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Item 1. Financial Statements

2024-12-16 compared with 2024-08-19 · 442 added, 340 removed, 684 unchanged (53% of the section changed)

3 unchanged sentences

(In thousands, except for share and per share data)

June 30, 2024

December 31, 2023

October 31, 2024

April 30, 2024

Current assets:

5 unchanged sentences

Cash and cash equivalents

Accounts receivable, net

Accounts receivables, net

Merchandise inventories, net

11 unchanged sentences

Operating lease right-of-use assets

Other assets - noncurrent

O ther assets - noncurrent

IMMERSION CORPORATION

1 unchanged sentence

(In thousands, except per share data)

June 30, 2024

December 31, 2023

October 31, 2024

April 30, 2024

LIABILITIES AND STOCKHOLDERS’ EQUITY

15 unchanged sentences

Operating lease liabilities – noncurrent

Other long-term liabilities

Deferred revenue – noncurrent

Other noncurrent liabilities

Long-term borrowings

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100,000,000 shares authorized;

48,153,239 and 47,636,273 shares issued, respectively;

31,960,747 and 31,528,977 shares outstanding, respectively

48,685,577 and 32,275,705 shares issued and outstanding at October 31, 2024, respectively;

48,047,329 and 31,854,837 shares issued and outstanding at April 30, 2024, respectively

Additional paid-in capital

Accumulated other comprehensive income

Accumulated earning (deficit)

Accumulated earnings (deficit)

Treasury stock at cost:

16,192,492 and 16,107,296 shares, respectively)

16,409,872 and 16,192,492 shares, respectively, at cost

Total stockholders' equity attributable to Immersion Corporation stockholders

4 unchanged sentences

IMMERSION CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF OPERATION S

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share amounts)

Three Months Ended June 30,

Six Months Ended June 30,

One Month Ended

Three Months Ended

Six Months Ended

July 31, 2024

October 31, 2024

June 30, 2023

October 31, 2024

June 30, 2023

Royalty and license

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Total revenues

Cost of sales (excludes depreciation and amortization expense):

Cost of sales (excludes depreciation and amortization expenses):

Barnes & Noble Education

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Total operating expenses

Operating income

Interest and other income (loss), net

Operating income (loss)

Interest and other income, net

Interest expense

Income before provision for income taxes

Income (loss) before provision for income taxes

Provision for income taxes

Net loss attributable to noncontrolling interest

Net income (loss)

Net income (loss) attributable to noncontrolling interest

Net income attributable to Immersion stockholders

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IMMERSION CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(In thousands)

Three Months Ended June 30,

Six Months Ended June 30,

One Month Ended

Three Months Ended

Six Months Ended

July 31, 2024

October 31, 2024

June 30, 2023

October 31, 2024

June 30, 2023

Net income (loss)

Change in unrealized gains (losses) on available-for-sale securities

Comprehensive income

Comprehensive loss attributable to noncontrolling interests

Comprehensive income (loss)

Comprehensive income (loss) attributable to noncontrolling interests

Comprehensive income attributable to Immersion stockholders

3 unchanged sentences

(In thousands, except number of shares)

Three Months Ended June 30, 2024

Accumulated Other Comprehensive Income

Accumulated Earnings (Deficit)

Three Months Ended October 31, 2024

Accumulated Other Comprehensive Income (loss)

Accumulated Earnings

Treasury Stock

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Additional Paid In Capital

Balances at March 31, 2024

Net income (loss)

Ba lances at July 31, 2024

Unrealized loss on available-for-sale securities, net of taxes

Barnes & Noble Education acquisition

Sale of Barnes & Noble Education's common stock, net of commissions

Release of restricted stock units and awards, net of shares withheld

1 unchanged sentence

Dividends declared

Rebalancing of controlling and noncontrolling interest

Stock-based compensation

Balances at June 30, 2024

Balances at October 31, 2024

See accompanying Notes to Condensed Consolidated Financial Statements.

3 unchanged sentences

Three Months Ended June 30, 2023

Accumulated Other Comprehensive Income

Accumulated Other Comprehensive Income (loss)

Accumulated Deficit

17 unchanged sentences

(In thousands, except number of shares)

Six Months Ended June 30, 2024

C ommon Stock

Six Months Ended October 31, 2024

Accumulated Other Comprehensive Income

5 unchanged sentences

Additional Paid In Capital

Balances at December 31, 2023

Net income (loss)

Balances at April 30, 2024

Unrealized loss on available-for-sale securities, net of taxes

Barnes & Noble Education acquisition

Release of restricted stock units and awards

Sale of Barnes & Noble Education's common stock, net of commissions

Release of restricted stock units and awards, net of shares withheld for payroll taxes

Shares issued to an employee in lieu of cash compensation

Dividends declared

Rebalancing of controlling and noncontrolling interest

Stock-based compensation

Balances at June 30, 2024

Balances at October 31, 2024

See accompanying Notes to Condensed Consolidated Financial Statements.

23 unchanged sentences

(In thousands)

Six Months Ended June 30,

Six Months Ended

October 31, 2024

June 30, 2023

Cash flows from operating activities:

2 unchanged sentences

Stock-based compensation

Loss on disposal of property and equipment

Deferred income taxes

Net gains on investment in marketable securities

20 unchanged sentences

Purchase of property and equipment

Proceeds from disposal of property and equipment

Net cash flows used in investing activities

2 unchanged sentences

Repayment of borrowing

Proceeds from sale of Barnes & Noble Education common stock

Dividend payments to stockholders

3 unchanged sentences

Net cash provided by (used in) financing activities

Net decrease in cash, cash equivalents and restricted cash

Net increase (decrease) in cash, cash equivalents and restricted cash

Cash, cash equivalents and restricted cash:

3 unchanged sentences

IMMERSION CORPORATION

RECONCILIATION OF CASH, CASH EQUIVALENTS AND RESTRICTED CASH TO CONDENSED CONSOLIDATED BALANCE SHEETS

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

June 30, 2024

Reconciliation of cash, cash equivalents and restricted cash for Condensed Consolidated Balance Sheets:

October 31, 2024

June 30, 2023

2 unchanged sentences

Barnes & Noble Education restricted cash reported as:

Prepaid and other current assets

Other non current assets

Prepaid expenses and other current assets

Other assets - noncurrent

Total restricted cash

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and commercial.

On June 10, 2024, we acquired a controlling interest in Barnes & Noble Education, Inc., a Delaware corporation (“Barnes & Noble Education”), refer to Note 2 .

On June 10, 2024, we acquired a controlling interest in Barnes & Noble Education, Inc., a Delaware corporation (“Barnes & Noble Education” or “BNED”) refer to Note 2 .

Business Combination for more information.

The financial results of Barnes & Noble Education have been included in our condensed consolidated financial statements from the acquisition date of June 10, 2024.

Barnes & Noble Education is a

contract operator of physical and virtual bookstores for college and university

campuses and K- 12 institutions across the

United States.

Barnes & Noble Education is also a textbook wholesaler and inventory management hardware

and software providers.

Barnes & Noble Education operates physical, virtual, and custom

bookstores, delivering essential educational content, tools and general

merchandise within a dynamic omnichannel retail environment.

Barnes & Noble Education is a contract operator of physical and virtual bookstores for college and university campuses and K- 12 institutions across the United States.

Barnes & Noble Education is also a textbook wholesaler and inventory management hardware and software providers.

Barnes & Noble Education operates physical, virtual, and custom bookstores, delivering essential educational content, tools and general merchandise within a dynamic omnichannel retail environment.

BNC First Day Equitable and Inclusive Access Programs

Barnes & Noble Education provides product and service offerings designed to address the most pressing issues in higher education, including equitable access, enhanced convenience and improved affordability through innovative course material delivery models designed to drive improved student experiences and outcomes.

Barnes & Noble Education offers BNC First Day ® equitable and inclusive access programs, consisting of First Day Complete and First Day , which provide faculty required course materials on or before the first day of class.

First Day Complete is adopted by an institution and includes all or the majority of undergraduate classes (and on occasion graduate classes), providing students both physical and digital materials.

Barnes & Noble Education offers its BNC First Day® affordable textbook access programs, consisting of First Day Complete and First Day, which provide faculty-required course materials to students on or before the first day of class.

• First Day Complete is adopted by an institution and includes all or the majority of undergraduate classes (and on occasion graduate classes), providing students with both physical and digital materials.

In addition to providing numerous benefits to students, faculty and administrators, the First Day Complete model drives substantially greater unit sales and sell-through for the bookstore.

• First Day is adopted by a faculty member for a single course, and students receive primarily digital course materials through their school's learning management system (“LMS”).

Offering course materials through Barnes & Noble Education’s equitable and inclusive access First Day Complete and First Day models is an important strategic initiative to meet the market demands of substantially reduced pricing to students, as well as the opportunity to improve student outcomes, while, at the same time, increasing Barnes & Noble Education’s market share, revenue and relative gross profits of course material sales given the higher volumes of units sold in such models as compared to historical sales models that rely on individual student marketing and sales.

Relationship with Fanatics and Lids

In December 2020, Barnes & Noble Education entered into relationship with Fanatics Retail Group Fulfillment, LLC (“Fanatics”) and Fanatics Lids College, Inc.

D/B/A “Lids” (“Lids”) (collectively referred to herein as the “F/L Relationship”).

Fanatics and Lids, acting on Barnes & Noble Education behalf as its service providers, provide unparalleled product assortment, e-commerce capabilities and powerful digital marketing tools to drive increased value for customers and accelerate growth of Barnes & Noble Education’s logo general merchandise business.

Barnes & Noble Education maintains its relationships with campus partners and remains responsible for staffing and managing the day-to-day operations of Barnes & Noble Education campus bookstores.

Fanatics operates as Barnes & Noble Education’s service provider, including processing consumer personal information on Barnes & Noble Education’s behalf, using their cutting-edge e-commerce and technology expertise to offer Barnes & Noble Education campus store websites expanded product selection, a world-class online and mobile experience, and a progressive direct-to-consumer platform.

Coupled with Lids, the leading standalone brick and mortar retailer focused exclusively on licensed fan and alumni products, Lids manages in-store assortment planning and merchandising of emblematic apparel, headwear, and gift products for our partner campus stores, and Lids owns the inventory it manages, relieving Barnes & Noble Education of the obligation to finance inventory purchases from working capital.

The Barnes & Noble brand (licensed from Barnes & Noble Education's former parent) along with its subsidiary brands, BNC and MBS , are synonymous with innovation in bookselling and campus retailing in the United States.

BNED's large college footprint, reputation, and credibility in the marketplace not only support its marketing efforts to universities, students, and faculty, but are also important to its relationship with leading educational publishers who rely on us as one of their primary distribution channels.

Principles of Consolidation and Basis of Presentation

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All significant intercompany accounts and transactions have been eliminated in consolidation.

The noncontrolling interest on the unaudited Condensed Consolidated Statements of Operations represents the portion of earnings or loss attributable to the interest in Barnes & Noble Education held by other owners.

