Invest in the Future.

As an investor, you have a unique opportunity to get behind a technology that is just beginning to reach its full potential. Just as touch input changed the way that billions of devices receive input from humans, touch feedback will change the way devices convey information back to us.  From mobile phones to wearables, game consoles to automobiles, haptic feedback is enriching the way that people interact with digital technology.  And the best is yet to come as content on mobile, video, games and social networks, become richer, more realistic and more personal with haptics.  At Immersion, we’re changing the digital world.

Jul 31, 2000

Immersion Corporation Reports Record Net Revenues of $2.6 Million for Second Quarter

Immersion Corporation Reports Record Net Revenues of $2.6 Million for Second Quarter SAN JOSE, Calif. July 31, 2000--Immersion Corporation, (NASDAQ: IMMR), the pioneering developer of sensory interaction technology, announced today that second quarter 2000 total revenues were $2.6 million, as compared with $1.6 million in the second quarter of 1999, an increase of 57%. The second quarter 2000 revenue was comprised of $1.0 million in royalty revenue, which was $841,000 or 596% higher than the second quarter of 1999; product sales of $1.0 million, which was the same as the second quarter of 1999 and development contract revenue of $525,000, which was $87,000 or 20% higher than the second quarter of 1999. Gross margin increased from 71% in the second quarter of 1999 to 78% in the second quarter of 2000. The net loss for the quarter was $3.1 million compared to a net loss of $835,000 recorded in the same period in the prior year. Basic and diluted net loss per share for the quarter was $0.19 compared with a basic and diluted net loss per share of $0.15 for the second quarter of 1999.

Total revenues for the six months ended June 30, 2000 increased to $5.0 million from $3.5 million for the six months ended June 30, 1999, an increase of 43%. Revenue for the six months ended June 30, 2000 was comprised of $1.9 million in royalty revenue, which was $1.2 million or 200% higher than the royalty revenue for the six months ended June 30, 1999; product sales for the six months ended June 30, 2000 was $2.3 million, which was $134,000 or 6% higher than the product sales for the six months ended June 30, 1999 and development contract revenue for the six months ended June 30, 2000 was $883,000, which was $135,000 or 18% higher than the development contract revenue for the six months ended June 30, 1999. Net loss, for the six months ended June 30, 2000 was $5.6 million compared to a net loss of $2.1 million for the six months ended June 30, 1999. Basic and diluted net loss per share, for the six months ended June 30, 2000 was $0.35, compared to basic and diluted net loss per share of $0.43 for the six months ended June 30, 1999.

"We're very pleased with our second quarter financial results and the progress we made during the quarter in our various business groups," said Victor Viegas, CFO at Immersion. "The increase in the Company's royalty revenue helped drive gross margins to 78% during the quarter. Our second quarter was important to us for a number of reasons including, our move to new facilities, the signing of merger agreements with Virtual Technologies, Inc and HT Medical Systems, Inc., the addition of BMW as a licensee and the development of new lower priced peripheral devices which are expected to ship by this holiday season."

About Immersion Corporation (www.immersion.com)

Founded in 1993, Immersion Corporation develops advanced hardware and software technologies that enable users to interact with computers using their sense of touch. Immersion's patented TouchSense(TM) technologies, enable computer peripheral devices to deliver tactile sensations that correspond to on-screen events. Immersion licenses its hardware and software technology, on which it holds 58 issued patents worldwide, to industry-leaders in order to integrate and implement its sensory feedback into professional simulation and modeling, consumer devices, and enabling technologies.

Statements made in this press release other than statements of historical fact are forward-looking statements, including those that reflect management's current forecast of certain aspects of Immersion's future. Forward-looking statements made in this press release are based on current information, which we have assessed but which by its nature is dynamic and subject to rapid and even abrupt changes. Forward looking statements include statements regarding new lower priced, royalty-bearing peripheral devices that we expect our licensees to ship this holiday season. Immersion's actual results might differ materially from those stated or implied by such forward looking statements due to risks and uncertainties associated with Immersion's business which include, but are not limited to, the ability of our licensees to manufacture and ship sufficient quantities of such lower priced, royalty-bearing peripheral devices in time for this holiday season, and the degree of consumer demand for such lower priced, royalty-bearing peripheral devices.

Additional risks and uncertainties are outlined in Immersion's reports on Forms 10-K and 10Q, as filed with the Securities and Exchange Commission. These factors may not constitute all factors that could cause actual results to differ materially from those discussed in any forward-looking statement. Immersion is not obligated to revise or update any forward-looking statements in order to reflect events or circumstances that may arise after the date of this release.

Note to Editors: Additional background information on Immersion Corporation is available through our Web Site at www.immersion.com. -0-

                         Immersion Corporation
            Condensed Consolidated Statements of Operations
               (In thousands, except per share amounts)
                              (Unaudited)

                               Three Months          Six Months
                               Ended June 30,       Ended June 30,
                             2000        1999        2000      1999

Revenues:
Royalty revenue          $    982    $    141    $  1,866    $    622
Product sales               1,047       1,048       2,267       2,133
Development
 contracts and other          525         438         883         748
                                             
Total revenues              2,554       1,627       5,016       3,503
                                             
Costs and expenses:
Cost of product sales         570         476       1,193         970
Sales and marketing         2,363         272       3,891         459
Research and development      868         599       1,544       1,057
General and administrative  1,386         796       2,786       1,548
Amortization of intangibles
 and deferred stock
 compensation               1,121         345       1,793         463
In-process research
 and development             --          --           887       1,190
                                             

Total costs
 and expenses               6,308       2,488      12,094       5,687
                                             
Operating loss             (3,754)       (861)     (7,078)     (2,184)
Interest and other
 income, net                  691          26       1,451          66
                                             
Net loss                $  (3,063)   $   (835)   $ (5,627)   $ (2,118)
                         ========    ========    ========    ========
Basic and diluted net
 loss per share          $  (0.19)   $  (0.15)   $  (0.35)   $  (0.43)
                                             
Shares used in
 calculating
 basic and diluted
 net loss per share        16,247       5,423      16,006       4,944
                                             


                         Immersion Corporation
                 Condensed Consolidated Balance Sheets
                            (In thousands)

                                                June 30,  December 31,
                                                  2000      1999 (1)
                                               (Unaudited)  (Audited)

ASSETS
  Cash and cash equivalents                      $22,839       $46,527
  Short-term investments                          14,886         4,781
  Accounts receivable, net                         1,716         1,064
  Inventories                                        855           660
  Prepaid expenses and
   other current assets                            2,401         1,057
                                                  ---        ---
 Total current assets                             42,697        54,089

  Property and equipment, net                      2,435           591
  Purchased intangibles
   and other assets, net                           9,596         4,758
  Other investments                                6,500          --
                                                  ---        ---
         TOTAL ASSETS                            $61,228       $59,438
                                                 =======       =======
LIABILITIES
  Accounts payable                               $ 1,265       $   750
  Accrued compensation                               649           180
  Other accrued liabilities                        1,320           503
  Deferred revenue and customer advances             372         1,355
  Income taxes payable                                 2             2
                                                  ---        ---
Total current liabilities                          3,608         2,790

STOCKHOLDERS' EQUITY                              57,620        56,648
                                                  ---        ---
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY         $61,228       $59,438
                                                 =======       =======

(1) Derived from the Company's annual audited financial statements.

*T


    CONTACT: Immersion Corporation
             Victor Viegas/Kimberly Firehammer, 408/467-1900
             Invest@immersion.com