Immersion (IMMR) risk factors, FY2026 10-K

Other

1. 01As previously discussed, our actual results could differ materially from our forward-looking statements
2. 02We have an evolving business model, which increases the complexity of our business
3. 03Although we have been profitable from operations since 2020, there is no assurance that we will continue to generate net income in the future. We may not be able to maintain or increase profitability
4. 04Our business strategy includes acquisitions, and acquisitions entail numerous risks, including the risk of management diversion and increased costs and expenses, all of which could negatively affect the Company’s profitability
5. 05Our business, results of operations, financial condition, cash flows, and stock price can be adversely affected by catastrophic events, such as natural disasters, war, acts of terrorism, pandemics, epidemics, or other public health emergencies
6. 06The uncertain economic and political environment could reduce our revenues and could have an adverse effect on our financial condition and results of operations
7. 07Changes in trade policies, including tariffs or other trade restrictions or the threat of such actions, may have a material adverse effect on our business, financial condition and results of operations
8. 08If we are unable to renew our existing licensing arrangements for our patents and other technologies on favorable terms that are consistent with our business objectives, our royalty and license revenue and cash flow could be materially and adversely affected
9. 09If we are unable to enter into new licensing arrangements for our patents on favorable terms that are consistent with our business objectives, our royalty and license revenue and cash flow could be materially adversely affected
10. 10Historically, a significant amount of our revenue has been derived from a limited number of customers, and we expect that this will continue to be the case in the future. For example, for the fiscal year ended April 30, 2026, the top five customers accounted for a significant amount of our total revenues
11. 11If our customers discontinue product lines that incorporate our technology, our operating results may be negatively impacted
12. 12Our failure to continuously develop or acquire patents could significantly harm our business, financial condition, results of operations or cash flow
13. 13Shortages of electronic components (such as integrated circuits) that may be integral to the manufacturing of our customers’ products may cause a decrease in production and sales of our customers’ products which could result in lower royalties payable to us
14. 14The terms in our agreements may be construed by our licensees in a manner that is inconsistent with the rights that we have granted to other licensees or in a manner that may require us to incur substantial costs to resolve conflicts over license terms
15. 15Our licenses with semiconductor and actuator manufacturers may cause confusion as to our licensing model and may prevent us from enforcing our patents based on the patent exhaustion doctrine, the implied license doctrine, or other legal doctrines
16. 16If we are not able to attract, recruit and retain qualified personnel, we may not be able to effectively deploy our technologies
17. 17We have experienced turnover in our senior management and our employee base, which could result in operational and administrative inefficiencies and could hinder the execution of our growth strategy
18. 18We may incur greater tax liability than we have provided for or have anticipated and may incur additional tax liability due to certain indemnification agreements with certain licensees, which could adversely affect our financial condition and operating results
19. 19Our international revenues subject us to additional risks and costs
20. 20the possibility of an outbreak of hostilities or unrest in markets where major customers are located, including Korea
21. 21Our failure to comply with complex U.S. and foreign laws and regulations could have a material adverse effect on our operations
22. 22We may not be able to continue to derive significant revenues from third party gaming peripheral makers for video gaming platforms
23. 23Because we have a fixed payment license with Microsoft, our royalty revenue from licensing in the gaming market and other consumer markets has declined and may further do so if Microsoft increases its volume of sales of touch-enabled products at the expense of our other licensees
24. 24Automobiles incorporating our touch-enabling technologies are subject to lengthy product development periods, making it difficult to predict when and whether we will receive royalties for these product types
25. 25Our inability to control or influence our licensees’ design, manufacturing, quality control, promotion, distribution, or pricing of their products incorporating our touch-enabling technologies could result in diminished royalty revenue if our licensees’ efforts fail to generate consumer demand
26. 26Our business may suffer if third parties assert that we violate their IP rights
27. 27Our business and operations could suffer in the event of any actual or perceived security breaches
28. 28If we are unable to maintain open-source compliant products, our ability to license our technologies and generate revenues may be impaired
29. 29Many of our technologies are designed for use with third-party platforms and technologies. Our business relies on our access to these platforms and technologies of third parties, which can be withdrawn, denied or not be available on terms acceptable to us
30. 30Our technologies are complex and may contain undetected errors, which could harm our reputation and future sales
31. 31If we fail to adequately protect personal information or other information we process or maintain, our business, financial condition and operating results could be adversely affected
32. 32Increasing attention on environmental, social and governance (“ESG”) matters may have a negative impact on our business, impose additional costs on us, and expose us to additional risks