The noncontrolling interest on the unaudited Condensed Consolidated Balance Sheets represents the portion of our net assets attributable to the other owners, based on the portion of the interest owned by such owners.

As of October 31, 2024, the noncontrolling interest was $ 171.6 million.

At the end of each reporting period, equity related to Barnes & Noble Education that is attributable to Immersion and the other owners is rebalanced to reflect Immersion’s and the other owners’ ownership in Barnes & Noble Education.

The condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America ( “ U.S.

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

Due to their nonhomogeneous operations, the Company’s condensed consolidated balance sheet and statement of operations for the three and six months ended June 30, 2024, separately present the operating assets, liabilities, and operations of Immersion’s business from the operating assets, liabilities and operations of Barnes & Noble Education's business.

Due to their nonhomogeneous operations, our Condensed Consolidated Balance Sheets as of October 31, 2024 and April 30, 2024 and Condensed Consolidated Statement of Operations for the month ended July 31, 2024 and the three and six months ended October 31, 2024, separately present the operating assets, liabilities, and operations of Immersion’s business from the operating assets, liabilities and operations of Barnes & Noble Education's business.

All of the assets of Barnes & Noble Education, reported on the balance sheet, can be used only to settle obligations of Barnes & Noble Education.

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Use of Estimates

The preparation of condensed consolidated financial statements and related disclosures requires management to make estimates and assumptions that affect the reported amounts of the condensed consolidated financial statements.

Significant estimates include revenue recognition, fair value of financial instruments, valuation of income taxes including uncertain tax provisions, stock-based compensation and long-term deposits for withholding taxes, the determination of the incremental borrowing rate, valuation of intangible assets, and goodwill and long-lived assets impairment.

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.

The results of operations for the three and six months ended June 30, 2024 are not necessarily indicative of the results to be expected for the full year.

In preparing financial statements in conformity with GAAP, we are required to make estimates and assumptions that affect the reported amounts in the condensed consolidated financial statements and accompanying notes.

Actual results could differ from those estimates.

Reporting Periods and Fiscal Year End

Immersion reports our financial results based on a calendar year basis.

For interim period reporting, we report our quarterly financial results as of March 31;

Reporting Periods

Immersion previously reported our financial results based on a calendar year basis.

For interim period reporting, we reported our quarterly financial results as of March 31;

September 30 and December 31 in each calendar year.

Barnes & Noble Education's fiscal year is comprised of 52 or 53 weeks, ending on the Saturday closest to the last day of April.

The financial information presented in this Quarterly Report on Form 10-Q includes the financial information of Barnes & Noble Education from the period of June 10, 2024 through June 30, 2024.

For purposes of these consolidated financial statements, the results of Barnes & Noble Education herein have been aligned to the Company’s reporting periods.

References to the “fiscal” year in relation to Barnes & Noble Education are in the context of their respective fiscal year.

In order to more closely align with Barnes & Noble Education’s fiscal year end, on September 27, 2024, the Board of Directors of Immersion (the “Board”) approved a change of our fiscal year from the period beginning on January 1 and ending on December 31 to the period beginning on May 1 and ending on April 30.

As a result of the change in fiscal year end, we filed a Transition Report on Form 10-QT for the transition period from January 1, 2024, through April 30, 2024 on November 8, 2024.

The change in quarterly reporting from the old to the new fiscal year resulted in the one month period ended July 31, 2024 not being covered by a separate report on Form 10-Q.

As this period is not covered in the transition report, it is included in this first initial report on Form 10-Q for the newly adopted fiscal year.

Our new fiscal year begins on May 1 and ends on April 30.

Our new fiscal quarters end on July 31, October 31, January 31 and April 30.

Therefore, the financial results of certain fiscal quarters may not be comparable to prior fiscal quarters.

References throughout this Quarterly Report on Form 10-Q to fiscal 2025 with respect to Immersion refer to the fiscal year ending April 30, 2025.

The financial information presented in this Quarterly Report on Form 10-Q includes the financial information of Barnes & Noble Education for the 13 weeks and 26 weeks ended October 26, 2024.

We did not recast the condensed consolidated financial statements for the three and six months ended October 31, 2023 because the financial reporting processes in place at that time included certain procedures that were completed only on a quarterly basis.

Consequently, to recast this period would have been impractical and would not have been cost-justified.

Prior to the completion of the Transactions, our business was not highly seasonal and seasonal differences do not generally affect the comparability of prior fiscal quarters.

As a result, the condensed consolidated financial statements for the three and six months ended June 30, 2023, are presented as the most nearly comparable quarter of the prior year.

Segment Information

Following the closing of the Transaction (as defined below) with Barnes & Noble Education, we operate as two reportable segments, Immersion and Barnes & Noble Education.

We identify our segments in the manner in which our Chief Executive Officer, as our chief operating decision maker (“CODM”), allocates resources and assesses financial performance.

Earnings per Share of the Company

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Goodwill and Indefinite-Lived Intangible Assets

The Company has goodwill and indefinite-lived intangible assets that have been recorded in connection with the acquisition of Barnes & Noble Education.

We have goodwill and indefinite-lived intangible assets that have been recorded in connection with the acquisition of Barnes & Noble Education.

Goodwill and indefinite-lived intangible assets are not amortized, but instead are tested for impairment at least annually.

The Company monitors these assets on a quarterly basis for potential indicators of impairment.

We monitor these assets on a quarterly basis for potential indicators of impairment.

Goodwill is required to be tested for impairment at the reporting unit level, which is an operating segment, or one level below the operating segment.

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A summary of the new significant accounting policies as a result of our acquisition of Barnes & Noble Education is as follows:

Barnes & Noble Education's business is highly seasonal.

For example, Barnes & Noble Education’s retail business is seasonal, particularly with respect to textbook sales and rentals, with the major portion of sales and operating profit realized during the fiscal quarters when college students generally purchase and rent textbooks for the upcoming semesters and lowest in the other fiscal quarters.

Barnes & Noble Education's quarterly results also may fluctuate depending on the timing of the start of the various schools’ semesters, the revenue impact of accounting principles with respect to the recognition of revenue associated with its equitable and inclusive access programs and the ability to secure inventory on a timely basis.

Barnes & Noble Education's business is highly seasonal, particularly with respect to textbook sales and rentals, with the major portion of sales and operating profit realized during the second and third fiscal quarters when college students generally purchase and rent textbooks for the upcoming semesters and lowest in the first and fourth fiscal quarters.

Barnes & Noble Education's quarterly results also may fluctuate depending on the timing of the start of the various schools’ semesters, as well as shifts in its fiscal calendar dates.

As the concentration of digital product sales increases, revenue will be recognized earlier during the academic term as digital textbook revenue is recognized when the customer accesses the digital content compared to:

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Restricted Cash

As of June 30, 2024, Barnes & Noble Education had restricted cash of $ 14.6 million, comprised of $ 13.6 million in Prepaid and other current assets in the c ondensed consolidated balance sheets related to segregated funds for commission due to Lids for logo merchandise sales as per the Lids service provider merchandising agreement and $ 1.0 million in Other assets-noncurrent in the condensed consolidated balance sheet related to amounts held in trust for future distributions related to employee benefit plans.

As of October 31, 2024 , Barnes & Noble Education had restricted cash of $ 17.3 million, comprised of $ 14.9 million in Prepaid expenses and other current assets in the C ondensed Consolidated Balance Sheet related to segregated funds for commission due to Lids for logo merchandise sales as per the Lids service provider merchandising agreement and $ 2.4 million in Other assets-noncurrent in the condensed consolidated balance sheet related to amounts held in trust for future distributions related to employee benefit plans.

The restricted cash was part of net assets acquired as part of the Transactions (defined below).

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Merchandise inventories, which consist of finished goods, are stated at the lower of cost or market.

Market value of Barnes & Noble Education's inventory, which is all purchased finished goods, is determined based on its estimated net realizable value, which is generally the selling price less normally predictable costs of disposal and transportation.

The market value of Barnes & Noble Education's inventory, which is all purchased finished goods, is determined based on its estimated net realizable value, which is generally the selling price less normally predictable costs of disposal and transportation.

Reserves for non-returnable inventory are based on our history of liquidating non-returnable inventory, which includes certain significant assumptions, including markdowns, sales below cost, inventory aging and expected demand.

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Textbook and trade book inventories are valued using the LIFO method and the related reserve was not material to the recorded amount of inventories.

There were no LIFO adjustments during the period from June 10, 2024 to June 30, 2024.

There were no LIFO adjustments during the period from June 10, 2024, to October 31, 2024.

For the physical bookstores, Barnes & Noble Education also estimates and accrues shortage for the period between the last physical count of inventory and the balance sheet date.

Shortage rates are estimated and accrued based on historical rates and can be affected by changes in merchandise mix and changes in actual shortage trends.

On June 10, 2024, Immersion acquired $ 336.7 million in merchandise inventory, measured at fair value, as part of the Transactions (defined below).

On June 10, 2024, Immersion acquired $ 336.7 million in the merchandise inventory, measured at fair value, as part of the Transactions (defined below).

Textbook Rental Inventories

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On June 10, 2024, Immersion acquired $ 9.8 million in rental textbook inventory, measured at fair value, as part of the Transactions (defined below).

Barnes & Noble Education recognizes lease assets and lease liabilities on the condensed consolidated balance sheet for substantially all lease arrangements as required by the Financial Accounting Standard Board (“FASB”) Accounting Standards Codification (“ASC ”) 842 , Leases (Topic 842 ).

Its portfolio of leases consists of operating leases comprised of operations agreements which grant Barnes & Noble Education the right to operate on-campus bookstores at colleges and universities;

real estate leases for office and warehouse operations;

and vehicle leases.

Barnes & Noble Education does not have finance leases.

Barnes & Noble Education recognize a right of use (“ROU”) asset and lease liability in the condensed consolidated balance sheet for leases with a term greater than twelve months.

Options to extend or terminate a lease are included in the determination of the ROU asset and lease liability when it is reasonably certain that such options will be exercised.

The lease terms generally range from one year to fifteen years and a number of agreements contain minimum annual guarantees, many of which are adjusted at the start of each contract year based on the actual sales activity of the leased premises for the most recently completed contract year.

Payment terms are based on the fixed rates explicit in the lease, including minimum annual guarantees, and/or variable rates based on:

i) a percentage of revenues or sales arising at the relevant premises (“variable commissions”), and/or ii) operating expenses, such as common area charges, real estate taxes and insurance.

For contracts with fixed lease payments, including those with minimum annual guarantees, Barnes & Noble Education recognizes lease expense on a straight-line basis over the lease term or over the contract year in order to best reflect the pattern of usage of the underlying leased asset and our minimum obligations arising from these types of leases.

Barnes & Noble Education's lease agreements do not contain any material residual value guarantees, material restrictions or covenants.

Barnes & Noble Education recognizes lease assets and lease liabilities on the Condensed Consolidated Balance Sheet for all operating lease arrangements based on the present value of future lease payments as required by Accounting Standards Codification (“ASC”) Topic 842 , Leases.

