the French proceeding. Xiaomi requested an extension, and replied on January 4, 2024. Immersion’s tentative deadline to respond is March 14, 2024. The next case management hearing is scheduled for March 21, 2024. 

 Immersion Corporation vs. Valve Corporation 

 On May 15, 2023, we filed a complaint against Valve Corporation (“Valve”) in the United States District Court for the Western District of Washington. The complaint alleges that Valve’s AR/VR systems, including the Valve Index, and handheld Steam Deck, infringe seven of our patents that cover various uses of haptic effects in connection with such AR/VR systems and other video game systems. We are seeking to enjoin Valve from further infringement and to recover a reasonable royalty for such infringement. 

 The complaint against Valve asserts infringement of the following patents: 

 • U.S. Patent No. 7,336,260 : “Method and Apparatus for Providing Tactile Sensations” 

 • U.S. Patent No. 8,749,507 : “Systems and Methods for Adaptive Interpretation of Input from a Touch-Sensitive Input Device” 

 • U.S. Patent No. 9,430,042 : “Virtual Detents Through Vibrotactile Feedback” 

 • U.S. Patent No. 9,116,546 : “System for Haptically Representing Sensor Input” 

 • U.S. Patent No. 10,627,907 : “Position Control of a User Input Element Associated With a Haptic Output Device” 

 • U.S. Patent No. 10,665,067 : “Systems and Methods for Integrating Haptics Overlay in Augmented Reality” 

 • U.S. Patent No. 11,175,738 : “Systems and Methods for Proximity-Based Haptic Feedback” 

 Valve responded to the Complaint on July 24, 2023 with a motion to dismiss. Valve re-noted its motion, which changed the Company’s response deadline from August 14, 2023, to August 21, 2023. The Company timely filed its response and Valve filed its reply on August 25, 2023. The motion remains pending. The Court entered a case schedule on November 21, 2023. The case schedule does not include a trial date but set the pretrial conference for May 30, 2025. 
 
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 6 . STOCK-BASED COMPENSATION 
 Stock Options and Awards 

 Our equity incentive program is a long-term retention program that is intended to attract, retain, and provide incentives for employees, consultants, officers, and directors and to align stockholder and employee interests. We may grant time-based options, market condition-based options, stock appreciation rights, restricted stock awards (“RSAs”), restricted stock units (“RSUs”), performance shares, market condition-based performance restricted stock units (“PSUs”), and other stock-based equity awards to employees, officers, directors, and consultants. 

 On January 18, 2022, our stockholders approved the 2021 Equity Incentive Plan (as amended, the “ 2021 Plan”), which provides for a total number of shares reserved and available for grant and issuance equal to 3,525,119 shares plus up to an additional 855,351 shares that are subject to stock options or other awards previously granted under the 2011 Equity Incentive Plan. On March 30, 2023, our stockholders approved an amendment to the 2021 Plan which increased the total number of shares reserved and available for grant and issuance equal to 8,146,607 shares plus up to an additional 855,351 shares that are subject to stock options or other awards previously granted under the 2011 Equity Incentive Plan. 

 Under our equity incentive plans, stock options may be granted at prices not less than the fair market value on the date of the grant for stock options. Stock options generally vest over four years and expire seven years from the grant date. Market condition-based stock awards are subject to a market condition whereby the closing price of our common stock must exceed a certain level for a number of trading days within a specified time frame or the awards will be canceled before expiration. RSAs generally vests over one year . RSUs generally vest over three years . Awards granted other than a stock option or a stock appreciation right shall reduce the common stock shares available for grant by 1.75 shares for every share issued. 

 A summary of our equity incentive program as of December 31, 2023 , is as follows (in thousands): 

 Common stock shares available for grant 
 4341 
 
 Stock options outstanding 
 — 
 
 RSUs outstanding 
 1,128 
 
 RSAs outstanding 
 75 
 
 PSUs outstanding 
 400 
 
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 Time-Based Stock Options 

 The following summarizes activities for the time-based stock options for the years ended December 31, 2023 : 

 Number of Shares
Underlying Stock Options
(in thousands) 
 
 Weighted Average
Exercise Price
Per Share 
 
 Weighted Average
Remaining Contractual Life
(Years) 
 
 Aggregate
Intrinsic Value
(in thousands) 

 Outstanding at December 31, 2022 
 140 
 
 $ 
 7.57 
 
 4.03 
 
 $ 
 — 
 
 Granted 
 — 
 
 — 
 
 Exercised 
 ( 21 
 ) 
 
 7.54 
 
 Canceled or expired 
 ( 119 
 ) 
 
 7.57 
 
 Outstanding as of December 31, 2023 
 — 
 
 $ 
 — 
 
 — 
 
 $ 
 — 
 
 Vested and expected to vest at December 31, 2023 
 — 
 
 $ 
 — 
 
 — 
 
 $ 
 — 
 
 Exercisable at December 31, 2023 
 — 
 
 $ 
 — 
 
 — 
 
 $ 
 — 
 
 The aggregate intrinsic value is calculated as the difference between the exercise price of the underlying awards and the exercise price of our common stock for the options that were in-the-money. 

 Restricted Stock Units 

 The following summarizes RSU activities for the year ended December 31, 2023 : 

 Number of Restricted Stock Units
 (in thousands) 
 
 Weighted Average Grant Date Fair Value Per Share 
 
 Weighted Average
Remaining Contractual Life
(Years) 
 
 Aggregate
Intrinsic Value
(in thousands) 

 Outstanding at December 31, 2022 
 887 
 
 $ 
 5.85 
 
 1.31 
 
 $ 
 6,226 
 
 Granted 
 527 
 
 7.16 
 
 Released 
 ( 234 
 ) 
 
 5.10 
 
 Forfeited 
 ( 52 
 ) 
 
 6.91 
 
 Outstanding at December 31, 2023 
 1,128 
 
 $ 
 6.57 
 
 1.05 
 
 $ 
 7,964 
 
 The aggregate intrinsic value is calculated as the market value as of the end of the reporting period. 

