What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2021-08-16 compared with 2021-05-07 · 161 added, 90 removed, 463 unchanged (35% of the section changed)

41 unchanged sentences

Three Months Ended

June 30, Six Months Ended

2021 2020 2021 2020

Royalty and license $ 10,881 $ 5,593 $ 17,949 $ 11,775

24 unchanged sentences

(In thousands, except number of shares)

Three Months Ended March 31, 2021

Three Months Ended June 30, 2021

Common Stock and

5 unchanged sentences

Shares Amount Shares Amount

Balances at December 31, 2020 39,161,214 $ 258,756 $ 122 $ ( 113,164 ) 12,143,433 $ ( 81,733 ) $ 63,981

Balances at March 31, 2021 43,020,610 $ 298,037 $ 122 $ ( 111,128 ) 12,143,433 $ ( 81,733 ) $ 105,298

Net income 5,341 5,341

Issuance of stock for ESPP purchases 15,543 89 89

Exercise of stock options, net of shares withheld for employee taxes 18,750 140 140

Release of restricted stock units and awards 213,310 —

Shares issued in connection with public offering, net of offering costs 3,309,811 35,937 35,937

Issuance costs in connection with public stock offering — ( 104 ) ( 104 )

Stock-based compensation 1,051 1,051

Balances at June 30, 2021 43,252,670 $ 299,124 $ 122 $ ( 105,787 ) 12,143,433 $ ( 81,733 ) $ 111,726

Three Months Ended June 30, 2020

Common Stock and

Additional Paid-In Capital Accumulated

Comprehensive

Income Accumulated

Deficit Treasury Stock Total

Stockholders’

Shares Amount Shares Amount

Balances at March 31, 2020 38,824,681 $ 254,081 $ 122 $ ( 123,393 ) 9,223,222 $ ( 63,066 ) $ 67,744

Three Months Ended March 31, 2020

Net loss ( 712 ) ( 712 )

Repurchase of stock 2,920,211 ( 18,667 ) ( 18,667 )

Release of restricted stock units and awards 182,895 —

Stock-based compensation 1,365 1,365

Balances at June 30, 2020 39,007,576 $ 255,446 $ 122 $ ( 124,105 ) 12,143,433 $ ( 81,733 ) $ 49,730

See accompanying Notes to Condensed Consolidated Financial Statements.

IMMERSION CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(In thousands, except number of shares)

Six Months Ended June 30, 2021

Common Stock and

6 unchanged sentences

Balances at December 31, 2020 39,161,214 $ 258,756 $ 122 $ ( 113,164 ) 12,143,433 $ ( 81,733 ) $ 63,981

Net income 7,377 7,377

Issuance of stock for ESPP purchase 15,543 89 89

Exercise of stock options, net of shares withheld for employee taxes 325,737 2,864 2,864

Release of restricted stock units and awards 440,365 —

Shares issued in connection with public offering, net of offering costs 3,309,811 35,833 35,833

Stock-based compensation 1,582 1,582

Balances at June 30, 2021 43,252,670 $ 299,124 $ 122 $ ( 105,787 ) 12,143,433 $ ( 81,733 ) $ 111,726

Six Months Ended June 30, 2020

Common Stock and

Additional Paid-In Capital Accumulated

Comprehensive

Income (Loss) Accumulated

Deficit Treasury Stock Total

Stockholders’

Shares Amount Shares Amount

Balances at December 31, 2019 38,624,784 $ 253,289 $ 124 $ ( 118,565 ) 7,210,456 $ ( 51,091 ) $ 83,757

Net loss ( 5,540 ) ( 5,540 )

Unrealized gain on available-for-sale securities, net of taxes ( 2 ) ( 2 )

Repurchase of stock 2,012,766 ( 11,975 ) ( 11,975 )

Issuance of stock for ESPP purchases 10,162 63 63

Stock repurchases 4,932,977 $ ( 30,642 ) ( 30,642 )

Issuance of stock for ESPP purchase 10,162 63 63

Release of restricted stock units and awards 372,630 —

Stock-based compensation 2,094 2,094

Balances at March 31, 2020 38,824,681 $ 254,081 $ 122 $ ( 123,393 ) 9,223,222 $ ( 63,066 ) $ 67,744

Balances at June 30, 2020 39,007,576 $ 255,446 $ 122 $ ( 124,105 ) 12,143,433 $ ( 81,733 ) $ 49,730

See accompanying Notes to Condensed Consolidated Financial Statements.