Barnes & Noble Education does not recognize lease assets or lease liabilities for short-term leases (i.e., those with a term of twelve months or less).

Barnes & Noble Education recognizes lease expense on a straight-line basis over the lease term for contracts with fixed lease payments, including those with fixed annual minimums, or over a rolling twelve -month period for leases where the annual guarantee resets at the start of each contract year, in order to best reflect the pattern of usage of the underlying leased asset.

Barnes & Noble Education recognizes lease expense related to college and university contracts, inclusive of the amortization of the unfavorable lease terms determined at the acquisition date of June 10, 2024, as cost of sales in the C ondensed Consolidated Statements of Operations and Barnes & Noble Education recognizes lease expense related to its various office spaces as selling and administrative expenses in the Condensed Consolidated Statements of Operations.

For leases entered into after June 10, 2024, Barnes & Noble Education uses its incremental borrowing rates to determine the present value of fixed lease payments based on the information available at the commencement date, as the rate implicit in the lease is not readily determinable.

Barnes & Noble Education utilizes an estimated collateralized incremental borrowing rate as of the effective date or the commencement date of the lease, whichever is later.

Property and Equipment

Property and equipment are carried at cost, less accumulated depreciation and amortization.

Depreciation and amortization is computed using the straight-line method over estimated useful lives.

Maintenance and repairs are expensed as incurred, however major maintenance and remodeling costs are capitalized if they extend the useful life of the asset.

Revenue Recognition and Deferred Revenue

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Revenue from sales of products is recognized at the point in time when control of the products is transferred to its customers in an amount that reflects the consideration it expects to be entitled to in exchange for the products.

Product revenue is recognized when the customer takes physical possession of its products, which occurs either at the point of sale for products purchased at physical locations or upon receipt of our products by customers for products ordered through websites and virtual bookstores.

Product revenue shipped from wholesale operations are recognized upon shipment of physical textbooks at which point title passes and risk of loss is transferred to the customer.

Additional revenue is recognized for shipping charges billed to customers and shipping costs are accounted for as fulfillment costs within cost of sale.

Revenue from the sale of digital textbooks, which contains a single performance obligation, is recognized when the customer accesses the digital content as product revenue.

A software feature is embedded within the content of digital textbooks, such that upon expiration of the term the customer is no longer able to access the content.

While the sale of the digital textbook allows the customer to access digital content for a fixed period of time, once the digital content is delivered to the customer, the performance obligation is complete.

Revenue from the rental of physical textbooks is deferred and recognized over the rental period based on the passage of time commencing at the point of sale, when control of the product transfers to the customer and is recognized as rental income in the condensed consolidated financial statements.

Product sales is recognized when the customer takes physical possession of its products, which occurs either at the point of sale for products purchased at physical locations or upon receipt of products by its customers for products ordered through websites and virtual bookstores.

Product sales shipped from Barnes & Noble Education's wholesale operations are recognized upon shipment of physical textbooks at which point title passes and risk of loss is transferred to the customer.

Additional revenue is recognized for shipping charges billed to customers and shipping costs are accounted for as fulfillment costs within cost of sales.

Revenue from the sale of digital textbooks, which contains a single performance obligation, is recognized when the customer accesses the digital content as product sale in Barnes & Noble Education's condensed consolidated financial statements.

A software feature is embedded within the content of Barnes & Noble Education's digital textbooks, such that upon expiration of the term the customer is no longer able to access the content.

While the sale of the digital textbooks allow the customer to access digital content for a fixed period of time, once the digital content is delivered to customers, the performance obligation is complete.

Rental periods are typically for a single semester and are always less than one year in duration.

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In these instances, Barnes & Noble Education accelerates any remaining deferred rental revenue at the point of sale.

Revenue recognized for BNC First Day offerings is consistent with Barnes & Noble Education's policies outlined above for product, digital and rental sales, net of an anticipated opt-out or return provision.

Revenue recognized for the BNC First Day offerings is consistent with Barnes & Noble Education's policies outlined above for product, digital and rental sales, net of an anticipated opt-out or return provision.

Given the growth of BNC First Day programs, the timing of cash collection from Barnes & Noble Education's school partners may shift to periods subsequent to when the revenue is recognized.

When a school adopts our BNC First Day equitable and inclusive access offerings, cash collection from the school generally occurs after the institution's drop/add dates, which is later in the working capital cycle, particularly in Barnes & Noble Education's third quarter given the timing of the Spring Term and its quarterly reporting period, as compared to direct-to-student point-of-sale transactions where cash is generally collected during the point-of-sale transaction or within a few days from the credit card processor.

When a school adopts our BNC First Day affordable textbook access offerings, cash collection from the school generally occurs after the institution's drop/add dates, which is later in the working capital cycle, particularly in Barnes & Noble Education's third quarter given the timing of the Spring Term and its quarterly reporting period, as compared to direct-to-student point-of-sale transactions where cash is generally collected during the point-of-sale transaction or within a few days from the credit card processor.

Barnes & Noble Education estimates returns based on an analysis of historical experience.

A provision for anticipated merchandise returns is provided through a reduction of sales and cost of sale in the period that the related sales are recorded.

A provision for anticipated merchandise returns is provided through a reduction of sales and cost of sales in the period that the related sales are recorded.

For sales and rentals involving third-party products, Barnes & Noble Education evaluates whether it is acting as a principal or an agent.

This determination is based on Barnes & Noble Education's evaluation of whether it controls the specified goods or services prior to transferring them to the customer.

There are significant judgments involved in determining whether Barnes & Noble Education controls the specified goods or services prior to transferring them to the customer including whether Barnes & Noble Education has the ability to direct the use of the good or service and obtain substantially all of the remaining benefits from the good or service.

For those transactions where Barnes & Noble Education is the principal, it records revenue on a gross basis, and for those transactions where it is an agent to a third-party, it records revenue on a net basis.

There are significant judgments involved in determining whether Barnes & Noble Education controls the specified goods or services prior to transferring them to the customer, including whether we have the ability to direct the use of the good or service and obtain substantially all of the remaining benefits from the good or service.

For those transactions where Barnes & Noble Education is the principal, it records revenue on a gross basis, and for those transactions where Barnes & Noble Education is an agent to a third-party, it records revenue on a net basis.

As the logo and emblematic general merchandise sales are fulfilled by Lids and Fanatics Retail Group Fulfillment, LLC (“Fanatics”, collectively, F/L Relationship), Barnes & Noble Education recognizes commission revenue earned for these sales on a net basis in its condensed consolidated financial statements.

Barnes & Noble Education does not have gift cards or customer loyalty programs.

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Service and other revenue

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

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

Brand marketing agreements often include multiple performance obligations which are individually negotiated with Barnes & Noble Education's customers.

For these arrangements that contain distinct performance obligations, Barnes & Noble Education allocates the transaction price based on the relative standalone selling price method by comparing the standalone selling price (“SSP”) of each distinct performance obligation to the total value of the contract.

The revenue is recognized as each performance obligation is satisfied, typically at a point in time for brand marketing service and overtime for advertising efforts as measured based upon the passage of time for contracts that are based on a stated period of time or the number of impressions delivered for contracts with a fixed number of impressions.

Deferred Revenue

Deferred revenue represents an obligation to transfer goods or services to a customer for which we have received consideration and consists of our deferred revenue liability (deferred revenue).

Deferred revenue consists of the following:

advanced payments from customers related to textbook rental performance obligations, which are recognized ratably over the terms of the related rental period;

unsatisfied performance obligations associated with brand partnership marketing services, which are recognized when the contracted services are provided to our brand partnership marketing customers;

and unsatisfied performance obligations associated with the premium paid for the sale of treasury shares, which are expected to be recognized over the term of the e-commerce and merchandising contracts for Fanatics and Lids, respectively .

The revenue is recognized as each performance obligation is satisfied, typically at a point in time for brand marketing service and over time for advertising efforts as measured based upon the passage of time for contracts that are based on a stated period of time or the number of impressions delivered for contracts with a fixed number of impressions.

Cost of Sales

Cost of sales primarily includes costs such as merchandise costs, textbook rental amortization, content development cost amortization, warehouse costs related to inventory management and order fulfillment, insurance, certain payroll costs, and management service agreement costs, including rent expense, related to our college and university contracts and other facility related expenses.

Rent expense is inclusive of the amortization of unfavorable lease terms that was recognized at the Closing Date.

Except as set forth herein, there are no other changes in our significant accounting policies.

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Recent Accounting Pronouncements Not Yet Adopted

In November 2024, the Financial Accounting Standards Board (‘FASB’) issued Accounting Standards Update (ASU) 2024 - 03 , Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures .

The ASU requires a public business entity to provide disaggregated disclosures of certain categories of expenses on an annual and interim basis including purchases of inventory, employee compensation, depreciation, and intangible asset amortization for each income statement line item that contains those expenses.

This ASU is effective for annual and interim periods beginning after December 15, 2026 (our 2028 fiscal year ), with early adoption permitted.

We are currently assessing this guidance and determining the impact on our condensed consolidated financial statements .

In December 2023, the FASB issued ASU No.

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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 will be effective for the fiscal year beginning May 1, 2025.

The guidance does not affect recognition or measurement in our consolidated financial statements.

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Improvements to Reportable Segment Disclosures to improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses.

This guidance will be effective for us for the annual report for the fiscal year ending December 31, 2024 and subsequent interim periods.

This guidance will be effective for us for the annual report for the fiscal year ending April 30, 2025, and subsequent interim periods.

Early adoption is permitted, and retrospective adoption is required for all prior periods presented.

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On June 10, 2024 (“Closing Date”), the Transactions (defined below) were consummated pursuant to the terms of the Purchase Agreement among Barnes & Noble Education and the Purchasers (as defined in the Purchase agreement) , following Barnes & Noble Education’s receipt of the requisite approval of its stockholders at a special meeting of its stockholders held on June 5, 2024.

The f ollowing is presented on a post-reverse stock split basis, which is defined as a reverse stock split of Barnes & Noble Education’s outstanding shares of Common Stock at a ratio of 1-for-100 , effective as of June 11, 2024.

The following is presented on a post-reverse stock split basis, which is defined as a reverse stock split of Barnes & Noble Education’s outstanding shares of common stock at a ratio of 1-for-100, effective as of June 11, 2024.

Pursuant to the terms of the Purchase Agreement, Barnes & Noble Education conducted a rights offering (the “Rights Offering”), whereby Barnes & Noble Education distributed at no charge to the holders of its common stock (“BNED Common Stock”) non-transferable subscription rights (“Rights”) to purchase up to an aggregate of 9,000,000 new shares of BNED Common Stock (the “Offered Shares”) at a subscription price of $ 5.00 per share (the “Subscription Price”).

On the Closing Date, Barnes & Noble Education issued the Offered Shares, which generated $ 45,000,000 in gross proceeds, including $ 10,033,507 of Offered Shares purchased by Toro 18 Holdings, LLC (“Investor”) pursuant to the Backstop Commitment (as defined in the Purchase Agreement).