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 Restricted Stock Awards 

 The following summarizes RSA activities for the year ended December 31, 2023 : 

 Number of Restricted Stock Awards
(in thousands) 
 
 Weighted Average Grant Date Fair Value Per Share 
 
 Weighted Average Remaining Recognition Period
(Years) 
 
 Outstanding at December 31, 2022 
 119 
 
 $ 
 5.47 
 
 0.39 
 
 Granted 
 75 
 
 8.31 
 
 Released 
 ( 119 
 ) 
 
 5.47 
 
 Forfeited 
 — 
 
 — 
 
 Outstanding at December 31, 2023 
 75 
 
 $ 
 8.31 
 
 0.24 
 
 Market Condition-Based Restricted Stock Units 

 In the first quarter of 2022 , we granted 600,000 shares of PSUs to certain members of our management team. Each PSU represents the right to one share of our common stock with vesting subject to: (a) the achievement of specified levels of the volume weighted average closing prices of our common stock during any 100 day-period between January 1, 2022 and January 1, 2027, subject to certification by the Compensation Committee (“Performance Milestones”); and (b) continued employment with us through the later of each achievement date or service vesting date, which occurs over a three (3) year period commencing on January 1, 2022. 

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 The following summarizes PSU activities for the year ended December 31, 2023 : 

 Number of Market Condition-Based Restricted Stock Units
(in thousands) 
 
 Weighted Average Grant Date Fair Value Per Share 
 
 Weighted Average Remaining Recognition Period
(Years) 
 
 Outstanding at December 31, 2022 
 615 
 
 $ 
 3.69 
 
 1.12 
 
 Granted 
 — 
 
 — 
 
 Released 
 ( 206 
 ) 
 
 3.73 
 
 Forfeited 
 ( 9 
 ) 
 
 6.20 
 
 Outstanding at December 31, 2023 
 400 
 
 $ 
 3.63 
 
 0.00 
 
 The assumptions used to value market condition-based restricted stock units granted during the year ended December 31, 2022 under our equity incentive program are as follows: 

 Year Ended December 31, 2022 
 
 Expected life (in years) 
 1.2 
 
 Volatility 
 58 
 % 

 Interest rate 
 1.7 
 % 

 Dividend yield 
 — 
 
 Employee Stock Purchase Plan 

 Under the 1999 Employee Stock Purchase Plan (“ESPP”), eligible employees may purchase common stock through payroll deductions at a purchase price of 85 % of the lower of the fair market value of our common stock at the beginning of the offering period or the purchase date. Participants may not purchase more than 2,000 shares in a six -month offering period or purchase stock having a value greater than $ 25,000 in any calendar year as measured at the beginning of the offering period. A total of 1.0 million shares of common stock had been reserved for issuance under the ESPP. During the year ended December 31, 2023, 1,298 shares were purchased under the ESPP. Effective February 1, 2023, our ESPP was discontinued, and 193,134 shares expired following the ESPP termination. 

 Stock-based Compensation Expense 

 Valuation and amortization methods 

 Stock-based compensation is based on the estimated fair value of awards, net of estimated forfeitures, and recognized over the requisite service period. Estimated forfeitures are based on historical experience at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. 

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 The stock-based compensation related to all of our stock-based awards and ESPP for the year ended December 31, 2023 and 2022 is as follows (in thousands): 

 Years Ended December 31, 

 2023 
 
 2022 

 Stock options 
 $ 
 ( 30 
 ) 
 
 $ 
 120 
 
 RSUs, RSAs and PSUs 
 
 3,425 
 
 3,295 
 
 ESPP 
 
 — 
 
 2 
 
 Total 
 $ 
 3,395 
 
 $ 
 
 3,417 
 
 Sales and marketing 
 $ 
 412 
 
 $ 
 61 
 
 Research and development 
 
 ( 69 
 ) 
 
 117 
 
 General and administrative 
 
 3,052 
 
 3,239 
 
 Total 
 $ 
 3,395 
 
 $ 
 3,417 
 
 As of December 31, 2023 , there was $ 4.4 million of unrecognized compensation cost adjusted for estimated forfeitures related to non-vested stock options, RSUs , RSAs and PSUs granted to our employees and directors. This unrecognized compensation cost will be recognized over an estimated weighted-average period of approximatel y 2.0 years. Total unrecognized compensation cost will be adjusted for future changes in estimated forfeitures. 
 
 7. STOCKHOLDERS’ EQUITY 
 Stock Repurchase Agreement 

 On February 14, 2022, we entered into a Common Stock Repurchase Agreement (the “Agreement”) with Invenomic Capital Management LP. (“Invenomic”). P ursuant to the Agreement, we purchased 904,499 shares of our common stock from Invenomic at $ 4.725 per share, or an aggregate purchase price of $ 4.3 million. The closing price of our common stock on February 14, 2022 was $ 4.80 per share. 

 We adopted a Section 382 Tax Benefits Preservation Plan on November 17, 2021 to diminish the risk we could experience an “ownership change” as defined in Section 382 of the Internal Revenue Code of 1986 , as amended, which could substantially limit or permanently eliminate our ability to utilize its net operating loss carryovers to reduce potential future income tax obligations. Under this plan, a person who acquires, without the approval of our Board of Directors (the "Board") , beneficial ownership of 4.99 % or more of the outstanding common stock could be subject to significant dilution. Following the repurchase, Invenomic’s holdings dropped to below 4.99 % of the outstanding common stock. 

 Stock Repurchase Program 

 On February 23, 2022, our Board approved a stock repurchase program of up to $ 30.0 million of our common stock for a period of up to twelve months (the "February 2022 Stock Repurchase Program"). 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 10 b 5 - 1 trading plans adopted in accordance with Rule 10 b 5 - 1 of the Securities Exchange Act of 1934 , as amended (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 February 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 February 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. 

 In the year ended December 31, 2022 we repurchased 1,637,566 shares of our common stock for $ 8.9 million at an average purchase price of $ 5.46 per share. The February 2022 Stock Repurchase Program was terminated on December 29, 2022. 
 
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 On December 29, 2022, the 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 February 2022 Stock Repurchase Plan 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 10 b 5 - 1 trading plans adopted in accordance with Rule 10 b 5 -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. On August 8, 2023, the Board approved an amendment to extend the expiration date of the December 2022 Stock Repurchase Program that was set to expire on December 29, 2023 to December 29, 2024 . 
 
 In the year ended December 31, 2023 we repurchased 1,217,774 shares of our common stock for $ 8.3 million at an average purchase price of $ 6.77 per share. As of December 31, 2023 we have $ 41.7 million available for repurchase under the December 2022 Stock Repurchase Program. 