2 unchanged sentences

(In thousands)

Three Months Ended

Six Months Ended

Cash flows provided by (used in) operating activities:

3 unchanged sentences

Stock-based compensation 1,582 2,094

Deferred income taxes 280 3

Foreign currency remeasurement losses 32 252

27 unchanged sentences

Supplemental disclosure of non-cash operating, investing, and financing activities:

Release of restricted stock units and awards under company stock plan $ 2,367 $ 1,356

Release of restricted stock units and awards under stock plan $ 4,016 $ 2,554

Leased assets obtained in exchange for new operating lease liabilities $ — $ 577

2 unchanged sentences

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2021

June 30, 2021

SIGNIFICANT ACCOUNTING POLICIES

4 unchanged sentences

Impact of COVID-19

In March 2020, the World Health Organization declared the outbreak of COVID-19 a pandemic, which continues to spread throughout the U.S.

and the world and has resulted in authorities implementing numerous measures to combat the spread of the virus, including travel bans and restrictions, quarantines, shelter-in-place orders, and business limitations and shutdowns.

The COVID-19 outbreak and related public health measures have adversely affected workforce, organizations, consumers, economies, and financial markets globally, leading to an economic downturn and increased market volatility.

Our compliance with these containment measures has impacted our day-to-day operations and could disrupt our business and operations, as well as that of our customers and suppliers for an extended period of time.

To support the health and well-being of our employees, customers and communities, we implemented work-from-home and restricted travel policies in the first quarter of 2020, which are expected to remain in place for the first half of 2021 and beyond.

In addition, many of our customers are working remotely, which may delay the timing of some orders due to their and our compliance with frequently changing government-mandated or recommended shelter-in-place orders in jurisdictions in which we, our customers and our suppliers operate.

In response to certain anticipated impacts from the COVID-19 pandemic, we implemented a series of cost reduction initiatives in the first half of 2020 to further preserve financial flexibility.

In response to the COVID-19 pandemic, we implemented work-from-home and restricted travel policies in the first quarter of 2020, which are expected to remain in place for most of 2021.

We implemented a series of cost reduction initiatives in the first half of 2020 to further preserve financial flexibility.

These actions include:

7 unchanged sentences

We applied for the CEWS to the extent we met the requirements to receive the subsidy.

During the three months ended March 31, 2021, we recorded $ 0.1 million in government subsidies as a reduction to operating expenses in the Condensed Consolidated Statements of Operations and Comprehensive Income (Loss).

During the six months ended June 30, 2021, we recorded $ 0.2 million in government subsidies as a reduction in operating expenses in the Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) .

During the three months ended June 30, 2020, we recorded $ 0.2 million in government subsidies as a reduction in operating expenses in the Condensed Consolidated Statements of Operations and Comprehensive Income (Loss).

Principles of Consolidation and Basis of Presentation

The accompanying condensed consolidated financial statements include the accounts of Immersion Corporation and our wholly-owned subsidiaries.

The accompanying condensed consolidated financial statements include the accounts of Immersion and our wholly-owned subsidiaries.

All intercompany accounts, transactions, and balances have been eliminated in consolidation.

8 unchanged sentences

We base our estimates on historical experience and on various other assumptions that are believed to be reasonable, the results of which form the basis for making judgments about the carrying values of assets and liabilities.

The results of operations for the three months ended March 31, 2021 are not necessarily indicative of the results to be expected for the full year.

The results of operations for the three and six months ended June 30, 2021 are not necessarily indicative of the results to be expected for the full year.

Segment Information

18 unchanged sentences

Disaggregated Revenue

The following table presents the disaggregation of our revenue for the three months ended March 31, 2021 and 2020 (in thousands).

The following table presents the disaggregation of our revenue for the three and six months ended June 30, 2021 and 2020 (in thousands).

Three Months Ended

June 30, Six Months Ended

2021 2020 2021 2020

Fixed fee license revenue $ 1,824 $ 1,292 $ 3,099 $ 2,578

8 unchanged sentences

As a result of accruing per-unit royalty revenue for the quarter based on such estimates, adjustments will be required in the following quarter to true up revenue to the actual amounts reported by its licensees.

We recorded $ 0.5 million and

$ 0.1 million adjustments to decrease royalty revenue during the three months ended March 31, 2021 and 2020, respectively.

In the three months ended June 30, 2021, we recorded adjustments of $ 2.0 million to increase royalty revenue.

We recorded adjustments of $ 20,000 to decrease royalty revenue during the three months ended June 30, 2020.

Contract Assets

As of March 31, 2021, we had contract assets of $ 10.2 million included within Prepaid expenses and other current assets , and $ 3.8 million included within Other assets on the Condensed Consolidated Balance Sheets.

As of December 31, 2020, we had contract assets of $ 11.6 million included within Prepaid expenses and other current assets , and $ 4.6 million included within Other assets , on the Condensed Consolidated Balance Sheets.

Contract assets decreased by $ 2.3 million from December 31, 2020 to March 31, 2021, primarily due to actual royalties billed during the three months ended March 31, 2021.

Contract Revenue

As of June 30, 2021, we had contract assets of $ 10.8 million included within Prepaid expenses and other current assets , and $ 3.2 million included within Other assets, on the Condensed Consolidated Balance Sheets .

As of December 31, 2020, we

had contract assets of $ 11.6 million included within Prepaid expenses and other current assets , and $ 4.6 million included within Other assets , on the Condensed Consolidated Balance Sheets.

Contract assets decreased by $ 2.2 million from December 31, 2020 to June 30, 2021, primarily due to actual royalties billed during the six months ended June 30, 2021.

Fixed Fee License Revenue

We recognize revenue from a fixed fee license agreement when we have satisfied our performance obligations, which typically occurs upon the transfer of rights to our technology upon the execution of the license agreement.

12 unchanged sentences

As the rights and obligations in a contract are interdependent, contract assets and contract liabilities that arise in the same contract are presented on a net basis.

Based on contracts signed and payments received as of March 31, 2021, we expect to recognize $ 25.2 million in revenue related to Performance Obligation B under our fixed fee license agreements, which is satisfied over time, including $ 13.2 million over one to three years and $ 12.0 million over more than three years.

Based on contracts signed and payments received as of June 30, 2021, we expect to recognize $ 24.0 million in revenue related to Performance Obligation B under our fixed fee license agreements, which is satisfied over time, including $ 12.0 million over one to three years and $ 12.0 million over more than three years.

Capitalized Contract Costs

During the three months ended March 31, 2021, we capitalized $ 0.1 million of incremental costs incurred to obtain new contracts with customers.

During the three and six months ended June 30, 2021, we capitalized $ 0.1 million and $ 0.2 million of incremental costs incurred to obtain new contracts with customers, respectively.

FAIR VALUE MEASUREMENTS

6 unchanged sentences

treasury securities.

We had no Level 2 instruments at March 31, 2021 and December 31, 2020.

We had no Level 2 instruments at June 30, 2021 and December 31, 2020.

Instruments valued based on unobservable inputs which reflect the reporting entity’s own assumptions or data that market participants would use in valuing an instrument are generally classified within Level 3 of the fair value hierarchy.

As of March 31, 2021 and December 31, 2020, we did not hold any Level 3 instruments.

Our financial instruments consisted of money market accounts as of March 31, 2021 and December 31, 2020 are classified as cash equivalents.

Financial instruments measured at fair value on a recurring basis as of March 31, 2021 and December 31, 2020 are classified based on the valuation technique in the table below (in thousands):

March 31, 2021

As of June 30, 2021 and December 31, 2020, we did not hold any Level 3 instruments.

Our financial instruments consisted of money market accounts as of June 30, 2021 and December 31, 2020 are classified as cash equivalents.

Financial instruments measured at fair value on a recurring basis as of June 30, 2021 and December 31, 2020 are classified based on the valuation technique in the table below (in thousands):

June 30, 2021

Fair Value Measurements Using

32 unchanged sentences

Accounts and other receivables $ 2,912 $ 2,218

Allowance for credit losses as of March 31, 2021 and December 31, 2020 were not material.

Allowance for credit losses as of June 30, 2021 and December 31, 2020 were not material.

Prepaid Expenses and Other Current Assets

27 unchanged sentences

Immersion Corporation and Immersion Software Ireland Limited

On April 28, 2017, Immersion and Immersion Software Ireland Limited (collectively, “Immersion”) received a letter from Samsung Electronics Co.

On April 28, 2017, Immersion and Immersion Software Ireland Limited (collectively referred to as “Immersion” in this section) received a letter from Samsung Electronics Co.

(“Samsung”) requesting that we reimburse Samsung with respect to withholding tax and penalties imposed on Samsung by the Korean tax authorities following an investigation where the tax authority determined that Samsung failed to withhold taxes on Samsung’s royalty payments to Immersion Software Ireland from 2012 to 2016.

On July 12, 2017, on behalf of Samsung, Immersion filed an appeal with the Korea Tax Tribunal regarding their findings with respect to the withholding taxes and penalties.

On October 18, 2018, the Korea Tax Tribunal held a hearing and on November 19, 2018, 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 Samsung.

On October 18, 2018, the Korea Tax Tribunal held a hearing and on November 19, 2018, 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 Samsung.

On behalf of Samsung, we filed an appeal with the Korea Administrative Court on February 15, 2019.

4 unchanged sentences

A third hearing occurred on March 21, 2021.

The Korea High Court indicated that a final decision is expected on May 28, 2021, but reserved the right to delay the date of the decision.

The Korea High Court had indicated that a final decision was originally expected on May 28, 2021, but instead, decided to hold a fourth hearing on July 9, 2021.

Following the hearing, the Court indicated that it expects to render a decision on this matter on October 1, 2021.

On September 29, 2017, Samsung filed an arbitration demand with the International Chamber of Commerce against us demanding that we reimburse Samsung for the imposed tax and penalties that Samsung paid to the Korean tax authorities.

13 unchanged sentences

In the second quarter of 2020, we recorded this deposit in Long-term deposits on our Condensed Consolidated Balance Sheets.

In the event that we do not ultimately prevail in our appeal in the Korean courts, the deposit included in Long-term deposits would be recorded as additional income tax expense on our Condensed Consolidated Statement of Operations and Comprehensive Loss, in the period in which we do not ultimately prevail.

In the event that we do not ultimately prevail in our appeal in the Korean courts, the deposit included in Long-term deposits would be recorded as additional income tax expense on our Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) , in the period in which we do not ultimately prevail.

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.

10 unchanged sentences

An eighth hearing occurred on April 8, 2021.

A ninth hearing is scheduled for June 24, 2021.

A ninth hearing occurred on June 24, 2021.

A tenth hearing is scheduled for October 14, 2021.

The Court has indicated that it expects to render a decision on this matter by the end of February 2022.

We believe that there are valid defenses to the claims raised by the Korean tax authorities and that LGE’s claims are without merit.

We intend to vigorously defend ourselves against these claims.

In the event that we do not ultimately prevail in our appeal in the Korean courts, any payments to LGE with respect to withholding tax imposed on LGE by the Korean tax authorities as described in the previous paragraph would be recorded as additional income tax expense on the Condensed Consolidated Statement of Operations and Comprehensive Income (Loss), in the period in which we do not ultimately prevail.

In the event that we do not ultimately prevail in our appeal in the Korean courts, any payments to LGE with respect to withholding tax imposed on LGE by the Korean tax authorities as described in the previous paragraph would be recorded as additional income tax expense on the Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) , in the period in which we do not ultimately prevail.

Immersion Software Ireland Limited v.

Marquardt GMBH

On August 3 , 2021, we filed an arbitration demand with the American Arbitration Association against Marquardt GmbH (“Marquardt”), one of our licensees in the automotive market.

The arbitration demand arises out of that certain Amended and

Restated Patent License Agreement (the “Marquardt License”), effective as of January 1, 2018, between us as licensor and Marquardt, as licensee.

Pursuant to the arbitration demand, we are demanding that Marquardt cure its breach of the Marquardt License and pay all royalties currently owed under the Marquardt License.

The last royalty report we have received from Marquardt was for the third quarter of calendar year 2020 in which Marquardt reported approximately $ 0.5 million in royalties but did not pay such royalties.

Further, since that date, we have not received any other royalty reports or royalty payments from Marquardt.

The term of the Marquardt License expires by its terms on December 31, 2023.

As a result of Marquardt’s breach of the Marquardt License, per unit royalties and applicable interest fees, in the amount of a definite sum to be determined, are currently past due.

Pursuant to the terms of the Marquardt License, we are requesting arbitration by a single arbitrator in Madison County, New York.

STOCK-BASED COMPENSATION

14 unchanged sentences

RSAs outstanding —

(1) We granted equity awards under the 2011 Equity Incentive Plan (the "2011 Plan") from July 2011 through April 2021.

The 2011 Plan expired on April 5, 2021, and the remaining 3,708,238 authorized shares were cancelled on the 2011 Plan expiration date.

We do not have an active equity incentive plan as of June 30, 2021.

Time-Based Stock Options

The following summarizes activities for the time-based stock options for the three months ended March 31, 2021 (in thousands except for weighted average exercise price per share and weighted average remaining contractual life data):

The following summarizes activities for the time-based stock options for the six months ended June 30, 2021 (in thousands except for weighted average exercise price per share and weighted average remaining contractual life data):

Number of Shares

6 unchanged sentences

Outstanding at December 31, 2020 828 $ 8.16 4.36 $ 2,628

Granted — $ —

Exercised ( 326 ) $ 8.79

Canceled or expired ( 127 ) $ 7.46

Outstanding at March 31, 2021 521 $ 7.74 5.21 $ 1,020

Vested and expected to vest at March 31, 2021 447 $ 7.76 5.18 $ 866

Exercisable at March 31, 2021 129 $ 8.32 4.69 $ 212

Aggregate intrinsic value is the difference between the closing price on the last trading day in March 2021 and the exercise price, multiplied by the number of in-the-money stock options.

Outstanding at June 30, 2021 375 $ 7.85 4.80 $ 431

Vested and expected to vest at June 30, 2021 375 $ 7.85 4.80 $ 431

Exercisable at June 30, 2021 158 $ 8.21 4.24 $ 161

Aggregate intrinsic value is the difference between the closing price on the last trading day in June 2021 and the exercise price, multiplied by the number of in-the-money stock options.

Restricted Stock Units

The following summarizes RSU activities for the three months ended March 31, 2021 (in thousands except for weighted average grant date fair value and weighted average remaining contractual life data):

The following summarizes RSU activities for the six months ended June 30, 2021 (in thousands except for weighted average grant date fair value and weighted average remaining contractual life data):

Number of Restricted Stock Units Weighted Average Grant Date Fair Value Weighted Average

3 unchanged sentences

Outstanding at December 31, 2020 802 $ 6.98 1.00 $ 9,057

Granted — $ —

Released ( 310 ) $ 7.45

Forfeited ( 128 ) $ 6.63

Outstanding at March 31, 2021 565 $ 6.78 1.08 $ 5,415

Outstanding at June 30, 2021 364 $ 6.71 1.01 $ 3,197

Restricted Stock Awards

The following summarizes RSA activities for the three months ended March 31, 2021 (in thousands except for weighted average grant date fair value and weighted average remaining recognition period):

The following summarizes RSA activities for the six months ended June 30, 2021 (in thousands except for weighted average grant date fair value and weighted average remaining recognition period):

Number of Restricted Stock Awards Weighted Average Grant Date Fair Value Weighted Average Remaining Recognition Period

3 unchanged sentences

Forfeited — $ —

Outstanding at March 31, 2021 130 $ 6.53 0.20

Outstanding at June 30, 2021 — $ — 0.00

Market Condition-Based Restricted Stock Units

In the fourth quarter of 2020, we granted 250,000 shares of PSUs to our executives.

Each PSU represents the right to one share of our common stock.

These equity awards will vest if the volume-weighted closing price of our common stock exceeds certain levels for a number of trading days within a specified time frame.

These awards vest over four years, with 25% eligible for vesting on the first anniversary of the grant date and remaining shares vesting on quarterly basis over the following three years.

We have 250,000 shares of PSUs outstanding as of March 31, 2021.

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 one hundred (100) day-period between November 10, 2020 and November 10, 2025, 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 four (4) year-period commencing on November 10, 2020.

The Performance Milestones of the PSUs were fully achieved, subject to final certification by the Compensation Committee.

The following summarizes PSU activities for the six months ended June 30, 2021 (in thousands except for weighted average grant date fair value and weighted average remaining recognition period):

Number of Market Condition-Based Restricted Stock Units Weighted Average Grant Date Fair Value Weighted Average Remaining Recognition Period

Outstanding at December 31, 2020 250 $ 6.20 2.08

Granted — $ —

Released — $ —

Forfeited ( 60 ) $ 6.20

Outstanding at June 30, 2021 190 $ 6.20 1.58

Employee Stock Purchase Plan

2 unchanged sentences

A total of 1.0 million shares of common stock has been reserved for issuance under the ESPP.

During the three months ended March 31, 2021, 15,543 shares were purchased under the ESPP.

As of March 31, 2021, 215,338 shares were available for future purchase under the ESPP.

During the six months ended June 30, 2021, 15,543 shares were purchased under the ESPP.

As of June 30, 2021, 215,338 shares were available for future purchase under the ESPP.

Stock-based Compensation Expense

The following table summarizes stock-based compensation expenses recognized for the three months ended March 31, 2021 and 2020 (in thousands):

The following table summarizes stock-based compensation expenses recognized for the three and six months ended June 30, 2021 and 2020 (in thousands):

Three Months Ended

June 30, Six Months Ended

2021 2020 2021 2020

Stock options $ 179 $ 298 $ 194 $ 553

RSUs and RSAs 497 462

RSUs, RSAs and PSUs 852 1,056 1,349 1,518

Employee stock purchase plan 20 11 39 23

8 unchanged sentences

These variables include actual and projected employee stock option exercise behaviors that impact the expected term, our expected stock price volatility over the term of the awards, risk-free interest rate, and expected dividend.

The assumptions used to value options granted under our equity incentive program are as follows:

Three Months Ended

Expected life (in years) N/A 4.2

Volatility N/A 52 %

Interest rate N/A 1.0 %

Dividend yield N/A — %

(1) There were no stock option grants in the three months ended March 31, 2021

As of March 31, 2021, there were $ 5.3 million of unrecognized compensation costs, adjusted for estimated forfeitures, related to non-vested stock options, RSAs and RSUs.

We did not grant stock options during the six months ended June 30, 2021.

As of June 30, 2021, there were $ 4.1 million of unrecognized compensation costs, adjusted for estimated forfeitures, related to non-vested stock options, RSAs and RSUs.

This unrecognized compensation cost will be recognized over an estimated weighted-average period of approximately 1.8 years.

4 unchanged sentences

We intend to use the net proceeds from the sale of the securities offered by this prospectus for working capital and other general corporate purposes, and we may use a portion of any net proceeds for investment in complementary businesses or alternative currencies.

On February 11, 2021, we entered into an equity distribution agreement ("Distribution Agreement") with an investment banking firm to issue and sell shares of our common stock having an aggregated offering price of up to $ 50 million.

Under the terms of the Distribution Agreement, we are obligated to pay 2.25 % commission on the gross sales proceeds from common stock sold and customary indemnification rights and the reimbursement of legal fees and disbursements.

The Distribution Agreement may be terminated by either party upon prior written notice to the other party, or at any time under certain circumstances.

We are not obligated to sell any shares under the Distribution Agreement.

During the first quarter of 2021, we sold 3.3 million shares of our common stock pursuant to the Distribution Agreement and we received net proceeds of $ 35.9 million from the offering net of $ 1.2 million of commissions and other offering costs.

We terminated the Distribution Agreement on March 5, 2021.

On February 11, 2021, we entered into an equity distribution agreement (the "February 2021 Distribution Agreement") with an investment banking firm to issue and sell shares of our common stock having an aggregated offering price of up to $ 50 million.

Under the terms of the February 2021 Distribution Agreement, we are obligated to pay 2.25 % commission on the gross sales proceeds from common stock sold and customary indemnification rights and the reimbursement of legal fees and disbursements.

During the first quarter of 2021, we sold 3.3 million shares of our common stock pursuant to the February 2021 Distribution Agreement and we received net proceeds of $ 35.9 million from the offering net of $ 1.2 million of commissions and other offering costs.

We terminated the February 2021 Distribution Agreement on March 5, 2021.

Stock Repurchase Program

2 unchanged sentences

As of June 30, 2020, we repurchased the maximum amount of shares of common stock available under the Stock Repurchase Program and no longer have any amount available for repurchase under the Stock Repurchase Plan.

During the first quarter of 2020, we repurchased approximately 2.0 million shares for approximately $ 12.0 million at an average cost of $ 5.95 per share.

During the three months ended June 30, 2020, we repurchased approximately 2.9 million shares for approximately $ 18.7 million at an average cost of $ 6.39 per share.

During the six months ended June 30, 2020, we repurchased approximately 4.9 million shares for approximately $ 30.6 million at an average cost of $ 6.39 per share.

Income tax provision consisted of the following (in thousands, except for effective tax rate percentage):

Three Months Ended

June 30, Six Months Ended

2021 2020 2021 2020

Income (loss) before provision for income taxes $ 5,847 $ ( 671 ) $ 8,024 $ ( 5,447 )

1 unchanged sentence

Effective tax rate 8.7 % ( 6.1 ) % 8.1 % ( 1.7 ) %

The provision for income tax for the three months ended March 31, 2021 and 2020, respectively, resulted primarily from estimated foreign taxes included in the calculation of the effective tax rate.

The provision for income tax for the three months and six months ended June 30, 2021 and 2020, respectively, resulted primarily from estimated foreign taxes included in the calculation of the effective tax rate.

We continue to carry a full valuation allowance on our U.S.

2 unchanged sentences

federal and state jurisdictions.

As of March 31, 2021, we had unrecognized tax benefits under ASC 740 Income Taxes of approximately $ 4.5 million and applicable interest of $ 0 .

As of June 30, 2021, we had unrecognized tax benefits under ASC 740 Income Taxes of approximately $ 4.5 million and applicable interest of $ 0 .

The total amount of unrecognized tax benefits that would affect our effective tax rate, if recognized, is $ 0 .

1 unchanged sentence

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

As of March 31, 2021, we had net deferred income tax assets of $ 2.7 million and deferred income tax liabilities of $ 0.4 million.

As of June 30, 2021, we had net deferred income tax assets of $ 2.7 million and deferred income tax liabilities of $ 0.4 million.

Because we have net operating loss and credit carryforwards, there are open statutes of limitations in which federal, state, and foreign taxing authorities may examine our tax returns for all years from 2001 through the current period.

8 unchanged sentences

Three Months Ended

June 30, Six Months Ended

2021 2020 2021 2020

Net income (loss) $ 5,341 $ ( 712 ) $ 7,377 $ ( 5,540 )

6 unchanged sentences

We include the underlying market condition stock awards in the calculation of diluted earnings per share if the performance condition has been satisfied as of the end of the reporting period and exclude stock equity awards if the performance condition has not been met.

For the three months ended March 31, 2021, 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 (loss) per share because their effect would have been anti-dilutive.

For the three months ended June 30, 2021, 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 (loss) per share because their effect would have been anti-dilutive.

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

Three Months Ended

June 30, Six Months Ended

2021 2020 2021 2020

Stock options 490 1,262 115 1,370

RSUs and RSAs — 376 — 87

490 1,638 115 1,457

We lease our office space under lease arrangements with expiration dates on or before February 29, 2024.

3 unchanged sentences

We apply discount rates to operating leases using a portfolio approach.

Below is a summary of our right-of-use assets (“ROU”) assets and lease liabilities as of March 31, 2021 and December 31, 2020, respectively (in thousands):

Balance Sheets Classification March 31,

Below is a summary of our right-of-use assets (“ROU”) assets and lease liabilities as of June 30, 2021 and December 31, 2020, respectively (in thousands):

Balance Sheets Classification June 30,

2021 December 31, 2020

11 unchanged sentences

Our San Francisco office has been closed since the first quarter of 2020 and we expect our San Francisco-based employees to continue to work-from-home in the foreseeable future.

