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Table of Contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[x]
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2022
or
[  ]TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from               to                                
Commission File Number 000-38334

Immersion Corporation
(Exact name of registrant as specified in its charter)
Delaware 94-3180138
(State or other jurisdiction of
incorporation or organization)		 (I.R.S. Employer
Identification No.)

2999 N.E. 191st Street, Suite 610, Aventura, FL, 33180
(Address of principal executive offices, zip code)
(408) 467-1900
(Registrant’s telephone number, including area code)

Not Applicable
(Former name, former address and former fiscal year, if changed since last report.)

Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading SymbolName of each exchange on which registered
Common Stock, $0.001 par valueIMMRNASDAQ Global Market
Series B Junior Participating Preferred Stock Purchase Rights
IMMRNASDAQ Global Market


Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes [x]        No [   ]

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes [x] No [ ]

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company” and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer
[ ]
Accelerated filer
[ ]
Non-accelerated filer
[X ]
Smaller reporting company
[X ]
Emerging Growth Company
[ ]

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes [    ]  No [X]

Number of shares of common stock outstanding at November 4, 2022 was 32,308,895.


IMMERSION CORPORATION
TABLE OF CONTENTS
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Table of Contents


PART I
FINANCIAL INFORMATION
Item 1. Financial Statements

IMMERSION CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
 September 30, 2022December 31,
2021
ASSETS
Current assets:
Cash and cash equivalents$36,767 $51,490 
Investments - current96,779 86,431 
Accounts and other receivables 3,343 1,970 
Prepaid expenses and other current assets7,731 13,432 
Total current assets144,620 153,323 
Property and equipment, net362 444 
Investments - noncurrent18,520 7,286 
Long-term deposits4,425 9,658 
Other assets3,290 4,809 
Total assets$171,217 $175,520 
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable$14 $2 
Accrued compensation1,270 555 
Deferred revenue - current4,763 4,826 
Other current liabilities7,729 11,247 
Total current liabilities13,776 16,630 
Deferred revenue - noncurrent13,808 16,699 
Other long-term liabilities479 896 
Total liabilities28,063 34,225 
Commitments and contingencies (Note 5)
Stockholders’ equity:
Common stock and additional paid-in capital326,097 323,296 
Accumulated other comprehensive income (loss)(57)412 
Accumulated deficit(89,718)(100,680)
Treasury stock(93,168)(81,733)
Total stockholders’ equity143,154 141,295 
Total liabilities and stockholders’ equity$171,217 $175,520 

See accompanying Notes to Condensed Consolidated Financial Statements.
2
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IMMERSION CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
AND COMPREHENSIVE INCOME
(In thousands, except per share amounts)
(Unaudited)
 
 Three Months Ended
September 30,		Nine Months Ended
September 30,
 2022202120222021
Revenues:
Royalty and license$13,931 $7,068 $29,079 $25,017 
Development, services, and other75 105 218 325 
Total revenues14,006 7,173 29,297 25,342 
Costs and expenses:
Cost of revenues— 8 4 78 
Sales and marketing282 443 986 2,743 
Research and development254 803 1,118 3,442 
General and administrative2,540 2,246 8,550 7,106 
Total costs and expenses3,076 3,500 10,658 13,369 
Operating income 10,930 3,673 18,639 11,973 
Interest and other income (loss), net(2,348)438 (6,413)162 
Income before provision for income taxes8,582 4,111 12,226 12,135 
Provision for income taxes(877)(340)(1,264)(987)
Net income $7,705 $3,771 $10,962 $11,148 
Basic net income per share$0.23 $0.12 $0.33 $0.36 
Shares used in calculating basic net income per share33,201 32,474 33,601 30,693 
Diluted net income per share$0.23 $0.12 $0.32 $0.36 
Shares used in calculating diluted net income per share33,682 32,612 34,035 31,065 
Other comprehensive income, net of tax
Change in unrealized gains (losses) on available-for-sale securities$344 $531 $(469)$531 
Total comprehensive income $8,049 $4,302 $10,493 $11,679 

See accompanying Notes to Condensed Consolidated Financial Statements.
3
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IMMERSION CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(In thousands, except number of shares)
(Unaudited)
Three Months Ended September 30, 2022
Common Stock and
Additional Paid-In Capital		Accumulated
Other
Comprehensive
Income (Loss)		Accumulated
Deficit		Treasury StockTotal
Stockholders’
Equity
SharesAmountSharesAmount
Balances at June 30, 202246,851,509 $325,351 $(401)$(97,423)13,378,528 $(87,790)$139,737 
Net income— — — 7,705 — — 7,705 
Unrealized gain on available-for-sale securities, net of taxes— — 344 — — — 344 
Stock repurchases— — — — 954,247 (5,304)(5,304)
Release of restricted stock units and awards, net of shares withheld51,875 — — — 13,768 (74)(74)
Issuance of stock for ESPP purchase3,691 16 — — — — 16 
Stock-based compensation— 730 — — — — 730 
Balances at September 30, 202246,907,075 326,097 $(57)$(89,718)14,346,543 $(93,168)$143,154 
Three Months Ended September 30, 2021
Common Stock and
Additional Paid-In Capital		Accumulated
Other
Comprehensive
Income		Accumulated
Deficit		Treasury StockTotal
Stockholders’
Equity
SharesAmountSharesAmount
Balances at June 30, 202143,252,670 $299,124 $122 $(105,787)12,143,433 $(81,733)$111,726 
Net income— — — 3,771 — — 3,771 
Unrealized gain on available-for-sale securities, net of taxes— — 531 — — — 531 
Issuance of stock for ESPP purchase9,490 61 — — — — 61 
Release of restricted stock units and awards8,407 — — — — — — 
Shares issued in connection with public offering, net of issuance costs1,897,326 14,285 — — — — 14,285 
Stock-based compensation— 415 — — — — 415 
Balances at September 30, 202145,167,893 $313,885 $653 $(102,016)12,143,433 $(81,733)$130,789 

See accompanying Notes to Condensed Consolidated Financial Statements.
4

IMMERSION CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(In thousands, except number of shares)
(Unaudited)
Nine Months Ended September 30, 2022
Common Stock and
Additional Paid-In Capital		Accumulated
Other
Comprehensive
Income (Loss)		Accumulated
Deficit		Treasury StockTotal
Stockholders’
Equity
SharesAmountSharesAmount
Balances at December 31, 202146,534,198 $323,296 $412 $(100,680)12,143,433 $(81,733)$141,295 
Net income10,962 10,962 
Unrealized loss on available-for-sale securities, net of taxes— — (469)— — — (469)
Stock repurchases2,174,793 (11,281)(11,281)
Issuance of stock for ESPP purchase11,416 51 — — — 51 
Release of restricted stock units and awards, net of shares withheld for employee taxes344,944 — — — 28,317 (154)(154)
Shares issued to an employee in lieu of cash compensation16,517 84 — — — — 84 
Shares issued in connection with public offering, net of issuance costs— 5 — — — — 5 
Stock-based compensation2,661 — — — — 2,661 
Balances at September 30, 202246,907,075 $326,097 $(57)$(89,718)14,346,543 $(93,168)143,154 
Nine Months Ended September 30, 2021
Common Stock and
Additional Paid-In Capital		Accumulated
Other
Comprehensive
Income		Accumulated
Deficit		Treasury StockTotal
Stockholders’
Equity
SharesAmountSharesAmount
Balances at December 31, 202039,161,214 $258,756 $122 $(113,164)12,143,433 $(81,733)$63,981 
Net income— — — 11,148 — — 11,148 
Unrealized gain on available-for-sale securities— — 531 — — — 531 
Exercise of stock options, net of shares withheld for employee taxes325,737 2,864 — — — — 2,864 
Issuance of stock for ESPP purchase25,033 150 — — — — 150 
Release of restricted stock units and awards448,772 — — — — — — 
Shares issued in connection with public offering, net of issuance costs5,207,137 50,118 — — — — 50,118 
Stock-based compensation— 1,997 — — — — 1,997 
Balances at September 30, 202145,167,893 $313,885 $653 $(102,016)12,143,433 $(81,733)130,789 

See accompanying Notes to Condensed Consolidated Financial Statements.
5

IMMERSION CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
  
Nine Months Ended
September 30,
 20222021
Cash flows provided by (used in) operating activities:
Net income $10,962 $11,148 
Adjustments to reconcile net income to net cash and cash equivalents provided by operating activities:
Depreciation of property and equipment95 75 
Reduction in carrying value of right of use assets524 500 
Stock-based compensation2,661 1,997 
Net (gain) loss on investment in marketable securities13,288 (490)
Net (gain) on derivative instruments(3,393)— 
Foreign currency remeasurement losses161 612 
Shares issued to an employee in lieu of cash compensation84 — 
Shares withheld to cover payroll taxes(154)— 
Other(29)68 
Changes in operating assets and liabilities:
Accounts and other receivables(1,373)(1,953)
Prepaid expenses and other current assets5,702 870 
Long-term deposits1,114 33 
Other assets5,084 2,097 
Accounts payable16 (30)
Accrued compensation715 (272)
Other current liabilities527 917 
Deferred revenue(2,954)(3,734)
Other long-term liabilities(950)(1,116)
Net cash and cash equivalents provided by operating activities32,080 10,722 
Cash flows provided by (used in) investing activities:
Purchases of marketable securities and other investments(131,100)(34,443)
Proceeds from sale or maturities of marketable securities and other investments95,225 — 
Proceeds from sale of derivative instruments11,170 1,757 
Payments for settlement of derivative instruments(10,844)— 
Purchases of property and equipment(29)(89)
Net cash and cash equivalents used in investing activities(35,578)(32,775)
Cash flows provided by (used in) financing activities:
Payment for purchases of treasury stock(11,281)— 
Proceeds from issuance of common stock, net of issuance costs5 50,118 
Proceeds from issuance of common stock under employee stock purchase plan51 150 
Proceeds from stock options exercises— 2,864 
Net cash and cash equivalents provided by (used in) financing activities(11,225)53,132 
Net increase (decrease) in cash and cash equivalents(14,723)31,079 
Cash and cash equivalents:
Beginning of period51,490 59,522 
End of period$36,767 $90,601 

See accompanying Notes to Condensed Consolidated Financial Statements.
6

IMMERSION CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
 
  
Nine Months Ended
September 30,
20222021
Supplemental disclosure of cash flow information:
Cash paid for income taxes$662 $88 
Supplemental disclosure of non-cash investing, and financing activities:
Release of restricted stock units and awards under company stock plan$1,836 $4,081 
Leased assets obtained in exchange for new operating lease liabilities$120 $— 
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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1.   SIGNIFICANT ACCOUNTING POLICIES
Description of Business

Immersion Corporation (the "Company", "Immersion", "we" or "us") was incorporated in 1993 in California and reincorporated in Delaware in 1999. We focus on the creation, design, development, and licensing of innovative haptic technologies that allow people to use their sense of touch more fully as they engage with products and experience the digital world around them. We have adopted a business model under which it provides advanced tactile software, related tools, technical assistance designed to help integrate our patented technology into our customers’ products or enhance the functionality of our patented technology to certain customers, and offers licenses to our patented technology to other customers.

Impact of COVID-19

The outbreak of a novel strain of coronavirus ("COVID-19") caused governments and public health officials around the world to implementing stringent measures to help control the spread of the virus. In response to the COVID-19 pandemic, we implemented work-from-home and restricted travel policies in the first quarter of 2020, but have since lifted our travel restriction and our employees now work both from the office and from home.

In April 2020, the Government of Canada announced the Canada Emergency Wage Subsidy (“CEWS”) for Canadian employers whose businesses were affected by the COVID-19 pandemic. The CEWS provides a subsidy of up to 75% of eligible employees’ employment insurable remuneration, subject to certain criteria. We applied for the CEWS to the extent we met the requirements to receive the subsidy. During the nine months ended September 30, 2021 we recognized $0.3 million in government subsidies as a reduction to operating expenses in the Condensed Consolidated Statements of Income and Comprehensive Income. We did not recognize for any government subsidy during the nine months ended September 30, 2022.

Principles of Consolidation and Basis of Presentation

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.
The accompanying 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 Article 10 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, 2021. 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.
Use of Estimates
The preparation of condensed consolidated financial statements and related disclosures requires management to make estimates and assumptions that affect the reported amounts of the condensed consolidated financial statements. Significant estimates include revenue recognition, fair value of financial instruments, useful lives of property and equipment, valuation of income taxes including uncertain tax provisions, stock-based compensation and long-term deposits for withholding taxes. We base our estimates on historical experience and on various other assumptions that are believed to be reasonable, the results of which form the basis for making judgments about the carrying values of assets and liabilities. The results of operations for the three and nine months ended September 30, 2022 are not necessarily indicative of the results to be expected for the full year.
Segment Information
We develop, license, and support a wide range of software and 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
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entertainment and other content; console gaming; automotive; medical; and commercial. We manage these application areas in one operating and reporting segment with only one set of management, development, and administrative personnel.
Our chief operating decision maker (“CODM”) is the Chief Executive Officer. The CODM approves budgets and allocates resources to and assesses the performance of our business using information about our revenue and operating loss. There is only one segment that is reported to management.
Certificates of Deposit
Certificate of deposits are reported at fair value on the Condensed Consolidated Balance Sheets based on their initial and remaining maturity days.
Initial or Remaining Maturity DaysBalance Sheets Classification
90 days or lessCash and cash equivalents
Between 91 days and 1 yearInvestments - current
Greater than 1 yearInvestments - noncurrent
Recently Adopted Accounting Pronouncements
In November 2021, Financial Accounting Standard Board ("FASB") issued ASU 2021-10, Government Assistance (Topic 832), which requires annual disclosures that increase the transparency of transactions involving government grants, including the types of transactions, the accounting for those transactions, and the effect of those transactions on an entity’s financial statements. This new standard became effective for annual periods beginning after December 15, 2021. We adopted this new guidance in the first quarter of 2022. This adoption did not have material impact on our condensed consolidated financial statements.

2. REVENUE RECOGNITION
Disaggregated Revenue
The following table presents the disaggregation of our revenue for the three and nine months ended September 30, 2022 and 2021 (in thousands):
Three Months Ended
September 30,		Nine Months Ended
September 30,
2022202120222021
Fixed fee license revenue$7,662 $1,247 $10,653 $4,346 
Per-unit royalty revenue6,269 5,821 18,426 20,671 
Total royalty and license revenue13,931 7,068 29,079 25,017 
Development, services, and other revenue75 105 218 325 
Total revenues$14,006 $7,173 $29,297 $25,342 
Per-unit Royalty Revenue
We record per-unit royalty revenue in the same period in which the licensee’s underlying sales occur. As we generally do not receive the per-unit licensee royalty reports for sales during a given quarter within the time frame that allows us to adequately review the reports and include the actual amounts in our quarterly results for such quarter, we accrue the related revenue based on estimates of our licensees’ underlying sales, subject to certain constraints on our ability to estimate such amounts. We develop such estimates based on a combination of available data including, but not limited to, approved customer forecasts, a look back at historical royalty reporting for each of our customers, and industry information available for the licensed products.
As a result of accruing per-unit royalty revenue for the quarter based on such estimates, adjustments will be required in the following quarter to true up revenue to the actual amounts reported by our licensees. In the three months ended September 30,
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2022, we recorded adjustments of $0.2 million to decrease royalty revenue. We recorded adjustments of $0.5 million to decrease royalty revenue during the three months ended September 30, 2021.
Contract Assets
As of September 30, 2022, we had contract assets of $6.9 million included within Prepaid expenses and other current assets, and $0.7 million included within Other assets on the Condensed Consolidated Balance Sheets. As of December 31, 2021, we had contract assets of $12.4 million included within Prepaid expenses and other current assets, and $1.7 million included within Other assets on the Condensed Consolidated Balance Sheets.
Contract assets decreased by $6.5 million from January 1, 2022 to September 30, 2022, primarily due to actual royalties billed and the reduction in contact assets balance following our settlement agreement with Marquardt GmbH.
Contracted Revenue
We recognize revenue from a fixed fee license agreement when we have satisfied our performance obligations, which typically occurs upon the transfer of rights to our technology upon the execution of the license agreement. However, in certain contracts, we grant a license to our existing patent portfolio at the inception of the license agreement as well as rights to the portfolio as it evolves throughout the contract term. For such arrangements, we have concluded that there are two separate performance obligations:
• Performance Obligation A: to transfer rights to our patent portfolio as it exists when the contract is executed.
• Performance Obligation B: to transfer rights to our patent portfolio as it evolves over the term of the contract, including access to new patent applications that the licensee can benefit from over the term of the contract.
If a fixed fee license agreement contains only Performance Obligation A, we recognize most or all of the revenue from the agreement at the inception of the contract. For fixed fee license agreements that contain both Performance Obligation A and B, we allocate the transaction price based on the standalone price for each of the two performance obligations. We use a number of factors primarily related to the attributes of our patent portfolio to estimate standalone prices related to Performance Obligation A and B. Once the transaction price is allocated, the portion of the transaction price allocable to Performance Obligation A is recognized in the period the license agreement is signed and the customer can benefit from rights provided in the contract. The portion allocable to Performance Obligation B is recognized on a straight-line basis over the contract term. For such contracts, a contract liability account is established and included within Deferred revenue on the Condensed Consolidated Balance Sheets. 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 September 30, 2022, we expect to recognize $18.6 million in revenue related to Performance Obligation B under our fixed fee license agreements, which are satisfied over time, including $12.2 million over one to three years and $6.4 million over more than three years.
Total deferred revenue was $21.5 million as of December 31, 2021, of which $3.7 million was recognized during the nine months ended September 30, 2022.
3.  INVESTMENTS AND FAIR VALUE MEASUREMENTS
Marketable Securities
We invest surplus funds in excess of operational requirements in a diversified portfolio of marketable securities, with the objectives of delivering competitive returns, maintaining a high degree of liquidity, and seeking to avoid the permanent impairment of principal.
Our investments in marketable debt securities, including U.S. treasury securities and corporate bonds are classified and accounted for as available-for-sale. The marketable debt securities are classified either short-term or long-term based on each instrument’s underlying contractual maturity date. As of September 30, 2022 and December 31, 2021, we reported $40.6 million and $7.3 million of investments in debt securities as Investments - noncurrent on our Condensed Consolidated Balance Sheets, respectively, as management intends to hold these investment for more than 12 months from the reporting date. We may sell certain marketable debt securities prior to their stated maturities for reasons including, but not limited to, managing liquidity, credit risk, duration and asset allocation. The marketable debt securities are measured at fair value with realized gains
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and losses reported as Interest and other income (loss), net on our Condensed Consolidated Statements of Income and Comprehensive Income. Unrealized gains and losses on marketable debt securities are reported as Accumulative Other Comprehensive Income (loss) on our Statements of Stockholders' Equity.
Our investments in marketable equity securities are classified based on the nature of the securities and their availability for use in current operations. The marketable equity securities are measured at fair value with gains and losses recognized in Interest and other income (loss), net on our Condensed Consolidated Statements of Income and Comprehensive Income.
We regularly review our investment portfolio to identify and evaluate investments that have indicators of possible impairment. Investments are considered impaired when a decline in fair value is judged to be other-than-temporary. If the cost of an individual investment exceeds its fair value, we evaluate, among other factors, general market conditions, the duration and extent to which the fair value is less than cost, and our intent and ability to hold the investment. Once a decline in fair value is determined to be other-than-temporary, we will record an impairment charge and establish a new cost basis in the investment.
Marketable securities as of September 30, 2022 and December 31, 2021 consisted of following (in thousands):
September 30, 2022

