IMMERSION CORP

Immersion Corporation operates in two segments: the Immersion segment, a premier licensing company focused on the acceleration and scaling through licensing of innovative haptic technologies, and the Barnes & Noble Education segment, one of the largest contract operators of physical and virtual bookstores for college and university campuses and K-12 institutions across the United States. The haptics industry is shaped by the need for tactile feedback in digital experiences, with competition based on patent strength and technological expertise. The education retail industry is highly seasonal, with major sales realized during the second and third fiscal quarters when college students purchase textbooks.

Primary competitors in the Immersion segment include internal design groups at OEMs and haptic integrated circuit manufacturers, as well as potential customers who may develop their own haptic solutions. The company's strong patent position generally makes it unique in the market, as it may lose a software licensing opportunity to a competitor or in-house team but still secure a patent license when haptics is used. Barnes & Noble Education competes by developing new products and solutions, leveraging its large operating footprint with direct access to students and faculty, well-established relationships with academic partners, stable long-term contracts, and well-recognized brands including BNC and MBS.

The Immersion segment generates revenue through licensing intellectual property, including patents and proprietary haptic technology, via fixed, variable, or one-time royalty and license payments over defined periods. The Barnes & Noble Education segment generates revenue through product sales, digital textbook sales, rental income, commission revenue from the F/L Relationship, and brand marketing programs. Revenue from the BNC First Day affordable access course material programs is recognized consistent with policies for product, digital, and rental sales, net of anticipated opt-out or return provisions.

The Immersion segment offers patent licenses and technology licenses covering haptic technology for mobile communications, wearables, consumer electronics, gaming, VR, automotive, and other markets. Licensees include Samsung, Google, Sony, Panasonic, Awinic, Dongwoon Anatech, Microsoft, Nintendo, ALPS Alpine, Continental, Preh, and others. Immersion Segment revenue generated from OEMs and integrated circuit customers in the mobile communications market represented 28% and 64% of total Royalty and license revenue for fiscal years ended April 30, 2026 and 2025, respectively. Revenue from gaming and VR customers represented 45% and 24% of total Royalty and license revenue for those same periods. Revenue from automotive customers represented 15% and 10% of total Royalty and license revenue for fiscal years ended April 30, 2026 and 2025, respectively.

The Barnes & Noble Education segment operates 1,116 physical and virtual bookstores as of April 30, 2026, including 647 physical campus bookstores and 469 virtual bookstores (286 K-12 virtual stores or 61% and 183 Higher Education virtual stores or 39%). Product and service offerings include course material sales and rentals, BNC First Day affordable access course material programs (First Day Complete and First Day), eTextbooks, general merchandise, cafés and convenience stores, brand marketing programs, wholesale textbook distribution, and wholesale inventory management hardware and POS software. In Fiscal 2026, BNC First Day programs' total sales increased by 28.0% from the prior year. Barnes & Noble Education operates 47 True Spirit apparel and spirit shop e-commerce websites through its F/L Relationship, 54 customized cafés featuring Starbucks Coffee, and 5 stand-alone convenience stores.

On June 10, 2024, Immersion acquired a controlling interest in Barnes & Noble Education through a series of transactions including a rights offering and a PIPE Transaction. Barnes & Noble Education received total gross proceeds of $95.0 million of new equity capital through a $50.0 million new equity investment led by Immersion and the $45.0 million Rights Offering. Immersion acquired 42% of all outstanding shares of BNED Common Stock and control of Barnes & Noble Education through five Immersion-appointed board seats; currently four of the seven members of the Barnes & Noble Education Board are Immersion appointees. The total consideration transferred was approximately $50.1 million, consisting of $52.2 million in cash consideration paid to Barnes & Noble Education less $2.1 million in transaction costs incurred by Immersion but reimbursed by Barnes & Noble Education. Barnes & Noble Education refinanced their Credit Facility providing access to a $325.0 million facility maturing in 2028. On September 19, 2024, Barnes & Noble Education entered into an ATM sales agreement with BTIG, selling the maximum of $40.0 million of BNED Common Stock at a weighted-average price of $10.06 per share, receiving $39.2 million in proceeds net of commissions. On December 20, 2024, Barnes & Noble Education entered into an additional ATM sales agreement with BTIG, selling the maximum of $40.0 million of BNED Common Stock at a weighted-average price of $10.42 per share, receiving $39.2 million in proceeds net of commissions.

