IMMERSION CORP 10-Q

Item 1 . Financial Statements IMMERSION CORPORATION CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands, except for share and per share data) (Unaudited) January 31, 2025 April 30, 2024 ASSETS Current assets: Immersion Cash and cash equivalents $ 68,505 $ 85,521 Investments – current 76,221 92,848 Accounts receivable, net 3,117 3,138 Prepaid expenses and other current assets 19,299 9,101 167,142 190,608 Barnes & Noble Education Cash and cash equivalents 9,185 — Accounts receivables, net 354,241 — Merchandise inventories, net 326,825 — Textbook rental inventories, net 41,033 — Prepaid expenses and other current assets 27,549 — 758,833 — Total current assets 925,975 190,608 Immersion Property and equipment, net 127 164 Investments – noncurrent 44,118 46,545 Long-term deposits 6,149 6,324 Deferred tax assets 865 2,793 Other assets – noncurrent 27,774 87 79,033 55,913 Barnes & Noble Education Property and equipment, net 100,752 — Intangible assets, net 92,542 — Goodwill 10,116 — Operating lease right-of-use assets 150,403 — O ther assets - noncurrent 11,722 — 365,535 — Total assets $ 1,370,543 $ 246,521 1 Table of Contents IMMERSION CORPORATION CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands, except for share and per share data) (Unaudited) January 31, 2025 April 30, 2024 LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities: Immersion Accounts payable $ 16 $ 55 Accrued compensation 190 4,003 Deferred revenue – current 2,942 12,494 Other current liabilities 30,427 13,654 33,575 30,206 Barnes & Noble Education Accounts payable 303,577 — Accrued liabilities 77,272 — Deferred revenue – current 49,708 — Operating lease liabilities – current 74,474 — 505,031 — Total current liabilities 538,606 30,206 Immersion Deferred revenue – noncurrent 6,522 7,978 Other long-term liabilities 4,933 7,107 11,455 15,085 Barnes & Noble Education Operating lease liabilities – noncurrent 106,468 — Deferred revenue – noncurrent 3,260 — Other noncurrent liabilities 3,261 — Long-term borrowings 141,200 — 254,189 — Total liabilities 804,250 45,291 Commitments and contingencies (Note 15 ) Stockholders’ equity: Common stock – $ 0.001 par value; 100,000,000 shares authorized; 49,020,309 and 32,396,432 shares issued and outstanding at January 31, 2025 , respectively; 48,047,329 and 31,854,837 shares issued and outstanding at April 30, 2024, respectively 49 48 Additional paid-in capital 384,749 322,786 Accumulated other comprehensive income (loss) 1,911 2,019 Accumulated earnings (deficit) 41,710 ( 18,263 ) Treasury stock at cost: 16,623,877 and 16,192,492 shares, respectively, at cost ( 109,253 ) ( 105,360 ) Total stockholders' equity attributable to Immersion Corporation stockholders 319,166 201,230 Noncontrolling interest in consolidated subsidiaries 247,127 — Total stockholders' equity 566,293 201,230 Total liabilities and stockholders’ equity $ 1,370,543 $ 246,521 See accompanying Notes to Condensed Consolidated Financial Statements. 2 Table of Contents IMMERSION CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except per share amounts) (Unaudited) Three Months Ended Nine Months Ended January 31, 2025 September 30, 2023 January 31, 2025 September 30, 2023 Revenues: Immersion Royalty and license $ 8,437 $ 9,482 $ 70,989 $ 23,539 Barnes & Noble Education Product and other 423,163 — 1,112,955 — Rental income 43,162 — 90,556 — 466,325 — 1,203,511 — Total revenues 474,762 9,482 1,274,500 23,539 Cost of sales (excludes depreciation and amortization expenses): Barnes & Noble Education Product and other cost of sales 343,613 — 897,617 — Rental cost of sales 25,330 — 50,513 — 368,943 — 948,130 — Operating expenses: Immersion Selling and administrative expenses 5,010 2,963 22,586 10,648 Barnes & Noble Education Selling and administrative expenses 71,498 — 178,822 — Depreciation and amortization expense 9,979 — 24,630 — Impairment 604 — 604 — Restructuring and other charges ( 7,478 ) — ( 2,414 ) — 74,603 — 201,642 — Total operating expenses 79,613 2,963 224,228 10,648 Operating income (loss) 26,206 6,519 102,142 12,891 Interest and other income (expense), net 14,803 ( 2,554 ) 29,039 10,731 Interest expense ( 4,167 ) — ( 11,081 ) — Income (loss) before provision for income taxes 36,842 3,965 120,100 23,622 Provision for income taxes ( 17,417 ) ( 1,285 ) ( 32,521 ) ( 5,636 ) Net income (loss) $ 19,425 $ 2,680 $ 87,579 $ 17,986 Net income (loss) attributable to noncontrolling interest 3,953 — 17,790 — Net income (loss) attributable to Immersion stockholders $ 15,472 $ 2,680 $ 69,789 $ 17,986 Earnings per common share attributable to Immersion stockholders Basic $ 0.48 $ 0.08 $ 2.17 $ 0.56 Diluted $ 0.47 $ 0.08 $ 2.12 $ 0.55 Weighted Average Com mon Stock Outstanding Basic 32,294 32,523 32,159 32,254 Diluted 33,055 32,750 32,959 32,586 See accompanying Notes to Condensed Consolidated Financial Statements. 3 Table of Contents IMMERSION CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (In thousands) (Unaudited) Three Months Ended Nine Months Ended January 31, 2025 September 30, 2023 January 31, 2025 September 30, 2023 Net income (loss) $ 19,425 $ 2,680 $ 87,579 $ 17,986 Change in unrealized gains (losses) on available-for-sale securities 380 320 ( 108 ) 993 Comprehensive income (loss) $ 19,805 $ 3,000 $ 87,471 $ 18,979 Comprehensive income (loss) attributable to noncontrolling interests 3,953 — 17,790 — Comprehensive income (loss) attributable to Immersion stockholders $ 15,852 $ 3,000 $ 69,681 $ 18,979 See accompanying Notes to Condensed Consolidated Financial Statements. 4 Table of Contents IMMERSION CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (In thousands, except number of shares) (Unaudited) Three Months Ended January 31, 2025 Common Stock Accumulated Other Comprehensive Income (Loss) Accumulated Earnings (Deficit) Treasury Stock Total Stockholders' Equity Attributable to Immersion Stockholder Noncontrolling Interest Total Stockholders ’ Equity Shares Amount Additional Paid In Capital Shares Amount Balances at October 31, 2024 48,685,577 $ 49 $ 382,174 $ 1,531 $ 34,535 16,409,872 $ ( 107,408 ) $ 310,881 $ 171,606 $ 482,487 Net income (loss) — — — — 15,472 — — 15,472 3,953 19,425 Unrealized gain (loss) on available-for-sale securities, net of taxes — — — 380 — — — 380 — 380 Sale of Barnes & Noble Education's common stock, net of commissions — — ( 1,506 ) — — — — ( 1,506 ) 70,345 68,839 Release of restricted stock units and awards, net of shares withheld 247,833 — — — — 77,337 ( 675 ) ( 675 ) — ( 675 ) Shares issued to an employee in lieu of cash compensation 86,899 — 727 — — — — 727 — 727 Dividends declared — — — — ( 8,297 ) — — ( 8,297 ) — ( 8,297 ) Stock repurchases — — — — — 136,668 ( 1,170 ) ( 1,170 ) — ( 1,170 ) Rebalancing of controlling and noncontrolling interest — — 1,274 — — — — 1,274 ( 1,274 ) — Stock-based compensation — — 2,080 — — — — 2,080 2,497 4,577 Balances at January 31, 2025 49,020,309 $ 49 $ 384,749 $ 1,911 $ 41,710 16,623,877 $ ( 109,253 ) $ 319,166 $ 247,127 $ 566,293 See accompanying Notes to Condensed Consolidated Financial Statements. 5 Table of Contents IMMERSION CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (In thousands, except number of shares) (Unaudited) Three Months Ended September 30, 2023 Common Stock Accumulated Other Comprehensive Income (Loss) Accumulated Earnings (Deficit) Treasury Stock Total Stockholders' Equity Attributable to Immersion Stockholder Noncontrolling Interest Total Stockholders ’ Equity Shares Amount Additional Paid In Capital Shares Amount Balances at June 30, 2023 47,519,064 $ 48 $ 322,822 $ 875 $ ( 54,710 ) 15,260,452 $ ( 98,999 ) $ 170,036 $ — $ 170,036 Net income (loss) — — — — 2,680 — — 2,680 — 2,680 Unrealized gain (loss) on available-for-sale securities, net of taxes — — — 320 — — — 320 — 320 Release of restricted stock units and awards, net of shares withheld 51,875 — — — — 21,527 ( 152 ) ( 152 ) — ( 152 ) Proceeds from stock option exercises — — — — — — — — — — Shares issued to an employee in lieu of cash compensation 7,326 — 48 — — — — 48 — 48 Stock repurchases — — — — — 485,061 ( 3,328 ) ( 3,328 ) — ( 3,328 ) Dividends declared — — ( 991 ) — — — — ( 991 ) — ( 991 ) Stock-based compensation — — 820 — — — — 820 — 820 Balances at September 30, 2023 47,578,265 $ 48 $ 322,699 $ 1,195 $ ( 52,030 ) 15,767,040 $ ( 102,479 ) $ 169,433 $ — $ 169,433 See accompanying Notes to Condensed Consolidated Financial Statements. 6 Table of Contents IMMERSION CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (In thousands, except number of shares) (Unaudited) Nine Months Ended January 31, 2025 Common Stock Accumulated Other Comprehensive Income (Loss) Accumulated Earnings (Deficit) Treasury Stock Total Stockholders' Equity Attributable to Immersion Stockholder Noncontrolling Interest Total Stockholders ’ Equity Shares Amount Additional Paid In Capital Shares Amount Balances at April 30, 2024 48,047,329 $ 48 $ 322,786 $ 2,019 $ ( 18,263 ) 16,192,492 $ ( 105,360 ) $ 201,230 $ — $ 201,230 Net income (loss) — — — — 69,789 — — 69,789 17,790 87,579 Unrealized gain (loss) on available-for-sale securities, net of taxes — — — ( 108 ) — — — ( 108 ) ( 108 ) Barnes & Noble Education acquisition — — — — — — — — 203,657 203,657 Sale of Barnes & Noble Education's common stock, net of commissions — — ( 2,336 ) — — — — ( 2,336 ) 80,587 78,251 Release of restricted stock units and awards, net of shares withheld for payroll taxes 790,166 1 — — — 294,717 ( 2,723 ) ( 2,722 ) — ( 2,722 ) Shares issued to an employee in lieu of cash compensation 182,814 — 1,545 — — — — 1,545 — 1,545 Dividends declared — — ( 1,524 ) — ( 9,816 ) — — ( 11,340 ) — ( 11,340 ) Stock repurchases — — — — — 136,668 ( 1,170 ) ( 1,170 ) — ( 1,170 ) Rebalancing of controlling and noncontrolling interest — — 58,514 — — — — 58,514 ( 58,514 ) — Stock-based compensation — — 5,764 — — — — 5,764 3,607 9,371 Balances at January 31, 2025 49,020,309 $ 49 $ 384,749 $ 1,911 $ 41,710 16,623,877 $ ( 109,253 ) $ 319,166 $ 247,127 $ 566,293 See accompanying Notes to Condensed Consolidated Financial Statements. 