On the Closing Date, Barnes & Noble Education issued the Offered Shares, which generated $ 45 million in gross proceeds, including approximately $ 10 million of Offered Shares purchased by Toro 18 Holdings LLC, a wholly-owned subsidiary of Immersion, (“Investor”) pursuant to the Backstop Commitment (as defined in the Purchase Agreement).

Pursuant to the Backstop Commitment, Immersion through Investor, purchased 2,006,701 shares of BNED Common Stock.

Barnes & Noble Education reimbursed Immersion, through Investor, for reasonable legal and other expenses in connection with the Transactions in the amount of $ 2,450,000 .

Barnes & Noble Education also paid an amount equal to $ 2,450,000 to Immersion, through Investor, as payment in consideration for its Backstop Commitment.

In addition to the Rights Offering, Immersion, through Investor, purchased from Barnes & Noble Education an aggregate of 9,000,000 new shares of BNED Common Stock at the Subscription Price for a purchase price of $ 45,000,000 (the “PIPE Transaction”, and together with the Rights Offering, the “Transactions”).

Barnes & Noble Education reimbursed Immersion, through Investor, for reasonable legal and other expenses in connection with the Transactions in the amount of $ 2.5 million.

Barnes & Noble Education also paid an amount equal to $ 2.5 million to Immersion, through Investor, as payment in consideration for its Backstop Commitment.

In addition to the Rights Offering, Immersion, through Investor, purchased from Barnes & Noble Education an aggregate of 9,000,000 new shares of BNED Common Stock at the Subscription Price for a purchase price of $ 45 million (the “PIPE Transaction”, and together with the Rights Offering, the “Transactions”).

As a result of the Transactions, Barnes & Noble Education received a total of $ 95 million in gross proceeds, of which $ 80.7 million was used to reduce its outstanding debt.

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Singer, Martin and Nader and Ms.

Hoffman are current members of the Company’s board of directors.

In addition, at the closing, Sean Madnani was appointed to the BNED Board along with two existing directors, Kathryn Eberle Walker and Denise Warren who will each continue to serve on the Barnes & Noble Education's Board following the Closing.

As part of the Transactions, the Company acquired 42 % of all outstanding common shares of Barnes & Noble Education, as well as control over Barnes & Noble Education through the five Immersion-appointed board seats.

Hoffman are current members of our Board.

In addition, at the closing, Sean Madnani was appointed to the Barnes & Noble Education Board along with two existing directors, Kathryn Eberle Walker and Denise Warren who will each continue to serve on the BNED Board following the Closing.

As part of the Transactions, we acquired 42 % of all outstanding common shares of Barnes & Noble Education, as well as control over Barnes & Noble Education through the five Immersion-appointed board seats.

The total consideration transferred was approximately $ 50.1 million, consisting of $ 52.2 million in cash consideration paid to Barnes & Noble Education less $ 2.1 million in transaction costs incurred by Immersion but reimbursed by Barnes & Noble Education.

For the six months ended June 30, 2024 , Immersion incurred costs related to this acquisition of $ 1.2 million, inclusive of the expenses reimbursed by Barnes & Noble Education, that were expensed as incurred and recorded in general and administrative expenses in the accompanying consolidated statement of operations.

For the six months ended October 31, 2024 , Immersion incurred costs related to this acquisition of $ 1.2 million, inclusive of the expenses reimbursed by Barnes & Noble Education, that were expensed as incurred and recorded in general and administrative expenses in the accompanying consolidated statement of operations.

The acquisition aims to expand Immersion's offerings, increase its customer reach, and diversify into the education sector.

The acquisition was accounted for as a business combination and the total purchase price was allocated to the net tangible and intangible assets and liabilities based on their fair values on the acquisition date with the excess recorded as goodwill.

The Company expects to continue to obtain information to assist in determining the fair value of the net assets acquired as of the Closing Date while the measurement period remains open, which will not exceed one year from the acquisition date.

We expect to continue to obtain information to assist in determining the fair value of the net assets acquired as of the Closing Date while the measurement period remains open, which will not exceed one year from the acquisition date.

Measurement period adjustments related to the acquisition will be applied retrospectively to the Closing Date.

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Total intangible assets

Trade name represent Barnes & Noble Education’s right to its trade name on a perpetual, royalty-free basis as it existed on the acquisition closing date.

Customer relationships consist of distinct value associated with Barnes & Noble Education's large operating footprint with direct access to students and faculty across a diverse customer base.

The Company used the assistance of a third-party firm to estimate the fair value of the intangible assets acquired.

The Company used an income approach to estimate the fair values of the trade names and customer relationships .

Trade name represents Barnes & Noble Education’s right to its trade name on a perpetual, royalty-free basis as it existed on the acquisition Closing Date.

Customer relationships consist of distinct values associated with Barnes & Noble Education’s large operating footprint with direct access to students and faculty across a diverse customer base.

We used the assistance of a third-party firm to estimate the fair value of the intangible assets acquired.

We used an income approach to estimate the fair values of the trade names and customer relationships .

The fair values assigned to identifiable intangible assets were determined through the use of the income approach, specifically the relief from royalty and the multi-period excess earnings methods.

The major assumptions used to estimate the values of identifiable intangible assets include management’s estimates of future revenue, adjusted for growth and attrition based on historical data and management's forward-looking expectations.

These cash flows were discounted at a rate of 21 %, which reflects the Company’s cost of equity.

The useful lives for intangible assets were determined based upon the remaining useful economic lives of the intangible assets that are expected to contribute directly or indirectly to future cash flows.

These cash flows were discounted at a rate of 21 %, which reflects our cost of equity.

Goodwill generated from this acquisition is primarily attributed to the value of Barnes & Noble Education’s assembled workforce.

Goodwill is not amortized and is tested for impairment at least annually or whenever events or changes in circumstances indicate that the carrying value may not be recoverable.

The Company’s entire goodwill balance is associated with the Barnes & Noble Education reporting unit.

Our entire goodwill balance is associated with the Barnes & Noble Education reporting unit.

Goodwill is not deductible for tax purposes.

The Company acquired a deferred tax asset of $ 0.7 million, recorded and a deferred tax liability of $ 1.3 million, recorded under Deferred tax liabilities, net – noncurrent, as part of this business combination, as shown in the accompanying consolidated balance sheet.

The Company also engaged a third-party valuation firm to estimate the fair value of the property and equipment and inventory acquired.

We acquired a deferred tax asset of $ 0.7 million, recorded and a deferred tax liability of $ 1.3 million, recorded under Deferred tax liabilities, net – noncurrent, as part of this business combination, as shown in the accompanying consolidated balance sheet.

We also used the assistance of a third-party valuation firm to estimate the fair value of the property and equipment, and inventory acquired.

The fair value as of the Closing Date reflects a step-up in basis due to the highly depreciable nature of the property and equipment.

No material fair value adjustments for inventory were identified, as there are minimal costs associated with procurement.

Most of the net tangible assets were valued at their respective carrying amounts as of the acquisition date, as the Company believes that these amounts approximate their current fair values.

Most of the net tangible assets were valued at their respective carrying amounts as of the acquisition date, as we believe that these amounts approximate their current fair values.

The leases acquired were recorded at their respective fair values as of the acquisition date.

The acquired entity’s results of operations were included in the Company's condensed consolidated financial statements from the date of acquisition, June 10, 2024, as adjusted for specific fair value adjustments discussed above.

For the three and six months ended June 30, 2024, Barnes & Noble Education contributed net operating revenue of $ 47.0 million, which is reflected in the accompanying condensed consolidated statement of operations.

For the three and six months ended June 30, 2024, Barnes & Noble Education contributed a net loss of $ 14.1 million, which is reflected in the accompanying condensed consolidated statement of operations.

The acquired entity’s results of operations were included in our condensed consolidated financial statements from the date of acquisition, June 10, 2024, as adjusted for specific fair value adjustments discussed above.

For the month ended July 31, 2024, the three and six months ended October 31, 2024 , Barnes & Noble Education contributed net operating revenue of $ 88.0 million, $ 602.1 million and $ 737.2 million, respectively, which is reflected in the accompanying Condensed Consolidated Statement of Operations .

The following unaudited pro forma condensed combined financial information gives effect to the acquisition of Barnes & Noble Education as if it was consummated on January 1, 2023 (the beginning of the comparable prior reporting period), and includes pro forma adjustments related to the amortization of acquired intangible assets, stock-based compensation expense, and direct and incremental transaction costs reflected in the historical financial statements.

Specifically, the following nonrecurring adjustments were made:

For the three and six months ended June 30, 2024, the Company’s direct and incremental acquisition-related expenses of $ 1.2 million and one-time severance payment of $ 1.5 million are excluded from the pro forma condensed combined net loss.

For the three and six months ended June 30, 2023 , respectively, the Company’s direct and incremental acquisition-related expenses of $ 1.2 million and one -time severance payment of $ 1.5 million are included in the pro forma condensed combined net loss.

For the six months ended October 31, 2024 , our direct and incremental acquisition-related expenses of $ 1.2 million and one -time severance payment of $ 1.5 million are excluded from the pro forma condensed combined net income.

For the six months ended June 30, 2023 , our direct and incremental acquisition-related expenses of $ 1.2 million and one -time severance payment of $ 1.5 million are included in the pro forma condensed combined net loss.

This unaudited data is presented for informational purposes only and is not intended to represent or be indicative of the results of operations that would have been reported had the acquisition occurred on January 1, 2023.

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The following table presents the unaudited pro forma condensed combined financial information (in thousands):

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended

Six Months Ended

October 31, 2024

June 30, 2023

October 31, 2024

June 30, 2023

Net income (loss)

SEGMENT REPORTING

We operate as two operating and reportable segments, Immersion and Barnes & Noble Education.

We operate two operating and reportable segments, Immersion and Barnes & Noble Education.

Summarized financial information for our reportable segments is reported below (in thousands):

Three Months Ended June 30,

Six Months Ended June 30,

One Month Ended

Three Months Ended

Six Months Ended

July 31, 2024

October 31, 2024

June 30, 2023

October 31, 2024

June 30, 2023

Barnes & Noble Education

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Barnes & Noble Education

Operating income

Operating income (loss)

REVENUE RECOGNITION

Disaggregated Revenue

The following table presents the disaggregation of our revenue of Immersion for the three and six months ended June 30, 2024 and 2023 (in thousands):

Three Months Ended June 30,

Six Months Ended June 30,

The following table presents the disaggregation of our revenue of Immersion for the month ended July 31, 2024, and the three and six months ended October 31, 2024 and June 30, 2023 (in thousands):

One Month Ended

Three Months Ended

Six Months Ended

July 31, 2024

October 31, 2024

June 30, 2023

October 31, 2024

June 30, 2023

Fixed fee license revenue

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Total revenues

Per-unit Royalty Revenue

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 our licensees.

In the three months ended June 30, 2024 , we recorded no adjustments to royalty revenue recognized in the previous quarter.

In the three months ended October 31, 2024 , we recorded no adjustments to royalty revenue recognized in the previous quarter.