 Dividends Payment 

 On November 14, 2022, our Board declared a quarterly dividend in the amount of $ 0.03 per share, which was paid on January 30, 2023, to stockholders of record on January 15, 2023. In addition, on December 29, 2022, our Board declared a special dividend in the amount of $ 0.10 per share, which was paid on January 30, 2023 to stockholders of record on January 15, 2023. 

 On February 21, 2023, the Board declared a quarterly dividend, in the amount of $ 0.03 per share, which will be paid on April 28, 2023 to stockholders of record on April 13, 2023. 

 On May 10, 2023, the Board declared a third quarterly dividend in the amount of $ 0.03 per share which was paid on July 28, 2023, to shareholders of record on July 13, 2023. 

 On August 11, 2023, the Board declared a quarterly dividend in the amount of $ 0.03 per share, which was paid on October 27, 2023 to shareholders of record on October 16, 2023. 

 On November 13, 2023, our Board declared a quarterly dividend in the amount of $ 0.045 per share, which was paid on January 25, 2024 to shareholders of record on January 14, 2024 . 

 On March 7, 2024 , our Board declared a quarterly dividend in the amount of $ 0.045 per share, will be payable on April 19, 2024 to shareholders of record on April 12, 2024 . 

 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. 

 In the year ended December 31, 2023 , the total dividends paid was $ 7.4 million. 

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 8 . INCOME TAXES 

 Benefit from (provision for) income taxes the years ended December 31, 2023 and 2022 consisted of the following (in thousands): 

 Years Ended December 31, 
 
 2023 
 
 2022 

 Income before provision for (benefit from) income taxes 
 42,915 
 
 26,965 
 
 Provision for (benefit from) income taxes 
 
 8,939 
 
 ( 3,699 
 ) 

 Effective tax rate 
 
 20.8 
 % 
 
 13.7 
 % 
 
 Provision for income taxes for the year ended December 31, 2023 resulted primarily from estimated domestic and foreign taxes included in the calculation of the effective tax rate. Benefit from income taxes for the year ended December 31, 2022, resulted primarily from estimated domestic and foreign taxes included in the calculation of the effective tax rate. We provided no valuation allowance for federal assets and continue to maintain full valuation allowance for state and certain foreign deferred tax assets in the United States and Canada. 

 The components of our income before benefit from (provision for) income taxes were as follows (in thousands): 

 Years Ended December 31, 

 2023 
 
 2022 

 Domestic 
 $ 
 30,458 
 
 $ 
 14,552 
 
 Foreign 
 12,457 
 
 12,413 
 
 Total 
 $ 
 42,915 
 
 $ 
 26,965 
 
 The benefit from (provision for) income taxes consisted of the following (in thousands): 

 Years Ended December 31, 

 2023 
 
 2022 

 Current: 
 
 U.S. federal 
 $ 
 3,554 
 
 $ 
 458 
 
 States and local 
 236 
 
 74 
 
 Foreign 
 1,621 
 
 871 
 
 Total current 
 5,411 
 
 1,403 
 
 Deferred: 
 
 U.S. federal 
 2,921 
 
 ( 5,694 
 ) 

 States and local 
 — 
 
 — 
 
 Foreign 
 607 
 
 592 
 
 Total deferred 
 3,528 
 
 ( 5,102 
 ) 

 Total benefit from (provision for) income taxes 
 $ 
 8,939 
 
 $ 
 ( 3,699 
 ) 
 
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 Deferred tax assets and liabilities are recognized for the temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes, tax losses, and credit carryforwards . 
 
 Significant components of the net deferred tax assets and liabilities consisted of (in thousands): 

 December 31, 

 2023 
 
 2022 

 Deferred tax assets: 
 
 Net operating loss carryforwards 
 $ 
 4,785 
 
 $ 
 5,391 
 
 State income taxes 
 50 
 
 15 
 
 Deferred revenue 
 2,769 
 
 3,498 
 
 Research and development and other credits 
 3,701 
 
 3,757 
 
 Reserve and accruals recognized in different periods 
 ( 563 
 ) 
 
 1,692 
 
 Capitalized research and development expenses 
 2,850 
 
 3,019 
 
 Depreciation and amortization 
 587 
 
 1,802 
 
 Lease liability 
 7 
 
 104 
 
 Total deferred tax assets 
 14,186 
 
 19,278 
 
 Valuation allowance 
 ( 10,837 
 ) 
 
 ( 12,341 
 ) 

 Net deferred tax assets 
 3,349 
 
 6,937 
 
 Deferred tax liabilities: 
 
 Right of use lease assets 
 ( 6 
 ) 
 
 ( 67 
 ) 

 Total deferred tax liabilities 
 ( 6 
 ) 
 
 ( 67 
 ) 

 Net deferred taxes 
 $ 
 3,343 
 
 $ 
 6,870 
 
 We account for deferred taxes under ASC 740 which requires a reduction of the carrying amounts of deferred tax assets by a valuation allowance if, based on available evidence, it is more likely than not that such assets will not be realized. Accordingly, the need to establish valuation allowances for deferred tax assets is assessed periodically based on the ASC 740 more-likely-than-not realization (“MLTN”) threshold criterion. This assessment considers matters such as future reversals of existing taxable temporary differences, projected future taxable income, tax-planning strategies, and results of recent operations. The evaluation of the recoverability of the deferred tax assets requires that we weigh all positive and negative evidence to reach a conclusion that it is more likely than not that all or some portion of the deferred tax assets will not be realized. The weight given to the evidence is commensurate with the extent to which it can be objectively verified. As of December 31, 2023, based on our assessment of the realizability of our deferred tax assets, we provided no valuation allowance for certain federal assets, whose future realization is more likely than not and continue to maintain full valuation allowance for state and certain foreign deferred tax assets in the United States and Canada, whose future realization is not more likely than not to be realized. As of December 31, 2022, based on our assessment of the realizability of our deferred tax assets, we put partial valuation allowance for certain federal assets, whose future realization is not more likely than not and continue to maintain full valuation allowance for state and certain foreign deferred tax assets in the United States and Canada. 