7 Table of Contents IMMERSION CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (In thousands, except number of shares) (Unaudited) Nine Months Ended September 30, 2023 Common Stock Accumulated Other Comprehensive Income (Loss) Accumulated Earnings (Deficit) Treasury Stock Total Stockholders' Equity Attributable to Immersion Stockholder Noncontrolling Interest Total Stockholders’ Equity Shares Amount Additional Paid In Capital Shares Amount Balances at December 31, 2022 46,974,598 $ 47 $ 322,667 $ 202 $ ( 70,016 ) 14,727,582 $ ( 95,200 ) $ 157,700 $ — $ 157,700 Net income (loss) — — — — 17,986 — — 17,986 — 17,986 Unrealized gain (loss) on available-for-sale securities, net of taxes — — — 993 — — — 993 — 993 Stock repurchases — — — — — 898,757 ( 6,180 ) ( 6,180 ) — ( 6,180 ) Release of restricted stock units and awards, net of shares withheld 508,344 1 — — — 140,701 ( 1,099 ) ( 1,098 ) — ( 1,098 ) Proceeds from Stock option exercises 21,222 — 160 — — — — 160 — 160 Issuance of stock for ESPP purchase 1,298 — 6 — — — — 6 — 6 Shares issued to an employee in lieu of cash compensation 72,803 — 538 — — — — 538 — 538 Dividends declared — — ( 3,198 ) — — — — ( 3,198 ) — ( 3,198 ) Stock-based compensation — — 2,526 — — — — 2,526 — 2,526 Balances at September 30, 2023 47,578,265 $ 48 $ 322,699 $ 1,195 $ ( 52,030 ) 15,767,040 $ ( 102,479 ) $ 169,433 $ — $ 169,433 See accompanying Notes to Condensed Consolidated Financial Statements. 8 Table of Contents IMMERSION CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) (Unaudited) Nine Months Ended January 31, 2025 September 30, 2023 Cash flows from operating activities: Net income (loss) $ 87,579 $ 17,986 Adjustments to reconcile net income to cash flows from operating activities: Depreciation and amortization expense 24,704 56 Stock-based compensation 9,380 2,526 Loss on disposal of property and equipment 3,227 — Deferred income taxes ( 1,908 ) — Net (gains) losses on investment in marketable securities ( 15,596 ) ( 4,330 ) Net (gains) losses on derivative instruments ( 5,586 ) ( 341 ) Shares issued to an employee in lieu of cash compensation 1,545 538 Other noncash ( 137 ) ( 18 ) Changes in operating assets and liabilities: Accounts and other receivables ( 240,477 ) ( 1,323 ) Merchandise inventories 9,916 — Textbook rental inventories ( 31,198 ) — Prepaid expenses and other current assets ( 10,362 ) 1,024 Changes in lease right-of-use assets and liabilities ( 1,460 ) 277 Long-term deposits 48 ( 1,967 ) Other assets ( 24,628 ) 337 Accounts payable and accrued liabilities 49,767 ( 1,457 ) Other current liabilities 15,747 3,080 Deferred revenue 30,916 ( 3,576 ) Other long-term liabilities ( 9,151 ) ( 33 ) Net cash flows provided by (used in) operating activities ( 107,674 ) 12,779 Cash flows from investing activities: Purchases of marketable securities and other investments ( 80,951 ) ( 158,347 ) Proceeds from sale or maturities of marketable securities and other investments 115,710 130,602 Proceeds from sale of derivative instruments 11,491 17,888 Payments for settlement of derivative instruments ( 4,856 ) ( 9,508 ) Acquisition of business net of cash acquired ( 29,647 ) — Purchase of property and equipment ( 8,134 ) ( 1 ) Proceeds from disposal of property and equipment 792 — Net cash flows provided by (used in) investing activities 4,405 ( 19,366 ) Cash flows from financing activities: Proceeds from borrowings 616,455 — Repayment of borrowing ( 576,491 ) — Proceeds from sale of Barnes & Noble Education common stock 78,251 — Dividend payments to stockholders ( 11,340 ) ( 6,419 ) Proceeds from stock options exercises — 160 Shares withheld to cover payroll taxes ( 2,725 ) ( 1,099 ) Other financing activities ( 1,170 ) ( 6,174 ) Net cash provided by (used in) financing activities 102,980 ( 13,532 ) Net increase (decrease) in cash, cash equivalents and restricted cash ( 289 ) ( 20,119 ) Cash, cash equivalents, and restricted cash: Beginning of period 85,521 48,820 End of period $ 85,232 $ 28,701 See accompanying Notes to Condensed Consolidated Financial Statements. 9 Table of Contents IMMERSION CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) (Unaudited) Reconciliation of cash, cash equivalents and restricted cash for Condensed Consolidated Balance Sheets: January 31, 2025 September 30, 2023 Cash and cash equivalents Immersion $ 68,505 $ 28,701 Barnes & Noble Education 9,185 — 77,690 28,701 Barnes & Noble Education restricted cash reported as: Prepaid expenses and other current assets 5,199 — Other assets - noncurrent 2,343 — Total restricted cash 7,542 — Total cash, cash equivalents and restricted cash $ 85,232 $ 28,701 See accompanying Notes to Condensed Consolidated Financial Statements. 10 Table of Contents IMMERSION CORPORATION NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) 1. SIGNIFICANT ACCOUNTING POLICIES Description of Business Immersion Corporation (“Immersion”) was incorporated in 1993 in California and reincorporated in Delaware in 1999 . Unless the context otherwise requires, references in this Quarterly Report on Form 10-Q to the “Company”, “we”, “us” and “our” refer to Immersion and our consolidated subsidiaries. Immersion generates license and royalty revenues from a wide range of intellectual property (“IP”) that more fully engage users’ sense of touch when operating digital devices. We focus on the following target application areas: mobile devices, wearables, consumer, mobile entertainment and other content; console gaming; automotive; medical; and commercial. On June 10, 2024, we acquired a controlling interest in Barnes & Noble Education, Inc., a Delaware corporation (“Barnes & Noble Education” or “BNED”). Please refer to Note 2 . Business Combination for additional information. The financial results of Barnes & Noble Education have been included in our condensed consolidated financial statements from the acquisition date of June 10, 2024. Barnes & Noble Education is one of the largest contract operators 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 bookstore management hardware and software provider. Barnes & Noble Education operates physical and virtual bookstores, delivering essential educational content 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 its BNC First Day® affordable access course material 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”). 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. Barnes & Noble Education ’ 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 The results of operations reflected in our condensed consolidated financial statements include the accounts of Immersion and our wholly-owned subsidiaries, as well as the accounts of Barnes & Noble Education, a consolidated variable interest entity, since June 10, 2024. All significant intercompany accounts and transactions have been eliminated in consolidation. The noncontrolling interest on the 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 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 January 31, 2025 , the noncontrolling interest was $ 247.1 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. 11 Table of Contents The condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America ( “ U.S. GAAP ” ) for interim financial information and with the instructions for Form 10-Q and the applicable articles of Regulation S-X. Accordingly, these condensed consolidated financial statements do not include all information and footnotes necessary for a complete presentation of the financial position, results of operations, and cash flows, in conformity with U.S. GAAP and should be read in conjunction with our audited consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2023 . In the opinion of management, all adjustments consisting of only normal and recurring items necessary for the fair presentation of the financial position and results of operations for the interim periods presented have been included. Certain prior year amounts have been reclassified to conform with the current year presentation. Due to their nonhomogeneous operations, our Condensed Consolidated Balance Sheets as of January 31, 2025 and April 30, 2024 and Condensed Consolidated Statement of Operations for the three and nine months ended January 31, 2025 , separately present the operating assets, liabilities, and operations of Immersion’s business from the operating assets, liabilities and operations of Barnes & Noble Education's business. All of the assets of Barnes & Noble Education, reported on the Condensed Consolidated Balance Sheet , can be used only to settle obligations of Barnes & Noble Education. None of the liabilities of Barnes & Noble Education have recourse to the general credit of Immersion Corporation. Use of Estimates In preparing financial statements in conformity with U.S. 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 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, June 30, 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. 