Cost or Amortized Cost		Unrealized GainsUnrealized LossesFair Value
Mutual funds$30,400 $— $(3,265)$27,135 
U.S. treasury securities25,640 19 (24)25,635 
Corporate bonds15,095 277 (457)14,915 
Equity securities54,813 1,002 (13,468)42,347 
$125,948 $1,298 $(17,214)$110,032 
December 31, 2021
Cost or Amortized CostUnrealized GainsUnrealized LossesFair Value
Mutual funds$50,000 $— $(338)$49,662 
Corporate bonds6,996 290 — 7,286 
Equity securities38,100 — (1,331)36,769 
$95,096 $290 $(1,669)$93,717 
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As of September 30, 2022 and December 31, 2021, marketable securities are as follows (in thousands):
September 30, 2022
Marketable Equity Securities Marketable Debt SecuritiesTotal
Mutual funds$27,135 $— $27,135 
U.S. treasury securities— 25,635 25,635 
Equity securities42,347 — 42,347 
Corporate bonds— 14,915 14,915 
$69,482 $40,550 $110,032 
December 31, 2021
Marketable Equity SecuritiesMarketable Debt SecuritiesTotal
Mutual funds$49,662 $— $49,662 
Equity securities36,769 — 36,769 
Corporate bonds— 7,286 7,286 
$86,431 $7,286 $93,717 

The amortized costs and fair value of our marketable debt securities, by contractual maturity, as of September 30, 2022 (in thousands) are as follows:
September 30, 2022
Amortized
Cost		Fair
Value
Less than 1 year$— $— 
1 to 5 years35,707 35,575 
More than 5 years5,028 4,975 
Total$40,735 $40,550 
Derivative Financial Instruments
We invest in derivatives that are not designated as hedging instruments and which consist of call and put options. When we sell call and put options, the premium received is reported as Other current liabilities on our Condensed Consolidated Balance Sheets. When we purchase put or call options, the premium paid is reported as Other current liabilities on our Condensed Consolidated Balance Sheets. The carrying value of these options are adjusted to the fair value at the end of each reporting period until the options expire. Gains and losses recognized from the periodic adjustments to fair value are recognized as Interest and other income, on our Condensed Consolidated Statements of Income and Comprehensive Income.
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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 September 30, 2022 and December 31, 2021 (in thousands):
September 30, 2022
CostUnrealized LossesFair Value
Derivative instruments$2,606 $593 $3,199 
$2,606 $593 $3,199 
December 31, 2021
CostUnrealized GainsFair Value
Derivative instruments$6,370 $(103)$6,267 
$6,370 $(103)$6,267 

A summary of realized and unrealized gains and losses from our equity securities and derivative instruments are as follows (in thousands):
Three Months Ended
September 30,		Nine Months Ended
September 30,
2022202120222021
Net unrealized gains (losses) recognized on marketable equity securities $(9,278)$490 $(14,062)$490 
Net realized gains (losses) recognized on marketable equity securities(555)— 218 — 
Net unrealized gains ( losses) recognized on derivative instruments3,907 (2)(696)(2)
Net realized gains recognized on derivative instruments2,214 9 4,089 9 
Net realized gains recognized on marketable debt securities188 — 556 — 
Total net gains (losses) recognized in interest and other income (loss), net$(3,524)$497 $(9,895)$497 
Fair Value Measurements
Our financial instruments measured at fair value on a recurring basis consisted of money-market funds, mutual funds, equity securities, corporate debt securities and derivatives. Equity securities are classified within Level 1 of the fair value hierarchy as they are valued based on quoted market price in an active market. Corporate debt securities and derivative instruments are valued based on quoted prices in markets that are less active, broker or dealer quotations, or alternative pricing sources with reasonable levels of price transparency are generally classified within Level 2 of the fair value hierarchy.
Financial instruments valued based on unobservable inputs which reflect the reporting entity’s own assumptions or data that market participants would use in valuing an instrument are generally classified within Level 3 of the fair value hierarchy. We did not hold Level 3 financial instruments as of September 30, 2022 and December 31, 2021.
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Financial instruments measured at fair value on a recurring basis as of September 30, 2022 and December 31, 2021 are classified based on the valuation technique in the table below (in thousands):
September 30, 2022
Fair Value Measurements Using
Quoted Prices
 in Active
Markets for
Identical Assets
(Level 1)		Significant
Other
Observable
Inputs
(Level 2)		Significant
Unobservable
Inputs
(Level 3)		Total
Assets:
Certificates of deposit$— $21,061 $— $21,061 
U.S. treasury securities— 25,635 — 25,635 
Mutual funds27,135 — — 27,135 
Equity securities42,347 — — 42,347 
Corporate bonds— 14,915 — 14,915 
Total assets at fair value$69,482 $61,611 $— $131,093 
Liabilities
Derivative instruments$— $3,199 $— $3,199 
Total liabilities at fair value$— $3,199 $— $3,199 

December 31, 2021
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:
Mutual funds$49,662 $— $— 49,662 
Equity securities36,769 — — 36,769 
Corporate bonds— 7,286 — 7,286 
Total assets at fair value$86,431 $7,286 $— $93,717 
Liabilities
Derivative instruments$— $6,267 $— $6,267 
Total liabilities at fair value$— $6,267 $— $6,267 
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4.   BALANCE SHEETS DETAILS
Cash and Cash Equivalents
Cash and cash equivalents were as follow (in thousands):
September 30,
2022		December 31,
2021
Cash $15,567 $51,490 
Certificates of deposit (1)
15,794 — 
Money market funds5,406 — 
Cash and cash equivalents$36,767 $51,490 
(1) Represents certificates of deposit with initial or remaining maturity days of 90 days or less.

Investments - Current
Investments - current were as follows (in thousands):
September 30,
2022		December 31,
2021
Certificates of deposit (2)
$5,267 $— 
U.S. treasury securities 22,030 — 
Marketable securities69,482 86,431 
Short-term investments$96,779 $86,431 
(2) Represents investments with remaining maturity days between 91 days and one year.
Accounts and Other Receivables
Accounts and other receivables were as follows (in thousands):
 September 30,
2022		December 31,
2021
Trade accounts receivables$2,016 $1,235 
Other receivables1,327 735 
Accounts and other receivables$3,343 $1,970 
Allowance for credit losses as of September 30, 2022 and December 31, 2021 were not material.

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Prepaid Expenses and Other Current Assets
Prepaid expenses and other current assets were as follows (in thousands):
September 30,
2022		December 31,
2021
Prepaid expenses$675 $798 
Contract assets - current6,913 12,448 
Other current assets143 186 
Prepaid expenses and other current assets$7,731 $13,432 
Investments - noncurrent
Investments- noncurrent are as follows (in thousands):
September 30,
2022		December 31,
2021
U.S. treasury securities$3,605 $— 
Marketable debt securities14,915 7,286 
Investments- noncurrent$18,520 $7,286 
Other Assets
Other assets are as follows (in thousands):
 September 30,
2022		December 31,
2021
Contract assets - long-term653 1,746 
Lease right-of-use assets507 912 
Deferred tax assets2,116 2,115 
Other assets 14 36 
Total other assets$3,290 $4,809 
Other Current Liabilities
Other current liabilities are as follows (in thousands):
 September 30,
2022		December 31,
2021
Derivative instruments$3,199 $6,267 
Lease liabilities - current715 1,098 
Other current liabilities3,815 3,882 
Total other current liabilities$7,729 $11,247 

5. CONTINGENCIES
From time to time, we receive claims from third parties asserting that our technologies, or those of our licensees, infringe on the other parties’ IP rights. Management believes that these claims are without merit. Additionally, periodically, we are involved in routine legal matters and contractual disputes incidental to our normal operations. In management’s opinion, unless we disclosed otherwise, the resolution of such matters will not have a material adverse effect on our consolidated financial condition, results of operations, or liquidity.
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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 its future results of operations.
Samsung Electronics Co. v. Immersion Corporation and Immersion Software Ireland Limited
On April 28, 2017, Immersion and Immersion Software Ireland Limited (collectively referred to as “Immersion” in this section) received a letter from Samsung Electronics Co. (“Samsung”) requesting that 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 behalf of Samsung, we filed an appeal with the Korea Administrative Court on February 15, 2019. On July 16, 2020, the Korea Administrative Court issued its ruling in which it ruled that the withholding taxes and penalties which were imposed by the Korean tax authorities on Samsung should be cancelled with some litigation costs to be borne by the Korean tax authorities.
On August 1, 2020, the Korean tax authorities filed an appeal with the Korea High Court. The first hearing in the Korea High Court occurred on November 11, 2020. A second hearing occurred on January 13, 2021. A third hearing occurred on March 21, 2021. 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. On October 1, 2021, the Korea High Court issued its ruling in which it ruled that withholding taxes and penalties totaling approximately KRW 6,186,218,586 (approximately $5.2 million) in national-level withholding tax and local withholding taxes imposed by the Korean tax authorities on Samsung for royalties paid to Immersion during the period of 2012 – 2014 be cancelled on the basis that the Korea tax authorities wrongfully engaged in a duplicative audit with respect to such time period. The Korea High Court also ruled that approximately KRW1,655,105,584 (approximately $1.4 million) of national-level withholding tax and local withholding taxes imposed by the Korean tax authorities on Samsung for royalties paid to Immersion during 2015 and 2016 be upheld in part on the basis that Immersion Software Ireland Limited did not have sufficient economic substance to be considered the beneficial owner of the royalties paid by Samsung to Immersion Software Ireland Limited. On or about October 22, 2021, the Korean tax authorities filed an appeal with the Korea Supreme Court with respect to certain portions of the Korea High Court decision and we filed an appeal with the Korea Supreme Court with respect to certain portions of the Korea High Court decision.
On December 1, 2021, the Korean tax authorities submitted its brief to the Korea Supreme Court challenging the cancellation by the Korea High Court of a portion of the withholding tax imposed by the Korean tax authorities. On December 3, 2021, we submitted our own brief to the Korea Supreme Court providing arguments in support of our position that Immersion Software Ireland Limited has sufficient economic substance to be considered the beneficial owner of the royalties paid by Samsung to Immersion Software Ireland Limited. Such brief also provided arguments challenging the calculation of the imposed withholding tax upheld by the Korea High Court. On December 2021, the Korean tax authorities filed a rebuttal brief relating to our brief filed on December 3, 2021. On December 29, 2021, we filed our rebuttal brief relating to the Korean tax authorities’ brief filed on December 1, 2021. On February 24, 2022, the Korea Supreme Court issued a decision affirming the rulings of the Korea High Court. We believe that any impairment in the Long-term deposits associated with the rulings of the Korea High Court is appropriately reflected in the Condensed Consolidated Balance Sheets.
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. Samsung was requesting that we pay Samsung the amount of KRW 7,841,324,165 (approximately $6.9 million) plus interest from and after May 2, 2017, plus the cost of the arbitration including legal fees. On March 27, 2019, we received the final award. The award ordered Immersion to pay Samsung KRW 7,841,324,165 (approximately $6.9 million as of March 31, 2019) which we paid on April 22, 2019 and recorded in Long-term deposits on our Condensed Consolidated Balance Sheets. The award also denied Samsung’s claim for interest from and after May 2, 2017 and ordered Immersion to pay Samsung’s cost of the arbitration in the amount of approximately $871,454, which was paid in 2019.

In the fourth quarter of 2021, we recorded an impairment charge of $1.4 million related to long-term deposits paid to Samsung. In March 2022, as a result of the Korea Supreme Court decision described above, we were reimbursed by Samsung in an amount equal to KRW6,088,855,388 (approximately $5 million) representing Korea national-level taxes, penalties and
17

interest that were canceled by the Korea Supreme Court, which amount is net of $1.3 million of the impairment charge previously recorded in the fourth quarter of 2021. We were also reimbursed an additional KRW608,885,000 (approximately $0.5 million) representing local-level taxes, penalties and interest that were canceled by the Korea Supreme Court, which amount is net of $0.1 million of the impairment charge previously recorded in the fourth quarter of 2021.
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 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 Korea courts. 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 Statements of Income and Comprehensive Income, 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. 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. The first hearing occurred on October 15, 2019. A second hearing occurred on December 19, 2019. A third hearing occurred on February 13, 2020. A fourth hearing occurred on June 9, 2020. A fifth hearing occurred on July 16, 2020. We anticipated a decision to be rendered on or about October 8, 2020, but the Korea Administrative Court scheduled and held a sixth hearing for November 12, 2020. A seventh hearing occurred on January 14, 2021. An eighth hearing occurred on April 8, 2021. A ninth hearing occurred on June 24, 2021. A tenth hearing occurred on September 13, 2021. An eleventh hearing occurred on November 15, 2021. A twelfth hearing occurred on December 23, 2021. The Court had indicated that it expected to render a decision on this matter by the end of February 2022. However, due to a reshuffling of judges, another hearing, which was originally scheduled for April 14, 2022 occurred on July 7, 2022. A thirteenth hearing occurred on October 27, 2022. A final hearing is scheduled for November 24, 2022. The Court has indicated that it expects to render a decision on this matter by December 31, 2022.

Based on the 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 Income and Comprehensive Income. In the event that we determine that it is more likely than not that we will not prevail against the claims from the Korean tax authorities, or a portion thereof, then we would estimate the anticipated additional tax expense associated with that outcome and record it as additional income tax expense in our Condensed Consolidated Statements of Income and Comprehensive Income in the period of the new determination. If the additional income tax expense was related to the periods assessed by Korean tax authorities and for which we recorded a Long-term deposits 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 a 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 Income and Comprehensive Income, in the period in which we do not ultimately prevail.

In the fourth quarter of 2021, we recorded an impairment charge of $0.8 million related to the long-term deposits paid to LGE.
Immersion Software Ireland Limited v. Marquardt GMBH

On August 3, 2021, we filed an arbitration demand with the American Arbitration Association (the “AAA”) against Marquardt GmbH (“Marquardt”), one of our licensees in the automotive market. The arbitration demand had arisen out of that certain Amended and Restated Patent License Agreement (the “Marquardt License”), effective as of January 1, 2018, between
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us as licensor and Marquardt, as licensee. Pursuant to the arbitration demand, we demanded that Marquardt cure its breach of the Marquardt License and pay all royalties currently owed under the Marquardt License.

Pursuant to the terms of the Marquardt License, we requested arbitration by a single arbitrator in Madison County, New York. On August 9, 2021, the AAA confirmed receipt of our arbitration demand dated August 3, 2021. On August 13, 2021, the AAA conducted an administrative conference call to discuss communications, mediation, tribunal appointment, place of arbitration, and other administrative topics. On September 15, 2021, Marquardt filed an answer to our arbitration demand with the AAA, in which Marquardt provided general denials of our claims and asserted a counterclaim for approximately $138,000 in royalties previously paid to us under the Marquardt License. On September 30, 2021, we filed an answer to Marquardt’s counterclaim in which we denied the allegations set forth in Marquardt’s counterclaim. A preliminary hearing occurred on December 6, 2021, during which the parties agreed to explore mediation and the arbitrator set forth a schedule relating to the arbitration. A mediation session occurred during the period of March 14-16, 2022. At the mediation, we entered into a binding settlement term sheet with Marquardt pursuant to which we agreed to cause our arbitration demand to be dismissed. In exchange, Marquardt agreed to the prepayment of certain royalties otherwise payable under the Marquardt License. Additionally on April 4, 2022, we entered into an amendment to the Marquardt License to reflect such payment and other related terms. On May 20, 2022, the parties submitted a stipulation of dismissal to the AAA dismissing with prejudice all claims brought by us against Marquardt in the arbitration.

Immersion Corporation vs. Meta Platforms, Inc., f/k/a Facebook, Inc.

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

The complaint against Meta asserts infringement of the following patents:

•U.S. Patent No. 8,469,806: “System and method for providing complex haptic stimulation during input of control gestures, and relating to control of virtual equipment”
•U.S. Patent No. 8,896,524: “Context-dependent haptic confirmation system”
•U.S. Patent No. 9,727,217: “Haptically enhanced interactivity with interactive content”
•U.S. Patent No. 10,248,298: “Haptically enhanced interactivity with interactive content”
•U.S. Patent No. 10,269,222: “System with wearable device and haptic output device”
•U.S. Patent No. 10,664,143: “Haptically enhanced interactivity with interactive content”

Meta responded to our complaint on August 1, 2022. On September 12, 2022, Meta filed a motion to transfer the lawsuit to the Northern District of California or, in the alternative, to the Austin Division of the Western District of Texas. Meta’s motion remains pending during venue discovery. Our response is due December 5, 2022.

6. STOCK-BASED COMPENSATION
Stock Options and Awards
Our equity incentive program is a long-term retention program that is intended to attract, retain, and provide incentives for employees, consultants, officers, and directors and to align stockholder and employee interests. We may grant time-based options, market condition-based options, stock appreciation rights, restricted stock awards (“RSAs”), restricted stock units (“RSUs”), performance shares, market condition-based performance restricted stock units (“PSUs”), and other stock-based equity awards to employees, officers, directors, and consultants.
On January 18, 2022, our stockholders approved the 2021 Equity Incentive Plan (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 granted under the 2011 Equity Incentive Plan.
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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 stock options. Stock options generally vest over four years and expire seven years from the grant date. Market condition-based stock awards are subject to a market condition whereby the closing price of our common stock must exceed a certain level for a number of trading days within a specified time frame or the awards will be canceled before expiration. RSAs generally vests over one year. RSUs generally vest over three years. Awards granted other than a stock option or a stock appreciation right shall reduce the common stock shares available for grant by 1.75 shares for every share issued.
A summary of our equity incentive program as of September 30, 2022 is as follows (in thousands):
Common stock shares available for grant1,873 
Stock options outstanding 143 
RSUs outstanding541 
RSAs outstanding119 
PSUs outstanding617 

Time-Based Stock Options
The following summarizes activities for the time-based stock options for the nine months ended September 30, 2022:
Number of Shares
Underlying Stock Options
(in thousands)		Weighted Average
Exercise Price
Per Share		Weighted Average
Remaining Contractual Life
(Years)		Aggregate
Intrinsic Value
(in thousands)
Outstanding at December 31, 2021242 $8.04 4.44$— 
Granted— — 
Exercised— — 
Canceled or expired(99)8.47 
Outstanding as of September 30, 2022143 $7.74 4.21$— 
Vested and expected to vest at September 30, 2022137 $7.74 4.21$— 
Exercisable at September 30, 202296 $7.77 4.17$— 

The aggregate intrinsic value is calculated as the difference between the exercise price of the underlying awards and the exercise price of our common stock for the options that were in-the-money.
We did not grant stock options in the nine months ended September 30, 2022.
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Restricted Stock Units
The following summarizes RSU activities for the nine months ended September 30, 2022:
Number of Restricted Stock Units
 (in thousands)		Weighted Average Grant Date Fair Value Per Share
Weighted Average
Remaining Contractual Life
(Years)
Aggregate
Intrinsic Value
(in thousands)
Outstanding at December 31, 2021224 $6.66 0.56$1,280 
Granted600 4.78 
Released(221)5.90 
Forfeited(62)5.90 
Outstanding at September 30, 2022541 $4.95 2.11$2,972 
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 September 30, 2022:
Number of Restricted Stock Awards
(in thousands)
Weighted Average Grant Date Fair Value Per ShareWeighted Average Remaining Recognition Period
(Years)
Outstanding at December 31, 2021— $— 0.00
Granted233 5.13 
Released(114)4.78 
Forfeited— — 
Outstanding at September 30, 2022119 $5.47 0.64

Market Condition-Based Restricted Stock Units
In the first quarter of 2022, we granted 600,000 shares of PSUs to certain members of our management team. Each PSU represents the right to one share of our common stock with vesting subject to: (a) the achievement of specified levels of the volume weighted average closing prices of our common stock during any 100 day-period between January 1, 2022 and January 1, 2027, subject to certification by the Compensation Committee (“Performance Milestones”); and (b) continued employment with us through the later of each achievement date or service vesting date, which occurs over a three (3) year period commencing on January 1, 2022.
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The following summarizes PSU activities for the nine months ended September 30, 2022:
Number of Market Condition-Based Restricted Stock Units
(in thousands)		Weighted Average Grant Date Fair Value Per ShareWeighted Average Remaining Recognition Period
(Years)
Outstanding at December 31, 202167 $6.20 1.49
Granted600 3.63 
Released(9)6.20 
Forfeited(41)6.20 
Outstanding at September 30, 2022617 $3.70 1.24

The assumptions used to value market condition-based restricted stock units granted during the nine months ended September 30, 2022 under our equity incentive program are as follows:
Nine Months Ended
September 30, 2022
Expected life (in years)1.2
Volatility58%
Interest rate1.7%
Dividend yield—

Employee Stock Purchase Plan
Under the 1999 Employee Stock Purchase Plan (“ESPP”), eligible employees may purchase common stock through payroll deductions at a purchase price of 85% of the lower of the fair market value of our common stock at the beginning of the offering period or the purchase date. Participants may not purchase more than 2,000 shares in a six-month offering period or purchase stock having a value greater than $25,000 in any calendar year as measured at the beginning of the offering period. A total of 1.0 million shares of common stock has been reserved for issuance under the ESPP. During the nine months ended September 30, 2022, 11,416 shares were purchased under the ESPP. As of September 30, 2022, 194,432 shares were available for future purchase under the ESPP.
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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 and ESPP for the three and nine months ended September 30, 2022 and 2021 is as follows (in thousands):
 Three Months Ended
September 30,		Nine Months Ended
September 30,
 2022202120222021
Stock options$53 $123 $67 $317 
RSUs, RSAs and PSUs678 286 2,593 1,635 
ESPP(1)6 1 45 
Total$730 $415 $2,661 $1,997 
Sales and marketing$19 $141 $20 $678 
Research and development18 118 96 653 
General and administrative693 156 2,545 666 
Total$730 $415 $2,661 $1,997 

As of September 30, 2022, there was $5.6 million of unrecognized compensation cost adjusted for estimated forfeitures related to non-vested stock options, RSUs, RSAs and PSUs granted to our employees and directors. This unrecognized compensation cost will be recognized over an estimated weighted-average period of approximately 1.6 years. Total unrecognized compensation cost will be adjusted for future changes in estimated forfeitures.

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

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

On February 23, 2022, our Board of Directors approved a stock repurchase program of up to $30.0 million of our common stock for a period of up to twelve months. Any stock repurchases may be made through open market and privately negotiated transactions, at such times and in such amounts as management deems appropriate, including pursuant to one or more Rule 10b5-1 trading plans adopted in accordance with Rule 10b5-1 of the Securities Exchange Act of 1934. 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 stock repurchase program was implemented as a method to return value to our stockholders. The
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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 stock repurchase program does not obligate us to repurchase any dollar amount or number of shares, and the program may be suspended or discontinued at any time.
In the three months ended September 30, 2022, we repurchased 954,247 shares of our common stock for $5.3 million at an average purchase price of $5.55 per share. In the nine months ended September 30, 2022, we repurchased 1,270,294 shares of our common stock for $7.0 million at an average purchase price of $5.50 per share. As of September 30, 2022, we have $23.0 million available for repurchase under the stock repurchase program.
8. INCOME TAXES
Provision for income taxes the three and nine months ended September 30, 2022 and 2021 consisted of the following (in thousands):
 Three Months Ended
September 30,		Nine Months Ended
September 30,
2022202120222021
Income before provision for income taxes$8,582 $4,111 $12,226 $12,135 
Provision for income taxes(877)(340)(1,264)(987)
Effective tax rate(10.2)%(8.3)%(10.3)%(8.1)%

Provision for income taxes for the three and nine months ended September 30, 2022 and 2021 resulted primarily from estimated domestic and foreign taxes included in the calculation of the effective tax rate. We continue to maintain a full valuation allowance against all of our federal and state deferred tax assets in the United States as well as federal tax assets in Canada.

As of September 30, 2022, we had unrecognized tax benefits under ASC 740 Income Taxes of approximately $6.4 million and applicable interest of $0.1 million. The total amount of unrecognized tax benefits that would affect our effective tax rate, if recognized, is $1.3 million. Our policy is to 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.

As of September 30, 2022, we had net deferred income tax assets of $2.0 million and deferred income tax liabilities of $0.2 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 2002 through the current period.

We maintain a valuation allowance against certain of our deferred tax assets, including all federal, state, and certain foreign deferred tax assets because of uncertainties regarding the realization of the asset balance due to historical losses, the variability of operating results, and uncertainty regarding near term projected results. If we determine the deferred tax assets are realizable based on our assessment of relevant factors, an adjustment to the valuation allowance may increase income in the period such determination is made.

9. NET INCOME (LOSS) PER SHARE
Basic net income (loss) per share is computed using the weighted average number of shares of common stock outstanding during the period. Diluted net income (loss) per share is computed using the weighted average number of shares of common
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stock, adjusted for any dilutive effect of potential common stock. Potential common stock, computed using the treasury stock method, includes stock options, stock awards and ESPP.
The following is a reconciliation of the denominators used in computing basic and diluted net income (loss) per share (in thousands, except per share amounts):
 Three Months Ended
September 30,		Nine Months Ended
September 30,
2022202120222021
Denominator:
Weighted-average shares outstanding, basic33,201 32,474 33,601 30,693 
Shares related to outstanding options, unvested RSUs, RSAs, PSUs and ESPP481 138 434 372 
Weighted average shares outstanding, diluted33,682 32,612 34,035 31,065 
We include market condition-based performance restricted stock units in the calculation of diluted earnings per share if the performance condition has been satisfied as of the end of the reporting period and exclude stock equity awards if the performance condition has not been met.

For the three and nine months ended September 30, 2022 and 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 per share because their effect would have been anti-dilutive. These outstanding securities consisted of the following (in thousands):

Three Months Ended
September 30,		Nine Months Ended
September 30,
2022202120222021
Stock options145 342 197 97 
Restricted stock units, restricted stock awards and market condition-based restricted stock units15 — 27 — 
Total160 342 224 97 

10. LEASES
We lease our office space under lease arrangements with expiration dates on or before March 31, 2024. We recognize lease expense on a straight-line basis over the lease term. Leases with an initial term of 12 months or less are not recorded on the Condensed Consolidated Balance Sheets. We combine lease and non-lease components for new and reassessed leases. We apply discount rates to operating leases using a portfolio approach.
Below is a summary of our ROU assets and lease liabilities (in thousands):
Balance Sheets ClassificationSeptember 30
2022		December 31,
2021
Assets
Right-of-use assetsOther assets$507 $912 
Liabilities
  Operating lease liabilities - currentOther current liabilities715 1,098 
  Operating lease liabilities - long-termOther long-term liabilities102 550 
Total lease liabilities$817 $1,648 

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The table below provides supplemental information related to operating leases during the nine months ended September 30, 2022 and 2021 (in thousands except for lease term):
Nine Months Ended
September 30,
20222021
Cash paid within operating cash flow$982 $1,115 
Weighted average lease terms (in years)0.881.60
Weighted average discount rates3.93 %N/A
On June 6, 2022, we entered into a sublease agreement with Innovobot Fund LLP (“Innovobot”) for our facility located in Montreal Canada (the "Montreal Facility"). This sublease commenced on June 8, 2022 and ends on February 27, 2024 which approximates the lease termination date of the original Montreal Facility lease. In accordance with provisions of ASC 842, we treated the sublease as a separate lease as we were not relieved of the primary obligation under the original lease. We continue to account for the original Montreal Facility, as a lessee, in the same manner as prior to the commencement date of the sublease. We accounted for the sublease as a lessor of the lease. We classified the sublease as an operating lease as it did not meet the criteria of a Sale-Type or Direct Financing lease. At the commencement date of the sublease, we recognized initial direct costs of $23,000. These deferred costs will be amortized over the term of the sublease payments.

On January 31, 2022, we entered into an agreement to lease for a 1,390 square feet of office space in Aventura, Florida (“Aventura Lease”). We use this facility as our principal executive offices and for general administrative functions. This lease commenced in the first quarter of 2022 and expires in the first quarter of 2024. We accounted for this lease as an operating lease in accordance with the provisions of ASC 842 Leases (“ASC 842”). In the first quarter of 2022, we recorded a lease liability of $0.1 million, which represents the present value of the lease payments using an estimated incremental borrowing rate of 3.93%. We also recognized right-to-use asset ("ROU") of $0.1 million which represents our right to use an underlying asset for the lease term.
On March 12, 2020, we entered into a sublease agreement with Neato Robotics, Inc. (“Neato”) for the SJ Facility. This sublease commenced in June 2020 and ends on April 30, 2023 which is the lease termination date of the original SJ Facility lease. In accordance with provisions of ASC 842, we treated the sublease as a separate lease as we were not relieved of the primary obligation under the original lease. We continue to account for the original SJ Facility, as a lessee, in the same manner as prior to the commencement date of the sublease. We accounted for the sublease as a lessor of the lease. We classified the sublease as an operating lease as it did not meet the criteria of a Sale-Type or Direct Financing lease. At the commencement date of the sublease, we recognized initial direct costs of $0.3 million. These deferred costs will be amortized over the term of the sublease payments. As of September 30, 2022, unamortized balance of the deferred costs are not material.
We recognize operating lease expense and lease payments from the sublease, on a straight-line basis, in our Condensed Consolidated Statements of Income and Comprehensive Income over the lease terms. During the three and nine months ended September 30, 2022 and 2021, our net operating lease expenses are as follows (in thousands):
Three Months Ended
September 30,		Nine Months Ended
September 30,
2022202120222021
Operating lease cost$236 $209 $672 $623 
Sublease income(306)(257)(837)(772)
Total lease cost (income)$(70)$(48)$(165)$(149)

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Minimum future lease payments obligations as of September 30, 2022 are as follows (in thousands):
For the Years Ending December 31,
2022$310 
2023585 
202438 
Total lease payments933 
Less: Interest116 
Total lease liability$817 
Future cash receipts from our sublease agreements as of September 30, 2022 are as follows (in thousands):
For the Years Ending December 31,
2022$321 
2023548 
202433 
Total$902 

11. SUBSEQUENT EVENT

On November 14, 2022, our Board of Directors declared a quarterly dividend. The first dividend, in the amount of $0.03 per share, will be payable, subject to any revocation, on January 30, 2023, to stockholders of record on January 15, 2023. 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 the capital allocation strategy from time-to-time.
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Item 2.   Management’s Discussion and Analysis of Financial Condition and Results of Operations
This Management’s Discussion and Analysis of Financial Condition and Results of Operations includes forward-looking statements within the meaning of Section 27A of the Securities Act, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). The forward-looking statements involve risks and uncertainties. Forward-looking statements are frequently identified by words such as “anticipates”, “believes”, “expects”, “intends”, “may”, “can”, “will”, “places”, “estimates”, and other similar expressions. However, these words are not the only way we identify forward-looking statements. Examples of forward-looking statements include any expectations, projections, or other characterizations of future events, or circumstances, and include statements regarding: the impact of COVID-19 on our business, including as to revenue, and potential cost reduction measures, and the impact of COVID-19 on our customers, suppliers, and on the economy in general; our strategy and our ability to execute our business plan; our competition and the market in which we operate; our customers and suppliers; our revenue trends related thereto, trends related thereto; and the recognition and components thereof; our costs and expenses, including capital expenditures; our investment of surplus funds and sales of marketable debt securities; seasonality and demand; our investment in research and technology development; changes to general and administrative expenses; our foreign operations and the reinvestment of our earnings related thereto; our investment in and protection of our IP; our employees; capital expenditures and the sufficiency of our capital resources; unrecognized tax benefit and tax liabilities; the impact of changes in interest rates and foreign exchange rates, as well as our plans with respect to foreign currency hedging in general; changes in laws and regulations; including with respect to taxes; our plans and estimates related to and the impact of current and future litigation and arbitration; our leases, sublease and the timing and income related thereto; and our stock repurchase and equity distribution programs.
Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict and many of which are outside of our control. Actual results could differ materially from those projected in the forward-looking statements, therefore we caution you not to place undue reliance on these forward-looking statements. Important factors that could cause our actual results and financial condition to differ materially from those indicated in the forward-looking statements include, among others, the risk factors contained below under Part II, Item 1A, Risk Factors.
Any forward-looking statements made by us in this report speak only as of the date of this report, and we do not intend to update these forward-looking statements after the filing of this report, unless required to do so by applicable law. You are urged to review carefully and consider our various disclosures in this report and in our other reports publicly disclosed or filed with the SEC that attempt to advise you of the risks and factors that may affect our business.

OVERVIEW

We are a premier licensing company focused on the invention, acceleration, and scaling, through licensing, of innovative haptic technologies that allow people to use their sense of touch to engage with products and experience the digital world around them. We are one of the leading experts in haptics, and our focus on innovation allows us to deliver world-class intellectual property (“IP”) and technology that enables the creation of products that delight end users. Our technologies are designed to facilitate the creation of high-quality haptic experiences, enable their widespread distribution, and ensure that their playback is optimized. Our primary business is currently in the mobility, gaming, and automotive markets, but we believe our technology is broadly applicable and see opportunities in evolving new markets, including entertainment, social content, virtual and augmented reality, and wearables, as well as residential, commercial, and industrial Internet of Things. In recent years, we have seen a trend towards broad market adoption of haptic technology. As other companies follow our leadership in recognizing how important tactile feedback can be in people’s digital lives, we expect the opportunity to license our IP and technologies will continue to expand.

We have adopted a business model under which we provide technical assistance designed to integrate our patented technology into our customers’ products or enhance the functionality of our patented technology, and offer licenses to our patented technology to our customers. Our licenses enable our customers to deploy haptically-enabled devices, content and other offerings, which they typically sell under their own brand names. We and our wholly-owned subsidiaries hold more than 1,200 issued or pending patents worldwide as of September 30, 2022. Our patents cover a wide range of digital technologies and ways in which touch-related technology can be incorporated into and between hardware products and components, systems software, application software, and digital content. We believe that our IP is relevant to many of the most important and cutting-edge ways in which haptic technology is and can be deployed, including in connection with mobile interfaces and user interactions, in association with pressure and other sensing technologies, as part of video and interactive content offerings, as related to virtual and augmented reality experiences, and in connection with advanced actuation technologies and techniques. Our portfolio includes numerous patents and patent applications that we believe may become essential to emerging standards in
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development by Standards Development Organizations (“SDOs”) including media standards in development by ISO/IEC Moving Picture Expert Group (MPEG) and software and system standards in development at IEEE-SA.

We were incorporated in 1993 in California and reincorporated in Delaware in 1999.

Results of Operations
Overview
Total revenues for the three months ended September 30, 2022 was $14.0 million, an increase of $6.8 million, or 95%, compared to the same period in 2021. Total revenues for the nine months ended September 30, 2022 was $29.3 million, an increase of $4.0 million, or 16%, compared to the same period in 2021.
Total cost and operating expenses were $3.1 million in the three months ended September 30, 2022, a decrease of $0.4 million, or 12% compared to the same period in 2021. Total cost and operating expenses were $10.7 million in the nine months ended September 30, 2022, a decrease of $2.7 million, or 20% compared to the same period in 2021.
In the three months ended September 30, 2022, we had net income of $7.7 million compared to a net income of $3.8 million in the three months ended September 30, 2021. In the nine months ended September 30, 2022 and 2021 we had net income of $11.0 million and $11.1 million, respectively.
The following table sets forth our Condensed Consolidated Statements of Income and Comprehensive Income data as a percentage of total revenues:
Three Months Ended
September 30,		Nine Months Ended
September 30,
2022202120222021
Revenues:
Fixed fee license revenue55 %18 %36 %17 %
Per-unit royalty revenue45 81 63 82 
Total royalty and license revenue100 99 99 99 
Development, services, and other— 1 1 1 
Total revenues100 100 100 100 
Costs and expenses:
Cost of revenues— — — — 
Sales and marketing2 6 3 11 
Research and development2 11 4 14 
General and administrative18 32 29 28 
Total costs and expenses22 49 36 53 
Operating income 78 51 64 47 
Interest and other income (loss), net(17)7 (22)1 
Income before provision for income taxes61 58 42 48 
Provision for income taxes(6)(5)(4)(4)
Net income 55 %53 %38 %44 %
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Revenues
Our revenue is primarily derived from fixed fee license agreements and per-unit royalty agreements, along with less significant revenue earned from development, services and other revenue. Royalty and license revenue is composed of per unit royalties earned based on usage or net sales by licensees and fixed payment license fees charged for our IP and software.
Three Months Ended September 30, 2022 Compared to Three Months Ended September 30, 2021
A revenue summary for the three months ended September 30, 2022 and 2021 are as follows (in thousands, except for percentages):
Three Months Ended September 30,
20222021$ Change% Change
Fixed fee license revenue$7,662 $1,247 $6,415 514%
Per-unit royalty revenue6,269 5,821 448 8%
Total royalty and license revenue13,931 7,068 6,863 97%
Development, services, and other revenue75 105 (30)(29)%
Total revenues$14,006 $7,173 $6,833 95%
Royalty and license revenue
Fixed fee license revenue increased $6.4 million, or 514% in in the third quarter of 2022 compared to the same period in 2021 due to a $6.4 million increase in mobility license revenue.
Per-unit royalty revenue increased by $0.4 million, or 8%, in the third quarter of 2022 compared to the same period in 2021, primarily due to a $0.9 million increase in other royalties revenue partially offset by a $0.2 million decrease in royalties from mobility licensees and a $0.2 million decrease in royalties from gaming licensees.
We expect royalty and license revenue to continue to be a major component of our future revenue as our technology is included in products and we succeed in our efforts to monetize our IP. Our fixed fee license revenue could fluctuate depending upon the timing of execution of new fixed license fee arrangements. We also anticipate that our royalty revenue will fluctuate relative to our customers’ unit shipments.
Geographically, revenues generated in Asia, North America and Europe for the three months ended September 30, 2022 represented 43%, 54%, and 3%, respectively, of our total revenue as compared to 80%, 15%, and 5%, respectively, for the three months ended September 30, 2021.
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Nine Months Ended September 30, 2022 Compared to Nine Months Ended September 30, 2021
A revenue summary for the three months ended September 30, 2022 and 2021 are as follows (in thousands, except for percentages):
Nine Months Ended September 30,
20222021$ Change% Change
Revenues:
Fixed fee license revenue$10,653 $4,346 $6,307 145%
Per-unit royalty revenue18,426 20,671 (2,245)(11)%
Total royalty and license revenue29,079 25,017 4,062 16%
Development, services, and other revenue218 325 (107)(33)%
Total revenues$29,297 $25,342 $3,955 16%
Royalty and license revenue
Fixed fee license revenue increased $6.3 million, or 145% in the first nine months of 2022 compared to the same period in 2021 primarily attributable to a $6.4 million increase in mobility revenue and a $0.1 million increase in other license revenue.
Per-unit royalty revenue decreased by $2.2 million, or 11%, in the first nine month of 2022 compared to the same period in 2021, primarily caused by a $2.4 million decrease in royalties from mobility licensees, a $1.0 million decrease in royalties from automotive licensees and a $0.3 million decrease in royalties from gaming licensees. These decreases were partially offset by a $1.4 million increase in royalties from other licensees.
Geographically, revenues generated in Asia, North America and Europe for the nine months ended September 30, 2022 represented 61%, 33%, and 6%, respectively, of our total revenue as compared to 80%, 13%, and 7%, respectively, for the nine months ended September 30, 2021.
Operating Expenses
A summary of operating expenses for the three and nine months ended September 30, 2022 and 2021 are as follows (in thousands, except for percentages):
Three Months Ended September 30,
20222021$ Change% Change
Sales and marketing$282 443 $(161)(36)%
Research and development254 803 (549)(68)%
General and administrative2,540 2,246 294 13 %
Nine Months Ended September 30,
20222021$ Change% Change
Sales and marketing$986 2,743 $(1,757)(64)%
Research and development1,118 3,442 (2,324)(68)%
General and administrative8,550 7,106 1,444 20 %

Sales and Marketing - Our sales and marketing expenses primarily consisted of employee compensation and benefits, including stock-based compensation; sales commissions; advertising; collateral marketing materials; market development funds; travel; and allocated facilities costs.
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Sales and marketing expenses decreased $0.2 million, or 36% and $1.8 million, or 64%, in the three and nine months ended September 30, 2022, respectively, compared to the same periods in 2021. The decreases in Sales and Marketing expenses were primarily attributable to decreases in compensation, benefits and other personnel related costs primarily due to lower headcount, decreases in variable compensation and stock-based compensation expense.
Research and Development - Our research and development expenses primarily consisted of employee compensation and benefits, including stock-based compensation; outside services and consulting fees; tooling and supplies; and allocated facilities costs.
Research and development expenses decreased $0.5 million, or 68% and $2.3 million, or 68%, in the three and nine months ended September 30, 2022, respectively, compared to the same periods in 2021. The decreases in Research and Development costs were primarily attributable to decreases in compensation, benefits and other personnel related costs due to lower headcount and decreases in stock-based compensation expense and severance costs.
General and Administrative - Our general and administrative expenses primarily consisted of employee compensation and benefits including stock-based compensation; legal other professional fees; external legal costs for patents; office expense; travel; and allocated facilities costs.
General and administrative expenses increased $0.3 million, or 13%, in the third quarter of 2022 as compared to the same period in 2021 primarily due to a $0.8 million increase in compensation, benefits and other personnel related costs partially offset by a $0.3 million decrease in consulting and professional services and a $0.3 million decrease in legal costs.
General and administrative expenses increased $1.4 million, or 20%, in the first nine months of 2022 as compared to the same period in 2021 primarily due to a $2.1 million increase in compensation, benefits and other personnel related costs and a $0.3 million increase in Annual Stockholders' Meeting and other public company related costs. These increases were partially offset by a $0.6 million decrease in legal costs and a $0.4 million decrease in consulting and professional services.
The increases in compensation, benefits and other personnel related costs were driven by increases in stock-based compensation expense and higher variable compensation during the three and nine months ended September 30, 2022 compared to the same periods in 2021. The decrease in legal expense in the three and nine months ended September 30, 2022 compared to the same period in 2021was primarily attributable to reduced activities, as well as a decrease in patent maintenance and prosecution costs.

We may be required to engage in litigation to protect our IP, in which case our general and administrative expenses could substantially increase reflecting such litigation costs.

Interest and Other Income (Loss)
Interest and Other Income (loss) - Interest and other income consists primarily of interest and dividend income from cash and cash equivalents and marketable debt and equity securities, short-term investments realized and unrealized gains (losses) on our marketable equity securities and derivative instruments and realized gains (losses) on our marketable debt securities.
Interest and other income (loss) decreased $2.8 million during the three months ended September 30, 2022 compared to the same period in 2021 primarily driven by a $4.0 million net loss on marketable securities partially offset by a $1.0 million increase in interest and dividend income.
The net loss on marketable securities for the three months ended September 30, 2022 primarily consisted of a $10.1 million increase in net losses on marketable equity securities partially offset by a $6.1 million net gains on derivative instruments.
Interest and other income (loss) decreased $6.6 million during the nine months ended September 30, 2022 compared to the same period in 2021 primarily driven by a $10.4 million increase in net loss on marketable securities partially offset by a $3.7 million increase in interest and dividend income.
The increase in net loss on marketable securities for the nine months ended September 30, 2022 largely consisted of a $13.8 million increase in net loss on marketable securities partially offset by a $3.4 million increase in net gains derivative instruments.
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The increase in interest and dividend income in the three and nine months ended September 30, 2022 compared to the same periods in 2021 was largely attributable to higher interest and dividend income from investments as well as interest income from a Korean tax litigation settlement.
Income Taxes
A summary of provision for income taxes and effective tax rates for the three and nine months ended September 30, 2022 and 2021 are as follows (in thousands):
Three Months Ended September 30,
20222021$ Change% Change
Income before provision for income taxes$8,582 $4,111 
Provision for income taxes(877)(340)(537)158 %
Effective tax rate(10.2)%(8.3)%
Nine Months Ended September 30,
20222021$ Change% Change
Income before provision for income taxes$12,226 $12,135 
Provision for income taxes(1,264)(987)(277)28 %
Effective tax rate(10.3)%(8.1)%

Provision for income taxes for the three and nine months ended September 30, 2022 and 2021 resulted primarily from estimated domestic and foreign taxes included in the calculation of the effective tax rate.

We continue to maintain a full valuation allowance against all of our federal and state deferred tax assets in the United States as well as federal tax assets in Canada. As a result, no benefit for losses generated from our U.S. territory was included in the calculation of the effective tax rate, which was the main reason for the difference between the statutory tax rate and actual effective tax rate. The year-over-year change in provision for income taxes resulted primarily from the change in income from continuing operations across various tax jurisdictions.

We continue to maintain a valuation allowance of against certain of our deferred tax assets, including all federal, state and certain foreign deferred tax assets in the United States and Canada as a result of uncertainties regarding the realization of the asset balance due to historical losses, the variability of operating results, and uncertainty regarding near term projected results. 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 September 30, 2022, we had unrecognized tax benefits under ASC 740 Income Taxes of approximately $6.4 million and applicable interest of $0.1 million. The total amount of unrecognized tax benefits that would affect our effective tax rate, if recognized, is $1.3 million. We account for interest and penalties related to uncertain tax positions as a component of income tax provision. We do not expect to have any significant changes to unrecognized tax benefits during the next twelve months.

Liquidity and Capital Resources
Our cash equivalents, investments - current and investments - noncurrent consist primarily of money-market funds, investment in equity and debt marketable securities (including mutual funds) and certificates of deposit. All marketable securities are stated at market value. Realized gains and losses on marketable equity securities and marketable debt securities are recorded in Other income (expense), net on the Condensed Consolidated Statements of Income and Comprehensive Income. Unrealized gains and losses on marketable equity securities (including mutual funds) are reported as Other income (expense), net on our Condensed Consolidated Statement of Income and Comprehensive Income. Unrealized gains and losses on marketable debt securities reported as a component of Accumulated other comprehensive income on our Condensed Consolidated Balance Sheets. Certificates of deposit are report as Investment - current or Investment -noncurrent based on their
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remaining maturity days. Interest income from certificates of deposit are reported as Interest and other income (loss), net on the Condensed Consolidated Statement of Income and Comprehensive Income.
Cash, cash equivalents and investments-current - As of September 30, 2022, our cash, cash equivalents, and investments- current totaled $133.5 million, a decrease of $4.4 million from $137.9 million on December 31, 2021.
A summary of select cash flow information for the nine months ended September 30, 2022 and 2021 (in thousands):
Nine Months Ended September 30,
20222021
Net cash provided by operating activities$32,080 $10,722 
Net cash used in investing activities$(35,578)$(32,775)
Net cash provided by (used in) financing activities$(11,225)$53,132 
Cash provided by operating activities - Our operating activities primarily consists of net income adjusted for certain non-cash items including depreciation and amortization; stock-based compensation expense, deferred income taxes and the effect of changes in operating assets and liabilities.
Net cash provided by operating activities was $32.1 million in the nine months ended September 30, 2022, a $21.4 million increase compared to the same period in 2021. This cash increase was primarily attributable to a $11.1 million increase from changes in net operating assets and a $10.5 million increase from changes in non-cash items partially offset by a $0.2 million decrease in net income.
Cash provided by (used in) investing activities - Our investing activities primarily consist of purchases of marketable securities and other investments and proceeds from disposal of marketable securities and other investments; proceeds from issuance of derivative instruments; payments made to settle derivative instruments and purchases of computer equipment, furniture and leasehold improvements.
Net cash used in investing activities during the nine months ended September 30, 2022 was $35.6 million primarily consisting of $141.9 million in cash used to purchase marketable securities and in the settlement of derivative instrument partially offset by $106.4 million in proceeds from selling marketable securities and derivatives.
Net cash used in investing activities during the nine months ended September 30, 2021 was $32.8 million primarily consisting of $34.4 million of purchases marketable securities partially offset by $1.8 million of proceeds from sale of derivative instruments.
Net cash used by financing activities during the nine months ended September 30, 2022 was $11.2 million primarily consisting of cash paid for stock repurchases.
Net cash provided by financing activities during the nine months ended September 30, 2021 was $53.1 million primarily consisting of $50.1 million of net proceeds from common stock issuances and $3.0 million cash proceeds from stock option exercises and stock purchases under our employee stock purchase plan.
Total cash, cash equivalents, and short-term investments were $133.5 million as of September 30, 2022 of which approximately 22%, or $30.0 million, was held by our foreign subsidiaries and subject to repatriation tax effects. Our intent is to permanently reinvest a majority of our earnings from foreign operations, and current plans do not anticipate that we will need funds generated from foreign operations to fund our domestic operations.
On November 14, 2022, our Board of Directors declared a quarterly dividend. The first dividend, in the amount of $0.03 per share, will be payable, subject to any revocation, on January 30, 2023, to stockholders of record on January 15, 2023. 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 the capital allocation strategy from time-to-time.
We may continue to invest in, protect, and defend our extensive IP portfolio, which can result in the use of cash in the event of litigation.
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On February 23, 2022, our Board of Directors approved a stock repurchase program of up to $30 million of our common stock for a period of up to twelve months. Any stock repurchases may be made through open market and privately negotiated transactions, at such times and in such amounts as management deems appropriate, including pursuant to one or more Rule 10b5-1 trading plans adopted in accordance with Rule 10b5-1 of the Securities Exchange Act of 1934. 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 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 stock repurchase program does not obligate us to repurchase any dollar amount or number of shares, and the program may be suspended or discontinued at any time.
In the nine months ended September 30, 2022, we repurchased 1,270,294 shares of our common stock for $7.0 million at an average purchase price of 5.50 per share. As of September 30, 2022, we have $23.0 million available for future repurchase under the stock repurchase program.
At September 30, 2022, we had a liability for unrecognized tax benefits totaling $0.2 million, none of which could be payable in cash.
We did not have any other significant non-cancellable purchase commitments as of September 30, 2022.
We anticipate that capital expenditures for property and equipment for the remainder of 2022 will be less than $1.0 million.
While the unprecedented public health and governmental efforts to contain the spread of COVID-19 have created significant uncertainty as to general economic and capital market conditions in 2022 and beyond, as of November 14, 2022, the date of this Quarterly Report on Form 10-Q, we believe we have sufficient capital resources to meet our working capital needs for the next twelve months and beyond.
Critical Accounting Estimates
Our discussion and analysis of our financial condition and results of operations are based upon our condensed consolidated financial statements, which have been prepared in accordance with U.S. GAAP. The preparation of these condensed consolidated financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, expenses, and related disclosure of contingent assets and liabilities. On an ongoing basis, we evaluate our estimates and assumptions, including those related to revenue recognition, marketable securities and derivative instruments, income taxes and contingencies. We base our estimates and assumptions on historical experience and on various other factors that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates and assumptions.

Due to the COVID-19 pandemic, there has been uncertainty and disruption in the global economy and financial markets. We are not aware of any specific event or circumstance that would require updates to our estimates or judgments or require us to revise the carrying value of our assets or liabilities as of November 14, 2022 the date of issuance of this Quarterly Report on Form 10-Q. These estimates may change as new events occur and additional information is obtained. Actual results could differ materially from these estimates under different assumptions or conditions.

Please refer to Management's Discussion and Analysis of Financial Condition and Results of Operations contained in Part II, Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2021 filed with the SEC on February 25, 2022, for a complete discussion of our critical accounting policies and estimates. The preparation of financial statements and related disclosures in conformity with U.S. generally accepted accounting principles (“GAAP”) and our discussion and analysis of our financial condition and operating results require the management to make judgments, assumptions and estimates that affect the amounts reported. See Note 1. Significant Accounting Policies of the Notes to Condensed Consolidated Financial Statements in Part I, Item 1 herein, which describes the significant accounting policies and methods used in the preparation of our condensed consolidated financial statements. Management bases its estimates on historical experience and on various other assumptions it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities.

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Recent Accounting Pronouncements
See Note 1 Significant Accounting Policies of the Notes to Condensed Consolidated Financial Statements for information regarding the effect of new accounting pronouncements on our financial statements.
Item 4.  Control and Procedures

Based on their evaluation as of September 30, 2022, our management, with the participation of our Chief Executive Officer and Chief Financial Officer, has concluded that our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) were effective to ensure that the information required to be disclosed by us in this Quarterly Report on Form 10-Q was (i) recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and regulations and (ii) accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure.

There were no changes to internal controls over financial reporting that occurred during the quarter ended September 30, 2022 that have materially affected or are reasonably likely to materially affect our internal controls over financial reporting.

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

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PART II
Item 1.  Legal Proceedings
Immersion Corporation vs. Meta Platforms, Inc., f/k/a Facebook, Inc.

On May 26, 2022, we filed a complaint against Meta in the United States District Court for the Western District of Texas. The complaint alleges that Meta’s AR/VR systems, including the Meta Quest 2, infringe six of our patents that cover various uses of haptic effects in connection with such AR/VR systems. We are seeking to enjoin Meta from further infringement and to recover a reasonable royalty for such infringement.

The complaint against Meta asserts infringement of the following patents:

•U.S. Patent No. 8,469,806: “System and method for providing complex haptic stimulation during input of control gestures, and relating to control of virtual equipment”
•U.S. Patent No. 8,896,524: “Context-dependent haptic confirmation system”
•U.S. Patent No. 9,727,217: “Haptically enhanced interactivity with interactive content”
•U.S. Patent No. 10,248,298: “Haptically enhanced interactivity with interactive content”
•U.S. Patent No. 10,269,222: “System with wearable device and haptic output device”
•U.S. Patent No. 10,664,143: “Haptically enhanced interactivity with interactive content”

Meta responded to our complaint on August 1, 2022. On September 12, 2022, Meta filed a motion to transfer the lawsuit to the Northern District of California or, in the alternative, to the Austin Division of the Western District of Texas. Meta’s motion remains pending during venue discovery. Our response is due December 5, 2022.

Samsung Electronics Co. v. Immersion Corporation and Immersion Software Ireland Limited
On April 28, 2017, we received a letter from 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, we 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 Immersion’s 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. On July 16, 2020, the Korea Administrative Court issued its ruling in which it ruled that the withholding taxes and penalties which were imposed by the Korean tax authorities on Samsung should be cancelled with some litigation costs to be borne by the Korean tax authorities.
On August 1, 2020, the Korean tax authorities filed an appeal with the Korea High Court. The first hearing in the Korea High Court occurred on November 11, 2020. A second hearing occurred on January 13, 2021. A third hearing occurred on March 21, 2021. 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. On October 1, 2021, the Korea High Court issued its ruling in which it ruled that withholding taxes and penalties totaling approximately KRW 6,186,218,586 (approximately $5.2 million) in national-level withholding tax and local withholding taxes imposed by the Korean tax authorities on Samsung for royalties paid to Immersion during the period of 2012 – 2014 be cancelled on the basis that the Korea tax authorities wrongfully engaged in a duplicative audit with respect to such time period. The Korea High Court also ruled that approximately KRW 1,655,105,584 (approximately $1.4 million) of national-level withholding tax and local withholding taxes imposed by the Korean tax authorities on Samsung for royalties paid to Immersion during 2015 and 2016 be upheld in part on the basis that Immersion Software Ireland Limited did not have sufficient economic substance to be considered the beneficial owner of the royalties paid by Samsung to Immersion Software Ireland Limited. On or about October 22, 2021, the Korean tax authorities filed an appeal with the Korea Supreme Court with respect to certain portions of the Korea High Court decision and we filed an appeal with the Korea Supreme Court with respect to certain portions of the Korea High Court decision.

On December 1, 2021, the Korean tax authorities submitted its brief to the Korea Supreme Court challenging the cancellation by the Korea High Court of a portion of the withholding tax imposed by the Korean tax authorities. On December 3, 2021, we submitted our own brief to the Korea Supreme Court providing arguments in support of our position that Immersion Software Ireland Limited has sufficient economic substance to be considered the beneficial owner of the royalties paid by Samsung to Immersion Software Ireland Limited. Such brief also provided arguments challenging the calculation of the imposed withholding tax upheld by the Korea High Court. On December 20, the Korean tax authorities filed a rebuttal brief
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relating to our brief filed on December 3, 2021. On December 29, 2021, we filed our rebuttal brief relating to the Korean tax authorities’ brief filed on December 1, 2021. On February 24, 2022, the Korea Supreme Court issued a decision affirming the rulings of the Korea High Court. We believe that any impairment in the Long-term deposits associated with the rulings of the Korea High Court is appropriately reflected in the Condensed Consolidated Balance Sheets.
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. Samsung is requesting that we pay Samsung the amount of KRW 7,841,324,165 (approximately $6.9 million) plus interest from and after May 2, 2017, plus the cost of the arbitration including legal fees. On March 27, 2019, we received the final award. The award ordered Immersion to pay Samsung KRW 7,841,324,165 (approximately $6.9 million as of March 31, 2019), which we paid on April 22, 2019, denied Samsung’s claim for interest from and after May 2, 2017; and ordered Immersion to pay Samsung’s cost of the arbitration in the amount of approximately $871,454, which was paid in 2019.
As a result of the Korea Supreme Court decision described above, we were reimbursed by Samsung in an amount equal to KRW 6,088,855,388 (approximately $5.0 million) representing Korea national-level taxes, penalties and interest that was canceled by the Korea Supreme Court. We were also reimbursed an additional KRW 608,885,000 (approximately $0.5 million) representing local-level taxes, penalties and interest that was canceled by the Korea Supreme Court.
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 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 Korea courts. In the second quarter of 2020, we recorded this deposit as Long-term deposits on our Condensed Consolidated Balance Sheets.
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. 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. The first hearing occurred on October 15, 2019. A second hearing occurred on December 19, 2019. A third hearing occurred on February 13, 2020. A fourth hearing occurred on June 9, 2020. A fifth hearing occurred on July 16, 2020. We anticipated a decision to be rendered on or about October 8, 2020, but the Korea Administrative Court scheduled and held a sixth hearing for November 12, 2020. A seventh hearing occurred on January 14, 2021. An eighth hearing occurred on April 8, 2021. A ninth hearing occurred on June 24, 2021. A tenth hearing occurred on September 13, 2021. An eleventh hearing occurred on November 15, 2021. A twelfth hearing occurred on December 23, 2021. The Court had indicated that it expected to render a decision on this matter by the end of February 2022. However, due to a reshuffling of judges, another hearing, which was originally scheduled for April 14, 2022 occurred on July 7, 2022. A thirteenth hearing occurred on October 27, 2022. A final hearing is scheduled for November 24, 2022. The Court has indicated that it expects to render a decision on this matter by December 31, 2022.

Based on the developments in these cases, we regularly reassess the likelihood that we will prevail in some or all of the claims from the Korean tax authorities. 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 Income and Comprehensive Income. In the event that we determine that it is more likely than not that we will not prevail against the claims from the Korean tax authorities, or a portion thereof, then we would estimate the anticipated additional tax expense associated with that outcome and record it as additional income tax expense in our Condensed Consolidated Statements of Income and Comprehensive Income in the period of the new determination. If the additional income tax expense was related to the periods assessed by Korean tax authorities and for which we recorded in Long-term deposits on our Condensed Consolidated Balance Sheets, then the additional income tax expense would be recorded as an impairment in the Long-term deposits. If the additional income tax expense was not related to the periods assessed by Korean tax authorities and for a which we recorded a Long-term deposits on our Condensed Consolidated Balance Sheets, then the additional income tax expense would be accrued as an Other current liabilities.
We cannot predict the ultimate outcome of the above-mentioned actions that are pending, and we are unable to estimate any potential liability we may incur. Please also refer to our disclosures in Note 5. Contingencies of the Note to the Condensed Consolidated Financial Statements.
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Immersion Software Ireland Limited v. Marquardt GMBH

On August 3, 2021, we filed an arbitration demand with the American Arbitration Association (the “AAA”) against Marquardt GmbH (“Marquardt”), one of our licensees in the automotive market. The arbitration demand had arisen 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 demanded that Marquardt cure its breach of the Marquardt License and pay all royalties currently owed under the Marquardt License.

Pursuant to the terms of the Marquardt License, we requested arbitration by a single arbitrator in Madison County, New York. On August 9, 2021, the AAA confirmed receipt of our arbitration demand dated August 3, 2021. On August 13, 2021, the AAA conducted an administrative conference call to discuss communications, mediation, tribunal appointment, place of arbitration, and other administrative topics. On September 15, 2021, Marquardt filed an answer to our arbitration demand with the AAA, in which Marquardt provided general denials of our claims and asserted a counterclaim for approximately $138,000 in royalties previously paid to us under the Marquardt License. On September 30, 2021, we filed an answer to Marquardt’s counterclaim in which we denied the allegations set forth in Marquardt’s counterclaim. A preliminary hearing occurred on December 6, 2021, during which the parties agreed to explore mediation and the arbitrator set forth a schedule relating to the arbitration. A mediation session occurred during the period of March 14-16, 2022. At the mediation, we entered into a binding settlement term sheet with Marquardt pursuant to which we agreed to cause our arbitration demand to be dismissed. In exchange, Marquardt agreed to the prepayment of certain royalties otherwise payable under the Marquardt License. Additionally on April 4, 2022, we entered into an amendment to the Marquardt License to reflect such payment and other related terms. On May 20, 2022, the parties submitted a stipulation of dismissal to the AAA dismissing with prejudice all claims brought by us against Marquardt in the arbitration.

Item 1A.   Risk Factors
There have been no material changes to the risk factors disclosed in Risk Factors in our Annual Report on Form 10-K for the year ended December 31, 2021 filed with the SEC on February 25, 2022.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Stock Repurchase Program

On February 23, 2022, our Board of Directors approved a stock repurchase program of up to $30 million of our common stock for a period of up to twelve months. Any stock repurchases may be made through open market and privately negotiated transactions, at such times and in such amounts as management deems appropriate, including pursuant to one or more Rule 10b5-1 trading plans adopted in accordance with Rule 10b5-1 of the Securities Exchange Act of 1934. 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 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 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.

As of September 30, 2022, we have $23.0 million available for repurchase under the stock repurchase program.

39

Share repurchase activity during the three months ended September 30, 2022 was as follows (in thousands, except per share amounts):

PeriodsTotal Number of Shares PurchasedAverage Price Paid Per ShareTotal Number of Shares Purchased as Part of Publicly Announced Plans or Programs
Approximate Dollar Value of Shares That May Yet Be Purchased Under the Plans or Programs (1)
July 1 to July 31, 2022— N/A— 28,300,000 
August 1 to August 31, 2022607,998 5.5372607,998 24,900,000 
September 1 to September 30, 2022346,249 5.5638346,249 23,000,000 

(1) The amounts represent the amount available to repurchase shares under the authorized repurchase program as of September 30, 2022. Our stock repurchase program does not obligate it to acquire any specific number of shares.


40


ITEM 6. EXHIBITS

The exhibits listed in the accompanying “Exhibit Index” are filed or incorporated by reference as part of this Form 10-Q.

Exhibit
Number		Exhibit DescriptionIncorporated by Reference
FormFile No.ExhibitFiling Date
8-K000-383343.1August 15, 2022
8-K000-279693.1June 7, 2017
8-K000-279693.1July 29, 2003
8-K000-279693.1November 17, 2021
*
**
*
**
*
**
*
*
+
+
101.INS*XBRL Report Instance Document
101.SCH*XBRL Taxonomy Extension Schema Document
101.CAL*XBRL Taxonomy Calculation Linkbase Document
101.DEF*XBRL Taxonomy Extension Definition Linkbase Document
101.LAB*XBRL Taxonomy Label Linkbase Document
101.PRE*XBRL Presentation Linkbase Document
104Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)
* Filed herewith
+ This certification is deemed not filed for purposes of section 18 of the Exchange Act, as amended, or otherwise subject to the liability of that section, nor shall it be deemed incorporated by reference into any filing under the Securities Act, as amended, or the Exchange Act, as amended.
** Management Contract

41

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

Date: November 14, 2022
IMMERSION CORPORATION
By 
/S/ AARON AKERMAN
 Aaron Akerman
Chief Financial Officer


42
1 4882-8189-3432.v1 IMMERSION CORPORATION CHANGE OF CONTROL AND SEVERANCE AGREEMENT This Change of Control and Severance Agreement (this “Agreement”) is made and entered into effective as of May 26, 2022 (the “Effective Date”), by and between Eric Singer (“Executive”) and Immersion Corporation, a Delaware corporation (the “Company”). Certain capitalized terms used in this Agreement are defined in Section 1 below. RECITALS A. It is expected that the Company from time to time will consider the possibility of a Change of Control. The Board of Directors of the Company (the “Board”) recognizes that such consideration can be a distraction to Executive and can cause Executive to consider alternative employment opportunities. B. The Board believes that it is in the best interests of the Company and its shareholders to provide Executive with an incentive to continue Executive’s employment and to maximize the value of the Company upon a Change of Control for the benefit of its shareholders. C. In order to provide Executive with enhanced financial security and sufficient encouragement to remain with the Company notwithstanding the possibility of a Change of Control, the Board believes that it is imperative to provide Executive with certain severance and other benefits upon Executive’s termination of employment in connection with a Change of Control. D. The Board also believes it is in the best interests of the Company and its shareholders to provide Executive with severance upon an involuntary termination other than in connection with a Change of Control. AGREEMENT In consideration of the mutual covenants herein contained and the continued employment of Executive by the Company, the parties agree as follows: 1. Definition of Terms. The following terms referred to in this Agreement shall have the following meanings: (a) Cause. “Cause” shall mean Executive’s (i) commission of a felony, an act involving moral turpitude, or an act constituting common law fraud, and which has an adverse effect on the business or affairs of the Company or its affiliates or stockholders; (ii) intentional or willful misconduct or refusal to follow the lawful instructions of the Board that is not cured within thirty (30) days following written notice from the Board; (iii) commission of any violation of a company policy that has a material adverse effect on the business or reputation of the Company or (iv) intentional breach of Company confidential information obligations which has an adverse effect on the Company or its affiliates. For these purposes, no act or failure to act DocuSign Envelope ID: AD6622BC-9ACA-4D14-9B61-B36D3DB99218

 
2 4882-8189-3432.v1 shall be considered “intentional or willful” unless it is done, or omitted to be done, in bad faith without a reasonable belief that the action or omission is in the best interests of the Company. (b) Change of Control. “Change of Control” shall mean the occurrence of any of the following events: (i) a change in the composition of the Board occurs, as a result of which fewer than one-half of the incumbent directors are directors who either: (A) had been directors of the Company on the “look-back date” (as defined below) (the “original directors”); or (B) were elected, or nominated for election, to the Board with the affirmative votes of at least a majority of the aggregate of the original directors who were still in office at the time of the election or nomination and the directors whose election or nomination was previously so approved (the “continuing directors”); provided, however, that for this purpose, the “original directors” and “continuing directors” shall not include any individual whose initial assumption of office occurred as a result of an actual or threatened election contest with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents, by or on behalf of a person other than the Board; or (ii) any “person” (as defined below) who by the acquisition or aggregation of securities, is or becomes the “beneficial owner” (as defined in Rule 13d-3 under the Securities Exchange Act of 1934 (the “Exchange Act”)), directly or indirectly, of securities of the Company representing 50% or more of the combined voting power of the Company’s then outstanding securities ordinarily (and apart from rights accruing under special circumstances) having the right to vote at elections of directors (the “Base Capital Stock”); except that any change in the relative beneficial ownership of the Company’s securities by any person resulting solely from a reduction in the aggregate number of outstanding shares of Base Capital Stock, and any decrease thereafter in such person’s ownership of securities, shall be disregarded until such person increases in any manner, directly or indirectly, such person’s beneficial ownership of any securities of the Company; or (iii) the consummation of a merger or consolidation of the Company or a Subsidiary of the Company with or into another entity or any other corporate reorganization, if persons who were not stockholders of the Company immediately prior to such merger, consolidation or other reorganization own immediately after such merger, consolidation or other reorganization 50% or more of the voting power of the outstanding securities of each of: (A) the Company (or its successor) and (B) any direct or indirect parent corporation of the Company (or its successor); or (iv) The sale, transfer or other disposition of all or substantially all of the Company’s assets, which for the avoidance of doubt, shall include the distribution (by way of dividend, distribution or similar action), in a single distribution or in a series of distributions DocuSign Envelope ID: AD6622BC-9ACA-4D14-9B61-B36D3DB99218

 
3 4882-8189-3432.v1 occurring within a 12-month period, by the Company of cash to its shareholders of an amount equal to an aggregate of at least fifty percent (50%) of the Company’s cash and cash equivalents held as of the date immediately prior to the date of such distribution, or in the case of multiple distributions within a 12-month period, as measured by the total amount of distributions within such 12-month period against the total cash and cash equivalents of the Company as of the date immediately prior to the date of such initial distribution within such 12-month period. For purposes of subsection 1(b)(i) above, the term “look-back date” shall mean the date 24 months prior to the date of the event that may constitute a Change of Control. For purposes of subsection 1(b)(ii)) above, the term “person” shall have the same meaning as when used in Sections 13(d) and 14(d) of the Exchange Act but shall exclude (1) a trustee or other fiduciary holding securities under an employee benefit plan maintained by the Company or a parent or subsidiary and (2) a corporation owned directly or indirectly by the stockholders of the Company in substantially the same proportions as their ownership of the stock. Any other provision of this Section 1(b) notwithstanding, a transaction shall not constitute a Change of Control if its sole purpose is to change the state of the Company’s incorporation or to create a holding company that will be owned in substantially the same proportions by the persons who held the Company’s securities immediately before such transaction, and a Change of Control shall not be deemed to occur if the Company files a registration statement with the United States Securities and Exchange Commission for the initial or secondary public offering of securities or debt of the Company to the public. (c) Equity Award. “Equity Award” shall mean Executive’s awards of options, stock appreciation rights, restricted shares or stock units with respect to the Company or its successor, or the direct or indirect parent of either, or of any deferred compensation into which such stock options, stock appreciation rights, restricted shares or stock units were converted upon or prior to a Change of Control. (d) Involuntary Termination. “Involuntary Termination” shall mean: (i) a material reduction in Executive’s title, duties, authorities or responsibilities as the Executive Chairman of the Company without the Executive’s consent; (ii) without Executive’s express written consent, a reduction by the Company of Executive’s base compensation of more than ten percent (10%), unless such reduction in base compensation is part of a general reduction in compensation applicable to senior executives of the Company; (iii) without Executive’s express written consent, the relocation of Executive’s principal place of employment, including Executive’s home office if Executive primarily works from Executive’s home, to a facility or a location more than forty (40) miles from its location as of the Effective Date or, on or following a Change of Control, from its location immediately prior to such Change of Control; DocuSign Envelope ID: AD6622BC-9ACA-4D14-9B61-B36D3DB99218