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 As of December 31, 2023 the net operating loss carryforwards for state income tax purposes were approximately $ 53.0 million, respectively. The state net operating losses begin to expire in 2029 . The federal net operating losses for tax years after 2017 can be carried forward indefinitely. We have no net operating loss carryforward from foreign jurisdictions. As of December 31, 2023 we had federal and state tax credit carryforwards of approximately $ 2.0 million and $ 2.5 million, respectively, available to offset future tax liabilities. The federal credit carryforwards will expire between 2023 and 2039 and the California tax credits will carryforward indefinitely. In addition, as of December 31, 2023 we have Canadian research and development credit carryforwards of $ 1.7 million, which will expire at various dates through 2040 . These operating losses and credit carryforwards have not been reviewed by the relevant tax authorities and could be subject to adjustment upon examinations. 

 Section 382 of the Internal Revenue Code (“IRC Section 382 ”) imposes limitations on a corporation’s ability to utilize its net operating losses and credit carryforwards if it experiences an “ownership change” as defined by IRC Section 382 . Utilization of a portion of our federal net operating loss carryforward was limited in accordance with IRC Section 382 , due to an ownership change that occurred during 1999 . This limitation has fully lapsed as of December 31, 2010. 

 The reconciliation of federal statutory income tax rate to our effective tax rate was as follows (in thousands): 

 Years Ended December 31, 
 
 2023 
 
 2022 

 Federal statutory rate 
 21.0 
 % 
 
 21.0 
 % 

 Foreign withholding 
 0.7 
 % 
 
 0.3 
 % 

 Stock-based compensation expense 
 ( 0.7 ) 
 % 
 
 0.3 
 % 

 Foreign rate differential 
 ( 2.1 ) 
 % 
 
 ( 2.3 ) 
 % 

 Prior year true-up items 
 — 
 % 
 
 ( 0.9 ) 
 % 

 Tax reserves 
 4.0 
 % 
 
 5.3 
 % 

 FTC 
 ( 6.0 ) 
 % 
 
 1.4 
 % 

 Other 
 0.6 
 % 
 
 0.7 
 % 

 State taxes, net of federal benefit 
 0.2 
 % 
 
 0.2 
 % 

 Global intangible low-taxed income 
 3.8 
 % 
 
 6.4 
 % 

 Nondeductible officers compensation 
 2.8 
 % 
 
 1.1 
 % 

 Valuation allowance 
 ( 3.5 ) 
 % 
 
 ( 47.2 ) 
 % 

 Effective tax rate 
 20.8 
 % 
 
 ( 13.7 ) 
 % 
 
 The undistributed earnings of our foreign subsidiaries are considered to be indefinitely reinvested and accordingly, no provision for applicable income taxes has been provided thereon. Upon distribution of those earnings, we are subject to withholding taxes payable to various foreign countries. As of December 31, 2023 , any foreign withholding taxes on the undistributed earnings of our foreign subsidiaries were immaterial. 

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 We maintain liabilities for uncertain tax positions. These liabilities involve considerable judgment and estimation and are continuously monitored by management based on the best information available, including changes in tax regulations, the outcome of relevant court cases, and other information. 

 A reconciliation of the beginning and ending amount of gross unrecognized tax benefits is as follows (in thousands): 

 Years Ended December 31, 
 
 2023 
 
 2022 

 Balance at beginning of year 
 7,093 
 
 7,569 
 
 Gross increases for tax positions of prior years 
 — 
 
 647 
 
 Gross decreases for federal tax rate change for tax positions of prior years 
 125 
 
 ( 2,170 
 ) 

 Gross increases for tax positions of current year 
 272 
 
 1,146 
 
 Lapse of statute of limitations 
 — 
 
 ( 99 
 ) 

 Balance at end of year 
 7,490 
 
 7,093 
 
 The unrecognized tax benefits relate primarily to federal and state research and development credits, intercompany profit on the transfer of certain IP rights to one of our foreign subsidiaries as part of our tax reorganization completed in 2015 and withholding tax reserve. Based on our assessment of the development in the Samsung case in October 2021, we continue to accrue $ 0.3 million liability for 2023. 

 We account for interest and penalties related to uncertain tax positions as a component of income tax expense. As of December 31, 2022 , we accrued $ 0.2 million interest or penalties related to uncertain tax positions. As of December 31, 2023 , the total amount of unrecognized tax benefits that would affect our effective tax rate, if recognized, was $ 4.9 million. 

 Because we have net operating loss and credit carryforwards, there are open statutes of limitations in which federal, state and foreign taxing authorities may examine our tax returns for all years from 2008 through the current period.
 
 9 . NET INCOME (LOSS) PER SHARE 
 Basic net income (loss) per share is computed using the weighted average number of shares of common stock outstanding during the period. Diluted net income (loss) per share is computed using the weighted average number of shares of common stock, adjusted for any dilutive effect of potential common stock. Potential common stock, computed using the treasury stock method, includes stock options, stock awards and ESPP. 

 The following is a reconciliation of the denominators used in computing basic and diluted net income (loss) per share (in thousands, except per share amounts): 

 Years Ended December 31, 

 2023 
 
 2022 

 Denominator: 
 
 Weighted-average shares outstanding, basic 
 
 32,214 
 
 33,280 
 
 Shares related to outstanding options, unvested RSUs, RSAs, PSUs and ESPP 
 
 322 
 
 228 
 
 Weighted average shares outstanding, diluted 
 
 32,536 
 
 33,508 
 
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 We include market condition-based performance restricted stock units in the calculation of diluted earnings per share if the performance condition has been satisfied as of the end of the reporting period and exclude stock equity awards if the performance condition has not been met. 

 For the year ended December 31, 2023 , we had no outstanding stock options and a wards that could potentially dilute basic earnings per share in the future. For the year ended December 31, 2022 , we had 0.2 million outstanding stock options and 25,000 outstanding awards that could potentially dilute basic earnings per share in the future, but these were excluded from the computation of diluted net income per share because their effect would have been anti-dilutive. 
 
 10 . LEASES 
 We lease our office space under lease arrangements with expiration dates on or before March 31, 2024. We recognize lease expense on a straight-line basis over the lease term. Leases with an initial term of 12 months or less are not recorded on the Consolidated Balance Sheets . We combine lease and non-lease components for new and reassessed leases. We apply discount rates to operating leases using a portfolio approach. 

