Immersion's Nasdaq Status in Jeopardy Amid Audit and Filing Woes

AVENTURA, Fla. – December 26, 2025 – Immersion Corporation, a pioneer in haptic feedback technology, 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 issues linked to its recent, transformative acquisition of Barnes & Noble Education (BNED).

On December 23, Immersion (Nasdaq: IMMR) received a formal notification from Nasdaq’s Listing Qualifications Department for not timely filing its Quarterly Report on Form 10-Q for the fiscal quarter that ended on October 31, 2025. This latest alert follows two prior warnings: one on August 20 for its overdue Annual Report on Form 10-K for the fiscal year ended April 30, 2025, and another on September 29 for its Q1 Form 10-Q. The timely submission of these reports is a fundamental requirement for continued listing under Nasdaq Listing Rule 5250(c)(1).

The repeated failures have set a critical deadline. Immersion is now required to submit an updated plan to Nasdaq by January 7, 2026, detailing how it will regain compliance. While Nasdaq can grant extensions of up to 180 days for a company to catch up on its filings, a failure to present a viable plan or meet its conditions could trigger delisting procedures, a move that would severely impact investor confidence and the company’s access to public capital markets.

Unpacking the Audit and Restatement Chaos

The root cause of Immersion's reporting delays lies in complex and ongoing internal investigations. Both Immersion and its recently acquired subsidiary, Barnes & Noble Education, have their audit committees engaged in probes that are expected to result in the restatement of previously-issued financial information. In a series of filings, the company has stated that due to these investigations, its management has been unable to finalize the financial reporting process.

Research into the matter reveals the probe at BNED is particularly focused on potential accounting irregularities, including the possible overstatement of accounts receivable and discrepancies in the calculation of cost of sales for fiscal years 2024 and 2025. The fallout has been significant, prompting Immersion’s board to declare that its own financial statements for multiple quarters in 2024 and 2025 should no longer be relied upon and will be restated in the forthcoming, and now delayed, annual report.

This situation points to substantial weaknesses in internal controls, a critical issue for any publicly traded company. The need to restate multiple periods of financial results suggests the accounting problems are not minor and require a deep and time-consuming review to correct, a process that has now put the company squarely in Nasdaq's crosshairs.

The BNED Acquisition: A Double-Edged Sword

At the heart of Immersion's current predicament is its ambitious acquisition of a controlling interest in Barnes & Noble Education in June 2024. The move was intended to dramatically scale and diversify Immersion’s business, moving beyond its core technology-licensing model into the vast educational retail and services market. On paper, the strategy appeared to be paying off, with preliminary results showing Immersion's revenue skyrocketing to $474.8 million in one quarter, up from just $9.5 million a year prior, almost entirely due to the consolidation of BNED.

However, the acquisition has proven to be a double-edged sword. While delivering explosive revenue growth, it has also imported BNED’s significant financial and operational challenges. Immersion has been transparent that its ability to file its own overdue reports is directly dependent on the consolidation of BNED's financial data, which cannot be completed until the subsidiary's audit investigation concludes. This dependency has effectively chained Immersion’s regulatory compliance to the uncertain timeline of BNED’s internal cleanup.

The entanglement highlights the immense risks of large-scale acquisitions, particularly when the target company carries underlying financial issues. What was meant to be a transformative growth driver has become a source of profound instability, forcing Immersion to divert significant resources and management attention away from its core operations to address a compliance crisis.

Market Reaction and the Path Forward

Despite the gravity of the delisting threat and internal turmoil, the market's reaction has been surprisingly muted. As of December 26, Immersion's stock was trading at $6.85, remaining relatively stable in the face of the negative news. This resilience may be attributed to several factors. Some analysts consider the stock undervalued, with price targets suggesting significant upside, and the company's low price-to-earnings ratio could be attracting investors who believe the current issues are temporary.

Furthermore, recent data shows a decrease in short interest and positive insider buying activity, signaling a degree of confidence from those closest to the company. It appears some investors are betting that Immersion, a long-standing leader in haptics with a robust portfolio of over 1,600 patents, can navigate this storm and that the underlying value of its technology and the BNED acquisition will ultimately prevail.

Nonetheless, the risk to its core business is real. The ongoing financial distractions could hamper innovation and deter potential partners in the competitive tech landscape. The haptic technology market is expanding rapidly, with applications in gaming, automotive, and medical simulation expected to drive billions in growth. Immersion is theoretically well-positioned to capitalize on this trend, but its ability to do so hinges on a swift and successful resolution of its current audit and compliance nightmare. The company is working diligently to file its reports "as soon as practicable," but its fate on Nasdaq now rests on its ability to untangle the complex financial knot tied by its largest acquisition.