We recorded adjustments of $ 0.3 million to increase royalty revenue during the three months ended June 30, 2023 .

Contract Assets

As of June 30, 2024 , we had contract assets of $ 2.8 million included within Prepaid expenses and other current asset s and $ 33.7 million within Other assets on the Condensed Consolidated Balance Sheets .

As of December 31, 2023 , we had contract assets of $ 7.7 million included within Prepaid expenses and other current assets , and $ 0.1 million included within Other assets on the Condensed Consolidated Balance Sheets .

Based on contracts signed and payments received as of June 30, 2024 , we expect to recognize $ 20.7 million in revenue under our fixed fee license agreements, which are satisfied over time, including $ 16.7 million over one to three years and $ 4.1 million over more than three years.

Contract assets increased by $ 28.3 million from January 1 , 2024 to June 30, 2024 , primarily due to increase in unbilled revenue related to the new contracts we entered into during the six months ended June 30, 2024 .

As of October 31, 2024 , we had contract assets of $ 6.7 million included within Prepaid expenses and other current asset s and $ 24.3 million within Other assets -noncurrent on the Condensed Consolidated Balance Sheets .

As of April 30, 2024 , we had contract assets of $ 6.6 million included within Prepaid expenses and other current assets on the Condensed Consolidated Balance Sheets .

Contract assets increased by $ 24.4 million from May 1 , 2024 , to October 31, 2024 , primarily due to an increase in unbilled revenue related to the new contracts we entered into during the six months ended October 31, 2024 .

Deferred Revenue

The following table presents changes in deferred revenue associated with Immersion’s contract liabilities (in thousands):

J une 30 , 2024

Deferred revenue at the beginning of period

October 31, 2024

June 30, 2023

Deferred revenue beginning of the period

Additions to deferred revenue during the period

Reductions to deferred revenue for revenue recognized during the period

Deferred revenue balance at the end of period:

Deferred revenue balance end of the period

Based on contracts signed and payments received as of October 31, 2024 , we expect to recognize $ 10.2 million in revenue under our fixed fee license agreements, which are satisfied over time, including $ 7.4 million over one to three years and $ 2.8 million over more than three years.

Barnes & Noble Education

Disaggregated Revenue

The following table disaggregated the revenue associated with our major product and service offerings (in thousands):

June 10 2024, to June 30, 2024

The follo wing table disaggregated the revenue associated with our ma jor products and service offerings (i n thousands) :

One Month Ended July 31, 2024

Three Months Ended October 31, 2024

From June 10, 2024 to October 31, 2024

Course material sale

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The following table presents changes in deferred revenue associated with Barnes & Noble Education's contract liabilities (in thousands):

June 30, 2024

October 31, 2024

Deferred revenue as of the acquisition date

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Deferred revenue balance at the end of period

As of D ecember 31 , 2022 , total deferred revenue was $ 17.4 million.

We recognized $ 2.3 million of deferred revenue during the six months ended June 30, 2023.

INVESTMENTS AND FAIR VALUE MEASUREMENTS

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.

A summary of our investments in marketable equity and debt securities as of June 30, 2024, are as follows:

A summary of our investments in marketable equity and debt securities as of October 31, 2024, is as follows:

Investments - current were as follows (in thousands):

June 30, 2024

December 31, 2023

October 31, 2024

April 30, 2024

Marketable equity securities

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Investments- noncurrent were as follows (in thousands):

June 30, 2024

December 31, 2023

October 31, 2024

April 30, 2024

treasury securities

Marketable debt securities

Corporate bonds

Investments- noncurrent

Marketable Securities

Marketable securities as of June 30, 2024 and December 31, 2023 consisted of the following (in thousands):

June 30, 2024

Marketable securities as of October 31, 2024 and April 30, 2024 consisted of the following (in thousands):

October 31, 2024

Cost or Amortized Cost

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Total marketable debt securities

December 31, 2023

April 30, 2024

Cost or Amortized Cost

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Total marketable debt securities

The amortized costs and fair value of our marketable debt securities, by contractual maturity, as of June 30, 2024 (in thousands) are as follows:

June 30, 2024

The amortized costs and fair value of our marketable debt securities, by contractual maturity, as of October 31, 2024 (in thousands) are as follows:

October 31, 2024

Amortized Cost

Less than 1 year

As of June 30, 2024 , the fair value of corporate bonds with unrealized loss position was $ 8.7 million , with an aggregated loss of $ 0.4 million.

As June 30, 2024, the fair value of U.S.

treasury securities with unrealized loss position was $ 6.6 million, with an aggregated loss of $ 16,000 .

As of December 31, 2023, the fair value of available-for-sale debt securities in unrealized loss position for corporate bonds and U.S.

As of October 31, 2024 , the fair value of corporate bonds with unrealized loss position was $ 10.8 million , with an aggregated loss of $ 22,000 .

There were no U.S.treasury with unrealized loss position at October 31.

As of April 30, 2024, the fair value of available-for-sale debt securities in unrealized loss position for corporate bonds and U.S.

treasury securities were $ 5.6 million and $ 25.2 million, respectively, with an aggregated loss of $ 0.1 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 June 30, 2024 and December 31, 2023 .

We had no credit-related impairment loss as of October 31, 2024 and April 30, 2024 .

Derivative Financial Instruments

Our derivative instruments consisted of call and put options sold at their fair value as of the balance sheet date.

These derivative instruments are reported as Other current liabilities on our Condensed Consolidated Balance Sheets as of June 30, 2024 and December 31, 2023 (in thousands):

June 30, 2024

Unrealized Losses

These derivative instruments are reported as Other current liabilities on our Condensed Consolidated Balance Sheets as of October 31, 2024 and April 30, 2024 (in thousands):

October 31, 2024

Unrealized Gains

Derivative instruments

December 31, 2023

Unrealized Losses

April 30, 2024

Unrealized Gains

Derivative instruments

A summary of realized and unrealized gains and losses from our equity securities and derivative instruments and realized gains

and losses from our marketable debt securities are as follows (in thousands):

Three Months Ended June 30,

Six Months Ended June 30,

A summary of realized and unrealized gains and losses from our equity securities and derivative instruments and realized gains and losses from our marketable debt securities are as follows (in thousands):

One Month Ended

Three Months Ended

Six Months Ended

July 31, 2024

October 31, 2024

June 30, 2023

October 31, 2024

June 30, 2023

Net unrealized gains (losses) recognized on marketable equity securities

Net realized gains recognized on marketable equity securities

Net unrealized losses recognized on derivative instruments

Net unrealized gains (losses) recognized on derivative instruments

Net realized gains recognized on derivative instruments

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Fair Value Measurements

Our financial instruments include cash and

cash equivalents, receivables, accrued liabilities and accounts payable.

fair value of cash and cash equivalents, receivables, accrued liabilities and

accounts payable approximates their carrying values because of the short-term

nature of these instruments, which are all considered Level 1.

The fair value

of long-term debt approximates its carrying value.

Our financial instruments include cash and cash equivalents, receivables, accrued liabilities and accounts payable.

The fair value of cash and cash equivalents, receivables, accrued liabilities and accounts payable approximates their carrying values because of the short-term nature of these instruments, which are all considered Level 1 .

The fair value of long-term debt approximates its carrying value.

Our financial instruments measured at fair value on a recurring basis consisted of U.S.

treasury securities, equity securities, corporate bonds and derivatives.

treasury securities and 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 bonds 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.

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.

treasury securities, corporate bonds 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.

Financial instruments value d 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 June 30, 2024 , and December 31, 2023 .

Financial instrume nts measured at fa ir value on a recurring basis as of June 30, 2024 and December 31, 2023 are classified based on the valuation technique in the table below (in thousands):

June 30, 2024

We did not hold Level 3 financial instruments as of October 31, 2024 , and April 30, 2024 .

Financial instrument s measured at fa ir value on a recurring basis as of October 31, 2024 and April 30, 2024 are classified based on the valuation technique in the table below (in thousands):

October 31, 2024

Fair Value Measurements Using

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Total liabilities at fair value

December 31, 2023

April 30, 2024

Fair Value Measurements Using

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The following table summarizes additional information related to Immersion’s operating leases:

October 31, 2024

June 30, 2023

Weighted average remaining lease terms (in years)

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Barnes & Noble Education

Barnes & Noble Education leases the right to

operate on-campus bookstores at colleges and universities, office space and

vehicles under operating leases in accordance with the provisions of ASC Topic

842, with expiration dates on or before June 30, 2033.

Barnes & Noble Education recognizes

lease expense on a straight line basis over the lease term or over the contract

year in order to best reflect the pattern of the underlying leased asset.

Leases with an initial term of twelve months or less are not recorded on the condensed

consolidated balance sheets.

Barnes and Noble Education combines lease and

non-lease components for new and reassessed leases, and applies discount rates

to operating leases under a portfolio approach.

Barnes & Noble Education used its

incremental borrowing rates to determine the present value of fixed lease

payments based on the information available on June 10, 2024 (“Closing Date”,

as discussed in Note 2, Business Combinations), as the rate implicit in the

lease is not readily determinable.

It utilized an estimated collateralized

incremental borrowing rate as of the Closing Date.

The Company also evaluated

the leases for unfavorable terms and recorded an adjustment for unfavorable

market terms of $ 32.0 million.

Unfavorable lease liabilities are presented net

of the corresponding right of use asset.

Barnes & Noble Education leases the right to operate on-campus bookstores at colleges and universities, office space and vehicles under operating leases in accordance with the provisions of ASC Topic 842 , with expiration dates on or before June 30, 2033.

Barnes & Noble Education recognizes lease expense on a straight-line basis over the lease term or over the contract year in order to best reflect the pattern of the underlying leased asset.

Leases with an initial term of twelve months or less are not recorded on the Condensed Consolidated Balance Sheets.

Barnes & Noble Education combines lease and non-lease components for new and reassessed leases, and applies discount rates to operating leases under a portfolio approach.

Barnes & Noble Education used its incremental borrowing rates to determine the present value of fixed lease payments based on the information available on June 10, 2024 (“Closing Date”, as discussed in Note 2 , Business Combinations), as the rate implicit in the lease is not readily determinable.

It utilized an estimated collateralized incremental borrowing rate as of the Closing Date.

The Company also evaluated the leases for unfavorable terms and recorded an adjustment for unfavorable market terms of $ 32.0 million.

Unfavorable lease liabilities are presented net of the corresponding right of use asset.

The following table summarizes additional information related to Barnes & Noble Education’s operating leases:

June 30, 2024

Weighted average remaining lease terms (in years)

One Month Ended

July 31, 2024

Three Months Ended October 31, 2024

From June 10, 2024 to October 31, 2024

Operating lease cost

Variable lease payments

Sublease income

Total lease cost

For the period June 10, 2024 to October 31, 2024

Cash paid for amounts included in the measurement of lease liabilities

Operating lease right-of-use assets obtained in exchange for operating lease liabilities

Weighted-average remaining lease term (in years)

Weighted-average discount rate

GOODWILL AND INTANGIBLE ASSETS

The Company recognized $ 14.2 million in goodwill as the result of the business combination with Barnes & Noble Education on June 10, 2024, as further described in Note 2 .