 Below is a summary of our right-of-use (“ROU”) assets and lease liabilities (in thousands): 
 
 Balance Sheets Classification 
 
 December 31, 2023 
 
 December 31, 2022 

 Assets 
 
 Right-of-use assets 
 Other assets 
 
 $ 
 36 
 
 $ 
 360 
 
 Liabilities 
 
 Operating lease liabilities - current 
 Other current liabilities 
 
 39 
 
 486 
 
 Operating lease liabilities - long-term 
 Other long-term liabilities 
 
 — 
 
 56 
 
 Total lease liabilities 
 
 $ 
 39 
 
 $ 
 542 
 
 The table below provides supplemental information related to operating leases during the years ended December 31, 2023 and 2022 (in thousands except for lease term): 

 Years Ended December 31, 

 2023 
 
 2022 

 Cash paid within operating cash flow 
 38 
 
 $ 
 1,264 
 
 Weighted average lease terms (in years) 
 0.20 
 
 0.70 
 
 Weighted average discount rates 
 N/A 
 
 3.93 
 
 % 
 
 On June 6, 2022, we entered into a sublease agreement with Innovobot Fund LLP (“Innovobot”) for our facility located in Montreal Canada (the "Montreal Facility"). This sublease commenced on June 8, 2022 and ended on February 27, 2024 which approximates the lease termination date of the original Montreal Facility lease. In accordance with provisions of ASC 842 , we treated the sublease as a separate lease as we were not relieved of the primary obligation under the original lease. We continue to account for the original Montreal Facility, as a lessee, in the same manner as prior to the commencement date of the sublease. We accounted for the sublease as a lessor of the lease. We classified the sublease as an operating lease as it did not meet the criteria of a Sale-Type or Direct Financing lease. At the commencement date of the sublease, we recognized initial direct costs of $ 23,000 . These deferred costs will be amortized over the term of the sublease payments. Both the Montreal Facility and the sublease ended in February 2024. 
 
 80 
 
 Table of Contents 
 
 On January 31, 2022, we entered into an agreement to lease a 1,390 square feet of office space in Aventura, Florida (“Aventura Lease”). We use this facility as our principal executive offices and for general administrative functions. This lease commenced in the first quarter of 2022 and expires in the first quarter of 2024 . We accounted for this lease as an operating lease in accordance with the provisions of ASC 842 Leases (“ASC 842 ”). In the first quarter of 2022 , we recorded a lease liability of $ 0.1 million, which represents the present value of the lease payments using an estimated incremental borrowing rate of 3.93 %. We also recognized a ROU asset of $ 0.1 million which represents our right to use an underlying asset for the lease term. 

 On March 12, 2020, we entered into a sublease agreement with Neato Robotics, Inc. (“Neato”) for our facility located in San Jose, California (the “San Jose Lease” ). This sublease commenced in June 2020 and ended on April 30, 2023 which is the lease termination date of the original San Jose Facility lease. In accordance with provisions of ASC 842 , we treated the sublease as a separate lease as we were not relieved of the primary obligation under the original lease. We continue to account for the original San Jose Facility, as a lessee, in the same manner as prior to the commencement date of the sublease. We accounted for the sublease as a lessor of the lease. We classified the sublease as an operating lease as it did not meet the criteria of a Sale-Type or Direct Financing lease. At the commencement date of the sublease, we recognized initial direct costs of $ 0.3 million were amortized over the term of the sublease. Both the San Jose Facility lease and the sublease ended in April 2023. 

 We recognize operating lease expense and lease payments from the sublease, on a straight-line basis, in our Consolidated Statements of Income and Comprehensive Income over the lease terms. 

 During the year ended December 31, 2023 and 2022 our net operating lease expenses are as follows (in thousands): 
 
 Years Ended
December 31, 

 2023 
 
 2022 

 Operating lease costs 
 $ 
 555 
 
 $ 
 906 
 
 Variable lease payments 
 
 18 
 
 426 
 
 Sublease income 
 
 ( 544 
 ) 
 
 ( 1,143 
 ) 

 Total lease cost (income) 
 
 $ 
 29 
 
 $ 
 189 
 
 Minimum future lease payments obligations as of December 31, 2023 are as follows (in thousands): 

 For the Years Ending December 31, 
 
 2024 
 39 
 
 Total lease payments 
 39 
 
 Less: Interest 
 
 — 
 
 Total lease liability 
 
 $ 
 39 
 
 Future cash receipts from our sublease agreements as of December 31, 2023 are as follows (in thousands): 

 For the Years Ending December 31, 
 
 2024 
 
 34 
 
 Total 
 
 $ 
 34 
 
 81 
 
 Table of Contents 
 
 11 . SEGMENT REPORTING, GEOGRAPHIC INFORMATION, AND SIGNIFICANT CUSTOMERS 
 
 Segment Information 

 We develop, license, and support a wide range of software and IP that more fully engage users’ senses of touch when operating digital devices. We focus on the following target application areas: mobile devices, wearables, consumer, mobile entertainment and other content; console gaming; automotive; medical; and commercial. We manage these application areas in one operating and reporting segment with only one set of management, development, and administrative personnel. 

 Our CODM is the Chief Executive Officer. The CODM approves budgets and allocates resources to and assesses our business performance using information about our revenue and operating loss. There is only one segment that is reported to management. 
 
 Revenue by Market Area 

 The following is a summary of revenues by market areas. Revenue as a percentage of total revenues by market are as follows: 

 Years Ended December 31, 

 2023 
 
 2022 

 Mobile, Wearables, and Consumer 
 41 
 % 
 
 60 
 % 

 Gaming Devices 
 32 
 
 21 
 
 Automotive 
 22 
 
 13 
 
 Other 
 5 
 
 6 
 
 Total 
 100 
 % 
 
 100 
 % 
 
 Geographic Revenue 

 Revenues are broken out geographically by the location of the customer. A summary of revenue by region as a percentage of total revenues are as follows: 

 Years Ended December 31, 

 2023 
 
 2022 

 Asia 
 74 
 % 
 
 62 
 % 

 Europe 
 17 
 
 10 
 
 North America 
 9 
 
 28 
 
 Total 
 100 
 % 
 
 100 
 % 
 
 A summary of revenue by country as a percentage of total revenues are as follows: 

 Years Ended December 31, 

 2023 
 
 2022 

 Japan 
 39 
 % 
 
 27 
 % 

 Korea 
 32 
 
 33 
 
 Germany 
 15 
 
 7 
 
 United States of America 
 9 
 
 28 
 
 Other countries with less than 10 % in a year 
 5 
 
 5 
 
 Total 
 100 
 % 
 
 100 
 % 
 
 82 
 
 Table of Contents 
 
 Property and Equipment, net by Country 
 
 Property and equipment, net by geographic areas as a percentage of total property and equipment, net are as follows: 

 December 31, 

 2023 
 
 2022 

 Canada 
 96 
 % 
 
 97 
 % 

 United States of America 
 2 
 
 2 
 
 Rest of World 
 2 
 
 1 
 
 Total 
 100 
 % 
 
 100 
 % 
 
 Significant Customers 

 During the year ended December 31, 2023 , three customers accounted for 31 %, 23 % and 14 % of our total revenue, respectively. In 2022 , three customers accounted for 31 %, 18 % and 13 % of our total revenues, respectively. 