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. 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 39 weeks ended January 25, 2025. We did not recast the condensed consolidated financial statements for the three and nine months ended January 31, 2024 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 nine months ended September 30, 2023 , are presented as the most comparable periods of the prior year. 12 Table of Contents 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. Earnings per Share of the Company We present both basic and diluted earnings per share (“EPS”) using the two -class method, which is an earnings allocation formula that determines EPS for common stock and any participating securities according to dividends declared (whether paid or unpaid). Under the two -class method, basic EPS is computed by dividing the income available to Immersion stockholders by the weighted-average number of common stock shares outstanding for the period. Basic EPS includes participating securities, consisting of unvested restricted stock that receive nonforfeitable dividends similar to shares of common stock. Diluted EPS reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock, where such exercise or conversion would result in a lower earnings per share amount. Business Combinations The determination of the fair value of net assets acquired in a business combination requires estimates and judgments of future cash flow expectations for the acquired business and the related identifiable tangible and intangible assets. Fair values of net assets acquired are calculated using expected cash flows and industry-standard valuation techniques. For current assets and current liabilities, book value is generally assumed to approximate fair value. Goodwill is the amount by which consideration paid for an acquired entity exceeds the fair value of its acquired net assets. Acquisition costs are expensed as incurred and are included within general and administrative expenses in the consolidated statements of operations. Due to the time required to gather and analyze the necessary data for each acquisition, U.S. GAAP provides a “measurement period” of up to one year from the date of acquisition in which to finalize these fair value determinations. During the measurement period, preliminary fair value estimates may be revised if new information is obtained about the facts and circumstances existing as of the date of acquisition or based on the final net assets and working capital of the acquired business, as prescribed in the applicable purchase agreement. Such adjustments may result in the recognition of, or an adjustment to the fair values of, acquisition-related assets and liabilities and/or consideration paid, and are referred to as “measurement period” adjustments. Measurement period adjustments are recorded to goodwill. Other revisions to fair value estimates, including those relating to facts and circumstances that occur subsequent to the date of acquisition, are reflected as income or expense, as appropriate. Goodwill and Indefinite-Lived Intangible Assets 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. 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. Impairment of Long-Lived Assets Our long-lived assets include property and equipment, operating lease right-of-use assets, and amortizable intangibles recorded in connection with our business acquisition of Barnes & Noble Education. We review our long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. We evaluate the long-lived assets of the reporting units for impairment at the lowest asset group level for which individual cash flows can be identified. When evaluating long-lived assets for potential impairment, we first compare the carrying amount of the asset group to the estimated future undiscounted cash flows. The impairment loss calculation compares the carrying amount of the assets to the fair value based on estimated discounted future cash flows. If required, an impairment loss is recorded for that portion of the asset’s carrying value in excess of fair value. 13 Table of Contents Significant Accounting Policies Related to Barnes & Noble Education A summary of the new significant accounting policies as a result of our acquisition of Barnes & Noble Education is as follows: Seasonality 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: (i) the rental of physical textbook where revenue is recognized over the rental period; and (ii) ala carte courseware sales where revenue is recognized when the customer takes physical possession of Barnes & Noble Education products, which occurs either at the point of sale for products purchased at physical locations or upon receipt of products by customers for products ordered through Barnes & Noble Education’s websites and virtual bookstores. Restricted Cash As of January 31, 2025 , Barnes & Noble Education had restricted cash of $ 7.5 million, comprised of $ 5.2 million in Prepaid expenses and other current assets in the Condensed 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 $ 2.3 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). Merchandise Inventories Merchandise inventories, which consist of finished goods, are stated at the lower of cost or market. 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. Cost is determined primarily by the retail inventory method for Barnes & Noble Education's physical bookstore inventory. Barnes & Noble Education's fulfillment and trade book inventories are valued using the LIFO method and the related reserve was not material to the recorded amount of the inventories. There were no LIFO adjustments during the period from June 10, 2024, to January 31, 2025 . 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 the merchandise inventory, measured at fair value, as part of the Transactions (defined below). 14 Table of Contents Textbook Rental Inventories Physical textbooks out on rent are categorized as textbook rental inventories. At the time a rental transaction is consummated, the book is removed from merchandise inventories and moved to textbook rental inventories at cost. The cost of the book is amortized down to its estimated residual value over the rental period. The related amortization expense is included in cost of sales. At the end of the rental period, upon return, the book is removed from textbook rental inventories and recorded in merchandise inventories at its amortized cost. On June 10, 2024, Immersion acquired $ 9.8 million in rental textbook inventory, measured at fair value, as part of the Transactions (defined below). Leases 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 Condensed 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. Revenue Recognition and Deferred Revenue Product sales and rentals The majority of Barnes & Noble Education's revenue is derived from the sale of products through its bookstore locations, including virtual bookstores, and its bookstore affiliated e-commerce websites, and contains a single performance obligation. Revenue from sales of products is recognized at the point in time when control of the products is transferred to its customers in an amount that reflects the consideration it expects to be entitled to in exchange for the products. 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 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. 15 Table of Contents Revenue from the sale of digital textbooks, which contains a single performance obligation, is recognized when the customer accesses the digital content as product sales 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 textbook allows the customer to access digital content for a fixed period of time, once the digital content is delivered to the customer, Barnes & Noble Education's 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 Barnes & Noble Education's condensed consolidated financial statements. Rental periods are typically for a single semester and are always less than one year in duration. Barnes & Noble Education offers a buyout option to allow the purchase of a rented physical textbook at the end of the rental period if the customer desires to do so. Barnes & Noble Education records the buyout purchase when the customer exercises and pays the buyout option price which is determined at the time of the buyout. In these instances, Barnes & Noble Education accelerates any remaining deferred rental revenue at the point of sale. Revenue recognized for 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 the BNC First Day affordable access course material 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 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 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. Barnes & Noble Education does not treat any promotional offers as expenses. Sales tax collected from Barnes & Noble Education's customers is excluded from reported revenues. Barnes & Noble Education's payment terms are generally 30 days and do not extend beyond one year. 16 Table of Contents Service and other revenue 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 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. Please refer to Note 1 . Significant Accounting Policies contained in Part II, Item 8 of our Annual Report on Form 10-K for the year ended December 31, 2023 , filed with the SEC on March 11, 2024, for a complete discussion of our significant accounting policies. 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. 