0001628280-22-004000 | 10-K | XBRL Viewer

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CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Dec. 31, 2021	Dec. 31, 2020
Current assets:
Cash and cash equivalents	$ 51,490	$ 59,522
Marketable securities	86,431	0
Accounts and other receivables	1,970	2,218
Prepaid expenses and other current assets	13,432	12,610
Total current assets	153,323	74,350
Property and equipment, net	444	209
Long-term deposits	9,658	12,571
Other assets, net	12,095	9,000
Total assets	175,520	96,130
Current liabilities:
Accounts payable	2	149
Accrued compensation	555	1,001
Other current liabilities	11,247	2,457
Deferred revenue	4,826	5,173
Total current liabilities	16,630	8,780
Long-term deferred revenue	16,699	21,334
Other long-term liabilities	896	2,035
Total liabilities	34,225	32,149
Commitments and contingencies (Note 5)
Stockholders’ equity:
Common stock and additional paid-in capital – $0.001 par value; 100,000,000 shares authorized; 46,534,198 and 39,161,214 shares issued, respectively; 34,390,765 and 27,017,781 shares outstanding, respectively	323,296	258,756
Accumulated other comprehensive income	412	122
Accumulated deficit	(100,680)	(113,164)
Treasury stock at cost: 12,143,433 and 12,143,433 shares, respectively	(81,733)	(81,733)
Total stockholders’ equity	141,295	63,981
Total liabilities and stockholders’ equity	$ 175,520	$ 96,130

CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares	Dec. 31, 2021	Dec. 31, 2020
Statement of Financial Position [Abstract]
Common stock, par value (in dollars per share)	$ 0.001	$ 0.001
Common stock, shares authorized (in shares)	100,000,000	100,000,000
Common stock, shares issued (in shares)	39,161,214	38,624,784
Common stock, shares outstanding (in shares)	34,390,765	27,017,781
Treasury stock, shares (in shares)	12,143,433	12,143,433

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS) - USD ($) shares in Thousands, $ in Thousands	12 Months Ended
	Dec. 31, 2021	Dec. 31, 2020
Revenues:
Revenue	$ 35,089	$ 30,456
Costs and expenses:
Cost of revenues	88	168
Sales and marketing	3,241	4,999
Research and development	4,150	5,014
General and administrative	9,835	18,055
Total costs and expenses	17,314	28,236
Operating income	17,775	2,220
Interest and other income	1,244	271
Other income (expense), net	(1,729)	668
Income before benefit from (provision for) income taxes	17,290	3,159
Benefit from (provision for) income taxes	(4,806)	2,242
Net income	$ 12,484	$ 5,401
Basic net income (loss) per share (in dollars per share)	$ 0.40	$ 0.19
Shares used in calculating basic net income (loss) per share (in shares)	31,459	28,117
Diluted net income (loss) per share (in dollars per share)	$ 0.39	$ 0.19
Shares used in calculating diluted net income (loss) per share (in shares)	31,769	28,477
Other comprehensive income, net of tax
Change in unrealized gains (losses) on available-for-sale securities	$ 290	$ (2)
Total other comprehensive income (loss)	290	(2)
Total comprehensive income	12,774	5,399
Royalty and license
Revenues:
Revenue	34,689	30,176
Development, services, and other
Revenues:
Revenue	$ 400	$ 280

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY - USD ($) $ in Thousands	Total	Common Stock and Additional Paid-In Capital	Accumulated Other Comprehensive Income (Loss)	Accumulated Deficit	Treasury Stock
Beginning balance (in shares) at Dec. 31, 2019		38,624,784			7,210,456
Stockholders' Equity Attributable to Parent, Beginning Balance at Dec. 31, 2019	$ 83,757	$ 253,289	$ 124	$ (118,565)	$ (51,091)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income	5,401			5,401
Unrealized loss on available-for-sale securities, net of taxes	(2)		(2)
Stock repurchase (in shares)					4,932,977
Treasury Stock, Value, Acquired, Cost Method	(30,642)				$ (30,642)
Exercise of stock options, net of shares withheld for employee taxes (in shares)		75,675
Exercise of stock options, net of shares withheld for employee taxes	577	$ 577
Release of restricted stock units and awards (in shares)		438,199
Release of restricted stock units and awards	0	$ 0
Issuance of stock for ESPP purchase (in shares)		22,556
Issuance of stock for ESPP purchase	134	$ 134
Stock-based compensation	4,756	$ 4,756
Ending balance (in shares) at Dec. 31, 2020		39,161,214			12,143,433
Ending balance at Dec. 31, 2020	63,981	$ 258,756	122	(113,164)	$ (81,733)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income	12,484			12,484
Unrealized loss on available-for-sale securities, net of taxes	290		290
Exercise of stock options, net of shares withheld for employee taxes (in shares)		325,737
Exercise of stock options, net of shares withheld for employee taxes	2,864	$ 2,864
Release of restricted stock units and awards (in shares)		477,605
Release of restricted stock units and awards	0
Issuance of stock for ESPP purchase (in shares)		25,033
Issuance of stock for ESPP purchase	150	$ 150
Stock issued during period (in shares)		6,544,609
Stock issued during period	59,188	$ 59,188
Stock-based compensation	2,338	$ 2,338
Ending balance (in shares) at Dec. 31, 2021		46,534,198			12,143,433
Ending balance at Dec. 31, 2021	$ 141,295	$ 323,296	$ 412	$ (100,680)	$ (81,733)

CONSOLIDATED STATEMENTS OF CASH FLOWS $ in Thousands	12 Months Ended
CONSOLIDATED STATEMENTS OF CASH FLOWS $ in Thousands	Dec. 31, 2021 USD ($)	Dec. 31, 2020 USD ($)
Cash flows from operating activities:
Net income	$ 12,484	$ 5,401
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	762	1,931
Stock-based compensation	2,338	4,756
Marketable Securities, Gain (Loss)	(479)	0
Derivative Instruments Not Designated as Hedging Instruments, Gain (Loss), Net	1,364	0
Foreign currency remeasurement gains (losses)	635	(427)
Deferred income taxes	531	(2,483)
Asset impairment charges	2,166	0
Impairment of right-of-use lease asset	32	271
Other	(9)	127
Changes in operating assets and liabilities:
Accounts and other receivables	248	1,167
Prepaid expenses and other current assets	(823)	1,486
Long-term deposits	110	(5,077)
Other assets	2,952	2,194
Accounts payable	(148)	(660)
Accrued compensation	(446)	(1,843)
Other current liabilities	2,205	(1,253)
Deferred revenue	(4,982)	(4,137)
Other long-term liabilities	(1,491)	(1,431)
Net cash provided by operating activities	17,449	22
Cash flows provided by (used in) investing activities:
Payments to Acquire Marketable Securities	(109,408)	0
Proceeds from Sale and Maturity of Marketable Securities	17,156	3,000
Proceeds from Derivative Instrument, Investing Activities	18,919	0
Payments for Derivative Instrument, Investing Activities	(14,016)	0
Purchases of property and equipment	(335)	(47)
Net cash provided by (used in) investing activities	(87,684)	2,953
Cash flows provided by (used in) financing activities:
Proceeds from issuance of common stock	59,189	0
Proceeds from issuance of common stock under employee stock purchase plan	150	134
Proceeds from stock options exercises	2,864	577
Cash paid for purchases of treasury stock	0	(30,642)
Net cash provided by (used in) financing activities	62,203	(29,931)
Cash and Cash Equivalents, Period Increase (Decrease)	(8,032)	(26,956)
Cash and cash equivalents:
Beginning of year	59,522	86,478
End of year	51,490	59,522
Cash and cash equivalents:
Beginning of year	88	65
End of year
Stock Issued	4,278	3,016
Leased assets obtained in exchange for new operating lease liabilities	$ 0	$ 577

SIGNIFICANT ACCOUNTING POLICIES

12 Months Ended

Dec. 31, 2021

Accounting Policies [Abstract]

SIGNIFICANT ACCOUNTING POLICIES

Description of Business

Immersion Corporation (the “Company”, “Immersion”, “we”, “our”, or “us”) was incorporated in 1993 in California and reincorporated in Delaware in 1999. We 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 have adopted a business model under which we provide advanced tactile software, related tools and 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.

Impact of COVID-19

In March 2020, the World Health Organization declared the outbreak of COVID-19 a pandemic, which continues to spread throughout the U.S. and the world and has resulted in authorities implementing numerous measures to combat the spread of the virus, including travel bans and restrictions, quarantines, shelter-in-place orders, and business limitations and shutdowns. The COVID-19 outbreak and related public health measures have adversely affected workforce, organizations, consumers, economies, and financial markets globally, leading to an economic downturn and increased market volatility.

In response to the COVID-19 pandemic, we implemented work-from-home and restricted travel policies in the first quarter of 2020, which are expected to remain in place for 2022.