We recognized $ 14.2 million in goodwill as the result of the business combination with BNED on June 10, 2024, as further described in Note 2 .

Business Combination.

The carrying value of goodwill as of June 30, 2024 and December 31, 2023 was $ 14.2 million and $ 0 , respectively.

In accordance with ASC Topic 350 , Intangibles - Goodwill and Other, the Company did not record any goodwill impairment losses during the three and six months ended June 30, 2024.

The carrying value of goodwill as of October 31, 2024 and April 30, 2024, were $ 14.2 million and $ 0 , respectively.

In accordance with ASC Topic 350 , Intangibles - Goodwill and Other, the Company did not record any goodwill impairment losses during the three and six months ended October 31, 2024 .

Goodwill represents the future economic benefit attributable to the Barnes & Noble Education's assembled workforce, which is not individually and separately recognized as an intangible asset.

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Intangible Assets, net

The following is a summary of intangible assets excluding goodwill recorded as intangible assets on our Condensed Consolidated Balance Sheets as of June 30, 2024 (in thousands):

As of June 30, 2024

The following is a summary of intangible assets excluding goodwill recorded as intangible assets on our Condensed Consolidated Balance Sheets as of October 31, 2024 (in thousands):

As of October 31, 2024

Gross Carrying Amount

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Trade name is determined to have an indefinite useful life and is not subject to amortization.

Amortization expense was $ 0.3 million for the three and six months ended June 30, 2024.

We did not have amortization expense in the three and six month ended in June 30, 2023.

Amortization expense was $ 0.3 million for the month ended July 31, 2024 .

Amortization expense was $ 1.0 million for the three months ended October 31, 2024 .

Amortization expense was $ 1.5 million for the period from June 10, 2024, to October 31, 2024.

Estimated amortization expense of the intangible assets to be recognized by the Company are as follows (in thousands):

Year ended December 31,

Year ended April 30,

Remainder of 2025

The following is a summary of Barnes & Noble Education's outstanding borrowing as of June 30, 2024 (in thousands):

The following is a summary of Barnes & Noble Education’s outstanding borrowing as of October 31, 2024 (in thousands):

Maturity Date

As of June 30, 2024

As of October 31, 2024

Total debt - Barnes & Noble credit facility

Balance sheet classification:

Short-term borrowings

Long-term borrowings

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Interest under the Restated ABL Facility accrues, at the election of Barnes & Noble Education, either (x) based on the Secured Overnight Financing Rate (“SOFR”) , which is subject to a floor of 2.5 % per annum, plus a spread of 3.5 % per annum or (y) at an alternate base rate , which is subject to a floor of 3.5 % per annum, plus a spread of 2.5 % per annum, provided that, in the event Barnes & Noble Education meets certain financial metrics for a consecutive six -month period beginning and ending after the one -year anniversary of the Closing Date, the foregoing spreads shall be reduced by 0.25 % per annum.

The Restated ABL Facility contains customary negative covenants that limit Barnes & Noble Education's ability to incur or assume additional indebtedness, grant or permit liens, make investments, make restricted payments and other specified payments, merge with other entities, dispose of or acquire assets, or engage in transactions with affiliates, among other things.

The Restated ABL Facility contains customary negative covenants that limit Barnes & Noble Education’s ability to incur or assume additional indebtedness, grant or permit liens, make investments, make dividend payments, make Restricted Payments (as defined under the Restated ABL Facility agreement) and other specified payments, merge with other entities, dispose of or acquire assets, or engage in transactions with affiliates, among other things.

Additionally, the Restated ABL Facility includes the following financial maintenance covenants:

following the date that is six months following the Closing Date, Barnes & Noble Education is required to maintain a minimum Availability (as defined in the Restated ABL Facility agreement ) of (x ) $ 25,000 for the first thirty ( 30 ) months after the Closing Date and (y) $ 30,000 after the date that is thirty ( 30 ) months after the Closing Date;

commencing with the month ending May 31, 2025, Barnes & Noble Education is required to maintain a Consolidated Fixed Charge Coverage Ratio (as defined in the Restated ABL Facility) of not less than 1.10 to 1.00 , which will be tested monthly on the last day of each fiscal month for the trailing 12 -month period;

commencing with the quarter ending October 31, 2024, Barnes & Noble Education is required to maintain a minimum Consolidated EBITDA (as defined in the Restated ABL Facility), which will be tested quarterly on the last day of each fiscal quarter for (a) the trailing six -month period for the first test date, (b) the trailing nine -month period of the second test date and (c) for the trailing 12 -month period thereafter

The Restated ABL Facility contains customary events of default, including for non-payment of obligations owing under the Restated ABL Facility, material breaches of representations and warranties, failure to perform or observe covenants, default on other material indebtedness, customary ERISA events of default, bankruptcy and insolvency, material judgments, invalidity of liens on collateral, change of control or cessation of business.

The Credit Agreement also contains customary affirmative covenants and representations and warranties.

following the date that is six months following the Closing Date, Barnes & Noble Education is required to maintain a minimum Availability (as defined in the Restated ABL Facility agreement ) of (x) $ 25 million for the first thirty ( 30 ) months after the Closing Date and (y) $ 30 million after the date that is thirty ( 30 ) months after the Closing Date;

commencing with the month ending on or about May 31, 2025, Barnes & Noble Education is required to maintain a Consolidated Fixed Charge Coverage Ratio (as defined in the Restated ABL Facility) of not less than 1.10 to 1.00 , which will be tested monthly on the last day of each fiscal month for the trailing 12 -month period;

commencing with the quarter ending on or about October 31, 2024, Barnes & Noble Education is required to maintain a minimum Consolidated EBITDA (as defined in the Restated ABL Facility), which will be tested quarterly on the last day of each fiscal quarter for (a) the trailing six -month period for the first test date, (b) the trailing nine -month period of the second test date and (c) for the trailing 12 -month period thereafter.

The Restated ABL Facility contains customary events of default, including for non-payment of obligations owing under the Credit Facility, material breaches of representations and warranties, failure to perform or observe covenants, default on other material indebtedness, customary ERISA events of default, bankruptcy and insolvency, material judgments, invalidity of liens on collateral, change of control or cessation of business.

The Restated ABL Facility also contains customary affirmative covenants and representations and warranties.

The credit facility is secured by substantially all of the inventory, accounts receivable and related assets of the borrowers under the credit facility.

This is considered an all asset lien (inclusive of proceeds from tax refunds payable to Barnes & Noble and pledge of equity from subsidiaries, exclusive of real estate).

In connection with the Restated ABL Facility, the 1.00 % fee payable in connection with the eighth amendment to the Restated ABL Facility (prior to its having been restated) is due and payable (x) 50 % on September 2, 2024, and (y) 50 % on June 10, 2025.

As of June 30, 2024, and through the date of this filing, Barnes & Noble Education was in compliance with all debt covenants under the Restated ABL Facility .

During the period June 10, 2024, to June 30, 2024, Barnes & Noble Education borrowed $ 101.5 million and repaid $ 16.1 million under the Restated ABL Facility , with $ 186.6 million of outstanding borrowings under the Restated ABL Facility as of June 30, 2024.

As of June 29, 2024, Barnes & Noble Education issued $ 3.6 million in letters of credit under the Restated ABL Facility .

This is considered an all asset lien (inclusive of proceeds from tax refunds payable to Barnes & Noble Education and pledge of equity from subsidiaries, exclusive of real estate).

None of the liabilities of Barnes & Noble Education have recourse to the general credit of Immersion Corporation.

In connection with the Restated ABL Facility, with respect to the 1.0 % fee payable in connection with the eighth amendment to the Restated ABL Facility (prior to its having been restated), (x) 50 % was paid on September 2, 2024, and (y) 50 % is due and payable on June 10, 2025.

As of October 31, 2024, and through the date of this filing, Barnes & Noble Education was in compliance with all debt covenants under the Restated ABL Facility.

During the period from June 10, 2024, to October 31, 2024, Barnes & Noble Education borrowed $ 404.1 million and repaid $ 327.8 million under the Restated ABL Facility , with $ 177.6 million of outstanding borrowings under the Restated ABL Facility as of October 31, 2024.

As of October 31, 2024, Barnes & Noble Education issued $ 3.6 million in letters of credit under the Restated ABL Facility .

STOCK-BASED COMPENSATION

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Stock options generally vest over four years and expire seven years from the applicable 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.

Market condition-based stock awards are subject to a market conditions 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 .

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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 June 30, 2024 is as follows (in thousands):

A summary of our equity incentive program as of October 31, 2024 is as follows (in thousands):

Common stock shares available for grant

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PSUs outstanding

As of June 30, 2024 , we did not have any outstanding stock options.

As of October 31, 2024 , we did not have any outstanding stock options.

Restricted Stock Units

The following summarizes RSU activities for the six months ended June 30, 2024 :

The following summarizes RSU activities for the six months ended October 31, 2024 :

Number of Restricted Stock Units (in thousands)

Weighted Average Grant Date Fair Value Per Share

Weighted Average Remaining Recognition Period (Years)

Weighted Average Remaining Contractual Term (Years)

Aggregate Intrinsic Value (in thousands)

Outstanding at December 31, 2023

Outstanding at June 30, 2024

Outstanding at April 30, 2024

Outstanding at October 31, 2024

The aggregate intrinsic value is calculated as the market value as of the end of the reporting period.

Restricted Stock Awards

The following summarizes RSA activities for the six months ended June 30, 2024 :

The following summarizes RSA activities for the six months ended October 31, 2024 :

Number of Restricted Stock Awards

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Weighted Average Remaining Recognition Period (Years)

Outstanding at December 31, 2023

Outstanding at June 30, 2024

Outstanding at April 30, 2024

Outstanding at October 31, 2024

Market Condition-Based Performance Stock Units

The following summarizes PSU activities for the six months ended June 30, 2024 :

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.

In March 2023, the Performance Milestone of the first tranche was achieved.

The second tranche Performance Milestone was achieved in the first quarter of fiscal 2025 .

In August 2024, the Performance Milestone of the third and final tranche was met.

As of October 31, 2024, 50,000 PSUs were outstanding and will be released upon the satisfaction of the services condition.

The following summarizes PSU activities for the six months ended October 31, 2024 :

Number of Market Condition-Based Performance Stock Units (in thousands)

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Weighted Average Remaining Recognition Period (Years)

Outstanding at December 31, 2023

Outstanding at June 30, 2024

Outstanding at April 30, 2024

Outstanding at October 31, 2024

Stock-based Compensation Expense

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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.