 A summary of customers with 10% or greater of our outstanding accounts and other receivables are as follows: 

 Years Ended December 31, 

 2023 
 
 2022 

 Customer A 
 81 
 % 
 
 60 
 
 % 

 Customer B 
 14 
 % 
 
 * 
 
 % 

 Customer C 
 * 
 
 21 
 % 
 
 * Represents less than 10 % of our total accounts and other receivables. 
 
 12. SUBSEQUENT EVENTS 

 On February 9, 2024 , we entered into a Patent License and Settlement Agreement (the “License and Settlement Agreement”) with Meta , pursuant to which the parties have agreed to terms for resolving the litigation matters against Meta described in Note 5 Contingencies (the “Litigation”) and Meta will license, on a non-exclusive basis, Immersion’s patent portfolio for use in its products. Under the License and Settlement Agreement, in consideration for the license and releases granted therein, Immersion expects to receive approximately $ 17.5 million, after deducting for legal fees related to the Litigation (and other pending litigation) and other liabilities. Pursuant to the License and Settlement Agreement, Immersion and Meta have agreed to terms for dismissal by them of the outstanding Litigation and IPRs. The description of the License and Settlement Agreement contained herein does not purport to be complete and is qualified in its entirety by reference to the License and Settlement Agreement, which we intend to file as an exhibit to our Quarterly Report on Form 10-Q for the quarter ending March 31, 2024. 
 
 83 
 
 Table of Contents 
 
 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 

 None. 

 Item 9A. Control and Procedures 

 Management’s Evaluation of Disclosure Controls and Procedures 

 Based on their evaluation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of December 31, 2023 , our management, with the participation of our Chief Executive Officer and Chief Financial Officer, have concluded that our disclosure controls and procedures were effective as of the end of the period covered by this report for the purpose of ensuring that the information required to be disclosed by us in this Annual Report on Form 10-K is made known to them by others on a timely basis, and that the information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, in order to allow timely decisions regarding required disclosure, and that such information is recorded, processed, summarized, and reported by us within the time periods specified in the SEC’s rules and instructions for Form 10-K. 

 Our management, including our Chief Executive Officer and Chief Financial Officer, does not expect that our disclosure controls and procedures or our internal controls over financial reporting will prevent all error and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within Immersion have been detected. 

 Management’s Annual Report on Internal Control over Financial Reporting 

 Our management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act). Internal control over financial reporting is a process designed by, or under the supervision of, our Chief Executive Officer and our Chief Financial Officer and affected by our board of directors and management to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with GAAP. Our management assessed the effectiveness of our internal control over financial reporting as of December 31, 2023 . Management’s assessment of internal control over financial reporting was conducted using the criteria in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”). In performing the assessment, our management concluded that, as of December 31, 2023 , our internal control over financial reporting is effective based on these criteria. 

 Changes in internal control over financial reporting 

 There were no changes to internal controls over financial reporting that occurred during the quarter ended December 31, 2023 that have materially affected or are reasonably likely to materially affect our internal controls over financial reporting. 

 Item 9B. Other Information 

 None. 

 Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections 

 Not applicable. 

 84 
 
 Table of Contents 
 
 PART III 

 The
SEC allows us to include information required in this Annual Report on Form
10-K by referring to other documents or reports we have already or will soon be
filing. This is called “Incorporation by Reference”. We intend to file our
definitive proxy statement pursuant to Regulation 14A not later than 120 days
after the end of the fiscal year covered by this Annual Report on Form 10-K ,
and certain information therein is incorporated in this Annual Report on Form
10-K by reference. 
 
 Item 10. Directors, Executive Officers and Corporate Governance 

 The information required by Item 10 with respect to directors and executive officers is incorporated by reference from the sections entitled “Election of Directors”, “Corporate Governance”, “Ownership of Our Equity Securities”, and “Audit Committee Report” in Immersion’s definitive Proxy Statement for its 2024 annual stockholders’ meeting. 

 Item 405 of Regulation S-K calls for disclosure of any known late filing or failure by an insider to file a report required by Section 16(a) of the Exchange Act. To the extent disclosure for delinquent reports is being made, it can be found under the caption “Delinquent Section 16(a) Reports” in Immersion’s definitive Proxy Statement for its 2024 annual stockholders’ meeting and is incorporated herein by reference. 

 We have adopted a code of ethics applicable to our employees, including our principal executive, financial and accounting officers, and it is available free of charge, on our website’s investor relations page. To view the code of ethics, go to ir.immersion.com, click on “Download Library” and click on “Governance.” Future amendments or waivers relating to the code of ethics will be disclosed on the webpage referenced in this paragraph within 4 business days following the date of such amendment or waiver. 

 Item 11. Executive Compensation 

 The information required by Item 11 is incorporated by reference from the sections entitled “Election of Directors”, “Director Compensation”, “Corporate Governance”, “Compensation Discussion and Analysis”, “Compensation Committee Report”, “Compensation Committee Interlocks and Insider Participation”, and “Executive Compensation” in Immersion’s definitive Proxy Statement for its 2024 annual stockholders’ meeting. 

 Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters 

 The information required by Item 12 is incorporated by reference from the section entitled “Ownership of Our Equity Securities” and “Equity Compensation Plan Information” in Immersion’s definitive Proxy Statement for its 2024 annual stockholders’ meeting. 