In response to certain anticipated impacts from the COVID-19 pandemic, we implemented a series of cost reduction initiatives in 2020 and 2021 to preserve financial flexibility. In 2020, these actions included: reductions of the base salaries and cash compensation of Company executives and board members; cancellation and reduction of bonus amounts in executive and employee bonus plans; renegotiated professional services fees from third-party services providers; relocation of certain positions to lower-cost regions; suspension of employee retirement savings plan contribution match by Immersion and accessing broad-based employer relief provided by the governments. In 2021, additional actions included: cancellation of 2021 Executive Incentive Plan and elimination of certain positions.

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 years ended December 31, 2021 and 2020, we recorded $0.3 million and $0.5 million, respectively, in government subsidies as a reduction to operating expenses in the Consolidated Statements of Income and Comprehensive Income.

Principles of Consolidation and Basis of Presentation

The accompanying consolidated financial statements include the accounts of Immersion Corporation and our wholly-owned subsidiaries. All intercompany accounts, transactions, and balances have been eliminated in consolidation.

Use of Estimates

The preparation of consolidated financial statements in conformity with the generally accepted accounting principles in the United States ("GAAP") requires estimates and assumptions that affect the amounts reported in the consolidated financial statements and the accompanying notes. Actual results may differ materially from these estimates On an ongoing basis, we evaluate our estimates, including those related to revenue recognition, fair value of financial instruments, property and equipment, income taxes, contingent liabilities, long-term deposits for withholding taxes and stock-based compensation. 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.

Foreign Currency Translation

The functional currency of our foreign subsidiaries is U.S. dollars. Gains and losses from the remeasurement financial statements of the foreign subsidiaries into the U.S. dollars and from foreign currency transaction are reported as Other income (expense), net in our Consolidated Statements of Income and Other Comprehensive Income.

Significant Accounting Policies

Revenue Recognition

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.

Fixed fee license revenue

We recognize revenue from fixed fee license agreements when our performance obligation has been satisfied, which typically occurs upon the transfer of rights to our technology upon the execution of the license agreement. 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 two separate performance obligations:

•Performance Obligation A: Transfer of rights to our patent portfolio as it exists when the contract is executed;

•Performance Obligation B: Transfer of 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 will 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 will 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 will be recognized in the quarter the license agreement is signed and the customer can benefit from rights provided in the contract, and the portion allocable to Performance Obligation B will be recognized on a straight-line basis over the contract term. For such contracts, a contract liability account will be established and included within Deferred revenue and Long-term deferred revenue on the 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.

Some of our license agreements contain fixed fees related to past infringements. Such fixed fees are recognized as revenue or recorded as a deduction to our operating expense in the quarter the license agreement is signed.

Payments for fixed fee license contracts typically are due in full within 30 - 45 days from execution of the contract. From time to time, we enter into a fixed fee license contract with payments due in a number of installments payable throughout the contract term. In such cases, we determine if a significant financing component exists and if it does, we will recognize more or less revenue and corresponding interest expense or income, as appropriate.

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 its licensees. In 2021, we recorded $0.5 million, $0.5 million and $0.1 million adjustments to decrease royalty revenue in the first, third and fourth quarters, respectively. In the second quarter of 2021, we recorded adjustments of $2.0 million to increase royalty revenue. We recorded $0.1 million and

$20,000 adjustments to decrease royalty revenue during the first and second quarters of 2020, respectively. We recorded $0.3 million and $0.6 million adjustments to increase royalty revenue during the third and fourth quarter of 2020, respectively.

Certain of our per-unit royalty agreements contain minimum royalty provisions which sets forth minimum amounts to be received by us during the contract term. Under Accounting Standard Codification 606, Revenue from Contracts with Customers, (“ASC 606”), minimum royalties are considered a fixed transaction price to which we have an unconditional right once all other performance obligations, if any, are satisfied. We recognize all minimum royalties as revenue at the inception of the license agreement, or in the period in which all remaining revenue recognition criteria have been met. We account for the unbilled minimum royalties as contract assets as Prepaid and other current assets and Other assets, net on our Consolidated Balance Sheets, and the balance of such contract assets will be reduced by the actual royalties to be reported by the licensee during the contract term until fully utilized, after which point any excess per-unit royalties reported are recognized as revenue. 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.

Payments of per-unit royalties typically are due within 30 to 60 days from the end of the quarter in which the underlying sales took place.

Development, services, and other revenue

As the performance obligation related to our development, service and other revenue is satisfied over a period of time, we recognize such revenue evenly over the period of performance obligations, which is generally consistent with the contractual term.

Deferred Revenue

Deferred revenue consists of amounts that have been invoiced or paid, but have not been recognized as revenue. The amounts are primarily derived from our fixed license fee agreements under which we are obliged to transfer both rights to our patent portfolio that exists when the contract is executed and rights to its patent portfolio as it evolves over the contract term.

Deferred revenue that will be recognizable during the succeeding 12-month period is recorded as Deferred Revenue, and the remaining deferred revenue is recorded as Long-term deferred revenue on the Consolidated Balance Sheets.

Capitalized Contract Costs

We capitalize certain incremental costs incurred, such as commissions, in order to obtain new contracts with our customers if we expect to recover these costs. The capitalized contract costs are amortized on a straight-line basis over the term of the contract.

Fair Value Measurement

We measure the fair value of financial assets as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. We use the GAAP fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. This hierarchy requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The three levels of the fair value hierarchy are as follows:

Level 1 — Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets.

Level 2 — Observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable market data.

Level 3 — Unobservable inputs for the asset or liability, which include assumptions market participants would use in pricing the asset or liability.

Cash Equivalents

We consider all highly liquid instruments with an original or remaining maturity of 90 days or less at the date of purchase to be cash equivalents.

Marketable Securities

Debt Securities

Debt securities primarily consist of investments in corporate bonds. We classify our debt securities as available-for-sale at the time of purchase and reevaluate such classification as of each balance sheet date. Investment in debt securities are classified either short-term or long-term based on each instrument’s underlying contractual maturity date and the management's intention.

Unrealized gains and losses on marketable debt securities classified as available-for-sale are recognized as Other comprehensive income (loss) on the Consolidated Statements of Income and Comprehensive Income.

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.

If quoted prices for identical instruments are available in an active market, debt securities are classified within Level 1 of the fair value hierarchy. If quoted prices for identical instruments in active markets are not available, fair values are estimated using quoted prices of similar instruments and are classified within Level 2 of the fair value hierarchy. To date, all of our debt securities can be valued using one of these two methodologies.

Equity Investments

We hold marketable equity investments over which we do not have a controlling interest or significant influence. Marketable equity investments are included in Marketable securities on the Consolidated Balance Sheets. They are measured using quoted prices in active markets with changes recorded in Other income (expense), net on the Consolidated Statements of Income and Other Comprehensive Income.

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 Consolidated Balance Sheets. When we purchase put or call options, the premium paid is reported as Marketable securities current on our 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 (loss), net on our Consolidated Statements of Income and Comprehensive Income. At December 31, 2021, we had $6.3 million in derivative instruments which 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 Consolidated Balance Sheets.

Our derivative financial instruments are classified within Level 2 of the fair value hierarchy because the valuation inputs are based on quoted prices and market observable data of similar instruments in active markets.

Accounts and Other Receivables

Accounts and other receivables are primarily comprised of trade receivables that are recorded at the invoice amount, net of an allowance for credit losses. We assess our allowance for credit losses on trade receivables by taking into consideration forecasts of future economic conditions, information about past events, such as our historical trend of write-offs, and customer-specific circumstances, such as bankruptcies and disputes. The allowance for credit losses on trade receivables is recorded in operating expenses on our Consolidated Statements of Income and Comprehensive Income.

Property and Equipment, Net

Property and equipment are stated at cost less accumulated depreciation. Depreciation is recorded using straight-line method over the estimated useful life of the related assets. Property and equipment is reviewed for impairment whenever events

or changes in circumstances indicate the carrying amount of an asset may not be recoverable.

The estimated useful lives are typically as follows:


Computer equipment and purchased software			3 years
Machinery and equipment			3-5 years
Furniture and fixtures			5 years

Leasehold improvements are amortized over the shorter of the lease term or their estimated useful life.

Total depreciation expense for property and equipment for years ended December 31, 2021 and 2020 were $0.1 million and $1.1 million, respectively.

Leases

We lease our office space under lease arrangements with expiration dates on or before February 29, 2024. Operating leases are accounted for as right-of-use (“ROU”) assets and lease liability obligations in our Consolidated Balance Sheets under Other assets, net, Other current liabilities and Other long-term liabilities, respectively. ROU assets and lease liabilities are recognized at lease commencement date based on the present value of lease payments over the lease term. We elect to combine lease and non-lease components and account for them as a single lease component. As our leases typically do not provide an implicit rate, we estimate our incremental borrowing rate based on the information available at the commencement date in determining the present value of lease payments. ROU assets also include any lease payments made and exclude lease incentives and direct costs. Lease expense is recognized on a straight-line basis over the lease term. We elected to not present leases with an initial term of 12 months or less on our Consolidated Balance Sheets.

