IMMERSION CORP

Evaluation of Disclosure Controls and Procedures

Our management is responsible for establishing and maintaining disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) that are designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by us in such reports is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure.

In accordance with Exchange Act Rules 13a-15 and 15d-15, an evaluation was completed under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures as of April 30, 2026.

As described below, material weaknesses existed as of April 30, 2026 in our internal control over financial reporting relating to: (i) Barnes & Noble Education, whose financial information is consolidated into our consolidated financial statements; and (ii) our accounting for the acquisition of a controlling interest in Barnes & Noble Education and the related consolidation accounting. In light of these material weaknesses, our management, including our Chief Executive Officer and Chief Financial Officer, concluded that our disclosure controls and procedures were not effective as of April 30, 2026.

A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that it will detect or prevent all misstatements or failures within the Company to disclose material information required to be set forth in our periodic reports.

Management’s Annual Report on Internal Control over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act). Internal control over financial reporting is a process designed by, or under the supervision of, our principal executive and principal financial officers and effected by our Board of Directors, management, and other personnel to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with U.S. generally accepted accounting principles ("GAAP"). Internal control over financial reporting includes those policies and procedures that:

Pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company;

Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with GAAP, and that receipts and expenditures are being made only in accordance with authorizations of management and the Board of Directors; and

Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the Company's assets that could have a material effect on the financial statements.

Our management assessed the effectiveness of our internal control over financial reporting as of April 30, 2026 using the criteria set forth in the Internal Control - Integrated Framework (2013 Framework) issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”).

This Annual Report does not include an attestation report of our registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by our registered public accounting firm pursuant to SEC rules that permit us to provide only management’s report in this Annual Report on Form 10-K.

A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of annual or interim financial statements will not be prevented or detected on a timely basis.

Based on our assessment under the COSO framework, our management concluded that our internal control over financial reporting was not effective as of April 30, 2026 due to the material weaknesses described below.

Material Weaknesses Related to Barnes & Noble Education

As previously disclosed, following our acquisition of a controlling interest in Barnes & Noble Education on June 10, 2024, it was discovered that an individual at Barnes & Noble Education had made unsupported journal entries that were not detected on a timely basis by Barnes & Noble Education’s internal controls. In connection with an investigation overseen by Barnes & Noble Education's Audit Committee and Board of Directors and the resulting restatement of Barnes & Noble Education’s previously issued consolidated financial statements, Barnes & Noble Education identified multiple material weaknesses in its internal control over financial reporting under the 2013 COSO framework with respect to fiscal 2025. Barnes & Noble Education disclosed that these material weaknesses remained as of May 2, 2026 to the extent indicated below because remediation efforts were ongoing.

Because Barnes & Noble Education’s financial information is consolidated into our consolidated financial statements, the material weaknesses in Barnes & Noble Education’s internal control over financial reporting represent material weaknesses in our internal control over financial reporting as of April 30, 2026. These material weaknesses include deficiencies in Barnes & Noble Education’s control environment, risk assessment, information and communication, monitoring activities, and control activities.

The material weaknesses at Barnes & Noble Education include:

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Control Environment - Significant turnover in key leadership roles in Barnes & Noble Education's accounting and finance organization during fiscal 2025 resulted in ineffective establishment of reporting lines, authorities and responsibilities, and insufficient resources to develop and operate certain internal controls over financial reporting.

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Risk Assessment - Ineffective risk assessment processes to identify and analyze risks related to the achievement of certain financial reporting objectives, including risks of fraud and the impact of business changes on the system of internal controls. In part because of the turnover described above, Barnes & Noble Education was unable to consistently perform or document risk assessments, inadequately assessed the need to supplement internal audit and finance functions, and did not regularly assess the need to update existing controls or provide continual training for control owners.

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Information and Communication - Ineffective information and communication activities, including untimely communication of expectations regarding certain roles and responsibilities, failure to communicate roles and responsibilities for designated backup of personnel during employee absences or departures, and inconsistent evidence of review over the completeness and accuracy of information produced by Barnes & Noble Education and used in controls.

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Monitoring Activities - Ineffective monitoring activities, including insufficient evaluation of the effectiveness of the operation of certain key controls, which included certain account reconciliation controls.

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Control Activities - Design and operating deficiencies in certain control activities, including:

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controls over the review and approval of manual journal entries, including segregation of duties and review of underlying support;

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general information technology controls relating to user access for certain systems supporting financial reporting at a Barnes & Noble Education subsidiary (This material weakness has been fully remediated as of April 30, 2026);

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controls over the completeness and accuracy of information produced by Barnes & Noble Education and used in the execution of key controls;

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controls over accounting for nonroutine transactions;

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controls over the monthly account reconciliation process in certain areas, including adequacy of support, evidence of review, and timely resolution of reconciling items; and

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controls over the accounting for leases.

