IMMERSION CORP

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

Stockholders and Board of Directors

Immersion Corporation

Aventura, Florida

Opinion on the Consolidated Financial Statements

We have audited the accompanying consolidated balance sheet of Immersion Corporation (the “Company”) as of April 30, 2025, the related consolidated statements of operations and comprehensive income (loss), stockholders’ equity, and cash flows for the year ended April 30, 2025 and the four-month transition period ended April 30, 2024, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at April 30, 2025, and the results of its operations and its cash flows for the year ended April 30, 2025 and the four-month transition period ended April 30, 2024, in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the Audit Committee and that: (1) relate to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of the critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Revenue Transactions - Product Sales

As described in Notes 2 and 5 to the consolidated financial statements, the majority of the Company’s revenue was derived from the sale of products through Barnes & Noble Education’s bookstore locations, including virtual bookstores and its bookstore affiliated ecommerce websites. Barnes & Noble Education’s total revenue from product sales was approximately $1.3 billion for the fiscal year ended April 30, 2025.

We identified the auditing of the accuracy and existence of revenue transactions from product sales as a critical audit matter. Auditing the accuracy and existence of revenue from product sales was especially challenging due to the high degree of auditor effort in performing procedures, given the significance of revenue from product sales and the large volume of transactions.

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Evaluating the accuracy and existence of revenue transactions, on a sample basis, by inspecting invoices, evidence of delivery of physical and digital content, evidence of collectability, and other supporting information, where applicable.

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Confirming certain revenue transactions with the customer or delivery of digital content with the provider.

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Evaluating the accuracy of product pricing by verifying the cost markup percentage against underlying contract terms for a selected sample of stores.

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Testing price changes, on a sample basis, to verify whether those changes were properly authorized.

Merchandise Inventories – Reserves for Non-Returnable Inventory

As described in Note 2 to the consolidated financial statements, Barnes & Noble Education recognizes reserves for non-returnable inventory based on the history of liquidating non-returnable inventory, which includes certain assumptions, including markdowns and inventory aging.

We identified the auditing of the non-returnable inventory reserves as a critical audit matter. The calculation of non-returnable inventory reserves used a number of assumptions, including markdowns and inventory aging. As a result of the number of inputs to the manual calculations and volume of transactions, auditing non-returnable inventory reserves was especially challenging due to the extensive audit effort required.

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Evaluating the methodology used to calculate the non-returnable inventory reserves for reasonableness.

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Assessing the sensitivity of certain inputs and assumptions used in the reserve calculation.

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Testing the completeness and accuracy of the markdowns and the underlying data used in calculating the inventory aging.

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Recalculating the reserves using management’s established methodology and assumptions.

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Performing a historical trend analysis by comparing the inventory reserve for each inventory aging category to the related historical reserve.

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Performing a trend analysis of the estimated reserves as a percentage of gross inventory.

Accounting for Leases

As described in Notes 2 and 7 to the consolidated financial statements, Barnes & Noble Education recognizes lease assets and lease liabilities on the consolidated balance sheets for leases comprised of operations agreements which grant Barnes & Noble Education the right to operate on-campus bookstores at colleges and universities; real estate leases for office and warehouse operations; and vehicle leases. As described in Note 2 to the consolidated financial statements, Barnes & Noble Education identified errors in its application of ASC Topic 842, Leases, related to the accounting for the minimum annual commission guarantees, variable commission arrangements and related amortization associated with Barnes & Noble Education’s store operating agreements.

We identified the accounting evaluation of the minimum annual commission guarantees, variable commission arrangements and related amortization associated with Barnes & Noble Education’s store operating agreements as a critical audit matter. Our principal considerations included the existence of accounting complexities related to such evaluation and significant judgments involved in the interpretation of the terms of the agreements and in the application of the appropriate accounting guidance. Auditing these elements required especially challenging and complex auditor judgment due to the nature and extent of audit effort required, including the extent of expertise needed.

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Reviewing and analyzing: (i) the terms of the operating agreements for a sample of on-campus bookstores at colleges and universities, and (ii) Barnes & Noble Education’s application of the relevant accounting guidance under ASC Topic 842 for those selected samples.

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Utilizing firm personnel with expertise in the relevant technical accounting to assist in: (i) evaluating the relevant terms of a representative example of Barnes & Noble Education’s operating agreements for on-campus bookstores at colleges and universities and (ii) assessing the appropriateness of the conclusions reached by Barnes & Noble Education.

Impact of the Investigation

As described in Note 2 to the consolidated financial statements, Barnes & Noble Education’s Audit Committee initiated an investigation over Barnes & Noble Education’s costs of sales associated with digital content and concluded that a former payment processing employee made unsupported manual journal entries that improperly reduced cost of sales associated with digital content, with a reciprocal impact to accrued liabilities and accounts receivable (“the Investigation”). As a result of the Investigation, the Company restated its previously reported financial statements.

Evaluating the sufficiency of audit procedures over the impact of the Investigation was determined to be a critical audit matter. The principal considerations for our determination were: (i) a high degree of auditor judgment and subjectivity that was required to design and execute incremental audit procedures and to assess the sufficiency of the audit procedures performed and evidence obtained, and (ii) the audit effort involved, including the extent of specialized skills or knowledge needed.

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Evaluating the sufficiency of the Investigation initiated by Barnes & Noble Education’s Audit Committee, including using professionals with specialized skills and knowledge in forensic investigation.

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Expanding the nature and extent of fraud inquiries performed with Barnes & Noble Education personnel.

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Performing a system access review to evaluate whether any instances of inappropriate use of the in-scope applications by the former payment processing employee existed.

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Considering the Investigation’s findings and performing incremental audit procedures over certain financial accounts, including:

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Testing the completeness and accuracy of the reconciliation for cost of sales associated with digital content.

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Confirming invoices for a selected vendor related to cost of sales associated with digital content.

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Performing additional journal entry testing.

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Testing the completeness and accuracy of the adjustments as a result of the Investigation.

Business Combination – Valuation of Acquired Intangible Assets

As described in Note 3 to the consolidated financial statements, the Company acquired 42% of all outstanding common shares of Barnes & Noble Education as well as control over Barnes & Noble Education through board seats. The total consideration transferred was approximately $50.1 million. The acquisition was accounted for as a business combination and the total purchase price was allocated to the net tangible and intangible assets and liabilities based on their fair values on the acquisition date with the excess recorded as goodwill. The identifiable intangible assets acquired were comprised of a trade name of $45.0 million and customer relationships of $50.0 million.

We identified certain key assumptions utilized in the valuation of the trade name and customer relationships as a critical audit matter. The principal considerations that led to this determination were the subjective judgment required by management in developing those assumptions, specifically, (i) the royalty rate assumption used in the trade name valuation and (ii) the EBIDTA margins used in the customer relationships valuation. Auditing these key assumptions involved especially subjective and challenging auditor judgement due to the nature and extent of audit effort required to address these matters, including the extent of specialized skills or knowledge needed.

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Utilizing personnel with specialized knowledge and skills in valuation to assist in evaluating the reasonableness of the royalty rate used in estimating the fair value of the trade name.

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Assessing the relevance and reliability of the external data used when evaluating the reasonableness of the royalty rate and EBITDA margins.

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Evaluating the reasonableness of the EBITDA margins by: (i) analyzing the current and past performance of Barnes & Noble Education and (ii) comparing to the performance of the guideline public companies identified.

/s/ BDO USA, P.C.

We have served as the Company's auditor since 2024.

San Francisco, California

March 11, 2026