Advertising

Advertising costs are expensed as incurred. Advertising expense for the years ended December 31, 2021 and 2020 were $0.2 million and $0.2 million, respectively.

Research and Development

Research and development expenses primarily consisted of personnel-related costs, including payroll and stock-based compensation, outside consulting expenses and allocations of corporate overhead expenses. Research and development costs are expensed as incurred.

Legal Proceedings and Litigations

We are involved in legal proceedings on an ongoing basis. If we believe that a loss arising from such matters is probable and can be reasonably estimated, we accrue the estimated loss in our Consolidated Financial Statements. If only a range of estimated losses can be determined, we accrue an amount within the range that, in our judgment, reflects the most likely outcome; if none of the estimates within that range is a better estimate than any other amount, we accrue the low end of the range.

Income Taxes

We use the asset and liability method of accounting for income taxes. Under this method, income tax expense is recognized for the amount of taxes payable or refundable for the current year. In addition, deferred tax assets and liabilities are recognized for the expected future tax consequences of temporary differences between the financial reporting and tax bases of assets and liabilities, and for operating losses and tax credit carryforwards. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized and are reversed at such time that realization is believed to be more-likely-than-not.

Software Development Costs

Costs for the development of new software products and substantial enhancements to existing software products associated with the development of products for sale are expensed to research and development expense until technological feasibility has been established, at which time any additional costs would be capitalized. We consider technological feasibility to be

established upon completion of a working model of the software. Because we believe our current process for developing software is essentially completed concurrently with the establishment of technological feasibility, no costs have been capitalized to date.

Stock-based Compensation

We recognize stock-based compensation cost for shares, net of estimated forfeiture over the requisite service period of the award, which is the vesting period. We use the Black-Scholes Merton option pricing model to determine the fair value of stock options and employee stock purchase plan shares. We estimate the fair value of market-performance based stock options and restricted stock units using a Monte Carlo simulation model which requires the input of assumptions, including expected term, stock price volatility and the risk-free rate of return. In addition, judgment is also required in estimating the number of stock-based awards that are expected to be forfeited. Forfeitures are estimated based on historical experience at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates.

Concentrations of Credit Risk and Significant Customers

Our financial instruments that are exposed to concentrations of credit risk consist primarily of cash and cash equivalents, marketable securities, and accounts and other receivables. Deposits held with banks may exceed the amount of insurance provided on such deposits. Generally, these deposits may be redeemed upon demand.

We are subject to a concentration of revenues given certain key licensees that contributed a significant portion of our total revenues. See Note 12. Segment Reporting, Geographic Information and Significant Customers of the Notes to Consolidated Financial Statements for more details on customer revenue concentration.

We license technology primarily to companies in North America, Europe, and Asia. To reduce credit risk, management performs periodic credit evaluations of the financial conditions of our customer. We periodically evaluate potential credit losses to ensure adequate reserves are maintained, but historically we have not experienced any significant losses related to individual customers or groups of customers in any particular industry or geographic area. As such, our reserves for credit losses for the years ended December 31, 2021 and December 31, 2020 were not material due to our low credit risk.

Certain Significant Risks and Uncertainties

We operate in multiple industries and our operations can be affected by a variety of factors. For example, management believes that changes in any of the following areas could have a negative effect on our future financial position and results of operations: 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 and the recognition and components thereof; our costs and expenses; including capital expenditures; our investment of surplus funds and sales of marketable debt securities; 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 related to and the impact of current and future litigation and arbitration; our sublease and the timing and income related thereto; our shelf S-3 registration statement and our plans with respect thereto, including anticipated use of proceeds and our stock repurchase and equity distribution programs and equity distribution programs.

Segment Information

We operate as one operating segment because our Chief Executive Officer, as our chief operating decision maker, reviews financial information, on a consolidated basis for purposes of making decisions regarding allocating resources and assessing performance.

Recently Issued Accounting Pronouncement

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 will be effective for annual periods beginning after December 15, 2021. Early adoption is permitted. We are assessing the impact effect of this new standard on our consolidated financial statements and related disclosures.

REVENUE RECOGNITION

12 Months Ended

Dec. 31, 2021

Revenue from Contract with Customer [Abstract]

REVENUE RECOGNITION

Disaggregated Revenue

The following table presents the disaggregation of our revenue for the years ended December 31, 2021 and 2020 (in thousands):


	Years Ended December 31,
	2021		2020
Fixed fee license revenue	$	5,843	$	5,472
Per-unit royalty revenue	28,846		24,704
Total royalty and license revenue	34,689		30,176
Development, services, and other revenue	400		280
Total revenues	$	35,089	$	30,456

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

Contract assets decreased by $2.0 million from January 1, 2021 to December 31, 2021, primarily due to actual royalties billed during the year.

Contracted Revenue

Based on contracts signed and payments received as of December 31, 2021, we expect to recognize $21.5 million revenue related to Performance Obligation B under our fixed fee license agreements, which are satisfied over time, including $13.6 million over one to three years and $7.9 million over more than three years.

Capitalized Contract Costs

We capitalized $0.2 million of incremental costs incurred to obtain new contracts with customers in each of the years ended December 31, 2021 and 2020.

- Definition

The entire disclosure of revenue from contract with customer to transfer good or service and to transfer nonfinancial asset. Includes, but is not limited to, disaggregation of revenue, credit loss recognized from contract with customer, judgment and change in judgment related to contract with customer, and asset recognized from cost incurred to obtain or fulfill contract with customer. Excludes insurance and lease contracts.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-URI http://asc.fasb.org/topic&trid=49130388

Reference 2: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 10
-URI http://asc.fasb.org/extlink&oid=123351226&loc=SL49130551-203045

Reference 3: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 13
-Subparagraph (b)(2)
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Reference 4: http://www.xbrl.org/2003/role/disclosureRef
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-Name Accounting Standards Codification
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-Section 50
-Paragraph 12
-Subparagraph (b)
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Reference 5: http://www.xbrl.org/2003/role/disclosureRef
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Reference 6: http://www.xbrl.org/2003/role/disclosureRef
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-Subparagraph (e)
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Reference 7: http://www.xbrl.org/2003/role/disclosureRef
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-Name Accounting Standards Codification
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Reference 8: http://www.xbrl.org/2003/role/disclosureRef
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Reference 9: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
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-Topic 606
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-Section 50
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Reference 10: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
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-SubTopic 10
-Section 50
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-Subparagraph (c)
-URI http://asc.fasb.org/extlink&oid=123351226&loc=SL49130554-203045

+ Details

INVESTMENTS AND FAIR VALUE MEASUREMENTS

12 Months Ended

Dec. 31, 2021

Investments, Debt and Equity Securities [Abstract]

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 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 December 31, 2021, we reported $7.3 million investment in debt securities as Other assets on our Consolidated Balance Sheets as the management intends to hold these investment for more than 12 months from the reporting date. We did not have marketable securities as of December 31, 2020. 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.

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 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 December 31, 2021 consisted of the following (in thousands):


	December 31, 2021
	Cost or Amortized Cost		Unrealized Gains		Unrealized Losses		Fair Value
Mutual funds	$	50,000	$	—	$	(338)	$	49,662
Equity securities	38,100		—		(1,331)		36,769
Corporate bonds	6,996		290		—		7,286
	$	95,096	$	290	$	(1,669)	$	93,717

As December 31, 2021, marketable securities are classified and reported on our Consolidated Balance Sheets as follows:


	December 31, 2021
	Marketable Securities (current)		Other Assets, Net (non-current)		Total
Mutual funds	$	49,662	$	—	$	49,662
Equity securities	36,769		—		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 December 31, 2021 (in thousands) are as follows:


	December 31, 2021
	Amortized Cost		Fair Value
Less than 1 year	$	—	$	—
1 to 5 years	6,996		7,286
Total	$	6,996	$	7,286

Derivative Financial Instruments

We invest in derivatives that are not designated as hedging instruments and which consisted of call and put options. When we sell call and put options, the premium received is reported as Other current liabilities on our Consolidated Balance Sheets. When we purchase put or call options, the premium paid is reported as Marketable securities on our 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 Consolidated Statements of Income and Comprehensive Income. At December 31, 2021, we had $6.3 million derivative instruments which 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 Consolidated Balance Sheets.


	Cost		Unrealized Gains		Fair Value
Liabilities
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):


	Years Ended December 31,
	2021		2020
Net unrealized losses recognized on equity investments	$	(1,669)	$	—
Net realized gains recognized on equity investments	2,148		—
Net realized losses recognized on derivative instruments	(1,467)		—
Net unrealized gains recognized on derivative instruments	103		—
Total net gains (losses) recognized in interest and other income	$	(885)	$	—

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. We had no Level 2 financial instruments at December 31, 2020.

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 December 31, 2021 and 2020.

