Immersion's Nasdaq Listing at Risk Amid Widening Financial Probe

AVENTURA, Fla. – December 26, 2025 – Haptic technology leader Immersion Corporation is facing a mounting regulatory crisis that threatens its standing on the Nasdaq Stock Market. The company disclosed it has received a third delinquency notice from Nasdaq for failing to file its quarterly financial report, deepening concerns over internal accounting probes and the turbulent integration of its recently acquired subsidiary, Barnes & Noble Education (BNED).

The latest notice, received on December 23, 2025, specifically targets the company's failure to file its Form 10-Q for the quarter ending October 31, 2025. This compounds earlier non-compliance alerts for its annual report for the fiscal year ended April 30, 2025, and its first-quarter report. With three consecutive reporting deadlines missed, Immersion is now under intense pressure to present a viable path back to compliance or risk being delisted from the exchange.

A Pattern of Delinquency and Delisting Fears

The string of warnings from Nasdaq highlights a significant breakdown in Immersion's financial reporting processes. The first notice arrived on August 20, 2025, after the company missed the deadline for its annual Form 10-K. A second followed on September 29 for its overdue first-quarter Form 10-Q. The latest notice for its second-quarter report confirms a persistent problem that the company has publicly attributed to complex internal investigations.

Continued listing on the Nasdaq exchange is contingent upon adhering to its Listing Rule 5250(c)(1), which mandates the timely filing of all periodic financial reports with the Securities and Exchange Commission (SEC). Failure to comply puts a company in a formal delinquency process. Immersion submitted an initial plan to regain compliance on October 20, 2025, but with another filing now overdue, it must provide an updated plan to Nasdaq no later than January 7, 2026.

While Nasdaq typically provides a grace period of up to 180 days for a company to rectify such deficiencies once a compliance plan is accepted, the repeated nature of the failures could test the exchange's patience. Should Nasdaq reject its plan or should Immersion fail to meet a new deadline, the company could face suspension and eventual delisting. Its only recourse at that point would be to appeal to a Nasdaq Hearings Panel, a move that would temporarily halt the delisting process but offer no guarantee of a favorable outcome. The looming deadline places immense pressure on Immersion's management to resolve the underlying issues swiftly.

At the Heart of the Crisis: The BNED Acquisition and Audit Probe

The root of Immersion's regulatory predicament appears to lie in its ambitious acquisition of a controlling interest in Barnes & Noble Education (BNED) in June 2024. What was intended to diversify revenue streams has introduced significant financial and operational complexities. The company has explicitly linked its filing delays to the immense challenge of consolidating BNED's financial information, which is itself under a microscope.

Both Immersion and BNED are conducting parallel audit committee investigations that are expected to result in the restatement of previously issued financial statements. According to company filings, the probe at BNED is examining potential accounting irregularities, including the overstatement of accounts receivable and discrepancies in how the cost of sales was recorded for its 2024 and 2025 fiscal years.

The fallout from these issues has been significant. Immersion's own board has concluded that the company's financial statements for multiple quarters in 2024 and 2025 can "no longer be relied upon" and will need to be restated in the forthcoming, and long-overdue, annual Form 10-K. This admission of material weakness in its internal controls underscores the severity of the accounting challenges. In its press release, Immersion stated its ability to file the overdue reports "remains subject to the consolidation of BNED's financial information," directly tying its own compliance fate to the resolution of the turmoil within its new subsidiary.

Wall Street's Divided Verdict

Despite the clear signs of internal turmoil and the existential threat of a Nasdaq delisting, Wall Street's reaction has been surprisingly measured. As of this week, Immersion’s stock (IMMR) has remained relatively stable, trading around $6.85 per share. This suggests that many investors may be looking past the current accounting chaos to the company's underlying value and future potential.

Several financial indicators support this optimistic view. Analyst consensus ratings lean towards a "Moderate Buy" or "Strong Buy," with some price targets projecting a significant upside, ranging from $12.25 to $13.50. Furthermore, the company's stock is trading at a low price-to-earnings ratio of 2.46 and a price-to-sales ratio of 0.18, metrics that often suggest a stock may be undervalued relative to its earnings and revenue.

Adding to this sentiment is a recent trend in insider activity, which has shown high-impact, open-market purchases by company insiders, often interpreted as a sign of confidence in the firm's long-term prospects. Concurrently, short interest in the stock—bets that its price will fall—has decreased by nearly 10%, indicating that bearish sentiment may be waning. This disconnect between the company's severe governance crisis and the market's hopeful valuation creates a high-stakes environment where investors are weighing the risk of delisting against the potential reward of a successful turnaround.

A Tale of Two Companies: Haptic Innovation vs. Financial Instability

Immersion's current predicament presents a stark contrast: a pioneering technology company bogged down by financial reporting failures. For decades, Immersion has been a leader in haptics, the science of touch feedback. It holds an extensive patent portfolio of over 1,600 issued and pending patents, and its technology is embedded in billions of devices worldwide, from smartphones and gaming controllers to automotive dashboards and medical training simulators. Its licensing and royalty-based model has long been its core strength.

However, the ongoing compliance crisis and the distraction of the BNED integration threaten to overshadow this legacy of innovation. The risk of delisting could severely damage investor confidence, restrict access to capital for future research and development, and tarnish its reputation among potential partners. These internal struggles are occurring as the haptic technology market is poised for explosive growth, with applications expanding rapidly. The medical simulation haptics sector alone, for example, is projected to become a multi-billion dollar market by 2026.

While the acquisition of BNED dramatically inflated Immersion's top-line revenue—with preliminary results showing a jump from $9.5 million to $474.8 million in a single quarter—it also imported the internal control weaknesses that now jeopardize the entire enterprise. The company's ability to capitalize on the growing demand for its core technology is now directly tied to its capacity to resolve these deep-seated accounting issues. The coming weeks will be critical in determining whether Immersion can untangle its financial reporting knot and reassure investors that its operational foundation remains as solid as its haptic technology.