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

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

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

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

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

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

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


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

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

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

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

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

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


IMMERSION CORPORATION
TABLE OF CONTENTS
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Table of Contents


PART I
FINANCIAL INFORMATION
Item 1. Financial Statements

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

See accompanying Notes to Condensed Consolidated Financial Statements.
2

Table of Contents

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

See accompanying Notes to Condensed Consolidated Financial Statements.
3

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

See accompanying Notes to Condensed Consolidated Financial Statements.
4


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

See accompanying Notes to Condensed Consolidated Financial Statements.
5


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

See accompanying Notes to Condensed Consolidated Financial Statements.
6


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

1.   SIGNIFICANT ACCOUNTING POLICIES
Description of Business

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

Impact of COVID-19

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

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

Principles of Consolidation and Basis of Presentation

The accompanying condensed consolidated financial statements include the accounts of Immersion and our wholly-owned subsidiaries. All intercompany accounts, transactions, and balances have been eliminated in consolidation.
The accompanying condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP") for interim financial information and with the instructions for Form 10-Q and Article 10 of Regulation S-X. Accordingly, these condensed consolidated financial statements do not include all information and footnotes necessary for a complete presentation of the financial position, results of operations, and cash flows, in conformity with U.S. GAAP and should be read in conjunction with our audited consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2021. In the opinion of management, all adjustments consisting of only normal and recurring items necessary for the fair presentation of the financial position and results of operations for the interim periods presented have been included. Certain prior year amounts have been reclassified to conform with the current year presentation.
Use of Estimates
The preparation of condensed consolidated financial statements and related disclosures requires management to make estimates and assumptions that affect the reported amounts of the condensed consolidated financial statements. Significant estimates include revenue recognition, fair value of financial instruments, useful lives of property and equipment, valuation of income taxes including uncertain tax provisions, stock-based compensation and long-term deposits for withholding taxes. We base our estimates on historical experience and on various other assumptions that are believed to be reasonable, the results of which form the basis for making judgments about the carrying values of assets and liabilities. The results of operations for the three and nine months ended September 30, 2022 are not necessarily indicative of the results to be expected for the full year.
Segment Information
We develop, license, and support a wide range of software and IP that more fully engage users’ sense of touch when operating digital devices. We focus on the following target application areas: mobile devices, wearables, consumer, mobile
8


entertainment and other content; console gaming; automotive; medical; and commercial. We manage these application areas in one operating and reporting segment with only one set of management, development, and administrative personnel.
Our chief operating decision maker (“CODM”) is the Chief Executive Officer. The CODM approves budgets and allocates resources to and assesses the performance of our business using information about our revenue and operating loss. There is only one segment that is reported to management.
Certificates of Deposit
Certificate of deposits are reported at fair value on the Condensed Consolidated Balance Sheets based on their initial and remaining maturity days.
Initial or Remaining Maturity DaysBalance Sheets Classification
90 days or lessCash and cash equivalents
Between 91 days and 1 yearInvestments - current
Greater than 1 yearInvestments - noncurrent
Recently Adopted Accounting Pronouncements
In November 2021, Financial Accounting Standard Board ("FASB") issued ASU 2021-10, Government Assistance (Topic 832), which requires annual disclosures that increase the transparency of transactions involving government grants, including the types of transactions, the accounting for those transactions, and the effect of those transactions on an entity’s financial statements. This new standard became effective for annual periods beginning after December 15, 2021. We adopted this new guidance in the first quarter of 2022. This adoption did not have material impact on our condensed consolidated financial statements.