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


	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 securities	36,769		—		—		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


	December 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 funds	$	45,614	$	—	$	—	$	45,614
Total assets at fair value	$	45,614	$	—	$	—	$	45,614

BALANCE SHEET DETAILS

12 Months Ended

Dec. 31, 2021

Organization, Consolidation and Presentation of Financial Statements [Abstract]

BALANCE SHEET DETAILS

BALANCE SHEETS DETAILS

Cash and Cash Equivalents

Our cash and cash equivalent balances were as follows (in thousands):


	December 31,
	2021		2020
Cash	$	51,490	$	13,908
Money market funds	—		45,614
Cash and cash equivalents	$	51,490	$	59,522

Accounts and Other Receivables

Accounts and other receivables were as follows (in thousands):


	December 31,
	2021		2020
Trade accounts receivables	$	1,235	$	1,618
Other receivables	735		600
Accounts and other receivables	$	1,970	$	2,218

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

Prepaid Expenses and Other Current Assets

Prepaid expenses and other current assets were as follows (in thousands):


	December 31,
	2021		2020
Prepaid expenses	$	798	$	816
Contract assets - current	12,448		11,623
Other current assets	186		171
	$	13,432	$	12,610

Other Assets, Net

Other assets, net are as follows (in thousands):


	December 31,
	2021		2020
Contract assets - long-term	$	1,746	$	4,596
Lease right-of-use assets	912		1,607
Deferred tax assets	2,115		2,659
Marketable debt securities -non-current	7,286		—
Other assets	36		138
Total other assets, net	$	12,095	$	9,000

Other Current Liabilities

Other current liabilities are as follows (in thousands):


	December 31,
	2021		2020
Derivative instruments	$	6,267	$	—
Lease liabilities - current	1,098		1,382
Other current liabilities	3,882		1,075
Total other current liabilities	$	11,247	$	2,457

CONTINGENCIES	12 Months Ended
CONTINGENCIES	Dec. 31, 2021
Commitments and Contingencies Disclosure [Abstract]
CONTINGENCIES	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. 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 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 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. We expect to be reimbursed by Samsung for the amount that was cancelled by the Korea High Court, as affirmed 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 in Long-term deposits on our Condensed Consolidated Balance Sheets. In the event that we do not ultimately prevail in our appeal in the Korean courts, the deposit included in Long-term deposits would be recorded as additional income tax expense on our Condensed Consolidated Statement of Income and Comprehensive Loss, in the period in which we do not ultimately prevail. On November 3, 2017, on behalf of LGE, we filed an appeal with the Korea Tax Tribunal regarding their findings with respect to the withholding taxes. 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 has been scheduled for April 14, 2022, at which time we believe we will have a better indication as to when the Court will render a decision on this matter. 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 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 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 Consolidated Balance Sheets, then the additional income tax expense would be recorded as an impairment to the Long-term deposit. 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 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 Consolidated Statements of Income and Comprehensive Income, in the period in which we do not ultimately prevail. See Note 8. Income Taxes of the Notes to Consolidated Financial Statements for more details. 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 arises out of that certain Amended and Restated Patent License Agreement (the “Marquardt License”), effective as of January 1, 2018, between us as licensor and Marquardt, as licensee. Pursuant to the arbitration demand, we are demanding that Marquardt cure its breach of the Marquardt License and pay all royalties currently owed under the Marquardt License. The last royalty report we have received from Marquardt was for the third quarter of calendar year 2020 in which Marquardt reported approximately $0.5 million in royalties but did not pay such royalties. Further, since that date, we have not received any other royalty reports or royalty payments from Marquardt. The term of the Marquardt License expires by its terms on December 31, 2023. As a result of Marquardt’s breach of the Marquardt License, per unit royalties relating to past royalty periods, and applicable interest fees, are currently past due. 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. An arbitrator has been chosen to arbitrate this matter. We anticipate that the arbitrator will conduct the arbitration proceedings in New York or via a remote platform, with the consent of the parties. 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 has been scheduled for the period of March 14-16, 2022.

STOCK-BASED COMPENSATION

12 Months Ended

Dec. 31, 2021

Share-based Payment Arrangement [Abstract]

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.

We granted equity awards under the 2011 Equity Incentive Plan (the "2011 Plan") from July 2011 through November 2020. The 2011 Plan expired on April 5, 2021, and the remaining 3,708,238 authorized shares were cancelled on the 2011 Plan expiration date. 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 Plan.

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 is as follows (in thousands):


			December 31, 2021
Common stock shares available for grant			—
Stock options outstanding			242
RSAs outstanding			—
RSUs outstanding			224
PSUs outstanding			67

Time-Based Stock Options

The following summarizes activities for the time-based stock options for the year ended December 31, 2021:


	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, 2020	828	$	8.16	4.36	$	2,628
Granted	—	—
Exercised	(326)	8.79
Canceled or expired	(260)	7.49
Outstanding as of December 31, 2021	242	$	8.04	4.44	$	—
Vested and expected to vest at December 31, 2021	222	$	8.08	4.40	$	—
Exercisable at December 31, 2021	132	$	8.41	4.11	$	—

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 during 2021. For the year ended December 31, 2020, the weighted average grant date fair value was $2.21. For the years ended December 31, 2020, the aggregate intrinsic value of stock options exercised was $0.1 million.

Restricted Stock Units

The following summarizes RSUs activities for the year ended December 31, 2021:


	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, 2020	802	$	6.98	1.00	$	9,057
Granted	—	—
Released	(325)	7.48
Forfeited	(253)	6.66
Outstanding at December 31, 2021	224	$	6.66	0.56	$	1,280

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 year ended December 31, 2021:


	Number of Restricted Stock Awards (in thousands)	Weighted Average Grant Date Fair Value Per Share		Weighted Average Remaining Recognition Period (Years)
Outstanding at December 31, 2020	130	$	6.53	0.45
Granted	—	—
Released	(130)	6.53
Forfeited	—	—
Outstanding at December 31, 2021	—	$	—	0.00

Market Condition-Based Restricted Stock Units

In the fourth quarter of 2020, we granted 250,000 shares of PSUs to our executives. Each PSU represents the right to one share of our common stock with vesting subject to: (a) the achievement of specified levels of the volume weighted average closing prices of our common stock during any one hundred (100) day-period between November 10, 2020 and November 10, 2025, subject to certification by the Compensation Committee (“Performance Milestones”); and (b) continued employment with us through the later of each achievement date or service vesting date, which occurs over a four (4) year-period commencing on

November 10, 2020. The Performance Milestones of the PSUs were fully achieved and certified by the Compensation Committee. In the fourth quarter of 2021, 22,500 shares of the outstanding PSUs, were vested and released.

The following summarizes PSU activities for the year ended December 31, 2021 (in thousands except for weighted average grant date fair value and weighted average remaining recognition period):


	Number of Market Condition-Based Restricted Stock Units (in thousands)	Weighted Average Grant Date Fair Value Per Share		Weighted Average Remaining Recognition Period (Years)
Outstanding at December 31, 2020	250	$	6.20	2.08

Released	(23)	$	6.20
Forfeited	(160)	$	6.20
Outstanding at December 31, 2021	67	$	6.20	1.49

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 year ended December 31, 2021, 25,033 shares were purchased under the ESPP with average purchase price of $6.00. During the year ended December 31, 2020, 22,556 shares were purchased under the ESPP with average purchase price of $5.96. As of December 31, 2021, 205,848 shares were available for future purchase under the ESPP.

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 years ended December 31, 2021 and 2020 is as follows (in thousands):


	For the Years Ended December 31,
	2021		2020
Stock options	$	386	$	1,062
RSUs, RSAs and PSUs	1,894		3,638
ESPP	58		56
Total	$	2,338	$	4,756

Sales and marketing	$	745	$	846
Research and development	742		870
General and administrative	851		3,040
Total	$	2,338	$	4,756

We use the Black-Scholes-Merton option pricing model to determine the fair value of our time-based options and ESPP shares. All share-based payment awards are amortized on a straight-line basis over the requisite service periods of the awards, which are generally the vesting periods.

The determination of the fair value of share-based awards on the date of grant using an option pricing model is affected by our stock price as well as assumptions regarding a number of complex and subjective variables. These variables include actual and projected employee stock option exercise behaviors that impact the expected term, our expected stock price volatility over the term of the awards, risk-free interest rate, and expected dividend.

We use the Monte Carlo Simulation model to value the stock options and restricted stock units with a market condition. Valuation techniques such as a Monte Carlo Simulation model have been developed to value path-dependent awards. The Monte Carlo Simulation model is a generally accepted statistical technique used, in this instance, to simulate a range of our future stock prices.

Expected term — We estimate the expected term of options granted by calculating the average term from our historical stock option exercise experience. The expected term of ESPP shares is the length of the offering period.

Expected volatility — We estimate the volatility of our common stock taking into consideration our historical stock price movement and our expected future stock price trends based on known or anticipated events.

Risk-free interest rate — We base the risk-free interest rate that is used in the option pricing model on U.S. Treasury zero-coupon issues with remaining terms similar to the expected term on the options.