The stock-based compensation related to all of our stock-based awards for the three and six months ended June 30, 2024 , and 2023 is as follows (in thousands):

Three Months Ended June 30,

Six Months Ended June 30,

The stock-based compensation related to all of our stock-based awards for the month ended July 31, 2024, the three and six months ended October 31, 2024 , and June 30, 2023 is as follows (in thousands):

One Month Ended

Three Months Ended

Six Months Ended

July 31, 2024

October 31, 2024

June 30, 2023

October 31, 2024

June 30, 2023

Stock options

RSUs, RSAs and PSUs

As of June 30, 2024 , there was $ 4.3 million of unrecognized compensation cost adjusted for estimated forfeitures related to unvested, RSUs, RSAs and PSUs granted to our employees and directors.

As of October 31, 2024 , there was $ 5.6 million of unrecognized compensation cost adjusted for estimated forfeitures related to unvested, RSUs, RSAs and PSUs granted to our employees and directors.

This unrecognized compensation cost will be recognized over an estimated weighted-average period of approximately 1.2 years.

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Barnes & Noble Education

Barnes & Noble Education grants options, restricted stock awards and restricted stock units under the Barnes and Noble Education Equity Incentive Plan.

Barnes & Noble Education grants options, restricted stock awards and restricted stock units under the Barnes & Noble Education Equity Incentive Plan.

On June 10, 2024, as part of the business combination, we assumed the following equity awards:

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The total fair value of equity award assumed was $ 33,000 .

Total stock-based expense for the period from June 10, 2024, to June 30, 2024, was not material.

On June 19, 2024, Barnes & Noble Education granted 37,205 restricted stock units to various directors of Barnes & Noble Education.

The restricted stock units vest on the earlier of one year from the date of grant or the next annual meeting of stockholders of Barnes & Noble Education.

On June 18, 2024, Barnes & Noble Education granted 7,441 RSUs and 29,764 RSAs to the members of BNED Board.

These awards vested on September 18, 2024.

On September 20, 2024, Barnes & Noble Education granted 61,290 RSUs and 81,720 RSAs to members of BNED Board.

These awards vest on the earlier of one year from the date of grant or the next annual meeting of stockholders.

On September 20, 2024, Barnes & Noble Education granted 1,533,250 PSUs to employees that include both a service condition and market condition in order for PSUs to vest.

The PSUs vest upon BNED Common Stock achieving a specified price per share (measured using a 100 -day average volume weighted average price) for each of three tranches and continued employment through a specified date.

There is a period of seven years from the grant date in order to achieve the specific target share price.

We have determined the grant date fair value using the Monte Carlo simulation model and compensation expense is recognized ratably over the service derived period regardless of whether the market condition is satisfied.

The fair value models for the PSUs use assumptions that include the risk-free interest rate and expected volatility.

The risk-free interest rate is based on United States Treasury yields in effect at the date of grant for periods corresponding to the expected PSU term.

Volatility is based on the historical volatility of Barnes & Noble Education's common stock over a period of time corresponding to the expected PSU term.

PSU Tranche # 1

P SU Tranche # 2

PSU Tranche # 3

Performance Milestone (VWAP)

Valuation method utilized

Risk-free interest rate

Company volatility

Derived service period

Grant date fair value per award

Stock-based Compensation Expense

For the month ended July 31, 2024, the three months ended October 31, 2024, and the period from June 10, 2024, to October 31, 2024, the total stock-based compensation expense for options, RSAs, RSUs and PSUs were $ 0.1 million, $ 1.0 million and $ 1.1 million, respectively.

The total unrecognized compensation cost related to unvested awards as of October 31, 2024, was $ 15.2 million and is expected to be recognized over a weighted-average period of 1.8 years.

EMPLOYEE BENEFIT PLAN

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For all plans, Barnes & Noble Education is responsible to fund the employer contributions directly, if any.

There was no benefit expense for these plan during the period from June 10, 2024 to June 30, 2024 .

There was no benefit expense for these plans during the period from June 10, 2024, to October 26, 2024 .

STOCKHOLDERS’ EQUITY

Stock Repurchase Program

On December 29, 2022, our Board of Directors ( 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 stock repurchase program that had been approved by the Board on February 23, 2022.

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 stock repurchase program that had been approved by the Board on February 23, 2022.

Any stock repurchases may be made through open market and privately negotiated transactions, at such times and in such amounts as management deems appropriate, including pursuant to one or more Rule 10 b 5 - 1 trading plans adopted in accordance with Rule 10 b 5 - 1 of the Securities Exchange Act of 1934 , as amended.

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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 Dec ember 29 , 2023 , to December 29, 2024 .

We did not repurchase any stock during the three months ended June 30, 2024 .

As of June 30, 2024 , we had $ 41.7 million available for repurchase under the December 2022 Stock Repurchase Program.

On August 27, 2024, 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, 2024, to December 29, 2025.

We did not repurchase any stock during the six months ended October 31, 2024 .

As of October 31, 2024 , we had $ 41.7 million available for repurchase under the December 2022 Stock Repurchase Program.

Dividends Declared and Dividend Payments

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On February 28, 2024 , our Board declared a quarterly dividend in the amount of $ 0.045 per share , which was paid on April 19, 2024 , to stockholders of record on April 12, 2024 .

On May 8, 2024, our Board declared a quarterly dividend in the amount of $ 0.045 per share, which was paid on July 26, 2024 to stockholders of record on July 8, 2024 .

On August 12, 2024, our Board declared a quarterly dividend in the amount of $ 0.045 per share, payable on October 18, 2024 to stockholders of record on October 4, 2024 .

On May 8, 2024 , our Board declared a quarterly dividend in the amount of $ 0.045 per share, which was paid on July 26, 2024 .

to stockholders of record on July 8, 2024 .

On August 12, 2024 , our Board declared a quarterly dividend in the amount of $ 0.045 per share, which was paid on October 18, 2024 , to stockholders of record on October 4, 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 first half of 2024 and 2023 , the total dividends paid was $ 3.0 million and $ 5.4 million, respectively.

Provision for income taxes for the three and six months ended June 30, 2024 and 2023 consisted of the following (in thousands):

Three Months Ended June 30,

Six Months Ended June 30,

Income before provision for income taxes

In the six months ended October 31, 2024 and June 30, 2023 , the total dividends paid were $ 3.0 million and $ 3.0 million, respectively.

At-the-Market Equity Offerings

On September 19, 2024, Barnes & Noble Education entered into an At-the-Market ("ATM") Sales Agreement with BTIG, LLC (“BTIG”) (the "Sales Agreement"), under Barnes & Noble Education may offer and sell BNED Common Stock from time to time through BTIG as its sales agent.

BTIG will use commercially reasonable efforts to sell an aggregate offering of up to $ 40 million of BNED Common Stock from time to time, based upon Barnes & Noble Education’s instructions (including any price, time or size limits or other customary parameters or conditions Barnes & Noble Education may impose).

Barnes & Noble Education will pay BTIG a commission of 2 % of the gross sales proceeds of any common shares sold under the Sales Agreement.

Barnes & Noble Education is not obligated to make any sales of common shares under the Sales Agreement.

During the three months ended October 31, 2024, Barnes & Noble Education issued and sold 1,046,460 shares of BNED Common Stock under the sales agreement at a weighted-average price of $ 9.35 per share and received $ 9.6 million in proceeds, net of commissions.

NONCONTROLLING INTEREST

Immersion is the primary beneficiary of Barnes & Noble Education and as a result, consolidates the financial results of Barnes & Noble Education and reports a noncontrolling interest representing BNED Common Stock held by other Barnes & Noble Education’s stockholders.

Changes in Immersion’s ownership interest in Barnes & Noble Education while Immersion retains its controlling interest in Barnes & Noble Education are accounted for as equity transactions.

The following table summarizes the ownership interest in Barnes & Noble Education:

October 31, 2024

% of Ownership

Number of Barnes & Noble Education Common Stock held by Immersion

Number of Barnes & Noble Education Common Stock held by noncontrolling interest

Total Barnes & Noble Education common stock outstanding

The weighted average ownership percentages for the applicable reporting periods are used to attribute net income to the non-controlling interest holders and were as follows:

One Month Ended

July 31, 2024

Three Month Ended October 31, 2024

From June 10, 2024 to October 31, 2024

Non-controlling interest holders' weighted average ownership percentages

The following table summarizes the effect of changes in ownership of Barnes & Noble Education on the Company’s equity for the periods presented (in thousands):

One Month Ended July 31, 2024

Three Month Ended October 31, 2024

From June 10, 2024 to October 31, 2024

Net Income (loss) attributable to Immersion

Transfers from (to) non-controlling interests:

Increase (decrease) in additional paid-in capital as a result of common stock issuances pursuant to vesting of equity awards, and sales of common stock

Total effect of changes in ownership interest on equity attributable to Immersion stockholders

Provision for income taxes for the month ended July 31, 2024, and the three and six months ended October 31, 2024 and June 30, 2023 consisted of the following (in thousands):

One Month Ended

Three Months Ended

Six Months Ended

July 31, 2 024

October 31, 2024

June 30, 2023

October 31, 2024

June 30, 2023

Income (loss) before provision for income taxes

Provision for income taxes

Effective tax rate

Provision for income taxes for the three and six months ended June 30, 2024 and 2023 resulted primarily from estimated domestic and foreign taxes included in the calculation of the effective tax rate.

Provision for income taxes for the month ended July 31, 2024, and the three and six months ended October 31, 2024 resulted primarily from estimated domestic and foreign taxes included in the calculation of the effective tax rate.

We provided no valuation allowance for federal deferred tax assets, whose future realization is more likely than not and continue to maintain full valuation allowance for certain state deferred tax assets in the United States as well as federal tax assets in Canada.

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We also maintain liabilities for uncertain tax positions.

As of June 30, 2024 , we had unrecognized tax benefits under ASC 740 Income Taxes of approximately $ 7.6 million of which $ 4.9 million could be payable in cash.

As of October 31, 2024, we had unrecognized tax benefits under ASC 740 Income Taxes of approximately $ 7.6 million, all of the $ 7.6 million could be payable in cash.

In addition, interest and penalty of $ 0.2 million could also be payable in cash in relation to unrecognized tax benefits.

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We do not expect to have any significant changes to unrecognized tax benefits during the next twelve months.

As of June 30, 2024 , we had net deferred income tax assets of $ 3.3 million and deferred income tax liabilities of $ 0 .

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.

Barnes & Noble Education

Barnes & Noble Education recorded an income tax provision of $ 0.1 million during the period of June 10, 2024 to June 30, 2024, which represented an effective income tax rate of ( 0.1 )% .

Barnes & Noble Education recorded an income tax provision of $ 1.3 million on pre-tax loss of $ 48.5 million during the period of May 1, 2024, to October 31, 2024, which represented an effective income tax rate of ( 2.6 )%.

In assessing the realizability of the deferred tax assets, management considered whether it is more likely than not that some or all of the deferred tax assets would be realized.

As of June 30, 2024, Barnes & Noble Education determined that it was more likely than not that it would not realize all deferred tax assets and its tax rate for the current fiscal year reflects this determination.

As of October 31, 2024, Barnes & Noble Education determined that it was more likely than not that it would not realize all deferred tax assets and its tax rate for the current fiscal year reflects this determination.