Material Weakness Related to Accounting for the Barnes & Noble Education Business Combination and Consolidation

In addition, in connection with our accounting for the acquisition of a controlling interest in Barnes & Noble Education, we identified a material weakness in our internal control over financial reporting related to our business combination and consolidation accounting, which continued to exist as of April 30, 2026.

The Company did not design and operate controls over the revaluation of the business combination as well as the review over the completeness and accuracy of the Company’s consolidation of Barnes & Noble Education and associated disclosures. This includes controls to ensure the completeness and accuracy of information provided to the third-party specialist and controls to review the completeness and accuracy of the resulting consolidation impacts to the financial statements and related footnote disclosures. This material weakness relates to the design and operation of our controls over a one-time business combination event and related consolidation of Barnes & Noble Education.

Notwithstanding the identified material weaknesses, management has performed additional procedures, including expanded analyses and review procedures, and concluded that the consolidated financial statements included in this Annual Report on Form 10-K are fairly stated, in all material respects, in accordance with GAAP.

Impact of the Material Weaknesses

The material weaknesses described above created a reasonable possibility that a material misstatement in our annual or interim consolidated financial statements would not be prevented or detected on a timely basis. As noted above, they contributed to the errors that resulted in the restatement of our previously issued condensed consolidated financial statements for the interim periods ended June 30, 2024, October 31, 2024, and January 31, 2025.

Management has performed additional procedures, including expanded analyses and review procedures, to conclude that the consolidated financial statements included in this Annual Report on Form 10‑K are fairly stated, in all material respects, in accordance with GAAP.

Management’s Plan to Remediate the Material Weaknesses

Our management and Board of Directors are committed to maintaining a strong internal control environment and remediating the material weaknesses described above as promptly as practicable.

Remediation Related to Barnes & Noble Education

Barnes & Noble Education is actively engaged in remediating the material weaknesses identified in its internal control over financial reporting and improving the overall effectiveness of its internal control environment. As disclosed by Barnes & Noble Education, it has implemented remediation plans with respect to each of the identified material weaknesses. Actions taken or underway at Barnes & Noble Education include, among other things:

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Enhancing procedures over the manual journal entry process, including ensuring clear identification of preparers and independent approvers, routing entries to appropriately qualified approvers, maintaining adequate supporting documentation, and increasing involvement of senior accounting personnel in the review of material entries.

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Strengthening information technology general controls relating to user access for systems supporting financial reporting.

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Identifying key reports and establishing procedures to ensure their completeness and accuracy and formalizing related control language for information produced by the entity.

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Enhancing review and documentation procedures for nonroutine transactions, including the use of a technical accounting tracker, recurring technical accounting review meetings, and consultation with external advisors as appropriate.

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Reinforcing the importance of the account reconciliation process, including clear success criteria for adequate support, evidence of review, documentation of reconciling items and timely resolution, and exploring the use of account reconciliation software.

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Establishing a working group to clarify financial oversight roles and responsibilities, enhance segregation of duties, centralize accounting policies and standard operating procedures, and provide ongoing training on accounting controls and ethics.

Remediation Related to the Business Combination Material Weakness

With respect to the material weakness related to our accounting for the Barnes & Noble Education business combination, we have taken and are continuing to take the following steps:

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Enhancing the design of our controls over business combination accounting, including more detailed and documented management review of the inputs, assumptions, and methods used by third‑party specialists

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Formalizing procedures for the review and documentation of information and reports received from acquired businesses and from third‑party specialists that are used in significant estimates and judgments for business combinations

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Increasing the level of technical accounting review for complex or nonroutine transactions, including establishing more formal documentation of accounting positions and involving internal and, when appropriate, external technical accounting resources

We believe these remediation actions, once fully implemented, designed, and operational for a sufficient period of time and tested, will address the material weaknesses described above. The material weaknesses will not be considered remediated until the controls have been designed and implemented, have operated for a sufficient period of time, and management has concluded, through testing, that they are operating effectively.

Changes in Internal Control over Financial Reporting

Other than described above, there were no changes in our internal control over financial reporting during the quarter ended April 30, 2026, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Inherent Limitations of Internal Controls

Our management, including our Chief Executive Officer and Chief Financial Officer, does not expect that our disclosure controls and procedures or our internal control over financial reporting will prevent all errors and all fraud. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control deficiencies and instances of fraud, if any, within Immersion have been detected.