 
4 4882-8189-3432.v1 (iv) any termination of Executive by the Company which is not effected for Cause; or (v) the failure of the Company to obtain the assumption of this Agreement or any other agreement between the Company and Executive by any successors contemplated in Section 9 below. A termination shall not be considered an “Involuntary Termination” unless Executive provides notice to the Company of the existence of the condition described in subsections (i), (ii), (iii) or (iv) above within ninety (90) days of the initial existence of such condition, the Company fails to remedy the condition within thirty (30) days following the receipt of such notice, and Executive terminates employment within one-hundred eighty (180) days following the initial existence of such condition. A termination due to death or disability shall not be considered an Involuntary Termination. (e) Termination Date. “Termination Date” shall mean Executive’s “separation from service” within the meaning of that term under Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”). 2. Term of Agreement. This Agreement will automatically terminate upon the date that all of the obligations of the parties hereto with respect to this Agreement have been satisfied. 3. At-Will Employment. The Company and Executive acknowledge that Executive’s employment is and shall continue to be at-will, as defined under applicable law. 4. Change of Control Related Benefits. If Executive is employed at the time of a Change of Control, then all of Executive’s Equity Awards will become fully vested and exercisable. The foregoing vesting credit will be effective immediately prior to the Change of Control. 5. Involuntary Termination. If Executive’s employment with the Company terminates as a result of an Involuntary Termination whether or not occurring in connection with a Change of Control, and Executive signs and does not revoke a Release that has become irrevocable within sixty (60) days following the Termination Date, then Executive shall be entitled to the following severance benefits, subject to Section 8 below: (a) 200% of Executive’s annual base salary (as in effect prior to any reduction that constitutes a basis for Involuntary Termination pursuant to this Agreement), payable in a lump sum on the sixtieth (60th) day following the Termination Date; (b) 200% of Executive’s target bonus as in effect for the Company’s fiscal year in which the Termination Date occurs, payable in a lump sum on the sixtieth (60th) day following the Termination Date; (c) any unpaid annual bonus that was earned (subject to continued employment through the payment date) for any annual bonus period which had ended prior to the Termination Date, which amount shall be paid at such time as annual bonuses are paid to other DocuSign Envelope ID: AD6622BC-9ACA-4D14-9B61-B36D3DB99218

 
5 4882-8189-3432.v1 senior executives of the Company (including for this purpose any semi-annual or other partial year period for which a portion of the annual bonus is approved as having been earned subject to continued employment but which has not yet been paid); (d) payment (or reimbursement) of up to 18 months of premiums under the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended, or corresponding provision of state law (“COBRA”) for health insurance coverage for Executive and Executive’s eligible dependents, at the same level and for the same eligible dependents covered as of Executive’s Termination Date, but not beyond the date that Executive (or his eligible dependents) become COBRA ineligible, provided that Executive is solely responsible for timely electing COBRA continuation coverage, and provided further, however, that notwithstanding the foregoing, in the event that the Company determines that such COBRA premium payments could result in adverse tax treatment to the Company or Executive under applicable law, the Company may instead provide Executive with payments during the foregoing coverage period equivalent in value to the COBRA premiums otherwise payable by the Company hereunder, but without regard to whether Executive (or his eligible dependents) continue group health coverage under the Company’s group health plan; and (e) all of Executive’s Equity Awards will become fully vested and exercisable. 6. Accrued Wages and Vacation; Expenses. If Executive’s employment with the Company terminates, without regard to the reason for, or the timing of, Executive’s termination of employment, then (i) the Company shall pay Executive any unpaid wages due for periods prior to the Termination Date; (ii) the Company shall pay Executive all of Executive’s accrued and unused vacation through the Termination Date; and (iii) following submission of proper expense reports by Executive, the Company shall reimburse Executive for all expenses reasonably and necessarily incurred by Executive in connection with the business of the Company prior to the Termination Date. These payments shall be made promptly upon termination and within the period of time mandated by law. 7. Limitation on Payments. In the event that the severance and other benefits provided for in this Agreement or otherwise payable to Executive (i) constitute “parachute payments” within the meaning of Section 280G of the Code and (ii) would be subject to the excise tax imposed by Section 4999 of the Code (the “Excise Tax”), then Executive’s benefits under this Agreement shall be either: (a) delivered in full or (b) delivered as to such lesser extent which would result in no portion of such benefits being subject to the Excise Tax, whichever of the foregoing amounts, taking into account the applicable federal, state and local income taxes and the Excise Tax, results in the receipt by Executive on an after-tax basis, of the greatest amount of benefits, notwithstanding that all or some portion of such benefits may be taxable under Section 4999 of the Code. DocuSign Envelope ID: AD6622BC-9ACA-4D14-9B61-B36D3DB99218

 
6 4882-8189-3432.v1 Unless the Company and Executive otherwise agree in writing, any determination required under this Section 7 shall be made in writing by the Company’s independent public accountants (the “Accountants”), whose determination shall be conclusive and binding upon Executive and the Company for all purposes. For purposes of making the calculations required by this Section 7, the Accountants may make reasonable assumptions and approximations concerning applicable taxes and may rely on reasonable, good faith interpretations concerning the application of Sections 280G and 4999 of the Code. The Company and Executive shall furnish to the Accountants such information and documents as the Accountants may reasonably request in order to make a determination under this Section 7. The Company shall bear all costs the Accountants may reasonably incur in connection with any calculations contemplated by this Section 7. In the event that a reduction is required, the reduction shall be applied first to any benefits that are not subject to Section 409A of the Code, and then shall be applied to benefits (if any) that are subject to Section 409A of the Code, with the benefits payable latest in time subject to reduction first. 8. Section 409A; Delayed Commencement of Benefits. The parties intend that any amounts payable hereunder comply with or are exempt from Section 409A of the Code (“Section 409A”), and this Agreement shall be administered accordingly. In the event that any changes to this Agreement or any additional terms are required to ensure that a payment is either exempt from or complies with Section 409A so that the additional taxes under Section 409A are not applied, Executive hereby agrees that the Company may make such change or incorporate such terms (by reference or otherwise) without Executive’s consent. Each payment contemplated by this Agreement will be treated as a separate payment for purposes of Section 409A. If any of the payments upon separation from service set forth herein and/or under any other agreement with the Company are deemed to be “deferred compensation,” then to the extent delayed commencement of any portion of such payments is required in order to avoid a prohibited distribution under Code Section 409A(a)(2)(B)(i) and the related adverse taxation under Code Section 409A, such payments shall not be provided to Executive prior to the earliest of (a) the expiration of the six-month period measured from the date of Executive’s separation from service with the Company, (b) the date of Executive’s death or (c) such earlier date as permitted under Code Section 409A without the imposition of adverse taxation. Upon the first business day following the expiration of such applicable Code Section 409A(a)(2)(B)(i) period, all payments deferred pursuant to this paragraph shall be paid in a lump sum to Executive, and any remaining payments due shall be paid as otherwise provided herein or in the applicable agreement. No interest shall be due on any amounts so deferred. Notwithstanding anything herein to the contrary, the Company shall have no liability to Executive or to any other person if the payments and benefits provided in this Agreement that are intended to be exempt from or compliant with Section 409A are not so exempt or compliant, as applicable. 9. Successors. (a) Company’s Successors. Any successor to the Company (whether direct or indirect and whether by purchase, lease, merger, consolidation, liquidation or otherwise) to all or substantially all of the Company’s business and/or assets shall assume the Company’s obligations under this Agreement and agree expressly to perform the Company’s obligations under this Agreement in the same manner and to the same extent as the Company would be required to perform such obligations in the absence of a succession. For all purposes under this DocuSign Envelope ID: AD6622BC-9ACA-4D14-9B61-B36D3DB99218

 
7 4882-8189-3432.v1 Agreement, the term “Company” shall include any successor to the Company’s business and/or assets which executes and delivers the assumption agreement described in this subsection (a) or which becomes bound by the terms of this Agreement by operation of law. (b) Executive’s Successors. Without the written consent of the Company, Executive shall not assign or transfer this Agreement or any right or obligation under this Agreement to any other person or entity. Notwithstanding the foregoing, the terms of this Agreement and all rights of Executive hereunder shall inure to the benefit of, and be enforceable by, Executive’s personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees and legatees. 10. Notices. (a) General. Notices and all other communications contemplated by this Agreement shall be in writing and shall be deemed to have been duly given when personally delivered or when mailed by U.S. registered or certified mail, return receipt requested and postage prepaid. In the case of Executive, mailed notices shall be addressed to Executive at the home address which he most recently communicated to the Company in writing. In the case of the Company, mailed notices shall be addressed to its corporate headquarters, and all notices shall be directed to the attention of its Secretary. (b) Notice of Termination. Any termination by the Company for Cause or by Executive as a result of an Involuntary Termination shall be communicated by a notice of termination to the other party hereto given in accordance with this Section 10. Such notice shall indicate the specific termination provision in this Agreement relied upon, shall set forth in reasonable detail the facts and circumstances claimed to provide a basis for termination under the provision so indicated, and shall specify the Termination Date (which shall be not more than thirty (30) days after the giving of such notice). The failure by Executive to include in the notice any fact or circumstance which contributes to a showing of Involuntary Termination shall not waive any right of Executive hereunder or preclude Executive from asserting such fact or circumstance in enforcing Executive’s rights hereunder, subject to the requirements of Section 1(d). 11. Arbitration. Any controversy involving the construction or application of any terms, covenants or conditions of this Agreement, or any claims arising out of any alleged breach of this Agreement, will be governed by the rules of the American Arbitration Association and submitted to and settled by final and binding arbitration in Santa Clara, California, except that any alleged breach of Executive’s confidential information obligations shall not be submitted to arbitration and instead the Company may seek all legal and equitable remedies, including without limitation, injunctive relief. 12. Miscellaneous Provisions. (a) No Duty to Mitigate. Executive shall not be required to mitigate the amount of any payment contemplated by this Agreement, nor shall any such payment be reduced by any earnings that Executive may receive from any other source. DocuSign Envelope ID: AD6622BC-9ACA-4D14-9B61-B36D3DB99218

 
8 4882-8189-3432.v1 (b) Waiver. No provision of this Agreement may be modified, waived or discharged unless the modification, waiver or discharge is agreed to in writing and signed by Executive and by an authorized officer of the Company (other than Executive). No waiver by either party of any breach of, or of compliance with, any condition or provision of this Agreement by the other party shall be considered a waiver of any other condition or provision or of the same condition or provision at another time. (c) Integration. This Agreement supersedes and replaces any prior agreements, representation or understandings, whether written, oral, express or implied, between Executive and the Company, including but not limited to any accelerated vesting provisions set forth in any agreement applicable to Executive’s Equity Awards (to the extent modified by this Agreement), and constitutes the entire agreement and understanding between the parties with respect to the subject matter hereof. (d) Choice of Law. The validity, interpretation, construction and performance of this Agreement shall be governed by the internal substantive laws, but not the conflicts of law rules, of the State of California. (e) Severability. The invalidity or unenforceability of any provision or provisions of this Agreement shall not affect the validity or enforceability of any other provision hereof, which shall remain in full force and effect. (f) Employment Taxes. All payments made pursuant to this Agreement shall be subject to withholding of applicable income and employment taxes. (g) Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed an original, but all of which together will constitute one and the same instrument. [SIGNATURE PAGE FOLLOWS] DocuSign Envelope ID: AD6622BC-9ACA-4D14-9B61-B36D3DB99218

 
9 4882-8189-3432.v1 IN WITNESS WHEREOF, each of the parties has executed this Agreement, in the case of the Company by its duly authorized officer, as of the day and year first above written. COMPANY: IMMERSION CORPORATION By: _______________________________________ Name: Francis Jose Title: CEO and General Counsel EXECUTIVE: Name: Eric Singer Title: Executive Chairman DocuSign Envelope ID: AD6622BC-9ACA-4D14-9B61-B36D3DB99218

 
1 4882-8189-3432.v2 IMMERSION CORPORATION CHANGE OF CONTROL AND SEVERANCE AGREEMENT This Change of Control and Severance Agreement (this “Agreement”) is made and entered into effective as of May 26, 2022 (the “Effective Date”), by and between William C. Martin (“Executive”) and Immersion Corporation, a Delaware corporation (the “Company”). Certain capitalized terms used in this Agreement are defined in Section 1 below. RECITALS A. It is expected that the Company from time to time will consider the possibility of a Change of Control. The Board of Directors of the Company (the “Board”) recognizes that such consideration can be a distraction to Executive and can cause Executive to consider alternative employment opportunities. B. The Board believes that it is in the best interests of the Company and its shareholders to provide Executive with an incentive to continue Executive’s employment and to maximize the value of the Company upon a Change of Control for the benefit of its shareholders. C. In order to provide Executive with enhanced financial security and sufficient encouragement to remain with the Company notwithstanding the possibility of a Change of Control, the Board believes that it is imperative to provide Executive with certain severance and other benefits upon Executive’s termination of employment in connection with a Change of Control. D. The Board also believes it is in the best interests of the Company and its shareholders to provide Executive with severance upon an involuntary termination other than in connection with a Change of Control. AGREEMENT In consideration of the mutual covenants herein contained and the continued employment of Executive by the Company, the parties agree as follows: 1. Definition of Terms. The following terms referred to in this Agreement shall have the following meanings: (a) Cause. “Cause” shall mean Executive’s (i) commission of a felony, an act involving moral turpitude, or an act constituting common law fraud, and which has an adverse effect on the business or affairs of the Company or its affiliates or stockholders; (ii) intentional or willful misconduct or refusal to follow the lawful instructions of the Board that is not cured within thirty (30) days following written notice from the Board; (iii) commission of any violation of a company policy that has a material adverse effect on the business or reputation of the Company or (iv) intentional breach of Company confidential information obligations which has an adverse effect on the Company or its affiliates. For these purposes, no act or failure to act DocuSign Envelope ID: 24C59FE2-F23B-4D25-ACEA-0CEFF1AE38AE

 
2 4882-8189-3432.v2 shall be considered “intentional or willful” unless it is done, or omitted to be done, in bad faith without a reasonable belief that the action or omission is in the best interests of the Company. (b) Change of Control. “Change of Control” shall mean the occurrence of any of the following events: (i) a change in the composition of the Board occurs, as a result of which fewer than one-half of the incumbent directors are directors who either: (A) had been directors of the Company on the “look-back date” (as defined below) (the “original directors”); or (B) were elected, or nominated for election, to the Board with the affirmative votes of at least a majority of the aggregate of the original directors who were still in office at the time of the election or nomination and the directors whose election or nomination was previously so approved (the “continuing directors”); provided, however, that for this purpose, the “original directors” and “continuing directors” shall not include any individual whose initial assumption of office occurred as a result of an actual or threatened election contest with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents, by or on behalf of a person other than the Board; or (ii) any “person” (as defined below) who by the acquisition or aggregation of securities, is or becomes the “beneficial owner” (as defined in Rule 13d-3 under the Securities Exchange Act of 1934 (the “Exchange Act”)), directly or indirectly, of securities of the Company representing 50% or more of the combined voting power of the Company’s then outstanding securities ordinarily (and apart from rights accruing under special circumstances) having the right to vote at elections of directors (the “Base Capital Stock”); except that any change in the relative beneficial ownership of the Company’s securities by any person resulting solely from a reduction in the aggregate number of outstanding shares of Base Capital Stock, and any decrease thereafter in such person’s ownership of securities, shall be disregarded until such person increases in any manner, directly or indirectly, such person’s beneficial ownership of any securities of the Company; or (iii) the consummation of a merger or consolidation of the Company or a Subsidiary of the Company with or into another entity or any other corporate reorganization, if persons who were not stockholders of the Company immediately prior to such merger, consolidation or other reorganization own immediately after such merger, consolidation or other reorganization 50% or more of the voting power of the outstanding securities of each of: (A) the Company (or its successor) and (B) any direct or indirect parent corporation of the Company (or its successor); or (iv) The sale, transfer or other disposition of all or substantially all of the Company’s assets, which for the avoidance of doubt, shall include the distribution (by way of dividend, distribution or similar action), in a single distribution or in a series of distributions DocuSign Envelope ID: 24C59FE2-F23B-4D25-ACEA-0CEFF1AE38AE

 
3 4882-8189-3432.v2 occurring within a 12-month period, by the Company of cash to its shareholders of an amount equal to an aggregate of at least fifty percent (50%) of the Company’s cash and cash equivalents held as of the date immediately prior to the date of such distribution, or in the case of multiple distributions within a 12-month period, as measured by the total amount of distributions within such 12-month period against the total cash and cash equivalents of the Company as of the date immediately prior to the date of such initial distribution within such 12-month period. For purposes of subsection 1(b)(i) above, the term “look-back date” shall mean the date 24 months prior to the date of the event that may constitute a Change of Control. For purposes of subsection 1(b)(ii)) above, the term “person” shall have the same meaning as when used in Sections 13(d) and 14(d) of the Exchange Act but shall exclude (1) a trustee or other fiduciary holding securities under an employee benefit plan maintained by the Company or a parent or subsidiary and (2) a corporation owned directly or indirectly by the stockholders of the Company in substantially the same proportions as their ownership of the stock. Any other provision of this Section 1(b) notwithstanding, a transaction shall not constitute a Change of Control if its sole purpose is to change the state of the Company’s incorporation or to create a holding company that will be owned in substantially the same proportions by the persons who held the Company’s securities immediately before such transaction, and a Change of Control shall not be deemed to occur if the Company files a registration statement with the United States Securities and Exchange Commission for the initial or secondary public offering of securities or debt of the Company to the public. (c) Equity Award. “Equity Award” shall mean Executive’s awards of options, stock appreciation rights, restricted shares or stock units with respect to the Company or its successor, or the direct or indirect parent of either, or of any deferred compensation into which such stock options, stock appreciation rights, restricted shares or stock units were converted upon or prior to a Change of Control. (d) Involuntary Termination. “Involuntary Termination” shall mean: (i) a material reduction in Executive’s title, duties, authorities or responsibilities as the Chief Strategy Officer of the Company without the Executive’s consent; (ii) without Executive’s express written consent, a reduction by the Company of Executive’s base compensation of more than ten percent (10%), unless such reduction in base compensation is part of a general reduction in compensation applicable to senior executives of the Company; (iii) without Executive’s express written consent, the relocation of Executive’s principal place of employment, including Executive’s home office if Executive primarily works from Executive’s home, to a facility or a location more than forty (40) miles from its location as of the Effective Date or, on or following a Change of Control, from its location immediately prior to such Change of Control; DocuSign Envelope ID: 24C59FE2-F23B-4D25-ACEA-0CEFF1AE38AE