Barnes & Noble Education will continue to evaluate this position.

Under Sections 382 and 383 of the Internal Revenue Code of 1986, as

amended, or the Code, if a corporation undergoes an “ownership change”

(generally defined as a cumulative change in our ownership by “5-percent

shareholders” that exceeds 50 percentage points over a rolling three-year

period), the corporation’s ability to use its pre-change net operating losses

and certain other pre-change tax attributes to offset its post-change income

and taxes may be limited.

Under Sections 382 and 383 of the Internal Revenue Code of 1986 , as amended, or the Code, if a corporation undergoes an “ownership change” (generally defined as a cumulative change in our ownership by “ 5 -percent shareholders” that exceeds 50 percentage points over a rolling three -year period), the corporation’s ability to use its pre-change net operating losses and certain other pre-change tax attributes to offset its post-change income and taxes may be limited.

Similar rules may apply under state tax laws.

result of the rights offering, backstop commitment, private investment, and

debt term loan conversion completed on June 10, 2024, Barnes & Noble Education may have experienced an

ownership change as defined by Sections 382 and 383.

Barnes & Noble Education intends to

perform a study to determine if an ownership change has occurred.

determined that an ownership change has occurred under Section 382 and 383, Barnes &Noble Education expects any corresponding annual limitations to severely impact the future

utilization of its tax attributes including its $ 265.5 million NOL

carryforward.

As a result of the rights offering, backstop commitment, private investment, and debt term loan conversion completed on June 10, 2024, Barnes & Noble Education may have experienced an ownership change as defined by Sections 382 and 383 .

Barnes & Noble Education intends to perform a study to determine if an ownership change has occurred.

If it is determined that an ownership change has occurred under Section 382 and 383 , Barnes & Noble Education expects any corresponding annual limitations to severely impact the future utilization of its tax attributes including its $ 265.5 million NOL carryforward.

EARNINGS PER SHARE

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Potential common stock, computed using the treasury stock method, includes stock options and stock awards.

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

Three Months Ended June 30,

Six Months Ended June 30,

The following are rec onciliations of the denominators used in computing basic and diluted net income per share (in thousands):

One Month Ended

Three Months Ended

Six Months Ended

July 31, 2024

October 31, 2024

June 30, 2023

October 31, 2024

June 30, 2023

Numerator for basic earnings per share:

Net income attributable to Immersion stockholders

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Shares related to outstanding options, unvested RSUs, RSAs, and PSUs

Weighted average shares outstanding, diluted

We include PSUs in the calculation of diluted earnings per share if the applicable 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 three and six months ended June 30, 2024 and 2023, we had stock options, RSUs, PSUs and RSAs outstanding 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.

Weighted ave rage shares outstanding, diluted

Net income per share attributable to Immersion stockholders

We include PSUs in the calculation of diluted earnings per share if the applicable performance conditions have 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 month ended July 31, 2024 and the three and six months ended October 31, 2024 and June 30, 2023 , we had stock options, RSUs, PSUs and RSAs outstanding 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.

These outstanding securities consisted of the following (in thousands):

Three Months Ended June 30,

Six Months Ended June 30,

One Month Ended

Three Months Ended

Six Months Ended

July 31, 2024

October 31, 2024

June 30, 2023

October 31, 2024

June 30, 2023

Stock options

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COMMITMENTS AND 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’ 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.

We are involved in a variety of claims, suits, investigations and proceedings that arise from time to time in the ordinary course of our business, including actions with respect to contracts, intellectual property, taxation, employment, benefits, personal injuries and other matters.

The results of these proceedings in the ordinary course of business are not expected to have a material adverse effect on our condensed consolidated financial position, results of operations, or cash flows.

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.

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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.

On September 25, 2023, the 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.

On July 25, 2024, the Korea Tax Tribunal rendered a decision against LGE, and deadline for the court appeal of the local income claim is October 21, 2024.

In addition, the Korea Administrative Court scheduled a hearing date of August 29, 2024.

As of June 30, 2024 , 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 recently assessed LGE.

On July 23, 2024, the Korea Tax Tribunal rendered a decision against LGE, and the deadline for the court appeal of the local income claim is October 21, 2024.

In addition, the Korea Administrative Court scheduled a hearing date of August 29, 2024, which was cancelled and will be rescheduled at a later date.

On October 18, 2024, the Company filed a complaint and a brief with the Korea Administrative Court for the local income tax appeal.

This case has been reassigned due to its significance and the Korean tax authority filed its answer on November 27, 2024.

As of October 31, 2024, 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 recently assessed LGE.

These withholding taxes have been reclassified and reported as an impairment reduction to the Long-term deposit made in the third quarter of 2023 in order to present the deposit at its estimated recoverable value.

Based on th e developments in these cases, we regularly reassess the likelihood that we will prevail in the claims from the Korean tax authorities with respect to the LGE case.

To the extent that we determine that it is more likely than not that we will prevail against the claims from the Korean tax authorities, then no additional tax expense is provided for in our Condensed Consolidated Statements of Operations and Comprehensive Income .

In the event that we determine that it is more likely than not that we will not prevail against the claims from the Korean tax authorities, or a portion thereof, then we would estimate the anticipated additional tax expense associated with that outcome and record it as additional income tax expense in our Condensed Consolidated Statements of Operations and Comprehensive Income in the period of the new determination.

If the additional income tax expense was related to the periods assessed by Korean tax authorities and for which we recorded a Long-term deposit on our Condensed Consolidated Balance Sheets , then the additional income tax expense would be recorded as an impairment to the Long-term deposits .

If the additional income tax expense was not related to the periods assessed by Korean tax authorities and for which we recorded in Long-term deposits on our Condensed Consolidated Balance Sheets , then the additional income tax expense would be accrued as an Other current liabilities .

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 Condensed Consolidated Statements of Operations and Comprehensive Income , in the period in which we do not ultimately prevail.

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 Condensed Consolidated Statements of Operation and Comprehensive Income (loss) , in the period in which we do not ultimately prevail.

Immersion Corporation vs.

3 unchanged sentences

On June 12, 2024, the Company entered into a Patent License Agreement (the “Xiaomi License Agreement”) with the Xiaomi Group, pursuant to which the parties have agreed to terms for resolving the Xiaomi Litigation and the Xiaomi Group will license, on a non-exclusive basis, the Company’s patent portfolio for use in its products.

Pursuant to the Xiaomi License Agreement, the Company and the Xiaomi Group have agreed to terms for dismissal by them of the outstanding Xiaomi Litigation.

The Xiaomi Litigation was dismissed in October 2024.

Immersion Corporation vs.

16 unchanged sentences

The Court entered a case schedule on November 21, 2023.

The case schedule did not include a trial date but set the pretrial conference for May 30, 2025.

Valve filed inter partes reviews (“ IPRs ”), IPR2024-00477 and IPR2024-00478 on January 19, 2024.

The case scheduled did not include a trial date but set the pretrial conference for May 30, 2025.

Valve filed IPRs, IPR 2024 - 00477 and IPR 2024 - 00478 on January 19, 2024.

These petitions are directed to U.S.

2 unchanged sentences

The Patent Trial and Appeal Board issued a decision, granting institution of these petitions on July 24, 2024, and July 25, 2024, respectively.

The Company’s patent owner responses to these petitions are due on October 15, 2024 and October 17, 2024, respectively.

The Company’s patent owner responses to these petitions were filed on October 15, 2024, and October 17, 2024, respectively.

Valve filed IPR 2024 - 00508 on January 30, 2024, which is directed to U.S.

1 unchanged sentence

The Patent Trial and Appeal Board issued a decision, granting institution of this petition on August 6, 2024.

The Company’s patent owner response to the petition is due on October 31, 2024.

The Company elected not to file patent owner response to the petition.

Valve filed IPR 2024 - 00556 on February 7, 2024, which is directed to U.S.

1 unchanged sentence

The Patent Trial and Appeal Board issued a decision, granting institution on August 6, 2024.

The Company’s patent owner response to the petition is due on October 31, 2024.

The Company elected not to file a patent owner response to the petition.

Valve filed IPR 2024 - 00557 on February 7, 2024, which is directed to U.S.

The Company filed its patent owner preliminary response to this petition on May 15, 2024.

The Company filed its patent owner's preliminary response to this petition on May 15, 2024.

The Patent Trial and Appeal Board issued a decision, granting institution on August 13, 2024.

The Company’s patent owner response to the petition was filed November 5, 2024.

Valve filed IPR 2024 - 00582 on February 16, 2024, which is directed to U.S.

The Company filed its patent owner preliminary response to this petition on June 27, 2024.

The Patent Trial and Appeal Board’s decision on whether to institute the petition is expected to issue around September 27, 2024.

The Patent Trial and Appeal Board issued a decision on granting institution on September 25, 2024.

The Company’s patent owner response to the petition is due December 16, 2024.

Valve filed IPR 2024 - 00714 on March 22, 2024, which is directed to U.S.

The Company filed its preliminary patent owner preliminary response to this petition on July 30, 2024.

The Patent Trial and Appeal Board’s decision on whether to institute the petition is expected to issue around October 30, 2024.

The Patent Trial and Appeal Board issued a decision, granting institution on August 28, 2024.

The Company’s patent owner response to the petition is due January 21, 2025.

The parties submitted their joint claim construction statement and respective positions on March 29, 2024.

5 unchanged sentences

Restructuring and Other Charges

During the period of June 10, 2024, to June 30, 2024, Barnes & Noble Education recognized restructuring and other charges totaling $ 2.4 million, comprised primarily of $ 2.0 million of severance costs related to the departure of Barnes & Noble Education's Chief Executive Officer on June 11, 2024, and $ 0.4 million costs associated with legal and advisory professional services.

During the period from June 10, 2024, to October 31, 2024, Barnes & Noble Education recognized restructuring and other charges (credits) totaling $ 5.1 million, comprised primarily of $ 2.1 million related to severance and other employee termination and benefit costs associated with elimination of various positions as part of cost reduction initiatives, $ 2.0 million of severance costs related to the departure of Barnes & Noble Education's Chief Executive Officer on June 11, 2024, a $ 1.9 million loss related to fixed assets disposal and $ 0.8 million costs associated with legal and advisory professional services restructuring and process improvements and other charges.

These costs and expenses were partially offset by a $ 1.4 million expense reversal related to the termination of liabilities related to a frozen retirement benefit plan.

SUBSEQUENT EVENTS

At-the-Market Equity Offerings

Subsequent to October 26, 2024, Barnes & Noble Education issued and sold 2,928,145 shares of its common stock under the Sales Agreement at a weighted-average price of $ 10.32 per share and received $ 29.7 million in proceeds, net of commissions.

As of November 27, 2024, we sold the maximum aggregate offering of $ 40 million of BNED Common Stock under the ATM Sales Agreement.

Dividends Declared

On November 8, 2024 , our Board declared a special cash dividend of $ 0.245 per share on our outstanding common stock payable, subject to any prior revocation, on January 24, 2025 , to stockholders of record on January 10, 2025 .

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements