Immersion Corp 10-Q for FY2020 Q3

About this 10-Q

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Immersion Corp (IMMR)

10-Q 2020-05-08 For: 2020-03-31

Added on April 08, 2026

Immersion Corp filed this 10-Q on May 8, 2020, covering the quarter ended March 31, 2020 (FY2020 Q3).

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Non-accelerated filer

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Smaller Reporting Company

Emerging Growth Company

Quarter ended March 31, 2020, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $6.26M; up 22.2% from $5.12M a year earlier
Net loss: $4.83M; compared with a net loss of $11.02M a year earlier
Diluted EPS: -$0.16; compared with -$0.35 a year earlier

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Delaware		94-3180138
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)



Title of each class	Trading Symbol	Name of each exchange on which registered
Common Stock, $0.001 par value	IMMR	NASDAQ Global Market




		Page
PART I
FINANCIAL INFORMATION

Item 1.	Financial Statements

	Unaudited Condensed Consolidated Balance Sheets as of March 31, 2020 and December 31, 2019	3

	Unaudited Condensed Consolidated Statements of Operations and Comprehensive Income (loss) for the Three Months Ended March 31, 2020 and 2019	4

	Unaudited Condensed Consolidated Statement of Stockholders' Equity for the Three Months Ended March 31, 2020 and 2019	5

	Unaudited Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2020 and 2019	6

	Unaudited Notes to Condensed Consolidated Financial Statements	7

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	22

Item 3.	Quantitative and Qualitative Disclosures about Market Risk	31

Item 4.	Controls and Procedures	32

PART II
OTHER INFORMATION

Item 1.	Legal Proceedings	33

Item 1A.	Risk Factors	36

Item 6.	Exhibits	53

SIGNATURES		56



	March 31, 2020			December 31, 2019
ASSETS
Current assets:
Cash and cash equivalents	$	76,229		$	86,478
Short-term investments	—			3,019
Accounts and other receivables	5,587			3,385
Prepaid expenses and other current assets	9,275			14,078
Total current assets	91,091			106,960
Property and equipment, net	283			1,226
Other assets	16,115			16,662
Total assets	$	107,489		$	124,848
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	937		$	809
Accrued compensation	1,989			2,844
Other current liabilities	4,173			3,478
Deferred revenue	4,617			4,692
Total current liabilities	11,716			11,823
Long-term deferred revenue	24,725			25,952
Other long-term liabilities	3,304			3,316
Total liabilities	39,745			41,091
Contingencies (Note 10)
Stockholders’ equity:
Common stock and additional paid-in capital — $0.001 par value; 100,000,000 shares authorized; 38,824,681 and 38,624,784 shares issued, respectively; 29,601,459 and 31,414,328 shares outstanding, respectively	254,081			253,289
Accumulated other comprehensive income	122			124
Accumulated deficit	(123,393		)	(118,565		)
Treasury stock at cost: 9,223,222 and 7,210,456 shares, respectively	(63,066		)	(51,091		)
Total stockholders’ equity	67,744			83,757
Total liabilities and stockholders’ equity	$	107,489		$	124,848



	Three months ended March 31,
	2020			2019
Revenues:
Royalty and license	$	6,182		$	5,047
Development, services, and other	75			75
Total revenues	6,257			5,122
Costs and expenses:
Cost of revenues	44			15
Sales and marketing	1,716			1,609
Research and development	1,689			2,302
General and administrative	7,356			12,695
Total costs and expenses	10,805			16,621
Operating loss	(4,548		)	(11,499		)
Interest and other income (loss)	(228		)	598
Loss before provision for income taxes	(4,776		)	(10,901		)
Provision for income taxes	(52		)	(115		)
Net loss	$	(4,828	)	$	(11,016	)
Basic net loss per share	$	(0.16	)	$	(0.35	)
Shares used in calculating basic net loss per share	31,006			31,089
Diluted net loss per share	$	(0.16	)	$	(0.35	)
Shares used in calculating diluted net loss per share	31,006			31,089
Other comprehensive income
Change in unrealized gains (loss) on short-term investments	(2		)	6
Total other comprehensive income (loss)	(2		)	6
Total comprehensive income (loss)	$	(4,830	)	$	(11,010	)



	Three Months Ended March 31, 2020
	Common Stock and Additional Paid-In Capital			Accumulated Other Comprehensive Income			Accumulated Deficit			Treasury Stock				Total Stockholders’ Equity
	Shares	Amount		Accumulated Other Comprehensive Income			Accumulated Deficit			Shares	Amount			Total Stockholders’ Equity
Balances at December 31, 2019	38,624,784	$	253,289	$	124		$	(118,565	)	7,210,456	$	(51,091	)	$	83,757
Net loss							(4,828		)					(4,828		)
Unrealized loss on available-for-sale securities, net of taxes				(2		)								(2		)
Repurchase of stock										2,012,766	(11,975		)	(11,975		)
Issuance of stock for ESPP purchase	10,162	63												63
Release of restricted stock units and awards	189,735													—
Stock based compensation		729												729
Balances at March 31, 2020	38,824,681	$	254,081	$	122		$	(123,393	)	9,223,222	$	(63,066	)	$	67,744



	Three Months Ended March 31, 2019
	Common Stock and Additional Paid-In Capital			Accumulated Other Comprehensive Income		Accumulated Deficit			Treasury Stock				Total Stockholders’ Equity
	Shares	Amount		Accumulated Other Comprehensive Income		Accumulated Deficit			Shares	Amount			Total Stockholders’ Equity
Balances at December 31, 2018	37,652,498	$	246,415	$	116	$	(98,521	)	6,823,147	$	(48,350	)	$	99,660
Net loss						(11,016		)					(11,016		)
Unrealized gain on available-for-sale securities, net of taxes				6									6
Issuance of common stock for employee stock purchase	13,479	109											109
Exercise of stock options, net of shares withheld for employee taxes	11,771	71											71
Release of restricted stock units and awards	697,996												—
Stock based compensation		2,103											2,103
Balances at March 31, 2019	38,375,744	$	248,698	$	122	$	(109,537	)	6,823,147	$	(48,350	)	$	90,933



	March 31, 2020
	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:
Money market accounts	$	60,546	$	—	$	—	$	60,546
Total assets at fair value ⁽¹⁾	$	60,546	$	—	$	—	$	60,546



	December 31, 2019
	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:
Money market accounts	$	63,351	$	—	$	—	$	63,351
U.S. Treasury securities	—		3,019		—		3,019
Total assets at fair value ⁽²⁾	$	63,351	$	3,019	$	—	$	66,370



	December 31, 2019
	Amortized Cost		Gross Unrealized Holding Gains		Gross Unrealized Holding Losses		Fair Value
U.S. Treasury securities	$	3,018	$	1	$	—	$	3,019
Total	$	3,018	$	1	$	—	$	3,019



	March 31, 2020		December 31, 2019
Cash	$	15,683	$	23,127
Money market funds	60,546		63,351
Cash and cash equivalents	$	76,229	$	86,478



	March 31, 2020		December 31, 2019
Trade accounts receivable	$	5,126	$	2,972
Other receivables	461		413
Accounts and other receivables	$	5,587	$	3,385



	March 31, 2020		December 31, 2019
Contract assets - long-term	$	6,374	$	6,928
Right-of-use ("ROU") assets	2,571		2,202
Deferred tax assets	470		470
Other assets and deposits	6,700		7,062
Total other assets	$	16,115	$	16,662



	March 31, 2020		December 31, 2019
Accrued legal	$	632	$	1,077
Lease liabilities - current	1,423		1,150
Other current liabilities	2,118		1,251
Total other current liabilities	$	4,173	$	3,478



	Three Months Ended March 31,
	2020			2019
Cash flows provided by (used in) operating activities:
Net loss	$	(4,828	)	$	(11,016	)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation and amortization	1,178			428
Stock-based compensation	729			2,103
Foreign currency translation loss	361			—
Other	—			117
Changes in operating assets and liabilities:
Accounts and other receivables	(2,202		)	(454		)
Prepaid expenses and other current assets	4,820			1,028
Other assets	(22		)	(11,642		)
Accounts payable	122			8,763
Accrued compensation	(855		)	(2,588		)
Other current liabilities	422			2,092
Deferred revenue	(1,302		)	(904		)
Other long-term liabilities	261			4,495
Net cash used in operating activities	(1,316		)	(7,578		)
Cash flows provided by (used in) investing activities:
Purchases of short-term investments	—			(8,930		)
Proceeds from maturities of short-term investments	3,000			8,000
Purchases of property and equipment	(21		)	(6		)
Net cash provided by (used in) investing activities	2,979			(936		)
Cash flows provided by (used in) financing activities:
Cash paid for purchases of treasury shares	(11,975		)	—
Proceeds from issuance of common stock under employee stock purchase plan	63			109
Proceeds from stock options exercises	—			71
Net cash provided by (used in) financing activities	(11,912		)	180
Net decrease in cash and cash equivalents	(10,249		)	(8,334		)
Cash and cash equivalents:
Beginning of period	86,478			110,988
End of period	$	76,229		$	102,654
Supplemental disclosure of cash flow information:
Leased assets obtained in exchange for new operating lease liabilities	$	577		$	—
Cash paid for income taxes	$	19		$	23
Supplemental disclosure of non-cash operating, investing, and financing activities:
Release of restricted stock units and awards under company stock plan	$	1,356		$	6,680



	March 31, 2020
Common stock shares available for grant	3,080
Stock options outstanding	1,370
RSAs outstanding	71
RSUs outstanding	1,192



	Number of Shares Underlying Stock Options		Weighted Average Exercise Price Per Share		Weighted Average Remaining Contractual Life (Years)	Aggregate Intrinsic Value
Outstanding at December 31, 2019	967		$	8.55	5.63	$	16
Granted	456		$	7.58
Exercised	—		$	—
Canceled or expired	(53	)	$	9.74
Outstanding as of March 31, 2020	1,370		$	8.18	6.10	$	—
Vested and expected to vest at March 31, 2020	1,130		$	8.24	6.02	$	—
Exercisable at March 31, 2020	192		$	9.80	4.11	$	—



	Number of Restricted Stock Units		Weighted Average Grant Date Fair Value		Weighted Average Remaining Contractual Life (Years)	Aggregate Intrinsic Value
Outstanding at December 31, 2019	945		$	8.81	1.25	$	7,020
Granted	458		$	5.92
Released	(190	)	$	9.67
Forfeited	(21	)	$	7.93
Outstanding at March 31, 2020	1,192		$	7.57	1.49	$	6,389



	Number of Restricted Stock Awards		Weighted Average Grant Date Fair Value		Weighted Average Remaining Recognition Period (Years)
Outstanding at December 31, 2019	91		$	7.45	0.45
Granted	12		$	5.43
Released	—		$	—
Forfeited	(32	)	$	7.27
Outstanding at March 31, 2020	71		$	7.18	0.21



	Three Months Ended March 31,
	2020		2019
Stock options	$	255	$	194
RSUs and RSAs	462		1,888
Employee stock purchase plan	12		21
Total	$	729	$	2,103

Sales and marketing	$	45	$	320
Research and development	168		630
General and administrative	516		1,153
Total	$	729	$	2,103



	Unrealized Gains & Losses on Available for Sale Securities			Foreign Currency Items		Total
Balance as of December 31, 2019	$	2		$	122	$	124
Amounts reclassified from accumulated other comprehensive income	(2		)	—		(2		)
Balance as of March 31, 2020	$	—		$	122	$	122



	Balance Sheets Classification	March 31, 2020		December 31, 2019
Assets
Right-of-use assets	Other assets	$	2,571	$	2,202
Liabilities
Operating lease liabilities - current	Other current liabilities	1,423		1,150
Operating lease liabilities - long-term	Other long-term liabilities	2,652		2,664
Total lease liabilities		$	4,075	$	3,814



Cash paid within operating cash flow	$	349
Weighted average lease terms (in years)	2.94



For the Years Ending December 31,
Remainder of 2020	1,186
2021	1,499
2022	1,197
2023	457
2024	24
Total	$	4,363


•	difficulties in persuading existing licensees who compensate us for including our software in certain of their touch-enabled products to also license and compensate us for our patents that cover other touch-enabled products of theirs that do not include our software;


•	difficulties in achieving and maintaining consumer and market demand or acceptance for our products;


•	any litigation we are or may be involved in may be unsuccessful or may result in one or more of our patents becoming limited in scope, declared unenforceable or invalidated.



*	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.



		IMMERSION CORPORATION

Date:	May 8, 2020	By:	/s/ AARON AKERMAN
			Aaron Akerman
			Chief Financial Officer and Principal Accounting Officer



Months	Base Rent per Month
Months 1 to 12*	$85,632.60
Months 13 to 24	$88,201.58
Months 25 to Expiration Date	$90,847.63


1.	Recitals/Amendment: Whereas the Term of said Sublease is scheduled to commence on the later of (i) May 1, 2020 and (ii) fifteen (15) days following Master Lessor’s consent to the Sublease, the parties hereto desire to amend Paragraph 3. A. of the Sublease as follows:


B.	There are no other modifications to the Sublease except as described immediately above and all other terms and conditions of the Sublease shall remain in full force and effect.