2023 - 09 : Income Taxes (Topic 740 ): Improvements to Income Tax Disclosures that requires entities to disclose additional information about federal, state, and foreign income taxes primarily related to the income tax rate reconciliation and income taxes paid. The new standard also eliminates certain existing disclosure requirements related to uncertain tax positions and unrecognized deferred tax liabilities. The guidance will be effective for the fiscal year beginning May 1, 2025. The guidance does not affect recognition or measurement in our consolidated financial statements. We are evaluating the impact of this amendment on our consolidated financial statements. In November 2023 , the FASB issued ASU 2023 - 07 , Segment Reporting (Topic 280 ): 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 April 30, 2025, and subsequent interim periods. Early adoption is permitted, and retrospective adoption is required for all prior periods presented. We are currently assessing this guidance and determining the impact on our consolidated financial statements. 17 Table of Contents 2 . BUSINESS COMBINATION 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 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 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 $ 2.5 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. In connection with the closing, Barnes & Noble Education appointed Eric Singer, William C. Martin, Emily S. Hoffman, and Elias Nader to serve as members of the board of directors of Barnes & Noble Education (the “BNED Board”) following the Closing. Messrs. Singer, Martin and Nader and Ms. 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 n ine months ended January 31, 2025 , 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. 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 were recorded during the quarter ended January 31, 2025. Refer to Note 7 . Goodwill and Intangible Assets for additional information. The fair value of the noncontrolling interest of $ 203.7 million on the Closing Date was calculated using the acquisition-date fair value of $ 13.40 per share multiplied by the number of noncontrolling interest shares. 18 Table of Contents The following table presents the preliminary purchase price allocation for the acquisition. Measurement period adjustments were based upon information obtained about facts and circumstances that existed at the acquisition date that, if known, would have affected the measurement of the amounts recognized at that date: (in thousands) Preliminary Purchase Price Allocation Measurement Period Adjustments Preliminary Purchase Price Allocation (As Adjusted) Assets acquired Cash and cash equivalents $ 14,736 $ - $ 14,736 Accounts receivable 113,743 - 113,743 Merchandise inventories 336,741 - 336,741 Textbook rental inventories 9,835 - 9,835 Prepaid expenses and other current assets (including $ 4.8 million in restricted cash) 26,969 - 26,969 Property and equipment 118,818 - 118,818 Operating lease right-of-use assets 155,664 - 155,664 Intangible assets 95,000 - 95,000 Other assets noncurrent (including $ 1.0 million in restricted cash) 11,634 751 12,385 Total assets acquired $ 883,140 $ 751 $ 883,891 Liabilities assumed Accounts payable $ 279,456 $ - 279,456 Accrued liabilities 51,123 ( 3,353 ) 47,770 Deferred revenue – current 7,651 - 7,651 Operating lease liabilities – current 80,263 - 80,263 Deferred tax liabilities – noncurrent 636 - 636 Operating lease liabilities – noncurrent 107,400 - 107,400 Deferred revenue – noncurrent 3,393 - 3,393 Other long-term liabilities 12,413 - 12,413 Long-term borrowings 101,235 - 101,235 Total liabilities assumed $ 643,570 $ ( 3,353 ) $ 640,217 Net assets acquired 239,570 4,104 243,674 Total consideration transferred $ 50,133 $ - $ 50,133 Less: Net assets acquired ( 239,570 ) ( 4,104 ) ( 243,674 ) Plus: Noncontrolling interest 203,657 - 203,657 Goodwill 14,220 ( 4,104 ) 10,116 Identifiable intangible assets acquired were comprised of the following (in thousands except for estimated useful life): Amount Estimated Life Trade name $ 45,000 Indefinite Customer relationships 50,000 13 years Total intangible assets $ 95,000 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. 19 Table of Contents 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 our 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 flow. 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. Our entire goodwill balance is associated with the Barnes & Noble Education reporting unit. Goodwill is not deductible for tax purposes. 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. Subsequent measurement period adjustments resulted in an increase of $ 0.7 million to our deferred tax asset. 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 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 our 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 nine months ended January 31, 2025 , Barnes & Noble Education contributed net operating revenue of $ 466.3 million and $ 1,203.5 million, respectively, and net income (loss) of $ 6.2 million and $ 29.5 million, respectively, which are both 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 n ine months ended January 31, 2025 , 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 n ine months ended September 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. It should not be taken as representative of future results of operations of the combined company. The following table presents the unaudited pro forma condensed combined financial information (in thousands): Three Months Ended Nine Months Ended January 31, 2025 September 30, 2023 January 31, 2025 September 30, 2023 Revenues $ 474,763 $ 273,643 $ 1,402,868 $ 967,601 Net income (loss) 25,188 ( 45,356 ) 26,756 ( 99,390 ) 20 Table of Contents 3. SEGMENT REPORTING 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 Nine Months Ended January 31, 2025 September 30, 2023 January 31, 2025 September 30, 2023 Revenues: Im m ersion $ 8,437 $ 9,482 $ 70,989 $ 23,539 Barnes & Noble Education 466,325 — 1,203,511 — Total revenues 474,762 9,482 1,274,500 23,539 Cost of sales (excludes depreciation and amortization expense): Barnes & Noble Education 368,943 — 948,130 — Operating expenses: Immersion 5,010 2,963 22,586 10,648 Barnes & Noble Education 74,603 — 201,642 — Total operating expenses 79,613 2,963 224,228 10,648 Operating income (loss) Immersion 3,427 6,519 48,403 12,891 Barnes & Noble Education 22,779 — 53,739 — Operating income (loss) $ 26,206 $ 6,519 $ 102,142 $ 12,891 4. REVENUE RECOGNITION Immersion Disaggregated Revenue The following table presents the disaggregation of our revenue of Immersion for the three and nine months ended January 31, 2025 and September 30, 2023 (in thousands): Three Months Ended Nine Months Ended January 31, 2025 September 30, 2023 January 31, 2025 September 30, 2023 Fixed fee license revenue $ 5,754 $ 1,199 $ 61,756 $ 3,732 Per-unit royalty revenue 2,683 8,283 9,233 19,807 Total royalty and license revenue $ 8,437 $ 9,482 $ 70,989 $ 23,539 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 January 31, 2025 , we recorded no adjustments to royalty revenue recognized in the previous quarter. We recorded adjustments of $ 0.5 million to increase royalty revenue during the three months ended September 30, 2023 . Contract Assets As of January 31, 2025 , we had contract assets of $ 7.7 million included within Prepaid expenses and other current asset s and $ 27.7 million within Other assets -noncurrent on the unaudited 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 and no contract assets within Other assets - noncurrent on the unaudited Condensed Consolidated Balance Sheets . 21 Table of Contents Contract assets increased by $ 28.8 million from May 1 , 2024 to January 31, 2025 , primarily due to an increase in unbilled revenue related to the new contracts we entered into during the nine months ended January 31, 2025 . Deferred Revenue The following table presents changes in deferred revenue associated with Immersion’s contract liabilities (in thousands): January 31, 2025 September 30, 2023 Deferred revenue beginning of the period $ 20,470 $ 17,395 Additions to deferred revenue during the period 882 — Reductions to deferred revenue for revenue recognized during the period ( 11,888 ) ( 3,576 ) Deferred revenue balance end of the period $ 9,464 $ 13,819 Based on contracts signed and payments received as of January 31, 2025 , we expect to recognize $ 9.5 million in revenue under our fixed fee license agreements, which are satisfied over time, including $ 6.6 million over one to three years and $ 2.9 million over more than three years. Barnes & Noble Education Disaggregated Revenue The follo wing table disaggregated the revenue associated with our ma jor products and service offerings (i n thousands) : Three Months Ended January 31, 2025 From June 10, 2024 to January 31, 2025 Course material sale $ 328,073 $ 851,889 General merchandise sale 71,608 202,419 Services and other revenue 23,482 58,647 Total product and other revenue 423,163 1,112,955 Course material rental income 43,162 90,556 Total revenue $ 466,325 $ 1,203,511 Deferred Revenue The following table presents changes in deferred revenue associated with Barnes & Noble Education's contract liabilities (in thousands): January 31, 2025 Deferred revenue as of the acquisition date $ 11,044 Additions to deferred revenue during the period 155,662 Reductions to deferred revenue for revenue recognized during the period ( 113,738 ) Deferred revenue balance at the end of period $ 52,968 22 Table of Contents 5 . 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 January 31, 2025 , is as follows: Investments - current were as follows (in thousands): January 31, 2025 April 30, 2024 Marketable equity securities $ 56,334 $ 50,496 U.S. treasury securities 19,887 42,352 Short-term investments $ 76,221 $ 92,848 Investments- noncurrent were as follows (in thousands): January 31, 2025 April 30, 2024 U.S. treasury securities $ 16,078 $ 19,747 Corporate bonds 28,039 26,798 Investments- noncurrent $ 44,117 $ 46,545 Marketable Securities Marketable securities as of January 31, 2025 and April 30, 2024 consisted of the following (in thousands): January 31, 2025 Cost or Amortized Cost Unrealized Gains Unrealized Losses Fair Value Marketable equity securities Equity securities $ 48,232 $ 11,794 $ ( 3,692 ) $ 56,334 Marketable debt securities U.S. treasury securities 35,636 329 — 35,965 Corporate bonds 26,583 1,508 ( 52 ) 28,039 Total marketable debt securities 62,219 1,837 ( 52 ) 64,004 $ 110,451 $ 13,631 $ ( 3,744 ) $ 120,338 April 30, 2024 Cost or Amortized Cost Unrealized Gains Unrealized Losses Fair Value Marketable equity securities Equity securities $ 50,645 $ 5,656 $ ( 5,805 ) $ 50,496 Marketable debt securities U.S. treasury securities 61,306 825 ( 32 ) 62,099 Corporate bonds 25,695 1,151 ( 48 ) 26,798 Total marketable debt securities 87,001 1,976 ( 80 ) 88,897 $ 137,646 $ 7,632 $ ( 5,885 ) $ 139,393 23 Table of Contents The amortized costs and fair value of our marketable debt securities, by contractual maturity, as of January 31, 2025 (in thousands) are as follows: January 31, 2025 Amortized Cost Fair Value Less than 1 year $ 19,729 $ 19,887 1 to 5 years 36,536 37,260 More than 5 years 5,954 6,857 Total $ 62,219 $ 64,004 As of January 31, 2025 , the fair value of corporate bonds with unrealized loss positions was $ 10.7 million , with an aggregated loss of $ 0.1 million. There were no U.S. treasury securities with an unrealized loss position at January 31, 2025 . As of April 30, 2024, the fair value of available-for-sale debt securities in unrealized loss positions 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 January 31, 2025 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 January 31, 2025 and April 30, 2024 (in thousands): January 31, 2025 Cost Unrealized (Gains) Losses Fair Value Derivative instruments $ 6,038 $ 451 $ 6,489 $ 6,038 $ 451 $ 6,489 April 30, 2024 Cost Unrealized (Gains) Losses Fair Value Derivative instruments $ 7,935 $ ( 2,495 ) $ 5,440 $ 7,935 $ ( 2,495 ) $ 5,440 24 Table of Contents 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 Nine Months Ended January 31, 2025 September 30, 2023 January 31, 2025 September 30, 2023 Net unrealized gains (losses) recognized on marketable equity securities $ 9,028 $ ( 287 ) $ 8,252 $ 472 Net realized gains recognized on marketable equity securities 2,095 ( 2,588 ) 6,037 3,643 Net unrealized gains (losses) recognized on derivative instruments ( 3,702 ) ( 1,631 ) ( 2,945 ) ( 1,825 ) Net realized gains recognized on derivative instruments 5,070 ( 72 ) 8,532 2,165 Net realized gains recognized on marketable debt securities — — 1,308 217 Total net gains recognized in interest and other income (loss), net $ 12,491 $ ( 4,578 ) $ 21,184 $ 4,672 Fair Value Measurements 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. 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. U.S. 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 January 31, 2025 , and April 30, 2024 . Financial instrument s measured at fa ir value on a recurring basis as of January 31, 2025 and April 30, 2024 are classified based on the valuation technique in the table below (in thousands): January 31, 2025 Fair Value Measurements Using Quoted Prices in Active Markets for Identical Assets (Level 1 ) Significant Other Observable Inputs (Level 2 ) Significant Unobservable Inputs (Level 3 ) Total Assets: U.S. treasury securities $ — $ 35,965 $ — $ 35,965 Equity securities 56,334 — — 56,334 Corporate bonds — 28,039 — 28,039 Total assets at fair value $ 56,334 $ 64,004 $ — $ 120,338 Liabilities Derivative instruments $ — $ 6,489 $ — $ 6,489 Total liabilities at fair value $ — $ 6,489 $ — $ 6,489 25 Table of Contents April 30, 2024 Fair Value Measurements Using Quoted Prices in Active Markets for Identical Assets (Level 1 ) Significant Other Observable Inputs (Level 2 ) Significant Unobservable Inputs (Level 3 ) Total Assets: U.S. treasury securities $ — $ 62,099 $ — $ 62,099 Equity securities 50,496 — — 50,496 Corporate bonds 8,220 18,578 — 26,798 Total assets at fair value $ 58,716 $ 80,677 $ — $ 139,393 Liabilities Derivative instruments $ — $ 5,440 $ — $ 5,440 Total liabilities at fair value $ — $ 5,440 $ — $ 5,440 6 . LEASES Immersion Immersion leases office space, which is accounted for as an operating lease in accordance with the provisions of ASC Topic 842 , with expiration dates on or before March 31, 2026. Immersion recognizes lease expense on a straight-line basis over the lease term. Leases with an initial term of twelve months or less are not recorded on the Condensed Consolidated Balance Sheets . Immersion combines lease and non-lease components for new and reassessed leases, and applies discount rates to operating leases under a portfolio approach. The following table summarizes additional information related to Immersion’s operating leases: January 31, 2025 September 30, 2023 Weighted average remaining lease terms (in years) 1.25 0.45 Weighted average discount rate 4.7 % N/A 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 & 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 Combination ), 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. 26 Table of Contents The following table summarizes additional information related to Barnes & Noble Education’s operating leases: Three Months Ended January 31, 2025 From June 10, 2024 to January 31, 2025 Operating lease cost $ 26,063 $ 65,099 Variable lease payments 15,715 47,541 Short-term lease cost 10,078 29,477 Total lease cost $ 51,856 $ 142,117 For the period June 10, 2024 to January 31, 2025 Cash paid for amounts included in the measurement of lease liabilities 57,492 Operating lease right-of-use assets obtained in exchange for operating lease liabilities 53,775 Weighted-average remaining lease term (in years) 4.6 Weighted-average discount rate 7.1 % 27 Table of Contents 7. GOODWILL AND INTANGIBLE ASSETS Goodwill We 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 . Business Combination . The carrying value of goodwill as of January 31, 2025 and April 30, 2024, were $ 10.1 million and $ 0 , respectively. The carrying amount of goodwill decreased by $ 4.1 million for the quarter ended January 31, 2025, due to a measurement period adjustment related to changes in the acquired deferred income taxes of BNED. In accordance with ASC Topic 350 , Intangibles - Goodwill and Other, the Company did not record any goodwill impairment losses during the three and nine months ended January 31, 2025 . 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. As such, the carrying value of goodwill has been allocated to the Barnes & Noble Education Segment and none of the goodwill has been allocated to the Immersion Segment. 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 January 31, 2025 (in thousands): As of January 31, 2025 Gross Carrying Amount Accumulated Amortization Net Carrying Amount Weighted-average remaining life (Years) Trade name $ 45,000 $ — $ 45,000 Infinite Customer relationships 50,000 ( 2,458 ) 47,542 12.4 Total $ 95,000 $ ( 2,458 ) $ 92,542 Amortization of finite-lived intangible assets is computed using the straight-line method over their estimated useful lives. Trade name is determined to have an indefinite useful life and is not subject to amortization. Amortization expense was $ 1.0 million for the three months ended January 31, 2025 . Amortization expense was $ 2.5 million for the period from June 10, 2024, to January 31, 2025. Estimated amortization expense of the intangible assets to be recognized by the Company are as follows (in thousands): Year ended April 30, Remainder of 2025 $ 962 2026 3,846 2027 3,846 2028 3,846 2029 3,846 Thereafter 31,196 Total $ 47,542 28 Table of Contents 8. DEBT The following is a summary of Barnes & Noble Education’s outstanding borrowing as of January 31, 2025 (in thousands): Maturity Date As of January 31, 2025 Total debt - Barnes & Noble credit facility June 9, 2028 $ 141,200 Balance sheet classification: Long-term borrowings $ 141,200 On the Closing Date, Barnes & Noble Education amended and restated and extended the maturity of its existing asset-based c redit facility with Bank of America, N.A., as administrative agent, collateral agent and swing line lender, and other lenders from time to time party thereto (such amended and restated credit facility, the “Restated ABL Facility”). Pursuant to the Restated ABL Facility, the lenders thereunder have committed to provide a four -year asset-backed revolving credit facility in an aggregate committed principal amount of up to $ 325 million. The Restated ABL Facility has a maturity date of June 9, 2028 . Barnes & Noble Education has interest only obligations until June 9, 2028, at which time the total principal is due and payable. 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 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 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; and • 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. 29 Table of Contents 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 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 January 31, 2025, 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 January 31, 2025 , Barnes & Noble Education borrowed $ 616.5 million and repaid $ 576.5 million under the Restated ABL Facility , with $ 141.2 million of outstanding borrowings under the Restated ABL Facility as of January 31, 2025 . As of January 31, 2025 , Barnes & Noble Education issued $ 0.6 million in letters of credit under the Restated ABL Facility . 9. STOCK-BASED COMPENSATION Immersion Our equity incentive program is a long-term retention program that is intended to attract, retain, and provide incentives for employees, consultants, officers, and directors and to align stockholder and employee interests. We may grant time-based options, market condition-based options, stock appreciation rights, restricted stock awards (“RSAs”), restricted stock units (“RSUs”), performance shares, market condition-based performance restricted stock units (“PSUs”), and other stock-based equity awards to employees, officers, directors, and consultants. On January 18, 2022, our stockholders approved the 2021 Equity Incentive Plan (as amended, the “ 2021 Plan”), which provides for a total number of shares reserved and available for grant and issuance equal to 3,525,119 shares plus up to an additional 855,351 shares that are subject to stock options or other awards previously granted under the 2011 Equity Incentive Plan. On March 30, 2023, our stockholders approved an amendment to the 2021 Plan which increased the total number of shares reserved and available for grant and issuance equal to 8,146,607 shares plus up to an additional 855,351 shares that are subject to stock options or other awards previously granted under the 2011 Equity Incentive Plan. Under our equity incentive plans, stock options may be granted at prices not less than the fair market value on the date of grant for such stock options. 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 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 . RSUs generally vest over three years . Awards granted other than a stock option or a stock appreciation right shall reduce the common stock shares available for grant by 1.75 shares for every share issued. A summary of our equity incentive program as of January 31, 2025 is as follows (in thousands): Common stock shares available for grant 2,235 RSUs outstanding 1,450 RSAs outstanding 86 PSUs outstanding — As of January 31, 2025 , we did not have any outstanding stock options. 30 Table of Contents Restricted Stock Units The following summarizes RSU activities for the nine months ended January 31, 2025 : Number of Restricted Stock Units (in thousands) Weighted Average Grant Date Fair Value Per Share Weighted Average Remaining Contractual Term (Years) Aggregate Intrinsic Value (in thousands) Outstanding at April 30, 2024 1,129 $ 6.53 1.09 $ 8,207 Granted 724 9.08 Released ( 390 ) 6.04 Forfeited ( 13 ) 7.85 Outstanding at January 31, 2025 1,450 $ 7.92 1.30 $ 12,134 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 nine months ended January 31, 2025 : Number of Restricted Stock Awards (in thousands) Weighted Average Grant Date Fair Value Per Share Weighted Average Remaining Recognition Period (Years) Outstanding at April 30, 2024 86 $ 7.25 1.00 Granted — — Released — — Forfeited — — Outstanding at January 31, 2025 86 $ 7.25 0.24 Market Condition-Based Performance Stock Units In the first quarter of 2022 , we granted 600,000 shares of PSUs to certain members of our management team. Each PSU represents the right to one share of our common stock with vesting subject to: (a) the achievement of specified levels of the volume weighted average closing prices of our common stock during any 100 day-period between January 1, 2022 and January 1, 2027, subject to certification by the Compensation Committee (“Performance Milestones”); and (b) continued employment with us through the later of each achievement date or service vesting date, which occurs over a three (3) year period commencing on January 1, 2022. 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 January 31, 2025, no PSUs were outstanding. 31 Table of Contents The following summarizes PSU activities for the nine months ended January 31, 2025 : Number of Market Condition-Based Performance Stock Units (in thousands) Weighted Average Grant Date Fair Value Per Share Weighted Average Remaining Recognition Period (Years) Outstanding at April 30, 2024 400 $ 3.63 0.42 Granted — — Released ( 400 ) 3.63 Forfeited — — Outstanding at January 31, 2025 — $ — — Stock-based Compensation Expense Valuation and amortization methods Stock-based compensation is based on the estimated fair value of awards, net of estimated forfeitures, and recognized over the requisite service period. Estimated forfeitures are based on historical experience at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. The stock-based compensation related to all of our stock-based awards for the three and nine months ended January 31, 2025 , and September 30, 2023 is as follows (in thousands): Three Months Ended Nine Months Ended January 31, 2025 September 30, 2023 January 31, 2025 September 30, 2023 Stock options $ — $ 10 $ — $ ( 31 ) RSUs, RSAs and PSUs 2,080 810 5,764 2,557 Total $ 2,080 $ 820 $ 5,764 $ 2,526 Selling and administrative expenses $ 2,080 $ 820 $ 5,764 $ 2,526 Total $ 2,080 $ 820 $ 5,764 $ 2,526 As of January 31, 2025 , there was $ 5.2 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 1.3 years. Total unrecognized compensation cost will be adjusted for future changes in estimated forfeitures. Barnes & Noble Education 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: Shares Assumed Stock options 25,191 Restricted stock award 4,853 Restricted stock unit 1,518 Total equity awards assumed 31,562 32 Table of Contents The total fair value of equity award assumed was $ 33,000 . On June 18, 2024, Barnes & Noble Education granted 7,441 RSUs and 29,764 RSAs to the members of the 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 the BNED Board. These RSUs 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) $ 10.00 $ 15.00 $ 20.00 Valuation method utilized Monte Carlo Monte Carlo Monte Carlo Risk-free interest rate 3.53 % 3.53 % 3.53 % Company volatility 120 % 120 % 120 % Derived service period 1.0 year 2.0 years 3.0 years Grant date fair value per award $ 9.74 $ 9.62 $ 9.46 Stock-based Compensation Expense For the three months ended January 31, 2025, and the period from June 10, 2024, to January 31, 2025, the total stock-based compensation expense for options, RSAs, RSUs, and PSUs were $ 2.5 million and $ 3.6 million, respectively. The total unrecognized compensation cost related to unvested awards as of January 31, 2025, was $ 12.9 million and is expected to be recognized over a weighted-average period of 1.7 years. 10 . EMPLOYEE BENEFIT PLAN Barnes & Noble Education sponsors defined contribution plans for the benefit of substantially all of its employees. MBS Textbook Exchange, LLC (“MBS”), a subsidiary of Barnes & Noble Education, maintains a profit-sharing plan covering substantially all full-time employees of MBS. For all plans, Barnes & Noble Education is responsible to fund the employer contributions directly, if any. There was no benefit expense for these plans during the period from June 10, 2024 to January 25, 2025. 33 Table of Contents 11. STOCKHOLDERS’ EQUITY Stock Repurchase Program 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. Additionally, the Board authorized the use of any derivative or similar instrument to effect stock repurchase transactions, including without limitation, accelerated share repurchase contracts, equity forward transactions, equity option transactions, equity swap transactions, cap transactions, collar transactions, naked put options, floor transactions or other similar transactions or any combination of the foregoing transactions. The December 2022 Stock Repurchase Program was implemented as a method to return value to our stockholders. The timing, pricing and sizes of any repurchases will depend on a number of factors, including the market price of our common stock and general market and economic conditions. The December 2022 Stock Repurchase Program does not obligate us to repurchase any dollar amount or number of shares, and the program may be suspended or discontinued at any time. On August 8, 2023, the Board approved an amendment to extend the expiration date of the December 2022 Stock Repurchase Program that was set to expire on Dec ember 29 , 2023 , to December 29, 2024 . 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. During the nine months ended January 31, 2025 , the Company repurchased 136,668 shares of our common stock for $ 1.2 million at an average purchase price of $ 8.55 per share. As of January 31, 2025 , we had $ 40.6 million available for repurchase under the December 2022 Stock Repurchase Program. Dividends Declared and Dividend Payments On November 13, 2023 , our Board declared a quarterly dividend in the amount of $ 0.045 per share, which was paid on January 25, 2024 , to stockholders of record on January 14, 2024 . 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, which was paid on October 18, 2024 , to stockholders of record on October 4, 2024 . On November 8, 2024 , our Board declared a special cash dividend of $ 0.245 p er share, which was paid on January 24, 2025 to stockholders of record on January 10, 2025 . 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. During the nine months ended January 31, 2025 and September 30, 2023 , the Company paid dividends of $ 11.3 million and $ 6.4 million, respectively. 34 Table of Contents 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 “September ATM Sales Agreement ”) , under Barnes & Noble Education sold BNED Common Stock from time to time through BTIG as its sales agent. BTIG sold an aggregate offering of up to $ 40.0 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 paid BTIG a commission of 2 % of the gross sales proceeds of common shares sold under the September ATM Sales Agreement. Barnes & Noble Education was not obligated to make any sales of common shares under the September ATM Sales Agreement. During the nine months ended January 31, 2025, Barnes & Noble Education issued and sold the maximum aggregate offering of $ 40.0 million of BNED Common Stock under the September ATM Sales Agreement at a weighted-average price of $ 10.06 per share and received $ 39.2 million in proceeds, net of commissions. On December 20, 2024, Barnes & Noble Education entered into an additional ATM sales agreement with BTIG (the “December ATM Sales Agreement”), under which Barnes &Noble Education sold BNED Common Stock through BTIG as the sales agent. BTIG sold an aggregate offering of up to $ 40.0 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 paid BTIG a commission of 2 % of the gross sales proceeds of common shares sold under the December ATM Sales Agreement. During the nine months ended January 31, 2025, Barnes & Noble Education issued and sold the maximum aggregate offering of $ 40.0 million of BNED Common Stock under the December ATM Sales Agreement at a weighted-average price of $ 10.42 per share and received $ 39.2 million in proceeds, net of commissions. 12 . 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: January 31, 2025 Shares Owned % of Ownership Number of Barnes & Noble Education Common Stock held by Immersion 11,006,701 32.32 % Number of Barnes & Noble Education Common Stock held by noncontrolling interest 23,047,145 67.68 % Total Barnes & Noble Education common stock outstanding 34,053,846 100.0 % 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: Three Month Ended January 31, 2025 From June 10, 2024 to January 31, 2025 Non-controlling interest holders' weighted average ownership percentages 64.0 61.0 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): Three Month Ended January 31, 2025 From June 10, 2024 to January 31, 2025 Net Income (loss) attributable to Immersion $ 2,868 $ 12,348 Transfers from (to) noncontrolling 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 $ ( 298 ) $ 56,111 Total effect of changes in ownership interest on equity attributable to Immersion stockholders $ 2,570 $ 68,459 35 Table of Contents 13 . INCOME TAXES Provision for income taxes for the three and nine months ended January 31, 2025 and September 30, 2023 consisted of the following (in thousands): Three Months Ended Nine Months Ended January 31, 2025 September 30, 2023 January 31, 2025 September 30, 2023 Income (loss) before provision for income taxes $ 36,842 $ 3,965 $ 120,100 $ 23,622 Provision for income taxes ( 17,417 ) ( 1,285 ) ( 32,521 ) ( 5,636 ) Effective tax rate 47.3 % 32.4 % 27.1 % 23.9 % Provision for income taxes for the three and nine months ended January 31, 2025 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. Changes in provision for income taxes resulted primarily from the change in income from continuing operations across various tax jurisdictions. In the event that we determine the deferred tax assets are realizable based on an assessment of relevant factors, an adjustment to the valuation allowance may increase income in the period such determination is made. The valuation allowance does not impact our ability to utilize the underlying net operating loss carryforwards. We also maintain liabilities for uncertain tax positions. As of January 31, 2025 , 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. The total amount of unrecognized tax benefits that would affect our effective tax rate, if recognized, is $ 7.6 million. We account for interest and penalties related to uncertain tax positions as a component of income tax provision. We do not expect to have any significant changes to unrecognized tax benefits during the next twelve months. The company recorded an estimated tax true-up to the BNED purchase accounting attributed to the BNED IRC Section 382 study performed and the accounting method change filed for its 2024 tax return in the current period. Barnes & Noble Education Barnes & Noble Education recorded an income tax provision of $ 11.9 million on pre-tax loss of $ 30.7 million during the period of May 1, 2024, to January 31, 2025 , which represented an effective income tax rate of ( 38.8 )%. 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 January 31, 2025 , Barnes & Noble Education determined that it was more likely than not that it would not realize all deferred tax assets and its tax rate for the current fiscal year reflects this determination. Barnes & Noble Education will continue to evaluate this position. 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. As a result of the rights offering, backstop commitment, private investment, and term loan debt conversion completed on June 10, 2024, Barnes & Noble Education conducted a study to determine if an ownership change had occurred. It was determined that an ownership change occurred under Section 382 and 383 , and the corresponding annual limitations materially impacts the utilization of Barnes & Noble Education's tax attributes including BNED's $ 233.3 million net operating loss carryforwards, $ 61.2 million disallowed interest expense carryforwards, and $ 1.1 million tax credit carryforwards. Barnes & Noble Education anticipates that $ 96.0 million of these tax attributes may be made available during the first five years following the ownership change on June 10, 2024, which would be able to offset future taxable income. 36 Table of Contents 14. EARNINGS PER SHARE We use the two -class method of computing EPS, which is an earnings allocation formula that determines EPS for common stock and any participating securities according to dividends declared. Under the two -class method, basic earnings per share is computed by dividing the income attributable to Immersion stockholders by the weighted-average number of common stock shares outstanding for the period. Diluted EPS reflects the potential dilution that could occur from share equivalent activity. Potential common stock, computed using the treasury stock method, includes stock options and stock awards. The following are rec onciliations of the denominators used in computing basic and diluted net income per share (in thousands): Three Months Ended Nine Months Ended January 31, 2025 September 30, 2023 January 31, 2025 September 30, 2023 Numerator for basic earnings per share: Net income attributable to Immersion stockholders $ 15,472 $ 2,680 $ 69,789 $ 17,986 Denominator: Weighted-average shares outstanding, basic 32,294 32,523 32,159 32,254 Shares related to outstanding options, unvested RSUs, RSAs, and PSUs 761 227 800 332 Weighted ave rage shares outstanding, diluted 33,055 32,750 32,959 32,586 Net income per share attributable to Immersion stockholders Basic $ 0.48 $ 0.08 $ 2.17 $ 0.56 Diluted $ 0.47 $ 0.08 $ 2.12 $ 0.55 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 three and nine months ended January 31, 2025 and September 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 Nine Months Ended January 31, 2025 September 30, 2023 January 31, 2025 September 30, 2023 Stock options — 110 — 128 RSUs, RSAs and PSUs — 64 — 20 Total — 174 — 148 37 Table of Contents 15 . COMMITMENTS AND CONTINGENCIES 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. Historically, costs related to these guarantees have not been significant, and we are unable to estimate the maximum potential impact of these guarantees on our future results of operations. LGE Korean Withholding Tax Matter On October 16, 2017, we received a letter from LG Electronics Inc. (“LGE”) requesting that we reimburse LGE with respect to withholding tax imposed on LGE by the Korean tax authorities following an investigation where the tax authority determined that LGE failed to withhold on LGE’s royalty payments to Immersion Software Ireland, a subsidiary of the Company, from 2012 to 2014 . Pursuant to an agreement reached with LGE, on April 8, 2020, we provided a provisional deposit to LGE in the amount of KRW 5,916,845,454 (approximately $ 5.0 million) representing the amount of such withholding tax that was imposed on LGE, which provisional deposit would be returned to us to the extent we ultimately prevail in the appeal in the Korean courts. In the second quarter of 2020 , we recorded this deposit in Long-term deposits on our Condensed Consolidated Balance Sheets . In the fourth quarter of 2021 , we recorded an impairment charge of $ 0.8 million related to the long-term deposits paid to LGE. On November 3, 2017, on behalf of LGE, we filed an appeal with the Korea Tax Tribunal regarding their findings with respect to the withholding taxes related to the 2012 to 2017 period. The Korea Tax Tribunal hearing took place on March 5, 2019. On March 19, 2019, the Korea Tax Tribunal issued its ruling in which it decided not to accept our arguments with respect to the Korean tax authorities’ assessment of withholding tax and