Expected dividend — We do not anticipate paying any cash dividends in the foreseeable future and therefore use an expected dividend yield of zero in the option-pricing model.

Forfeitures — We are required to estimate future forfeitures at the time of grant and revise those estimates in subsequent periods if actual forfeitures differ from those estimates. We use historical data to estimate pre-vesting option and RSU forfeitures and record stock-based compensation expense only for those awards that are expected to vest.

The assumptions used to value options granted during 2020 under our equity incentive program are as follows:


Time-based stock options:
			For the Year Ended December 31, 2020
Expected life (in years)			4.2
Volatility			52%
Interest rate			1.0%
Dividend yield			—


Market condition based restricted stock units:
			For the Year Ended December 31, 2020
Expected life (in years)			1.2
Volatility			52%
Interest rate			1.0%
Dividend yield			—

We did not grant stock options or market condition based restricted stock units during the year ended December 31, 2021.

As of December 31, 2021, there was $2.5 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 1.4 years. Total unrecognized compensation cost will be adjusted for future changes in estimated forfeitures.

STOCKHOLDERS' EQUITY	12 Months Ended
STOCKHOLDERS' EQUITY	Dec. 31, 2021
Equity [Abstract]
STOCKHOLDERS' EQUITY	STOCKHOLDERS’ EQUITY Stock Offering On February 3, 2021, we filed a shelf registration statement on Form S-3 with the Securities and Exchange Commission which provided us with the flexibility to raise up to $250 million of capital. We intend to use the net proceeds from the sale of the securities offered by this prospectus for working capital and other general corporate purposes, and we may use a portion of any net proceeds for investment in complementary businesses or alternative currencies. On February 11, 2021, we entered into an equity distribution agreement (the "February 2021 Distribution Agreement") with Craig-Hallum Capital Group LLC (“Craig-Hallum”), as sales agent to issue and sell shares of our common stock having an aggregated offering price of up to $50 million. Under the terms of the February 2021 Distribution Agreement, we were obligated to pay a 2.25% commission on the gross sales proceeds from common stock sold and customary indemnification rights and the reimbursement of legal fees and disbursements. During the first quarter of 2021, we sold 3.3 million shares of our common stock pursuant to the February 2021 Distribution Agreement and we received net proceeds of $35.9 million from the offering net of $1.2 million of commissions and other offering costs. We terminated the February 2021 Distribution Agreement on March 5, 2021. On July 6, 2021, we entered into an equity distribution agreement (the "July 2021 Distribution Agreement") with Craig-Hallum Capital Group LLC (“Craig-Hallum”), as sales agent to issue and sell shares of our common stock having an aggregated offering price of up to $60 million. Under the July 2021 Distribution Agreement, we will set the parameters for the sale of shares, including the number of shares to be issued, the time period during which sales are requested to be made, limitations on the number of shares that may be sold in any one trading day and any minimum price below which sales may not be made. Subject to the terms and conditions of the July 2021 Distribution Agreement, the investment banker may sell the shares by methods deemed to be an “at the market offering” as defined in Rule 415(a)(4) promulgated under the Securities Act of 1933, as amended, including sales made through the Nasdaq Global Market or on any other existing trading market for the common stock. We are obligated to pay 2.25% commission on the gross sales proceeds from common stock sold and the reimbursement of legal fees and disbursements. The July 2021 Distribution Agreement may be terminated by either party upon prior written notice to the other party, or at any time under certain circumstances, including but not limited to the occurrence of a material adverse change in Immersion. We are not obligated to sell any minimum number of shares under the July 2021 Distribution Agreement. During 2021, we sold 3.2 million shares of our common stock pursuant to the July 2021 Distribution Agreement and we received net proceeds of approximately $23.3 million from the offering after deducting $0.8 million commissions and other offering costs. Stock Repurchase Program On November 1, 2007, our Board of Directors (the “Board”) authorized the repurchase of up to $50 million of our common stock (the “Stock Repurchase Program”). In addition, on October 22, 2014, the Board authorized another $30 million under the Stock Repurchase Program. We may repurchase our common stock for cash in the open market in accordance with applicable securities laws. The timing and amount of any stock repurchase will depend on share price, corporate and regulatory requirements, economic and market conditions, and other factors. The stock repurchase authorization has no expiration date, does not require us to repurchase a specific number of shares, and may be modified, suspended, or discontinued at any time. In 2020, we repurchased approximately 4.9 million shares of our common stock for $30.6 million at an average cost of $6.21 per share. As of December 31, 2020, we have no amount available for repurchase under the Stock Repurchase Program. Section 382 Tax Benefits Preservation Plan On November 17, 2021, our Board approved and adopted a Section 382 Tax Benefits Preservation Plan, dated as of November 17, 2021, by and between the Company and Computershare Trust Company, N.A., as rights agent (the “Rights Agent”) (the “Section 382 Tax Benefits Preservation Plan”). Pursuant to the Section 382 Tax Benefits Preservation Plan, our Board declared a dividend of one preferred share purchase right (each, a “Right”) for each outstanding share of common stock, par value $0.001, of the Company (the “Common Stock”). The dividend is distributed on December 1, 2021 to stockholders of record as of the close of business on December 1, 2021. Our Board adopted the Section 382 Tax Benefits Preservation Plan to diminish the risk that we could experience an “ownership change” as defined in Section 382 of the Internal Revenue Code of 1986, as amended (the “Code”), which could substantially limit or permanently eliminate our ability to utilize our net operating loss carryovers (collectively, the “NOLs”) to reduce potential future income tax obligations. Under the Code and the regulations promulgated thereunder by the U.S. Treasury Department, these NOLs may be “carried forward” in certain circumstances to offset any current and future taxable income and thus reduce federal income tax liability, subject to certain requirements and restrictions. While the amount and timing of our future taxable income cannot be predicted with any certainty and, accordingly, we cannot predict the amount of these NOLs that will ultimately be used to reduce its income tax liability, to the extent that the NOLs do not otherwise become limited, these NOLs could be a potentially valuable asset to us. For more information, please refer to the complete text of the Section 382 Tax Benefits Preservation Plan, a copy of which is incorporated by reference into this Form 10-K as Exhibit 4.2.

- Definition

The entire disclosure for shareholders' equity comprised of portions attributable to the parent entity and noncontrolling interest, including other comprehensive income. Includes, but is not limited to, balances of common stock, preferred stock, additional paid-in capital, other capital and retained earnings, accumulated balance for each classification of other comprehensive income and amount of comprehensive income.

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+ Details

INCOME TAXES

12 Months Ended

Dec. 31, 2021

Income Tax Disclosure [Abstract]

INCOME TAXES

Income tax benefit from (provision for) the years ended December 31, 2021 and 2020 consisted of the following (in thousands):


	For the Year Ended December 31,
	2021			2020
Income before benefit from (provision for) income taxes	$	17,290		$	3,159
Benefit from (provision for) income taxes	(4,806)			2,242
Effective tax rate	27.8		%	(71.0)		%

Provision for income taxes for the years ended December 31, 2021 primarily consisted of estimated U.S. taxes, adjustments to uncertain tax positions withholding tax reserve, foreign taxes and foreign withholding taxes. Benefit for income taxes for the year ended December 31, 2020 resulted primarily from estimated foreign taxes, foreign withholding tax expense and the release of a $2.2 million valuation allowance from one of our foreign entities.

The components of our income before benefit from (provision for) income taxes were as follows (in thousands):


	For the Year Ended December 31,
	2021		2020
Domestic	$	5,893	$	(4,602)
Foreign	11,397		7,761
Total	$	17,290	$	3,159

The benefit from (provision for) income taxes consisted of the following (in thousands):


	For the Year Ended December 31,
	2021		2020
Current:
U.S, federal	3,285		$	—
States and local	2		(3)
Foreign	934		(114)
Total current	$	4,221	$	(117)
Deferred:
U.S, federal	—		—
States and local	—		—
Foreign	585		2,359
Total deferred	585		2,359
Total benefit from (provision for) income taxes	$	4,806	$	2,242

Deferred tax assets and liabilities are recognized for the temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes, tax losses, and credit carryforwards.