 Item 13. Certain Relationships and Related Transactions, and Director Independence 

 The information required by Item 13 is incorporated by reference from the section entitled “Corporate Governance” and “Related Person Transactions” in Immersion’s definitive Proxy Statement for its 2024 annual stockholders’ meeting. 

 Item 14. Principal Accounting Fees and Services 

 The information req uired by Item 14 is incorporated by reference from the section entitled “Ratification of Appointment of Independent Registered Public Accounting Firm” in Immersion’s definitive Proxy Statement for its 2024 annual stockholders’ meeting. 

 85 
 
 Table of Contents 
 
 PART IV 

 Item 15. Exhibits, Financial Statement Schedules 

 The following documents are filed as part of this Form: 

 1 
 
 Financial Statements 
 
 ​ 

 Page 
 
 Report of Independent Registered Public Accounting Firm 
 46 

 Consolidated Balance Sheets as of December 31, 2023, and 2022 
 47 

 Consolidated Statements of Income and Comprehensive Income for the Years Ended December 31, 2023, and 2022 
 48 

 Consolidated Statements of Stockholders’ Equity for the Years Ended December 31, 2023, and 2022 
 49 

 Consolidated Statements of Cash Flows for the Years Ended December 31, 2023, and 2022 
 50 

 Notes to Consolidated Financial Statements 
 52 

 2 
 
 Financial Statement Schedules 
 
 Schedules not listed above have been omitted because the information required to be set forth therein is not applicable or is shown in the consolidated financial statements or notes herein. 
 
 86 
 
 Table of Contents 
 
 3 
 
 Exhibits: 
 
 The following exhibits are filed herewith: 

 Exhibit
Number 
 
 Exhibit Description 
 
 Incorporated by Reference 
 
 Filed
Herewith 

 Form 
 
 File No. 
 
 Exhibit 
 
 Filing Date 
 
 3.1 
 
 Immersion Corporation Amended and Restated Bylaws, effective as of August 12, 2022 
 
 10-K 
 
 001-38334 
 
 3.1 
 
 February 22, 2023 
 
 3.2 
 
 Amended and Restated Certificate of Incorporation of Immersion Corporation 
 
 8-K 
 
 000-27969 
 
 3.1 
 
 June 7, 2017 
 
 3.3 
 
 Certificate of Designation of the Powers, Preferences and Rights of Series A Redeemable Convertible Preferred Stock 
 
 8-K 
 
 000-27969 
 
 3.1 
 
 July 29, 2003 
 
 3.4 
 
 Amended and Restated Certificate of Designations of Series B Participating Preferred Stock of Immersion Corporation 
 
 8-K 
 
 000-27969 
 
 3.1 
 
 November 17, 2021 
 
 4.1 
 
 Description of Securities 
 
 10-K 
 
 001-38334 
 
 4.1 
 
 February 22, 2023 
 
 4.2 
 
 Section 382 Tax Benefits Preservation Plan, dated as of November 17, 2021, by and between Immersion Corporation and Computershare Trust Company, N.A., as Rights Agent. 
 
 8-K 
 
 000-27969 
 
 4.1 
 
 November 17, 2021 
 
 10.1 
 
 # 
 
 License Agreement dated as of July 25, 2003 by and between Microsoft Corporation and Immersion Corporation 
 
 S-3/A 
 
 333-108607 
 
 10.4 
 
 February 13, 2004 
 
 10.2 
 
 * 
 
 Form of Indemnity Agreement 
 
 10-K 
 
 001-38334 
 
 10.3 
 
 February 22, 2023 
 
 10.3 
 
 * 
 
 Amended and Restated Immersion Corporation 2021 Equity Incentive Plan (effective January 20, 2023) 
 
 10-Q 
 
 001-38334 
 
 10.3 
 
 May 11, 2023 
 
 10.4 
 
 * 
 Form of Stock Option Award Agreement for Immersion Corporation 2021 Equity Incentive Plan. 
 
 10-K 
 
 001-38334 
 
 10.13 
 
 February 25, 2022 
 
 10.5 
 
 * 
 Form of Award Agreement (Restricted Stock Units) to the Immersion Corporation 2021 Equity Incentive Plan. 
 
 10-K 
 
 001-38334 
 
 10.11 
 
 February 22, 2023 
 
 10.6 
 
 * 
 Form of Amendment to Award Agreement (Performance-Based Restricted Stock Units) to the Immersion Corporation 2021 Equity Incentive Plan 
 
 10-K 
 
 001-38334 
 
 10.12 
 
 February 22, 2023 
 
 10.7 
 
 * 
 
 Form of Award Agreement (Performance-Based Restricted Stock Units) to the Immersion Corporation 2011 Equity Incentive 
 
 10-K 
 
 000-38334 
 
 10.13 
 
 February 22, 2023 
 
 10.8 
 
 Office Lease between Carr NP Properties, L.L.C., and Immersion Corporation dated September 15, 2011. 
 
 10-Q 
 
 000-27969 
 
 10.2 
 
 November 7, 2011 
 
 10.9 
 
 First Amendment to Office Lease dated November 12, 2014 by and between Immersion Corporation and BSREP Rio Robles LLC 
 
 8-K 
 
 000-27969 
 
 10.1 
 
 November 14, 2014 
 
 10.10 
 
 Sublease, dated March 12, 2020, by and between Immersion Corporation and Neato Robotics, Inc. 
 
 10-Q 
 
 001-38334 
 
 10.3 
 
 May 8, 2020 
 
 10.11 
 
 First Amendment to Sublease, dated May 1, 2020, by and between Immersion Corporation and Neato Robotics, Inc. 
 
 10-Q 
 
 001-38334 
 
 10.1 
 
 May 8, 2020 
 
 10.12 
 
 # 
 
 Lease Agreement, dated January 26, 2022, by and between Immersion Corporation and COFE CIX Av entura, LLC 
 
 10-K 
 
 001-38334 
 
 10.27 
 
 February 25, 2022 
 
 87 
 
 Table of Contents 
 
 10.13 
 
 # 
 
 Settlement and License Agreement, dated as of January 26, 2018, by and between Immersion Corporation and Apple Inc. 
 