2. REVENUE RECOGNITION
Disaggregated Revenue
The following table presents the disaggregation of our revenue for the three and nine months ended September 30, 2022 and 2021 (in thousands):
Three Months Ended
September 30,
Nine Months Ended
September 30,
2022202120222021
Fixed fee license revenue$7,662 $1,247 $10,653 $4,346 
Per-unit royalty revenue6,269 5,821 18,426 20,671 
Total royalty and license revenue13,931 7,068 29,079 25,017 
Development, services, and other revenue75 105 218 325 
Total revenues$14,006 $7,173 $29,297 $25,342 
Per-unit Royalty Revenue
We record per-unit royalty revenue in the same period in which the licensee’s underlying sales occur. As we generally do not receive the per-unit licensee royalty reports for sales during a given quarter within the time frame that allows us to adequately review the reports and include the actual amounts in our quarterly results for such quarter, we accrue the related revenue based on estimates of our licensees’ underlying sales, subject to certain constraints on our ability to estimate such amounts. We develop such estimates based on a combination of available data including, but not limited to, approved customer forecasts, a look back at historical royalty reporting for each of our customers, and industry information available for the licensed products.
As a result of accruing per-unit royalty revenue for the quarter based on such estimates, adjustments will be required in the following quarter to true up revenue to the actual amounts reported by our licensees. In the three months ended September 30,
9


2022, we recorded adjustments of $0.2 million to decrease royalty revenue. We recorded adjustments of $0.5 million to decrease royalty revenue during the three months ended September 30, 2021.
Contract Assets
As of September 30, 2022, we had contract assets of $6.9 million included within Prepaid expenses and other current assets, and $0.7 million included within Other assets on the Condensed Consolidated Balance Sheets. As of December 31, 2021, we had contract assets of $12.4 million included within Prepaid expenses and other current assets, and $1.7 million included within Other assets on the Condensed Consolidated Balance Sheets.
Contract assets decreased by $6.5 million from January 1, 2022 to September 30, 2022, primarily due to actual royalties billed and the reduction in contact assets balance following our settlement agreement with Marquardt GmbH.
Contracted Revenue
We recognize revenue from a fixed fee license agreement when we have satisfied our performance obligations, which typically occurs upon the transfer of rights to our technology upon the execution of the license agreement. However, in certain contracts, we grant a license to our existing patent portfolio at the inception of the license agreement as well as rights to the portfolio as it evolves throughout the contract term. For such arrangements, we have concluded that there are two separate performance obligations:
• Performance Obligation A: to transfer rights to our patent portfolio as it exists when the contract is executed.
• Performance Obligation B: to transfer rights to our patent portfolio as it evolves over the term of the contract, including access to new patent applications that the licensee can benefit from over the term of the contract.
If a fixed fee license agreement contains only Performance Obligation A, we recognize most or all of the revenue from the agreement at the inception of the contract. For fixed fee license agreements that contain both Performance Obligation A and B, we allocate the transaction price based on the standalone price for each of the two performance obligations. We use a number of factors primarily related to the attributes of our patent portfolio to estimate standalone prices related to Performance Obligation A and B. Once the transaction price is allocated, the portion of the transaction price allocable to Performance Obligation A is recognized in the period the license agreement is signed and the customer can benefit from rights provided in the contract. The portion allocable to Performance Obligation B is recognized on a straight-line basis over the contract term. For such contracts, a contract liability account is established and included within Deferred revenue on the Condensed Consolidated Balance Sheets. As the rights and obligations in a contract are interdependent, contract assets and contract liabilities that arise in the same contract are presented on a net basis.
Based on contracts signed and payments received as of September 30, 2022, we expect to recognize $18.6 million in revenue related to Performance Obligation B under our fixed fee license agreements, which are satisfied over time, including $12.2 million over one to three years and $6.4 million over more than three years.
Total deferred revenue was $21.5 million as of December 31, 2021, of which $3.7 million was recognized during the nine months ended September 30, 2022.
3.  INVESTMENTS AND FAIR VALUE MEASUREMENTS
Marketable Securities
We invest surplus funds in excess of operational requirements in a diversified portfolio of marketable securities, with the objectives of delivering competitive returns, maintaining a high degree of liquidity, and seeking to avoid the permanent impairment of principal.
Our investments in marketable debt securities, including U.S. treasury securities and corporate bonds are classified and accounted for as available-for-sale. The marketable debt securities are classified either short-term or long-term based on each instrument’s underlying contractual maturity date. As of September 30, 2022 and December 31, 2021, we reported $40.6 million and $7.3 million of investments in debt securities as Investments - noncurrent on our Condensed Consolidated Balance Sheets, respectively, as management intends to hold these investment for more than 12 months from the reporting date. We may sell certain marketable debt securities prior to their stated maturities for reasons including, but not limited to, managing liquidity, credit risk, duration and asset allocation. The marketable debt securities are measured at fair value with realized gains
10