Risks Related to Controls and Procedures

1. 33Pursuant to the Sarbanes-Oxley Act of 2002, we are required to maintain internal control over financial reporting and to assess and report on the effectiveness of our internal controls, including the disclosure of any material weaknesses that our management identifies in our internal control over financial reporting
2. 34Due to inherent limitations, there can be no assurance that our system of disclosure and internal controls and procedures will be successful in preventing all errors, theft and fraud, or in informing management of all material information in a timely manner
3. 35In the past we have not been in compliance with SEC reporting requirements and Nasdaq continued listing rules. If we are unable to remain in compliance with SEC reporting requirements and Nasdaq continued listing rules, there may be a material adverse effect on the Company and our stockholders
4. 36Our failure to prepare and timely file our periodic reports with the SEC limits our access to the public markets to raise debt or equity capital and may impact our ability to obtain alternative financing

Risks Related to our Consolidated Variable Interest Entity Barnes & Noble Education

1. 37Our consolidated variable interest entity, Barnes & Noble Education, is a public company which may expose us to additional costs, and our management may be required to devote substantial time to compliance initiatives
2. 38Changes in Barnes & Noble Education’s relationships with significant clients and suppliers, including the loss or reduction in business from one or more of them, could have a material adverse impact on its business
3. 39Tariffs or other restrictions placed on imports, and any ensuing trade wars may have a material adverse impact on our financial condition and results of operations
4. 40If Barnes & Noble Education fails to maintain proper and effective internal controls, our business and financial condition could be materially adversely impacted
5. 41Due to inherent limitations, there can be no assurance that Barnes & Noble Education’s system of disclosure and internal controls and procedures will be successful in preventing all errors, theft and fraud, or in informing management of all material information in a timely manner
6. 42Barnes & Noble Education may incur additional substantial costs in connection with remediation efforts following the BNED Restatement, which could adversely affect its results of operations
7. 43Barnes & Noble Education may be required to indemnify its current and former directors, officers and employees in connection with litigation and other actions which could result in significant legal expenses and other costs to us
8. 44Barnes & Noble Education’s past failure to prepare and timely file its periodic reports with the SEC limits its access to the public markets to raise debt or equity capital, may impact its ability to obtain alternative financing, and could have negative consequences under the terms of its existing credit agreements
9. 45Our revenues and operating results are likely to vary significantly from quarter to quarter due to a number of factors, many of which are outside of our control and any of which could cause the price of our common stock to decline
10. 46Our stock price may fluctuate regardless of our performance
11. 47Future sales of our equity could result in significant dilution to our existing stockholders and depress the market price of our common stock
12. 48We could recognize losses with respect to the marketable securities in which we invest
13. 49Any stock repurchase program could affect our stock price and add volatility
14. 50Changes in financial accounting standards or policies may affect our reported financial condition or results of operations and, in certain cases, could cause a decline and/or fluctuation in the price of our common stock
15. 51Our business is subject to changing regulations regarding corporate governance and other compliance areas that will increase both our costs and the risk of noncompliance
16. 52Provisions in our charter documents, Rights Agreement, and Delaware law could prevent or delay a change in control, which could reduce the market price of our common stock
17. 53In addition, certain provisions of Delaware law may discourage, delay, or prevent someone from acquiring or merging with us. These provisions could limit the price that investors might be willing to pay in the future for shares
18. 54We could be subject to additional income tax liabilities
19. 55Any decision to reduce or discontinue the payment of cash dividends to our stockholders could cause the market price of our common stock to decline significantly