We have been actively seeking a sublease tenant for the SF Facility.

We have been actively seeking a sublease tenant for the SF Facility without success since early 2020.

In the fourth quarter of 2020, we recorded $ 0.3 million impairment charge to the SF Facility ROU asset.

In the second quarter of 2021, we recorded an additional $ 32,000 impairment charge to the SF Facility ROU asset.

On November 12, 2014, we entered into an amendment to the lease of approximately 42,000 square feet office space in San Jose, California facilities (“SJ Facility”).

9 unchanged sentences

These deferred costs will be amortized over the terms of the sublease payments.

As of March 31, 2021, $ 0.1 million was reported in Prepaid expenses and other current assets and $ 0.1 million was reported in Other assets on our Condensed Consolidated Balance Sheets .

As of June 30, 2021, $ 0.1 million was reported in Prepaid expenses and other current assets and $ 0.1 million was reported in Other assets on our Condensed Consolidated Balance Sheets .

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

During the three months ended March 31, 2021, and 2020, our net operating lease expenses are as follows (in thousands):

During the three and six months ended June 30, 2021, and 2020, our net operating lease expenses are as follows (in thousands):

Three Months Ended

June 30, Six Months Ended

2021 2020 2021 2020

Operating lease cost $ 199 $ 301 $ 616 $ 573

1 unchanged sentence

Net lease cost (income) $ ( 58 ) $ 231 $ 101 $ 503

The table below provides supplemental information related to operating leases for the three months ended March 31, 2021 and 2020 (in thousands except for lease term):

Three Months Ended

The table below provides supplemental information related to operating leases for the six months ended June 30, 2021 and 2020 (in thousands except for lease term):

Six Months Ended

Cash paid within operating cash flow $ 740 $ 349

Weighted average lease terms 2.2 2.9

Weighted average lease terms (in years) 1.8 2.7

Weighted average discount rate N/A 3.5 %

Minimum future lease payment obligations for our operating leases as of March 31, 2021 are as follows (in thousands):

Minimum future lease payment obligations for our operating leases as of June 30, 2021 are as follows (in thousands):

For the Years Ending December 31,

1 unchanged sentence

Total $ 2,474

Future lease payments as of March 31, 2021 from our sublease agreement are as follows (in thousands):

Future lease payments as of June 30, 2021 from our sublease agreement are as follows (in thousands):

For the Years Ending December 31,

1 unchanged sentence

Total $ 1,957

SUBSEQUENT EVENT

On July 6, 2021, we entered into an equity distribution agreement (the "July 2021 Distribution Agreement") with an investment banking firm to issue and sell shares of our common stock having an aggregated offering price of up to $ 60 million.

Under the July 2021 Distribution Agreement, we will set the parameters for the sale of shares, including the number of shares to be issued, the time period during which sales are requested to be made, limitations on the number of shares that may be sold in any one trading day and any minimum price below which sales may not be made.

Subject to the terms and conditions of the July 2021 Distribution Agreement, the investment banker may sell the shares by methods deemed to be an “at the market offering” as defined in Rule 415(a)(4) promulgated under the Securities Act of 1933, as amended, including sales made through the Nasdaq Global Select Market or on any other existing trading market for the common stock.

We are obligated to pay 2.25 % commission on the gross sales proceeds from common stock sold and customary indemnification rights and the reimbursement of legal fees and disbursements.

The July 2021 Distribution Agreement may be terminated by either party upon prior written notice to the other party, or at any time under certain circumstances, including but not limited to the occurrence of a material adverse change in Immersion.

We are not obligated to sell any shares under the July 2021 Distribution Agreement .

As of August 12, 2021, we sold 1.9 million shares of our common stock pursuant to the July 2021 Distribution Agreement and we received net proceeds of approximately $ 14.5 million from the offering after deducting commissions and other estimated offering expense.

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

What changed 10-Q

Item 1. Financial Statements