 
4 4882-8189-3432.v2 (iv) any termination of Executive by the Company which is not effected for Cause; or (v) the failure of the Company to obtain the assumption of this Agreement or any other agreement between the Company and Executive by any successors contemplated in Section 9 below. A termination shall not be considered an “Involuntary Termination” unless Executive provides notice to the Company of the existence of the condition described in subsections (i), (ii), (iii) or (iv) above within ninety (90) days of the initial existence of such condition, the Company fails to remedy the condition within thirty (30) days following the receipt of such notice, and Executive terminates employment within one-hundred eighty (180) days following the initial existence of such condition. A termination due to death or disability shall not be considered an Involuntary Termination. (e) Termination Date. “Termination Date” shall mean Executive’s “separation from service” within the meaning of that term under Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”). 2. Term of Agreement. This Agreement will automatically terminate upon the date that all of the obligations of the parties hereto with respect to this Agreement have been satisfied. 3. At-Will Employment. The Company and Executive acknowledge that Executive’s employment is and shall continue to be at-will, as defined under applicable law. 4. Change of Control Related Benefits. If Executive is employed at the time of a Change of Control, then all of Executive’s Equity Awards will become fully vested and exercisable. The foregoing vesting credit will be effective immediately prior to the Change of Control. 5. Involuntary Termination. If Executive’s employment with the Company terminates as a result of an Involuntary Termination whether or not occurring in connection with a Change of Control, and Executive signs and does not revoke a Release that has become irrevocable within sixty (60) days following the Termination Date, then Executive shall be entitled to the following severance benefits, subject to Section 8 below: (a) 200% of Executive’s annual base salary (as in effect prior to any reduction that constitutes a basis for Involuntary Termination pursuant to this Agreement), payable in a lump sum on the sixtieth (60th) day following the Termination Date; (b) 200% of Executive’s target bonus as in effect for the Company’s fiscal year in which the Termination Date occurs, payable in a lump sum on the sixtieth (60th) day following the Termination Date; (c) any unpaid annual bonus that was earned (subject to continued employment through the payment date) for any annual bonus period which had ended prior to the Termination Date, which amount shall be paid at such time as annual bonuses are paid to other DocuSign Envelope ID: 24C59FE2-F23B-4D25-ACEA-0CEFF1AE38AE

 
5 4882-8189-3432.v2 senior executives of the Company (including for this purpose any semi-annual or other partial year period for which a portion of the annual bonus is approved as having been earned subject to continued employment but which has not yet been paid); (d) payment (or reimbursement) of up to 18 months of premiums under the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended, or corresponding provision of state law (“COBRA”) for health insurance coverage for Executive and Executive’s eligible dependents, at the same level and for the same eligible dependents covered as of Executive’s Termination Date, but not beyond the date that Executive (or his eligible dependents) become COBRA ineligible, provided that Executive is solely responsible for timely electing COBRA continuation coverage, and provided further, however, that notwithstanding the foregoing, in the event that the Company determines that such COBRA premium payments could result in adverse tax treatment to the Company or Executive under applicable law, the Company may instead provide Executive with payments during the foregoing coverage period equivalent in value to the COBRA premiums otherwise payable by the Company hereunder, but without regard to whether Executive (or his eligible dependents) continue group health coverage under the Company’s group health plan; and (e) all of Executive’s Equity Awards will become fully vested and exercisable. 6. Accrued Wages and Vacation; Expenses. If Executive’s employment with the Company terminates, without regard to the reason for, or the timing of, Executive’s termination of employment, then (i) the Company shall pay Executive any unpaid wages due for periods prior to the Termination Date; (ii) the Company shall pay Executive all of Executive’s accrued and unused vacation through the Termination Date; and (iii) following submission of proper expense reports by Executive, the Company shall reimburse Executive for all expenses reasonably and necessarily incurred by Executive in connection with the business of the Company prior to the Termination Date. These payments shall be made promptly upon termination and within the period of time mandated by law. 7. Limitation on Payments. In the event that the severance and other benefits provided for in this Agreement or otherwise payable to Executive (i) constitute “parachute payments” within the meaning of Section 280G of the Code and (ii) would be subject to the excise tax imposed by Section 4999 of the Code (the “Excise Tax”), then Executive’s benefits under this Agreement shall be either: (a) delivered in full or (b) delivered as to such lesser extent which would result in no portion of such benefits being subject to the Excise Tax, whichever of the foregoing amounts, taking into account the applicable federal, state and local income taxes and the Excise Tax, results in the receipt by Executive on an after-tax basis, of the greatest amount of benefits, notwithstanding that all or some portion of such benefits may be taxable under Section 4999 of the Code. DocuSign Envelope ID: 24C59FE2-F23B-4D25-ACEA-0CEFF1AE38AE

 
6 4882-8189-3432.v2 Unless the Company and Executive otherwise agree in writing, any determination required under this Section 7 shall be made in writing by the Company’s independent public accountants (the “Accountants”), whose determination shall be conclusive and binding upon Executive and the Company for all purposes. For purposes of making the calculations required by this Section 7, the Accountants may make reasonable assumptions and approximations concerning applicable taxes and may rely on reasonable, good faith interpretations concerning the application of Sections 280G and 4999 of the Code. The Company and Executive shall furnish to the Accountants such information and documents as the Accountants may reasonably request in order to make a determination under this Section 7. The Company shall bear all costs the Accountants may reasonably incur in connection with any calculations contemplated by this Section 7. In the event that a reduction is required, the reduction shall be applied first to any benefits that are not subject to Section 409A of the Code, and then shall be applied to benefits (if any) that are subject to Section 409A of the Code, with the benefits payable latest in time subject to reduction first. 8. Section 409A; Delayed Commencement of Benefits. The parties intend that any amounts payable hereunder comply with or are exempt from Section 409A of the Code (“Section 409A”), and this Agreement shall be administered accordingly. In the event that any changes to this Agreement or any additional terms are required to ensure that a payment is either exempt from or complies with Section 409A so that the additional taxes under Section 409A are not applied, Executive hereby agrees that the Company may make such change or incorporate such terms (by reference or otherwise) without Executive’s consent. Each payment contemplated by this Agreement will be treated as a separate payment for purposes of Section 409A. If any of the payments upon separation from service set forth herein and/or under any other agreement with the Company are deemed to be “deferred compensation,” then to the extent delayed commencement of any portion of such payments is required in order to avoid a prohibited distribution under Code Section 409A(a)(2)(B)(i) and the related adverse taxation under Code Section 409A, such payments shall not be provided to Executive prior to the earliest of (a) the expiration of the six-month period measured from the date of Executive’s separation from service with the Company, (b) the date of Executive’s death or (c) such earlier date as permitted under Code Section 409A without the imposition of adverse taxation. Upon the first business day following the expiration of such applicable Code Section 409A(a)(2)(B)(i) period, all payments deferred pursuant to this paragraph shall be paid in a lump sum to Executive, and any remaining payments due shall be paid as otherwise provided herein or in the applicable agreement. No interest shall be due on any amounts so deferred. Notwithstanding anything herein to the contrary, the Company shall have no liability to Executive or to any other person if the payments and benefits provided in this Agreement that are intended to be exempt from or compliant with Section 409A are not so exempt or compliant, as applicable. 9. Successors. (a) Company’s Successors. Any successor to the Company (whether direct or indirect and whether by purchase, lease, merger, consolidation, liquidation or otherwise) to all or substantially all of the Company’s business and/or assets shall assume the Company’s obligations under this Agreement and agree expressly to perform the Company’s obligations under this Agreement in the same manner and to the same extent as the Company would be required to perform such obligations in the absence of a succession. For all purposes under this DocuSign Envelope ID: 24C59FE2-F23B-4D25-ACEA-0CEFF1AE38AE

 
7 4882-8189-3432.v2 Agreement, the term “Company” shall include any successor to the Company’s business and/or assets which executes and delivers the assumption agreement described in this subsection (a) or which becomes bound by the terms of this Agreement by operation of law. (b) Executive’s Successors. Without the written consent of the Company, Executive shall not assign or transfer this Agreement or any right or obligation under this Agreement to any other person or entity. Notwithstanding the foregoing, the terms of this Agreement and all rights of Executive hereunder shall inure to the benefit of, and be enforceable by, Executive’s personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees and legatees. 10. Notices. (a) General. Notices and all other communications contemplated by this Agreement shall be in writing and shall be deemed to have been duly given when personally delivered or when mailed by U.S. registered or certified mail, return receipt requested and postage prepaid. In the case of Executive, mailed notices shall be addressed to Executive at the home address which he most recently communicated to the Company in writing. In the case of the Company, mailed notices shall be addressed to its corporate headquarters, and all notices shall be directed to the attention of its Secretary. (b) Notice of Termination. Any termination by the Company for Cause or by Executive as a result of an Involuntary Termination shall be communicated by a notice of termination to the other party hereto given in accordance with this Section 10. Such notice shall indicate the specific termination provision in this Agreement relied upon, shall set forth in reasonable detail the facts and circumstances claimed to provide a basis for termination under the provision so indicated, and shall specify the Termination Date (which shall be not more than thirty (30) days after the giving of such notice). The failure by Executive to include in the notice any fact or circumstance which contributes to a showing of Involuntary Termination shall not waive any right of Executive hereunder or preclude Executive from asserting such fact or circumstance in enforcing Executive’s rights hereunder, subject to the requirements of Section 1(d). 11. Arbitration. Any controversy involving the construction or application of any terms, covenants or conditions of this Agreement, or any claims arising out of any alleged breach of this Agreement, will be governed by the rules of the American Arbitration Association and submitted to and settled by final and binding arbitration in Santa Clara, California, except that any alleged breach of Executive’s confidential information obligations shall not be submitted to arbitration and instead the Company may seek all legal and equitable remedies, including without limitation, injunctive relief. 12. Miscellaneous Provisions. (a) No Duty to Mitigate. Executive shall not be required to mitigate the amount of any payment contemplated by this Agreement, nor shall any such payment be reduced by any earnings that Executive may receive from any other source. DocuSign Envelope ID: 24C59FE2-F23B-4D25-ACEA-0CEFF1AE38AE

 
8 4882-8189-3432.v2 (b) Waiver. No provision of this Agreement may be modified, waived or discharged unless the modification, waiver or discharge is agreed to in writing and signed by Executive and by an authorized officer of the Company (other than Executive). No waiver by either party of any breach of, or of compliance with, any condition or provision of this Agreement by the other party shall be considered a waiver of any other condition or provision or of the same condition or provision at another time. (c) Integration. This Agreement supersedes and replaces any prior agreements, representation or understandings, whether written, oral, express or implied, between Executive and the Company, including but not limited to any accelerated vesting provisions set forth in any agreement applicable to Executive’s Equity Awards (to the extent modified by this Agreement), and constitutes the entire agreement and understanding between the parties with respect to the subject matter hereof. (d) Choice of Law. The validity, interpretation, construction and performance of this Agreement shall be governed by the internal substantive laws, but not the conflicts of law rules, of the State of California. (e) Severability. The invalidity or unenforceability of any provision or provisions of this Agreement shall not affect the validity or enforceability of any other provision hereof, which shall remain in full force and effect. (f) Employment Taxes. All payments made pursuant to this Agreement shall be subject to withholding of applicable income and employment taxes. (g) Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed an original, but all of which together will constitute one and the same instrument. [SIGNATURE PAGE FOLLOWS] DocuSign Envelope ID: 24C59FE2-F23B-4D25-ACEA-0CEFF1AE38AE

 
9 4882-8189-3432.v2 IN WITNESS WHEREOF, each of the parties has executed this Agreement, in the case of the Company by its duly authorized officer, as of the day and year first above written. COMPANY: IMMERSION CORPORATION By: _______________________________________ Name: Francis Jose Title: CEO and General Counsel EXECUTIVE: Name: William C. Martin Title: Chief Strategy Officer DocuSign Envelope ID: 24C59FE2-F23B-4D25-ACEA-0CEFF1AE38AE

 
1 4880-6434-0024.v1 IMMERSION CORPORATION CHANGE OF CONTROL AND SEVERANCE AGREEMENT This Change of Control and Severance Agreement (this “Agreement”) is made and entered into effective as of May 26, 2022 (the “Effective Date”), by and between Francis Jose (“Executive”) and Immersion Corporation, a Delaware corporation (the “Company”). Certain capitalized terms used in this Agreement are defined in Section 1 below. RECITALS A. It is expected that the Company from time to time will consider the possibility of a Change of Control. The Board of Directors of the Company (the “Board”) recognizes that such consideration can be a distraction to Executive and can cause Executive to consider alternative employment opportunities. B. The Board believes that it is in the best interests of the Company and its shareholders to provide Executive with an incentive to continue Executive’s employment and to maximize the value of the Company upon a Change of Control for the benefit of its shareholders. C. In order to provide Executive with enhanced financial security and sufficient encouragement to remain with the Company notwithstanding the possibility of a Change of Control, the Board believes that it is imperative to provide Executive with certain severance and other benefits upon Executive’s termination of employment in connection with a Change of Control. D. The Board also believes it is in the best interests of the Company and its shareholders to provide Executive with severance upon an involuntary termination other than in connection with a Change of Control. AGREEMENT In consideration of the mutual covenants herein contained and the continued employment of Executive by the Company, the parties agree as follows: 1. Definition of Terms. The following terms referred to in this Agreement shall have the following meanings: (a) Cause. “Cause” shall mean Executive’s (i) commission of a felony, an act involving moral turpitude, or an act constituting common law fraud, and which has an adverse effect on the business or affairs of the Company or its affiliates or stockholders; (ii) intentional or willful misconduct or refusal to follow the lawful instructions of the Board that is not cured within thirty (30) days following written notice from the Board; (iii) commission of any violation of a company policy that has a material adverse effect on the business or reputation of the Company or (iv) intentional breach of Company confidential information obligations which has an adverse effect on the Company or its affiliates. For these purposes, no act or failure to act DocuSign Envelope ID: 8487CF55-C9B9-499A-932F-E06257515CD6

 
2 4880-6434-0024.v1 shall be considered “intentional or willful” unless it is done, or omitted to be done, in bad faith without a reasonable belief that the action or omission is in the best interests of the Company. (b) Change of Control. “Change of Control” shall mean the occurrence of any of the following events: (i) a change in the composition of the Board occurs, as a result of which fewer than one-half of the incumbent directors are directors who either: (A) had been directors of the Company on the “look-back date” (as defined below) (the “original directors”); or (B) were elected, or nominated for election, to the Board with the affirmative votes of at least a majority of the aggregate of the original directors who were still in office at the time of the election or nomination and the directors whose election or nomination was previously so approved (the “continuing directors”); provided, however, that for this purpose, the “original directors” and “continuing directors” shall not include any individual whose initial assumption of office occurred as a result of an actual or threatened election contest with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents, by or on behalf of a person other than the Board; or (ii) any “person” (as defined below) who by the acquisition or aggregation of securities, is or becomes the “beneficial owner” (as defined in Rule 13d-3 under the Securities Exchange Act of 1934 (the “Exchange Act”)), directly or indirectly, of securities of the Company representing 50% or more of the combined voting power of the Company’s then outstanding securities ordinarily (and apart from rights accruing under special circumstances) having the right to vote at elections of directors (the “Base Capital Stock”); except that any change in the relative beneficial ownership of the Company’s securities by any person resulting solely from a reduction in the aggregate number of outstanding shares of Base Capital Stock, and any decrease thereafter in such person’s ownership of securities, shall be disregarded until such person increases in any manner, directly or indirectly, such person’s beneficial ownership of any securities of the Company; or (iii) the consummation of a merger or consolidation of the Company or a Subsidiary of the Company with or into another entity or any other corporate reorganization, if persons who were not stockholders of the Company immediately prior to such merger, consolidation or other reorganization own immediately after such merger, consolidation or other reorganization 50% or more of the voting power of the outstanding securities of each of: (A) the Company (or its successor) and (B) any direct or indirect parent corporation of the Company (or its successor); or (iv) The sale, transfer or other disposition of all or substantially all of the Company’s assets, which for the avoidance of doubt, shall include the distribution (by way of dividend, distribution or similar action), in a single distribution or in a series of distributions DocuSign Envelope ID: 8487CF55-C9B9-499A-932F-E06257515CD6

 
3 4880-6434-0024.v1 occurring within a 12-month period, by the Company of cash to its shareholders of an amount equal to an aggregate of at least fifty percent (50%) of the Company’s cash and cash equivalents held as of the date immediately prior to the date of such distribution, or in the case of multiple distributions within a 12-month period, as measured by the total amount of distributions within such 12-month period against the total cash and cash equivalents of the Company as of the date immediately prior to the date of such initial distribution within such 12-month period. For purposes of subsection 1(b)(i) above, the term “look-back date” shall mean the date 24 months prior to the date of the event that may constitute a Change of Control. For purposes of subsection 1(b)(ii)) above, the term “person” shall have the same meaning as when used in Sections 13(d) and 14(d) of the Exchange Act but shall exclude (1) a trustee or other fiduciary holding securities under an employee benefit plan maintained by the Company or a parent or subsidiary and (2) a corporation owned directly or indirectly by the stockholders of the Company in substantially the same proportions as their ownership of the stock. Any other provision of this Section 1(b) notwithstanding, a transaction shall not constitute a Change of Control if its sole purpose is to change the state of the Company’s incorporation or to create a holding company that will be owned in substantially the same proportions by the persons who held the Company’s securities immediately before such transaction, and a Change of Control shall not be deemed to occur if the Company files a registration statement with the United States Securities and Exchange Commission for the initial or secondary public offering of securities or debt of the Company to the public. (c) Equity Award. “Equity Award” shall mean Executive’s awards of options, stock appreciation rights, restricted shares or stock units with respect to the Company or its successor, or the direct or indirect parent of either, or of any deferred compensation into which such stock options, stock appreciation rights, restricted shares or stock units were converted upon or prior to a Change of Control. (d) Involuntary Termination. “Involuntary Termination” shall mean: (i) a material reduction in Executive’s title, duties, authorities or responsibilities as the General Counsel of the Company without the Executive’s consent, with Executive acknowledging for the avoidance of doubt that a termination of his interim role as Chief Executive Office and any of the duties, authorities or responsibilities associated therewith shall not by itself constitute an Involuntary Termination; (ii) without Executive’s express written consent, a reduction by the Company of Executive’s base compensation of more than ten percent (10%), unless such reduction in base compensation is part of a general reduction in compensation applicable to senior executives of the Company; (iii) without Executive’s express written consent, the relocation of Executive’s principal place of employment, including Executive’s home office if Executive primarily works from Executive’s home, to a facility or a location more than forty (40) miles DocuSign Envelope ID: 8487CF55-C9B9-499A-932F-E06257515CD6