 10-Q/A 
 
 001-38334 
 
 10.2 
 
 July 31, 2018 
 
 10.14 
 
 Settlement and License Agreement, dated as of May 12, 2019, by and between Immersion Corporation and Samsung Electronics Co. Ltd 
 
 10-Q 
 
 001-38334 
 
 10.1 
 
 August 14, 2019 
 
 10.15 
 
 * 
 
 Form of Change of Control and Severance Agreement 
 
 8-K 
 
 001-38334 
 
 10.2 
 
 May 27, 2022 
 
 10.16 
 
 * 
 
 Amended and Restated Change of Control and Severance Agreement, dated January 3, 2023, between Immersion Corporation and Eric Singer 
 
 8-K 
 
 001-38334 
 
 10.2 
 
 January 3, 2023 
 
 10.17 
 
 * 
 Offer Letter, dated December 30, 2022, between Immersion Corporation and Eric Singer 
 
 8-K 
 
 001-38334 
 
 10.1 
 
 January 3, 2023 
 
 10.18 
 
 * 
 
 Summary of Compensation Information of William Martin, the Company’s Chief Strategy Officer 
 
 10-K 
 
 001-38334 
 
 10.26 
 
 February 22, 2023 
 
 10.19 
 
 * 
 
 Change of Control and Severance Agreement, dated May 26, 2022, by and between Immersion Corporation and William C. Martin. 
 
 10-Q 
 
 001-38334 
 
 10.2 
 
 November 14, 2022 
 
 10.20 
 
 * 
 
 Immersion Corporation Annual Bonus Plan 
 
 8-K 
 
 001-38334 
 
 10.1 
 
 May 30, 2023 
 
 10.21 
 
 * 
 
 Mutual Separation and Release Agreement between Immersion Corporation and Aaron Akerman 
 
 8-K 
 
 001-38334 
 
 10.2 
 
 May 30, 2023 
 
 10.22 
 
 * 
 
 Offer Letter, dated May 26, 2023 between Immersion Corporation and J. Michael Dodson 
 
 8-K 
 
 001-38334 
 
 10.3 
 
 May 30, 2023 
 
 10.23 
 
 * 
 
 Change of Control and Severance Agreement, dated May 26, 2023 between Immersion Corporation and J. Michael Dodson 
 
 8-K 
 
 001-38334 
 
 10.4 
 
 May 30, 2023 
 
 10.24 
 
 Equity Distribution Agreement, dated as of July 6, 2021, by and between Immersion Corporation and Craig-Hallum Capital Group LLC 
 
 8-K 
 
 001-38334 
 
 1.1 
 
 July 6, 2021 
 
 21.1 
 
 Subsidiaries of Immersion Corporation. 
 
 X 
 
 88 
 
 Table of Contents 
 
 23.1 
 
 Consent of Plante & Moran, PLLC, Independent Registered Public Accounting Firm, with respect to the fiscal year ended December 31 , 2023. 
 
 X 

 31.1 
 
 Certification of Eric Singer, Chief Executive Officer, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 
 
 X 

 31.2 
 
 Certification of J. Michael Dodson, Chief Financial Officer, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 
 
 X 

 32.1 
 
 + 
 
 Certification of Eric Singer, Chief Executive Officer, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 
 
 X 

 32.2 
 
 + 
 
 Certification of J. Michael Dodson, Chief Financial Officer, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. 
 
 X 

 97.1 
 
 Dodd-Frank Clawback Po licy 
 
 X 

 101.INS 
 
 Inline XBRL Report Instance Document 
 
 X 

 101.SCH 
 
 Inline XBRL Taxonomy Extension Schema Document 
 
 X 

 101.CAL 
 
 Inline XBRL Taxonomy Calculation Linkbase Document 
 
 X 

 101.DEF 
 
 Inline XBRL Taxonomy Extension Definition Linkbase Document 
 
 X 

 101.LAB 
 
 Inline XBRL Taxonomy Label Linkbase Document 
 
 X 

 101.PRE 
 
 Inline XBRL Presentation Linkbase Document 
 
 X 

 104 
 + 
 Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101) 
 
 X 
 
 # Confidential treatment has been granted for portions of this exhibit by the SEC. 

 * Constitutes a management contract or compensatory plan. 

 + This certification is deemed not filed for purposes of section 18 of the Exchange Act, as amended, or otherwise subject to the liability of that section, nor shall it be deemed incorporated by reference into any filing under the Securities Act, as amended, or the Exchange Act, as amended. 

 Item 16. Form 10-K Summary 

 None. 

 89 
 
 Table of Contents 
 
 SIGNATURES 

 Pursuant to the requirements of Section 13 or 15(d) of the Exchange Act, the Registrant has duly caused this Report to be signed on its behalf by the undersigned thereunto duly authorized. 
 
 Date: March 11, 2024 

 IMMERSION CORPORATION 
 
 By 
 
 / S / J. MICHAEL DODSON 
 
 J. Michael Dodson 
 
 Chief Financial Officer 
 
 POWER OF ATTORNEY 

 KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Eric Singer and J. Michael Dodson, jointly and severally, his or her true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for him or her and in his or her name, place, and stead, in any and all capacities, to sign any and all amendments to t his Annual Report on Form 10-K and to file the same, with exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, hereby ratifying and confirming all that each of said attorneys-in-fact, or his or her substitute or substitutes, may do or cause to be done by virtue thereof. 

 Pursuant to the requirements of the Securities Exchange Act of 1934, this Annual Report on Form 10-K has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated. 

 Name 
 
 Title 
 
 Date 
 
 / S / ERIC SINGER 
 
 President, Chief Executive Officer and Chairman of the Board 

 (Principal Executive Officer) 
 
 March 11, 2024 

 Eric Singer 
 
 / S / J. MICHAEL DODSON 
 
 Chief Financial Officer 

 (Principal Financial Officer and 

 Principal Accounting Officer) 
 
 March 11, 2024 

 J. Michael Dodson 
 
 William C. Martin 
 
 Chief Strategy Officer and Director 
 
 March 11, 2024 

 William C. Martin 
 
 / S /EMILY S. HOFFMAN 
 
 Director 
 
 March 11, 2024 

 Emily S. Hoffman 
 
 / S / ELIAS NADER 
 
 Director 
 
 March 11, 2024 

 Elias Nader 
 
 / S / FREDERICK WASCH 
 
 Director 
 
 March 11, 2024 

 Frederick Wasch 
 
 90
IMMERSION CORP 10-K

Item 8. Financial Statements and Supplementary Data