For the fiscal year ended April 30, 2026, total revenues were $1,638.1 million, compared to $1,249.5 million in the prior fiscal year. Net income was $12.1 million, compared to net income of $6.6 million in the prior year. The increase in revenue was primarily driven by the inclusion of Barnes & Noble Education's results following the June 10, 2024 acquisition.

Barnes & Noble Education plans to continue to scale the number of schools adopting First Day Complete in Fiscal 2027 and beyond. Many institutions adopted First Day Complete in Fiscal 2026, and the program has allowed Barnes & Noble Education to reverse historical long-term trends in course materials revenue declines at those schools where such programs have been adopted. The First Day Complete model drives substantially greater unit sales and sell-through for the bookstore.

Barnes & Noble Education expects to continue to introduce scalable and advanced solutions focused largely on the student and customer experience, expand its e-commerce capabilities and accelerate such capabilities through its service providers, Fanatics and Lids, win new accounts, and expand revenue opportunities through strategic relationships. Barnes & Noble Education expects gross comparable store general merchandise sales to increase over the long term, as product assortments continue to emphasize changing consumer trends and evolve presentation concepts and merchandising, which is expected to be further enhanced and accelerated through the F/L Relationship.

The filing does not contain specific margin or cost outlook figures.

The filing does not contain specific operational outlook details regarding supply chain, manufacturing capacity, technology infrastructure investments, or headcount strategy.

The filing does not contain specific R&D spending levels, capital expenditure plans, share repurchase authorization amounts, or dividend policy figures for the upcoming period.

Barnes & Noble Education's business is highly seasonal, with the major portion of sales and operating profit realized during the second and third fiscal quarters and lowest in the first and fourth fiscal quarters. Quarterly results may fluctuate depending on the timing of the start of various schools' semesters and shifts in the fiscal calendar dates. Given the growth of BNC First Day affordable access course material programs, the timing of cash collection from school partners may shift to periods subsequent to when revenue is recognized, particularly in the third quarter given the timing of the Spring Term and the quarterly reporting period.

The broader macro-economic global supply chain issues may impact the ability to source school supplies sold in campus bookstores, including technology-related products and emblematic clothing and gifts. Delayed or incomplete publisher shipments of physical textbook orders, or delays in receiving digital courseware access codes, could have an adverse impact on sales, including the BNC First Day Complete affordable access program, which relies upon timely receipt of inventory in advance of class start dates each academic term.

A limited number of customers account for a significant portion of revenue, and the loss of major customers could harm operating results. Immersion Segment revenue generated from OEMs and integrated circuit customers in the mobile communications market represented 28% and 64% of total Royalty and license revenue for fiscal years ended April 30, 2026 and 2025, respectively. The company may not be able to continue to derive significant revenues from third party gaming peripheral makers for video gaming platforms. Barnes & Noble Education's financial results are highly dependent upon its ability to build textbook inventory from suppliers in advance of the selling season, and if current suppliers stop selling on acceptable terms, including due to bankruptcies or refusal to ship due to liquidity constraints, the company may be unable to procure content from other suppliers. Barnes & Noble Education's failure to prepare and timely file its periodic reports with the SEC limits its access to public markets to raise debt or equity capital, may impact its ability to obtain alternative financing, and could have negative consequences under the terms of its existing credit agreements.

Management's message emphasizes the strategic transformation following the acquisition of a controlling interest in Barnes & Noble Education on June 10, 2024, which expanded Immersion's offerings, increased customer reach, and diversified into the education sector. The key strategic priorities include driving adoption of haptic technology across markets, monetizing intellectual property through licensing, and scaling Barnes & Noble Education's First Day Complete program. Management highlights that the acquisition aims to expand Immersion's offerings, increase its customer reach, and diversify into the education sector.