and losses reported as Interest and other income (loss), net on our Condensed Consolidated Statements of Income and Comprehensive Income. Unrealized gains and losses on marketable debt securities are reported as Accumulative Other Comprehensive Income (loss) on our Statements of Stockholders' Equity.
Our investments in marketable equity securities are classified based on the nature of the securities and their availability for use in current operations. The marketable equity securities are measured at fair value with gains and losses recognized in Interest and other income (loss), net on our Condensed Consolidated Statements of Income and Comprehensive Income.
We regularly review our investment portfolio to identify and evaluate investments that have indicators of possible impairment. Investments are considered impaired when a decline in fair value is judged to be other-than-temporary. If the cost of an individual investment exceeds its fair value, we evaluate, among other factors, general market conditions, the duration and extent to which the fair value is less than cost, and our intent and ability to hold the investment. Once a decline in fair value is determined to be other-than-temporary, we will record an impairment charge and establish a new cost basis in the investment.
Marketable securities as of September 30, 2022 and December 31, 2021 consisted of following (in thousands):
September 30, 2022

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

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

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

December 31, 2021
Fair Value Measurements Using
Quoted Prices
 in Active
Markets for
Identical Assets
(Level 1)
Significant
Other
Observable
Inputs
(Level 2)
Significant
Unobservable
Inputs
(Level 3)
Total
Assets:
Mutual funds$49,662 $ $ 49,662 
Equity securities36,769   36,769 
Corporate bonds 7,286  7,286 
Total assets at fair value$86,431 $7,286 $ $93,717 
Liabilities
Derivative instruments$ $6,267 $ $6,267 
Total liabilities at fair value$ $6,267 $ $6,267 
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4.   BALANCE SHEETS DETAILS
Cash and Cash Equivalents
Cash and cash equivalents were as follow (in thousands):
September 30,
2022
December 31,
2021
Cash $15,567 $51,490 
Certificates of deposit (1)
15,794  
Money market funds5,406  
Cash and cash equivalents$36,767 $51,490 
(1) Represents certificates of deposit with initial or remaining maturity days of 90 days or less.

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

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

5. CONTINGENCIES
From time to time, we receive claims from third parties asserting that our technologies, or those of our licensees, infringe on the other parties’ IP rights. Management believes that these claims are without merit. Additionally, periodically, we are involved in routine legal matters and contractual disputes incidental to our normal operations. In management’s opinion, unless we disclosed otherwise, the resolution of such matters will not have a material adverse effect on our consolidated financial condition, results of operations, or liquidity.
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In the normal course of business, we provide indemnification of varying scope to customers, most commonly to licensees in connection with licensing arrangements that include our IP, although these provisions can cover additional matters. Historically, costs related to these guarantees have not been significant, and we are unable to estimate the maximum potential impact of these guarantees on its future results of operations.
Samsung Electronics Co. v. Immersion Corporation and Immersion Software Ireland Limited
On April 28, 2017, Immersion and Immersion Software Ireland Limited (collectively referred to as “Immersion” in this section) received a letter from Samsung Electronics Co. (“Samsung”) requesting that we reimburse Samsung with respect to withholding tax and penalties imposed on Samsung by the Kor