Significant components of the net deferred tax assets and liabilities consisted of (in thousands):


	December 31,
	2021		2020
Deferred tax assets:
Net operating loss carryforwards	$	7,638	$	9,239
State income taxes	1		1
Deferred revenue	4,502		5,426
Research and development and other credits	10,493		8,638
Reserve and accruals recognized in different periods	395		1,027
Capitalized research and development expenses	3,333		3,318
Depreciation and amortization	2,492		3,134
Lease liability	339		351
Total deferred tax assets	29,193		31,134
Valuation allowance	(27,239)		(28,475)
Net deferred tax assets	1,954		2,659
Deferred tax liabilities:
Right of use lease assets	(185)		(344)
Foreign credits	—		(14)
Other deferred tax liabilities	—		—
Total deferred tax liabilities	(185)		(358)
Net deferred taxes	$	1,769	$	2,301

We account for deferred taxes under ASC 740 which requires a reduction of the carrying amounts of deferred tax assets by a valuation allowance if, based on available evidence, it is more likely than not that such assets will not be realized. Accordingly, the need to establish valuation allowances for deferred tax assets is assessed periodically based on the ASC 740 more-likely-than-not realization ("MLTN") threshold criterion. This assessment considers matters such as future reversals of existing taxable temporary differences, projected future taxable income, tax-planning strategies, and results of recent operations. The evaluation of the recoverability of the deferred tax assets requires that we weigh all positive and negative evidence to reach a conclusion that it is more likely than not that all or some portion of the deferred tax assets will not be realized. The weight given to the evidence is commensurate with the extent to which it can be objectively verified. As of December 31, 2021, based on our assessment of the realizability of our deferred tax assets, we continued to maintain a full valuation allowance against all of our federal and state net deferred tax assets in the U.S and Canada and certain deferred taxes. The valuation allowance for Ireland subsidiary was released in 2020 based on the profitability analysis of the cumulative 12-quarter actual and the projection for the next 3-year.

As of December 31, 2021, the net operating loss carryforwards for federal and state income tax purposes were approximately $14.0 million and $53.0 million, respectively. The state net operating losses begin to expire in 2029. The federal net operating losses for tax years after 2017 can be carried forward indefinitely. We have no net operating loss carryforward from foreign jurisdictions. As of December 31, 2021, we had federal and state tax credit carryforwards of approximately $4.5 million and $2.5 million, respectively, available to offset future tax liabilities. The federal credit carryforwards will expire between 2022 and 2039 and the California tax credits will carryforward indefinitely. In addition, as of December 31, 2021, we have Canadian research and development credit carryforwards of $1.9 million, which will expire at various dates through 2040. These operating losses and credit carryforwards have not been reviewed by the relevant tax authorities and could be subject to adjustment upon examinations.

Section 382 of the Internal Revenue Code (“IRC Section 382”) imposes limitations on a corporation’s ability to utilize its net operating losses and credit carryforwards if it experiences an “ownership change” as defined by IRC Section 382. Utilization of a portion of our federal net operating loss carryforward was limited in accordance with IRC Section 382, due to an ownership change that occurred during 1999. This limitation has fully lapsed as of December 31, 2010. As of December 31, 2021, we conducted an IRC Section 382 analysis with respect to our net operating loss and credit carryforwards and determined there was no limitation. There can be no assurance that future issuances of our securities will not trigger limitations under IRC Section 382 which could limit utilization of these tax attributes.

The reconciliation between the 21.0% U.S. effective federal statutory rate and our effective tax rates are as follows:


	For the Year Ended December 31,
	2021		2020
Federal statutory rate	21.0	%	21.0	%
Foreign withholding	0.4	%	2.0	%
Stock-based compensation expense	0.6	%	12.9	%
Foreign rate differential	(7.9)	%	(33.0)	%
Prior year true-up items	0.1	%	1.1	%
Tax reserves	(2.3)	%	(4.0)	%
Other	2.7	%	0.1	%
FTC conversion true up	(11.1)	%	(10.3)	%
State taxes, net of federal benefit	—	%	0.1	%
Global intangible low-taxed income	9.7	%	21.0	%
Nondeductible officers compensation	—	%	3.5	%
Irish corporation restructure	—	%	(169.2)	%
Valuation allowance	14.6	%	83.8	%
Effective tax rate	27.8	%	(71.0)	%

Undistributed earnings of our foreign subsidiaries are considered to be indefinitely reinvested and accordingly, no provision for applicable income taxes has been provided thereon. Upon distribution of those earnings, we are subject to withholding taxes payable to various foreign countries. As of December 31, 2021, any foreign withholding taxes on the undistributed earnings of our foreign subsidiaries were immaterial.

We maintain liabilities for uncertain tax positions. These liabilities involve considerable judgment and estimation and are continuously monitored by management based on the best information available, including changes in tax regulations, the outcome of relevant court cases, and other information. A reconciliation of the beginning and ending amount of gross unrecognized tax benefits is as follows (in thousands):


	For the Year Ended December 31,
	2021		2020
Balance at beginning of year	$	4,525	$	4,826
Gross increases for tax positions of prior years	1		—
Gross increases for tax positions of current year	3,296		10
Lapse of statute of limitations	(253)		(311)
Balance at end of year	$	7,569	$	4,525

The unrecognized tax benefits relate primarily to federal and state research and development credits, intercompany profit on the transfer of certain IP rights to one of our foreign subsidiaries as part of our tax reorganization completed in 2015 and withholding tax reserve. Based on our assessment of the developments in the Samsung case (South Korea withholding taxes) in October of 2021, we provided for an additional income tax expense of $3.3 million in the fourth quarter of 2021. Of this amount, $2.2 million was recorded as an impairment to the Long-term deposits and $1.1 million was accrued as an Other current liability on our Consolidated Statements Balance Sheet at December 31, 2021. The $2.2 million impairment charge is comprised of $1.4 million and $0.8 million for Samsung and LGE litigations, respectively.

We account for interest and penalties related to uncertain tax positions as a component of income tax expense. As of December 31, 2021, we accrued $0.1 million interest or penalties related to uncertain tax positions. As of December 31, 2021, the total amount of unrecognized tax benefits that would affect our effective tax rate, if recognized, was $0.

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.

- Definition

The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information.

+ References

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+ Details

NET INCOME (LOSS) PER SHARE

12 Months Ended

Dec. 31, 2021

Earnings Per Share [Abstract]

NET INCOME (LOSS) PER SHARE

NET INCOME PER SHARE

Basic net income per share is computed using the weighted average number of shares of common stock outstanding during the period. Diluted net income per share is computed using the weighted average number of shares of common 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 per share (in thousands, except per share amounts):


	For the Year Ended December 31,
	2021	2020

Denominator:
Weighted-average shares outstanding, basic	31,459	28,117
Shares related to outstanding options, unvested RSUs, RSAs, PSUs and ESPP	310	360
Weighted average shares outstanding, diluted	31,769	28,477

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

For the years ended December 31, 2021 and 2020, we had 0.2 million and 1.2 million stock options outstanding, respectively, 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.

LEASES

12 Months Ended

Dec. 31, 2021

Leases [Abstract]

LEASES

We lease our office space under lease arrangements with expiration dates on or before February 29, 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 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 as of December 31, 2021 and 2020, respectively (in thousands):


		December 31,
	Balance Sheets Classification	2021		2020
Assets
Right-of-use assets	Other assets	$	912	$	1,607
Liabilities
Operating lease liabilities - current	Other current liabilities	1,098		1,382
Operating lease liabilities - long-term	Other long-term liabilities	550		1,677
Total lease liabilities		$	1,648	$	3,059

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


	For the Year Ended December 31,
	2021		2020
Cash paid within operating cash flow	$	1,491	$	1,431
Weighted average lease terms (in years)	1.40		2.25
Weighted average discount rates	N/A		3.50		%

On January 31, 2020, we entered into an agreement to lease approximately 5,000 square feet of office space in San Francisco, California (“SF Facility”). This facility is used for administrative functions. The lease commenced in the first quarter of 2020 and expires in 2022. In the first quarter of 2020, we recorded a lease liability of $0.6 million, which represents the present value of the lease payments using an estimated incremental borrowing rate of 3.50%. We also recognized lease right-of-use assets (“ROU”) of $0.6 million which represents our right to use an underlying asset for the lease term. Operating lease ROU assets and liabilities are recognized at the commencement date based on the present value of lease payments over the lease term.

As a result of COVID-19, we implemented work-from-home policy in the first quarter of 2020. Our San Francisco office has been closed since the first quarter of 2020 and we expect our San Francisco-based employees to continue to work-from-home in the foreseeable future. We have been actively seeking a sublease tenant for the SF Facility without success since early 2020. In the fourth quarter of 2020, we recorded $0.3 million impairment charge to the SF Facility ROU asset. In the second quarter of 2021, we recorded an additional $32,000 impairment charge to the SF Facility ROU asset.

On November 12, 2014, we entered into an amendment to the lease of approximately 42,000 square feet office space in San Jose, California facilities (“SJ Facility”). The lease commenced in May 2015 and expires as of April 2023.

During 2019, we began to shift general and administrative, research and development and executive functions and employees from the SJ Facility to our San Francisco, California and Montreal, Canada offices. In the fourth quarter of 2019, we announced our decision to exit the SJ Facility by March 31, 2020. We accelerated the amortization of our SJ Facility leasehold improvements over their remaining estimated life. The SJ Facility leasehold improvements were fully amortized by March 31, 2020. In the fourth quarter of 2019, we recorded a $0.9 million impairment charge to the SJ Facility ROU asset.

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 Leases (“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 December 31, 2021, $0.1 million was recorded in Prepaid expenses and other current assets and $0.1 million was recorded in Other assets, net on our Consolidated Balance Sheets.

We recognize operating lease expense and lease payments from the sublease, on a straight-line basis, in our Consolidated Statements of Income and Comprehensive Income over the lease terms. During the years ended December 31, 2021 and 2020, our net operating lease expenses are as follows (in thousands):


	For the Year Ended December 31,
	2021		2020
Operating lease cost	$	1,226	$	1,139
Sublease income	(1,030)		(585)
Total lease cost	$	196	$	554

Minimum future lease payments obligations as of December 31, 2021 are as follows (in thousands):


For the Years Ending December 31,
2022	$	1,220
2023	460
2024	25
Total	$	1,705

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


For the Years Ending December 31,
2022	$	1,077
2023	351
Total	$	1,428

On January 31, 2022, we entered into an agreement to lease for 1,390 square feet of office space in Aventura, Florida (“Aventura Lease”). We plan to use this facility for administrative functions. This lease commenced in the first quarter of 2022 and expires in the first quarter of 2024. We expect to pay approximately $0.1 million in lease payments under the terms of the Aventura Lease.

EMPLOYEE BENEFITS	12 Months Ended
EMPLOYEE BENEFITS	Dec. 31, 2021
Retirement Benefits [Abstract]
EMPLOYEE BENEFIT PLAN	EMPLOYEE BENEFITS We have a 401(k) tax-deferred savings plan under which eligible employees may elect to have a portion of their salary deferred and contributed to the 401(k) plan. Employees’ contributions may be matched at our discretion. Prior to 2020, we matched 50% of the employees’ contribution up to $4,000. In the first quarter of 2020, as one of the COVID-19 related cost cutting initiatives, we suspended the 401 (k) match. In 2020, we made $48,000 in 401(k) contribution. In 2020, in conjunction with the transition of certain research and development and administration functions from San Jose, California to Montreal, Canada, we recorded a $0.5 million one-time charge for termination benefits for the employees impacted by this transition. We paid all the termination benefits during 2020. As of December 31, 2020, we have no accrued termination benefits.

SEGMENT REPORTING, GEOGRAPHIC INFORMATION, AND SIGNIFICANT CUSTOMERS

12 Months Ended

Dec. 31, 2021

Segment Reporting [Abstract]

SEGMENT REPORTING, GEOGRAPHIC INFORMATION, AND SIGNIFICANT CUSTOMERS

Segment Information

We develop, license, and support a wide range of software and IP that more fully engage users’ senses of touch when operating digital devices. We focus on the following target application areas: mobile devices, wearables, consumer, mobile 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 our business performance using information about our revenue and operating loss. There is only one segment that is reported to management.

Revenue by Market Area

The following is a summary of revenues by market areas. Revenue as a percentage of total revenues by market are as follows:


	For the Year Ended December 31,
	2021		2020
Mobile, Wearables, and Consumer	60	%	69	%
Gaming Devices	21		15
Automotive	19		15
Other	—		1
Total	100	%	100	%

Geographic Revenue

Revenues are broken out geographically by the location of the customer. A summary of revenue by region as a percentage of total revenues are as follows:


	For the Year Ended December 31,
	2021		2020
Asia	76	%	76	%
North America	12		16
Europe	12		8
Total	100	%	100	%

A summary of revenue by country as a percentage of total revenues are as follows:


	For the Year Ended December 31,
	2021		2020
Korea	38	%	49	%
Japan	29		18
United States of America	12		16
Germany	10		6
Other countries with less than 10% in a year	11		11
Total	100	%	100	%

Property and Equipment, net by Country

Property and equipment, net by geographic areas as a percentage of total property and equipment, net are as follows:


	December 31,
	2021		2020
Canada	89	%	68	%
United States of America	11	%	32	%
Total	100	%	100	%

Significant Customers

During the years ended December 31, 2021, two customer accounted for 34% and 12% of our total revenues, respectively. In 2020, one customer accounted for 40% of our total revenues.

A summary of customers with 10% or greater of our outstanding accounts and other receivables are as follows:


	December 31,
	2021		2020
Customer A	44	%	33	%
Customer B	20	%	*
Customer C	19	%	*
Customer D	10	%	*
Customer E	*		39	%
Customer F	*		15	%
Customer G	*		10	%

* Represents less than 10% of our total accounts and other receivables.

- Definition

The entire disclosure for reporting segments including data and tables. Reportable segments include those that meet any of the following quantitative thresholds a) it's reported revenue, including sales to external customers and intersegment sales or transfers is 10 percent or more of the combined revenue, internal and external, of all operating segments b) the absolute amount of its reported profit or loss is 10 percent or more of the greater, in absolute amount of 1) the combined reported profit of all operating segments that did not report a loss or 2) the combined reported loss of all operating segments that did report a loss c) its assets are 10 percent or more of the combined assets of all operating segments.

+ References

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+ Details

Subsequent Events	12 Months Ended
Subsequent Events	Dec. 31, 2021
Subsequent Events [Abstract]
Subsequent Events	SUBSEQUENT EVENTS 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. 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.