penalties imposed on LGE. On behalf of LGE, we filed an appeal with the Korea Administrative Court on June 10, 2019. We have had numerous hearings before the Korea Administrative Court in the years 2019 through 2022 . We had a hearing on April 27, 2023, and the Korea Administrative Court rendered a decision on this matter on June 8, 2023, in which it ruled that the withholding taxes and penalties which were imposed by the Korean tax authorities on LGE should be cancelled with litigation costs to be borne by the Korean tax authorities. In connection with the Korea Administrative Court’s decision, the Korean tax authorities filed an appeal on June 28, 2023, with the Seoul High Court to seek the cancellation of the lower court’s decision. The appellate case is in progress at the Seoul High Court and the first and the second hearings took place on November 30, 2023, and February 1, 2024, respectively. However, the next hearing will be set at a later date. On April 25, 2023, we received notice from LGE requesting us to reimburse LGE with respect to withholding tax imposed on LGE by the Korean tax authorities following a recent tax audit of LGE for the years 2018 through 2022 . Pursuant to an agreement reached with LGE, on June 2, 2023, we provided a provisional deposit to LGE in the amount of KRW 3,024,877,044 (approximately $ 2.3 million) representing the amount of such withholding tax that was imposed on LGE, which provisional deposit would be returned to us to the extent we ultimately prevail in the appeal in the Korean courts. In the second quarter of 2023 , we recorded this deposit in Long-term deposits on our Condensed Consolidated Balance Sheets . On June 29, 2023, on behalf of LGE, we filed an appeal with the Korea Tax Tribunal regarding their findings with respect to the withholding taxes related to the 2018 to 2022 period. On August 7, 2023, the Korean tax authority submitted its answer against the tax appeal. On September 8, 2023, on behalf of LGE, the Company submitted its rebuttal brief in response thereto. On September 25, 2023, 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 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. On February 24, 2025, the Korea Administrative Court scheduled a hearing for March 21, 2025, and the Company intends to request a deferral for this hearing. As of January 31, 2025 , we have not accrued any withholding taxes, interest. and penalties related to the 2018 to 2022 period for which the Korean tax authorities have recently assessed LGE. 38 Table of Contents 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 (Loss) . 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 (Loss) 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 Operation and Comprehensive Income (loss) , in the period in which we do not ultimately prevail. Immersion Corporation vs. Xiaomi Group On or about March 3, 2023, the Company initiated patent infringement lawsuits against several companies of the Xiaomi-Group in Germany, France and India (the “Xiaomi Litigation”). Immersion filed complaints against Xiaomi-Group companies and their agents in the Düsseldorf Regional Court in Germany, the Tribunal judiciaire de Paris (Paris First Instance Civil Court) in France, and the High Court of Delhi, at New Delhi, in India. The complaints alleged that the Xiaomi-Group’s devices, including the Xiaomi 12 , infringed Immersion's patents that cover various uses of haptic effects in connection with such devices. 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. The Xiaomi Litigation was dismissed in October 2024. Immersion Corporation vs. Valve Corporation ( “Valve ”) On May 15, 2023, the Company filed a complaint against Valve in the United States District Court for the Western District of Washington. The complaint alleges that Valve’s AR/VR systems, including the Valve Index, and handheld Steam Deck, infringe seven of our patents that cover various uses of haptic effects in connection with such AR/VR systems and other video game systems. The Company is seeking to enjoin Valve from further infringement and to recover a reasonable royalty for such infringement. 39 Table of Contents The complaint against Valve asserts infringement of the following patents: • U.S. Patent No. 7,336,260 : “Method and Apparatus for Providing Tactile Sensations” • U.S. Patent No. 8,749,507 : “Systems and Methods for Adaptive Interpretation of Input from a Touch-Sensitive Input Device” • U.S. Patent No. 9,430,042 : “Virtual Detents Through Vibrotactile Feedback” • U.S. Patent No. 9,116,546 : “System for Haptically Representing Sensor Input” • U.S. Patent No. 10,627,907 : “Position Control of a User Input Element Associated with a Haptic Output Device” • U.S. Patent No. 10,665,067 : “Systems and Methods for Integrating Haptics Overlay in Augmented Reality” • U.S. Patent No. 11,175,738 : “Systems and Methods for Proximity-Based Haptic Feedback” Valve responded to the complaint on July 24, 2023, with a motion to dismiss. Valve re-noted its motion, which changed Immersion’s response deadline from August 14, 2023, to August 21, 2023. Immersion timely filed its response, and Valve filed its reply on August 25, 2023. The Court heard arguments on Valve’s motion on February 8, 2024. The Court entered a case schedule on November 21, 2023. The case scheduled did not include a trial date but set the pretrial conference for May 30, 2025. V alve filed IPRs, IPR2024-00477 and IPR2024-00478 on January 19, 2024. These petitions are directed to U.S. Patent Nos. 7,336,260 and 9,430,042 respectively. The Company filed its patent owner preliminary responses to these petitions on April 26, 2024, and April 29, 2024, respectively. 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 were filed on October 15, 2024, and October 17, 2024, respectively. Valve filed their replies to the Company’s patent owner responses for both petitions on January 17, 2025. The Company’s patent owner sur-replies for the petitions were filed on February 28, 2025. Oral argument for both of these IPR proceedings are scheduled for April 23, 2025. Valve filed IPR2024-00508 on January 30, 2024, which is directed to U.S. Patent No. 9,116,546. The Company elected not to file a patent owner preliminary response to this petition. The Patent Trial and Appeal Board issued a decision, granting institution of this petition on August 6, 2024. The Company elected not to file patent owner response to the petition. The Board is expected to issue their final written decision no later than August 6, 2025. Valve filed IPR2024-00556 on February 7, 2024, which is directed to U.S. Patent No. 8,749,507. The Company filed its patent owner preliminary response to this petition on May 15, 2024. The Patent Trial and Appeal Board issued a decision, granting institution on August 6, 2024. The Company elected not to file a patent owner response to the petition. The Board is expected to issue their final written decision no later than August 6, 2025. Valve filed IPR2024-00557 on February 7, 2024, which is directed to U.S. Patent No. 10,665,067. 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 their reply to the Company’s patent owner response on February 4, 2025. The Company’s patent owner sur-reply is due March 18, 2025. Valve filed IPR2024-00582 on February 16, 2024, which is directed to U.S. Patent No. 11,175,738. The Company filed its patent owner preliminary response to this petition on June 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 was filed December 20, 2024. Valve’s reply to the Company’s patent owner response is due on March 31, 2025. Valve filed IPR2024-00714 on March 22, 2024, which is directed to U.S. Patent No. 10,627,907. The Company filed its preliminary patent owner preliminary response to this petition on July 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 was filed January 21, 2025. Valve’s reply to the Company’s patent owner response is due on April 15, 2025. The parties submitted their joint claim construction statement and respective positions on March 29, 2024. On March 14, 2024, Valve filed a motion to stay the district court case pending the PTAB’s decisions on the IPRs. Immersion opposed the motion on March 25, 2024, and Valve filed its reply brief on March 29, 2024. The Court granted Valve’s motion to stay on April 4, 2024. In connection with that order, the Court struck Valve’s motion to dismiss with leave to refile at a later date. 40 Table of Contents 16. SUPPLEMENTARY INFORMATION Restructuring and Other Charges During the period from June 10, 2024, to January 31, 2025, Barnes & Noble Education recognized restructuring and other charges (credits) totaling $ ( 2.4 ) million, comprised primarily of $( 9.0 ) million expense reversal related to the termination of liabilities related to a frozen retirement benefit plan, partially offset by $ 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. 17 . SUBSEQUENT EVENTS Dividends Declared On March 10, 2025 , our Board declared a quarterly dividend in the amount of $ 0.045 per share and will be payable, subject to any prior revocation, on April 25, 2025 to stockholders of record on April 14, 2025 . Stock Repurchase Program On March 10, 2025, our Board approved an amendment to extend the expiration date of the Company's current stock repurchase program that was set to expire on December 29, 2025 to December 29, 2026 . Refer to Note 11. Stockholders' Equity for additional information on dividends declared and the Company's current stock repurchase program. 41 Table of Contents