 
4 4880-6434-0024.v1 from its location as of the Effective Date or, on or following a Change of Control, from its location immediately prior to such Change of Control; (iv) any termination of Executive by the Company which is not effected for Cause; or (v) the failure of the Company to obtain the assumption of this Agreement or any other agreement between the Company and Executive by any successors contemplated in Section 10 below. A termination shall not be considered an “Involuntary Termination” unless Executive provides notice to the Company of the existence of the condition described in subsections (i), (ii), (iii) or (iv) above within ninety (90) days of the initial existence of such condition, the Company fails to remedy the condition within thirty (30) days following the receipt of such notice, and Executive terminates employment within one-hundred eighty (180) days following the initial existence of such condition. A termination due to death or disability shall not be considered an Involuntary Termination. (e) Termination Date. “Termination Date” shall mean Executive’s “separation from service” within the meaning of that term under Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”). 2. Term of Agreement. This Agreement will automatically terminate upon the date that all of the obligations of the parties hereto with respect to this Agreement have been satisfied. 3. At-Will Employment. The Company and Executive acknowledge that Executive’s employment is and shall continue to be at-will, as defined under applicable law. 4. Change of Control Related Benefits (a) Effect of Change of Control on Performance-Based Equity Awards. If Executive is either employed at the time of a Change of Control or Executive’s employment with the Company terminates as a result of an Involuntary Termination on or within three (3) months prior to a Change of Control, and provided that in the case of such Involuntary Termination the Executive signs and does not revoke a release in a form approved by the Company (a “Release”) that has become irrevocable within sixty (60) days following the later of the Change of Control or the Termination Date, then unless provided otherwise in Executive’s Equity Award agreement, all of Executive’s Equity Awards subject to performance vesting based on stock price shall have performance measured based on the transaction price and otherwise shall have their performance criteria deemed satisfied at 100% of target for any unfinished performance period, and such Equity Awards will convert to time-based vesting on such vesting schedule as specified in the applicable Equity Award agreement, subject to the provisions of Section 4(b). The portion of any performance-based Equity Award for which the performance condition is not deemed satisfied pursuant to this Section 4(a) (if any) will be forfeited. The foregoing vesting credit and forfeiture will be effective immediately prior to the Change of Control. (b) Involuntary Termination in Connection with a Change of Control. If Executive’s employment with the Company terminates as a result of an Involuntary Termination DocuSign Envelope ID: 8487CF55-C9B9-499A-932F-E06257515CD6

 
5 4880-6434-0024.v1 either on or at any time within twelve months (12) months after a Change of Control, or within three (3) months prior to a Change of Control, and Executive signs and does not revoke a Release that has become irrevocable within sixty (60) days following the later of the Change of Control or the Termination Date, then Executive shall be entitled to the following severance benefits, subject to Section 9 below: (i) 100% of Executive’s annual base salary (as in effect prior to any reduction that constitutes a basis for Involuntary Termination pursuant to this Agreement), payable in a lump sum on the sixtieth (60th) day following the later of the Termination Date or the Change of Control; (ii) any unpaid annual bonus that was earned (subject to continued employment through the payment date) for any annual bonus period which had ended prior to the Termination Date, which amount shall be paid at such time as annual bonuses are paid to other senior executives of the Company (including for this purpose any semi-annual or other partial year period for which a portion of the annual bonus is approved as having been earned subject to continued employment but which has not yet been paid); (iii) payment (or reimbursement) of up to 12 months of premiums under COBRA for health insurance coverage for Executive and Executive’s eligible dependents, at the same level and for the same eligible dependents covered as of Executive’s Termination Date, but not beyond the date that Executive (or his eligible dependents) become COBRA ineligible, provided that Executive is solely responsible for timely electing COBRA continuation coverage, and provided further, however, that notwithstanding the foregoing, in the event that the Company determines that such COBRA premium payments could result in adverse tax treatment to the Company or Executive under applicable law, the Company may instead provide Executive with payments during the foregoing coverage period equivalent in value to the COBRA premiums otherwise payable by the Company hereunder, but without regard to whether Executive (or his eligible dependents) continue group health coverage under the Company’s group health plan; and (iv) all of Executive’s outstanding Equity Awards subject to time-based vesting only (including any Equity Awards converted to time-based vesting pursuant to Section 4(a)) will become fully vested and exercisable; provided, however, that notwithstanding any contrary provision in the Equity Award agreement, if Executive is entitled to accelerated vesting under this Section 4(b) or vesting credit under Section 4(a) as a result of an Involuntary Termination within three (3) months prior to a Change of Control: (1) the portion of the Equity Award subject to such accelerated or credited vesting shall not be forfeited or terminated upon the Termination Date but shall remain outstanding until immediately prior to the Change of Control, (2) the accelerated vesting and vesting credit shall be deemed to take place immediately prior to the Change of Control, and (3) any options and stock appreciation rights will remain outstanding and exercisable in accordance with, and for the post-termination exercisability period set forth in, the applicable Equity Award agreement as if Executive’s status as a service provider of the Company had ceased as of the Change of Control (provided that in no event will an Equity Award remain outstanding after the expiration of the Equity Award’s maximum term to expiration and, for the avoidance of doubt, subject to any earlier termination in accordance DocuSign Envelope ID: 8487CF55-C9B9-499A-932F-E06257515CD6

 
6 4880-6434-0024.v1 with the terms and conditions of the Company’s plan, including if applicable, its termination in connection with the Change of Control). 5. Involuntary Termination Apart from a Change of Control. If Executive’s employment with the Company terminates as a result of an Involuntary Termination that occurs more than three (3) months prior to or twelve (12) months after a Change of Control, and Executive signs and does not revoke a Release that has become irrevocable within sixty (60) days following the Termination Date, then Executive shall be entitled to the following severance benefits, subject to Section 9 below: (a) 50% of Executive’s annual base salary (as in effect prior to any reduction that constitutes a basis for Involuntary Termination pursuant to this Agreement), payable in a lump sum on the sixtieth (60th) day following the Termination Date; (b) any unpaid annual bonus that was earned (subject to continued employment through the payment date) for any annual bonus period which had ended prior to the Termination Date, which amount shall be paid at such time as annual bonuses are paid to other senior executives of the Company(including for this purpose any semi-annual or other partial year period for which a portion of the annual bonus is approved as having been earned subject to continued employment but which has not yet been paid); and (c) payment (or reimbursement) of up to 6 months of premiums under COBRA for health insurance coverage for Executive and Executive’s eligible dependents, at the same level and for the same eligible dependents covered as of Executive’s Termination Date, but not beyond the date that Executive (or his eligible dependents) become COBRA ineligible, provided that Executive is solely responsible for timely electing COBRA continuation coverage, and provided further, however, that notwithstanding the foregoing, in the event that the Company determines that such COBRA premium payments could result in adverse tax treatment to the Company or Executive under applicable law, the Company may instead provide Executive with payments during the foregoing coverage period equivalent in value to the COBRA premiums otherwise payable by the Company hereunder, but without regard to whether Executive (or his eligible dependents) continue group health coverage under the Company’s group health plan. 6. Mutually Exclusive Benefits. For the avoidance of doubt, the benefits afforded under Sections 4(b) and 5 are mutually exclusive. If Executive has an Involuntary Termination within three (3) months prior to a Change of Control and becomes entitled to cash severance pursuant to Section 4(b), but already received cash severance pursuant to Section 5, the amount of the cash severance payable pursuant to Section 4(b) shall be offset by the amount already paid, subject to compliance with Section 409A of the Code. 7. Accrued Wages and Vacation; Expenses. If Executive’s employment with the Company terminates, without regard to the reason for, or the timing of, Executive’s termination of employment, then (i) the Company shall pay Executive any unpaid wages due for periods prior to the Termination Date; (ii) the Company shall pay Executive all of Executive’s accrued and unused vacation through the Termination Date; and (iii) following submission of proper expense reports by Executive, the Company shall reimburse Executive for all expenses reasonably and necessarily incurred by Executive in connection with the business of the DocuSign Envelope ID: 8487CF55-C9B9-499A-932F-E06257515CD6

 
7 4880-6434-0024.v1 Company prior to the Termination Date. These payments shall be made promptly upon termination and within the period of time mandated by law. 8. Limitation on Payments. In the event that the severance and other benefits provided for in this Agreement or otherwise payable to Executive (i) constitute “parachute payments” within the meaning of Section 280G of the Code and (ii) would be subject to the excise tax imposed by Section 4999 of the Code (the “Excise Tax”), then Executive’s benefits under this Agreement shall be either: (a) delivered in full or (b) delivered as to such lesser extent which would result in no portion of such benefits being subject to the Excise Tax, whichever of the foregoing amounts, taking into account the applicable federal, state and local income taxes and the Excise Tax, results in the receipt by Executive on an after-tax basis, of the greatest amount of benefits, notwithstanding that all or some portion of such benefits may be taxable under Section 4999 of the Code. Unless the Company and Executive otherwise agree in writing, any determination required under this Section 8 shall be made in writing by the Company’s independent public accountants (the “Accountants”), whose determination shall be conclusive and binding upon Executive and the Company for all purposes. For purposes of making the calculations required by this Section 8, the Accountants may make reasonable assumptions and approximations concerning applicable taxes and may rely on reasonable, good faith interpretations concerning the application of Sections 280G and 4999 of the Code. The Company and Executive shall furnish to the Accountants such information and documents as the Accountants may reasonably request in order to make a determination under this Section 8. The Company shall bear all costs the Accountants may reasonably incur in connection with any calculations contemplated by this Section 8. In the event that a reduction is required, the reduction shall be applied first to any benefits that are not subject to Section 409A of the Code, and then shall be applied to benefits (if any) that are subject to Section 409A of the Code, with the benefits payable latest in time subject to reduction first. 9. Section 409A; Delayed Commencement of Benefits. The parties intend that any amounts payable hereunder comply with or are exempt from Section 409A of the Code (“Section 409A”), and this Agreement shall be administered accordingly. In the event that any changes to this Agreement or any additional terms are required to ensure that a payment is either exempt from or complies with Section 409A so that the additional taxes under Section 409A are not applied, Executive hereby agrees that the Company may make such change or incorporate such terms (by reference or otherwise) without Executive’s consent. Each payment contemplated by this Agreement will be treated as a separate payment for purposes of Section 409A. If any of the payments upon separation from service set forth herein and/or under any other agreement with the Company are deemed to be “deferred compensation,” then to the extent delayed commencement of any portion of such payments is required in order to avoid a prohibited distribution under Code Section 409A(a)(2)(B)(i) and the related adverse taxation under Code Section 409A, such payments shall not be provided to Executive prior to the earliest of (a) the DocuSign Envelope ID: 8487CF55-C9B9-499A-932F-E06257515CD6

 
8 4880-6434-0024.v1 expiration of the six-month period measured from the date of Executive’s separation from service with the Company, (b) the date of Executive’s death or (c) such earlier date as permitted under Code Section 409A without the imposition of adverse taxation. Upon the first business day following the expiration of such applicable Code Section 409A(a)(2)(B)(i) period, all payments deferred pursuant to this paragraph shall be paid in a lump sum to Executive, and any remaining payments due shall be paid as otherwise provided herein or in the applicable agreement. No interest shall be due on any amounts so deferred. Notwithstanding anything herein to the contrary, the Company shall have no liability to Executive or to any other person if the payments and benefits provided in this Agreement that are intended to be exempt from or compliant with Section 409A are not so exempt or compliant, as applicable. 10. Successors. (a) Company’s Successors. Any successor to the Company (whether direct or indirect and whether by purchase, lease, merger, consolidation, liquidation or otherwise) to all or substantially all of the Company’s business and/or assets shall assume the Company’s obligations under this Agreement and agree expressly to perform the Company’s obligations under this Agreement in the same manner and to the same extent as the Company would be required to perform such obligations in the absence of a succession. For all purposes under this Agreement, the term “Company” shall include any successor to the Company’s business and/or assets which executes and delivers the assumption agreement described in this subsection (a) or which becomes bound by the terms of this Agreement by operation of law. (b) Executive’s Successors. Without the written consent of the Company, Executive shall not assign or transfer this Agreement or any right or obligation under this Agreement to any other person or entity. Notwithstanding the foregoing, the terms of this Agreement and all rights of Executive hereunder shall inure to the benefit of, and be enforceable by, Executive’s personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees and legatees. 11. Notices. (a) General. Notices and all other communications contemplated by this Agreement shall be in writing and shall be deemed to have been duly given when personally delivered or when mailed by U.S. registered or certified mail, return receipt requested and postage prepaid. In the case of Executive, mailed notices shall be addressed to Executive at the home address which he most recently communicated to the Company in writing. In the case of the Company, mailed notices shall be addressed to its corporate headquarters, and all notices shall be directed to the attention of its Secretary. (b) Notice of Termination. Any termination by the Company for Cause or by Executive as a result of an Involuntary Termination shall be communicated by a notice of termination to the other party hereto given in accordance with this Section 11. Such notice shall indicate the specific termination provision in this Agreement relied upon, shall set forth in reasonable detail the facts and circumstances claimed to provide a basis for termination under the provision so indicated, and shall specify the Termination Date (which shall be not more than thirty (30) days after the giving of such notice). The failure by Executive to include in the notice DocuSign Envelope ID: 8487CF55-C9B9-499A-932F-E06257515CD6

 
9 4880-6434-0024.v1 any fact or circumstance which contributes to a showing of Involuntary Termination shall not waive any right of Executive hereunder or preclude Executive from asserting such fact or circumstance in enforcing Executive’s rights hereunder, subject to the requirements of Section 1(d). 12. Arbitration. Any controversy involving the construction or application of any terms, covenants or conditions of this Agreement, or any claims arising out of any alleged breach of this Agreement, will be governed by the rules of the American Arbitration Association and submitted to and settled by final and binding arbitration in Santa Clara, California, except that any alleged breach of Executive’s confidential information obligations shall not be submitted to arbitration and instead the Company may seek all legal and equitable remedies, including without limitation, injunctive relief. 13. Miscellaneous Provisions. (a) No Duty to Mitigate. Executive shall not be required to mitigate the amount of any payment contemplated by this Agreement, nor shall any such payment be reduced by any earnings that Executive may receive from any other source. (b) Waiver. No provision of this Agreement may be modified, waived or discharged unless the modification, waiver or discharge is agreed to in writing and signed by Executive and by an authorized officer of the Company (other than Executive). No waiver by either party of any breach of, or of compliance with, any condition or provision of this Agreement by the other party shall be considered a waiver of any other condition or provision or of the same condition or provision at another time. (c) Integration. This Agreement supersedes and replaces any prior agreements, representation or understandings, whether written, oral, express or implied, between Executive and the Company, including but not limited to the Retention and Ownership Change Event Agreement entered into between Executive and the Company effective May 22, 2021 and any accelerated vesting provisions set forth therein or in any other agreement applicable to Executive’s Equity Awards (to the extent modified by this Agreement), and constitutes the entire agreement and understanding between the parties with respect to the subject matter hereof. (d) Choice of Law. The validity, interpretation, construction and performance of this Agreement shall be governed by the internal substantive laws, but not the conflicts of law rules, of the State of California. (e) Severability. The invalidity or unenforceability of any provision or provisions of this Agreement shall not affect the validity or enforceability of any other provision hereof, which shall remain in full force and effect. (f) Employment Taxes. All payments made pursuant to this Agreement shall be subject to withholding of applicable income and employment taxes. (g) Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed an original, but all of which together will constitute one and the same instrument. DocuSign Envelope ID: 8487CF55-C9B9-499A-932F-E06257515CD6

 
10 4880-6434-0024.v1 [SIGNATURE PAGE FOLLOWS] DocuSign Envelope ID: 8487CF55-C9B9-499A-932F-E06257515CD6

 
11 4880-6434-0024.v1 IN WITNESS WHEREOF, each of the parties has executed this Agreement, in the case of the Company by its duly authorized officer, as of the day and year first above written. COMPANY: IMMERSION CORPORATION By: _______________________________________ Name: Eric Singer Title: Executive Chairman EXECUTIVE: By: Name: Francis Jose Title: CEO and General Counsel DocuSign Envelope ID: 8487CF55-C9B9-499A-932F-E06257515CD6

 

Exhibit 31.1
CERTIFICATIONS PURSUANT TO SECTION 302 OF
THE SARBANES-OXLEY ACT OF 2002
I, Francis Jose, certify that:
I have reviewed this annual report on Form 10-Q of Immersion Corporation;
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, and cash flows of the registrant as of, and for, the periods presented in this report;
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):
a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting, which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize, and report financial information; and
b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 14, 2022

/s/   FRANCIS JOSE
Francis Jose
Chief Executive Officer

Exhibit 31.2
CERTIFICATIONS PURSUANT TO SECTION 302 OF
THE SARBANES-OXLEY ACT OF 2002
I, Aaron Akerman, certify that:
I have reviewed this annual report on Form 10-Q of Immersion Corporation;
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, and cash flows of the registrant as of, and for, the periods presented in this report;
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):
a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting, which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize, and report financial information; and
b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
Date: November 14, 2022
/s/   AARON AKERMAN
Aaron Akerman
Chief Financial Officer

Exhibit 32.1
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Annual Report of Immersion Corporation (the “Company”) on Form 10-Q for the three months ended September 30, 2022 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Francis Jose, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that based on my knowledge:
(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m or 78o(d)); and
(2) The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.
/s/   FRANCIS JOSE
Francis Jose
Chief Executive Officer
November 14, 2022
A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to the Registrant and will be retained by the Registrant and furnished to the Securities and Exchange Commission or its staff upon request.

Exhibit 32.2
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Annual Report of Immersion Corporation (the “Company”) on Form 10-Q for the three months ended September 30, 2022 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Aaron Akerman, Chief Financial Officer, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that based on my knowledge:
(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m or 78o(d)); and
(2) The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.
/s/AARON AKERMAN
Aaron Akerman
Chief Financial Officer
November 14, 2022
A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to the Registrant and will be retained by the Registrant and furnished to the Securities and Exchange Commission or its staff upon request.