SIGNIFICANT ACCOUNTING POLICIES (Policies)	12 Months Ended
SIGNIFICANT ACCOUNTING POLICIES (Policies)	Dec. 31, 2021
Accounting Policies [Abstract]
Principles of Consolidation and Basis of Presentation	The accompanying consolidated financial statements include the accounts of Immersion Corporation and our wholly-owned subsidiaries. All intercompany accounts, transactions, and balances have been eliminated in consolidation.
Use of Estimates	The preparation of consolidated financial statements in conformity with the generally accepted accounting principles in the United States ("GAAP") requires estimates and assumptions that affect the amounts reported in the consolidated financial statements and the accompanying notes. Actual results may differ materially from these estimates On an ongoing basis, we evaluate our estimates, including those related to revenue recognition, fair value of financial instruments, property and equipment, income taxes, contingent liabilities, long-term deposits for withholding taxes and stock-based compensation. 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.
Foreign Currency Translation	The functional currency of our foreign subsidiaries is U.S. dollars. Gains and losses from the remeasurement financial statements of the foreign subsidiaries into the U.S. dollars and from foreign currency transaction are reported as Other income (expense), net in our Consolidated Statements of Income and Other Comprehensive Income.
Cash Equivalents	We consider all highly liquid instruments with an original or remaining maturity of 90 days or less at the date of purchase to be cash equivalents.
Short-term Investments	Debt Securities Debt securities primarily consist of investments in corporate bonds. We classify our debt securities as available-for-sale at the time of purchase and reevaluate such classification as of each balance sheet date. Investment in debt securities are classified either short-term or long-term based on each instrument’s underlying contractual maturity date and the management's intention. Unrealized gains and losses on marketable debt securities classified as available-for-sale are recognized as Other comprehensive income (loss) on the Consolidated Statements of Income and Comprehensive Income. 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. If quoted prices for identical instruments are available in an active market, debt securities are classified within Level 1 of the fair value hierarchy. If quoted prices for identical instruments in active markets are not available, fair values are estimated using quoted prices of similar instruments and are classified within Level 2 of the fair value hierarchy. To date, all of our debt securities can be valued using one of these two methodologies. Equity Investments We hold marketable equity investments over which we do not have a controlling interest or significant influence. Marketable equity investments are included in Marketable securities on the Consolidated Balance Sheets. They are measured using quoted prices in active markets with changes recorded in Other income (expense), net on the Consolidated Statements of Income and Other Comprehensive Income. 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 Consolidated Balance Sheets. When we purchase put or call options, the premium paid is reported as Marketable securities current on our 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 (loss), net on our Consolidated Statements of Income and Comprehensive Income. At December 31, 2021, we had $6.3 million in derivative instruments which 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 Consolidated Balance Sheets. Our derivative financial instruments are classified within Level 2 of the fair value hierarchy because the valuation inputs are based on quoted prices and market observable data of similar instruments in active markets.
Property and Equipment	Property and equipment are stated at cost less accumulated depreciation. Depreciation is recorded using straight-line method over the estimated useful life of the related assets.Leasehold improvements are amortized over the shorter of the lease term or their estimated useful life.
Leases	LeasesWe lease our office space under lease arrangements with expiration dates on or before February 29, 2024. Operating leases are accounted for as right-of-use (“ROU”) assets and lease liability obligations in our Consolidated Balance Sheets under Other assets, net, Other current liabilities and Other long-term liabilities, respectively. ROU assets and lease liabilities are recognized at lease commencement date based on the present value of lease payments over the lease term. We elect to combine lease and non-lease components and account for them as a single lease component. As our leases typically do not provide an implicit rate, we estimate our incremental borrowing rate based on the information available at the commencement date in determining the present value of lease payments. ROU assets also include any lease payments made and exclude lease incentives and direct costs. Lease expense is recognized on a straight-line basis over the lease term. We elected to not present leases with an initial term of 12 months or less on our Consolidated Balance Sheets.
Revenue Recognition and Deferred Revenue	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. Fixed fee license revenue We recognize revenue from fixed fee license agreements when our performance obligation has been satisfied, which typically occurs upon the transfer of rights to our technology upon the execution of the license agreement. 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 two separate performance obligations: •Performance Obligation A: Transfer of rights to our patent portfolio as it exists when the contract is executed; •Performance Obligation B: Transfer of 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 will 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 will 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 will be recognized in the quarter the license agreement is signed and the customer can benefit from rights provided in the contract, and the portion allocable to Performance Obligation B will be recognized on a straight-line basis over the contract term. For such contracts, a contract liability account will be established and included within Deferred revenue and Long-term deferred revenue on the 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. Some of our license agreements contain fixed fees related to past infringements. Such fixed fees are recognized as revenue or recorded as a deduction to our operating expense in the quarter the license agreement is signed. Payments for fixed fee license contracts typically are due in full within 30 - 45 days from execution of the contract. From time to time, we enter into a fixed fee license contract with payments due in a number of installments payable throughout the contract term. In such cases, we determine if a significant financing component exists and if it does, we will recognize more or less revenue and corresponding interest expense or income, as appropriate. 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 its licensees. In 2021, we recorded $0.5 million, $0.5 million and $0.1 million adjustments to decrease royalty revenue in the first, third and fourth quarters, respectively. In the second quarter of 2021, we recorded adjustments of $2.0 million to increase royalty revenue. We recorded $0.1 million and $20,000 adjustments to decrease royalty revenue during the first and second quarters of 2020, respectively. We recorded $0.3 million and $0.6 million adjustments to increase royalty revenue during the third and fourth quarter of 2020, respectively. Certain of our per-unit royalty agreements contain minimum royalty provisions which sets forth minimum amounts to be received by us during the contract term. Under Accounting Standard Codification 606, Revenue from Contracts with Customers, (“ASC 606”), minimum royalties are considered a fixed transaction price to which we have an unconditional right once all other performance obligations, if any, are satisfied. We recognize all minimum royalties as revenue at the inception of the license agreement, or in the period in which all remaining revenue recognition criteria have been met. We account for the unbilled minimum royalties as contract assets as Prepaid and other current assets and Other assets, net on our Consolidated Balance Sheets, and the balance of such contract assets will be reduced by the actual royalties to be reported by the licensee during the contract term until fully utilized, after which point any excess per-unit royalties reported are recognized as revenue. 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. Payments of per-unit royalties typically are due within 30 to 60 days from the end of the quarter in which the underlying sales took place. Development, services, and other revenue As the performance obligation related to our development, service and other revenue is satisfied over a period of time, we recognize such revenue evenly over the period of performance obligations, which is generally consistent with the contractual term. Deferred Revenue Deferred revenue consists of amounts that have been invoiced or paid, but have not been recognized as revenue. The amounts are primarily derived from our fixed license fee agreements under which we are obliged to transfer both rights to our patent portfolio that exists when the contract is executed and rights to its patent portfolio as it evolves over the contract term. Deferred revenue that will be recognizable during the succeeding 12-month period is recorded as Deferred Revenue, and the remaining deferred revenue is recorded as Long-term deferred revenue on the Consolidated Balance Sheets. Capitalized Contract Costs We capitalize certain incremental costs incurred, such as commissions, in order to obtain new contracts with our customers if we expect to recover these costs. The capitalized contract costs are amortized on a straight-line basis over the term of the contract.
Advertising	Advertising costs are expensed as incurred.
Research and Development	Research and development expenses primarily consisted of personnel-related costs, including payroll and stock-based compensation, outside consulting expenses and allocations of corporate overhead expenses. Research and development costs are expensed as incurred.
Income Taxes	We use the asset and liability method of accounting for income taxes. Under this method, income tax expense is recognized for the amount of taxes payable or refundable for the current year. In addition, deferred tax assets and liabilities are recognized for the expected future tax consequences of temporary differences between the financial reporting and tax bases of assets and liabilities, and for operating losses and tax credit carryforwards. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized and are reversed at such time that realization is believed to be more-likely-than-not.
Software Development Costs	Costs for the development of new software products and substantial enhancements to existing software products associated with the development of products for sale are expensed to research and development expense until technological feasibility has been established, at which time any additional costs would be capitalized. We consider technological feasibility to be established upon completion of a working model of the software. Because we believe our current process for developing software is essentially completed concurrently with the establishment of technological feasibility, no costs have been capitalized to date.
Concentration of Credit Risks	We are subject to a concentration of revenues given certain key licensees that contributed a significant portion of our total revenues. See Note 12. Segment Reporting, Geographic Information and Significant Customers of the Notes to Consolidated Financial Statements for more details on customer revenue concentration. We license technology primarily to companies in North America, Europe, and Asia. To reduce credit risk, management performs periodic credit evaluations of the financial conditions of our customer. We periodically evaluate potential credit losses to ensure adequate reserves are maintained, but historically we have not experienced any significant losses related to individual customers or groups of customers in any particular industry or geographic area.
Certain Significant Risks and Uncertainties	We operate in multiple industries and our operations can be affected by a variety of factors. For example, management believes that changes in any of the following areas could have a negative effect on our future financial position and results of operations: 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 and the recognition and components thereof; our costs and expenses; including capital expenditures; our investment of surplus funds and sales of marketable debt securities; 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 related to and the impact of current and future litigation and arbitration; our sublease and the timing and income related thereto; our shelf S-3 registration statement and our plans with respect thereto, including anticipated use of proceeds and our stock repurchase and equity distribution programs and equity distribution programs.
Recently Adopted Accounting Pronouncements and Accounting Pronouncements Not Yet Adopted	Recently Issued Accounting Pronouncement
Fair Value	We measure the fair value of financial assets as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. We use the GAAP fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. This hierarchy requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The three levels of the fair value hierarchy are as follows: Level 1 — Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets. Level 2 — Observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable market data. Level 3 — Unobservable inputs for the asset or liability, which include assumptions market participants would use in pricing the asset or liability.
Segment Reporting, Policy	We operate as one operating segment because our Chief Executive Officer, as our chief operating decision maker, reviews financial information, on a consolidated basis for purposes of making decisions regarding allocating resources and assessing performance.
Compensation Related Costs, Policy	We recognize stock-based compensation cost for shares, net of estimated forfeiture over the requisite service period of the award, which is the vesting period. We use the Black-Scholes Merton option pricing model to determine the fair value of stock options and employee stock purchase plan shares. We estimate the fair value of market-performance based stock options and restricted stock units using a Monte Carlo simulation model which requires the input of assumptions, including expected term, stock price volatility and the risk-free rate of return. In addition, judgment is also required in estimating the number of stock-based awards that are expected to be forfeited. Forfeitures are estimated based on historical experience at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates.
Commitments and Contingencies, Policy	We are involved in legal proceedings on an ongoing basis. If we believe that a loss arising from such matters is probable and can be reasonably estimated, we accrue the estimated loss in our Consolidated Financial Statements. If only a range of estimated losses can be determined, we accrue an amount within the range that, in our judgment, reflects the most likely outcome; if none of the estimates within that range is a better estimate than any other amount, we accrue the low end of the range.
Accounts Receivable	Accounts and other receivables are primarily comprised of trade receivables that are recorded at the invoice amount, net of an allowance for credit losses. We assess our allowance for credit losses on trade receivables by taking into consideration forecasts of future economic conditions, information about past events, such as our historical trend of write-offs, and customer-specific circumstances, such as bankruptcies and disputes. The allowance for credit losses on trade receivables is recorded in operating expenses on our Consolidated Statements of Income and Comprehensive Income.

SIGNIFICANT ACCOUNTING POLICIES (Tables)

12 Months Ended

Dec. 31, 2021

Accounting Policies [Abstract]

Estimated useful lives of property and equipment

The estimated useful lives are typically as follows:


Computer equipment and purchased software			3 years
Machinery and equipment			3-5 years
Furniture and fixtures			5 years

Advertising expense

Advertising expense for the years ended December 31, 2021 and 2020 were $0.2 million and $0.2 million, respectively.

REVENUE RECOGNITION (Tables)

12 Months Ended

Dec. 31, 2021

Revenue from Contract with Customer [Abstract]

Disaggregated revenue

The following table presents the disaggregation of our revenue for the years ended December 31, 2021 and 2020 (in thousands):


	Years Ended December 31,
	2021		2020
Fixed fee license revenue	$	5,843	$	5,472
Per-unit royalty revenue	28,846		24,704
Total royalty and license revenue	34,689		30,176
Development, services, and other revenue	400		280
Total revenues	$	35,089	$	30,456

INVESTMENTS AND FAIR VALUE MEASUREMENTS (Tables)

12 Months Ended

Dec. 31, 2021

Investments, Debt and Equity Securities [Abstract]

Schedule of short-term investments

Marketable securities as of December 31, 2021 consisted of the following (in thousands):


	December 31, 2021
	Cost or Amortized Cost		Unrealized Gains		Unrealized Losses		Fair Value
Mutual funds	$	50,000	$	—	$	(338)