On November 11, 2009, Immersion Corporation ("Immersion" or the "Company") received a letter from the Nasdaq Stock Market ("Nasdaq") stating that Immersion violated Nasdaq Marketplace Rule 5250(c)(1) as a result of its delayed filing of its Quarterly Report on Form 10-Q for the period ended September 30, 2009.

Immersion has 60 calendar days, or until January 11, 2010, to submit to Nasdaq a plan to regain compliance with the Nasdaq listing rules. Immersion intends to submit a plan to regain compliance within this 60-day period. If Nasdaq accepts Immersion's plan, Immersion will have until February 8, 2010 to regain compliance. If Nasdaq does not accept Immersion's plan, Immersion will have the opportunity to appeal that decision to the Hearings Panel.

Immersion issued a press release on November 17, 2009 disclosing its receipt of this letter. A copy of the press release is attached hereto as Exhibit 99.01 and is incorporated by reference herein.

Since fiscal 2006, the Company has licensed software from a third party provider to automate the administration of its employee equity programs and calculate its stock-based compensation expense. After upgrading to a new version of the software provided by the third party in September 2009, the Company identified differences in the stock-based compensation expense of prior periods and, after reviewing such differences, identified an error in its accounting for stock-based compensation expense. Specifically, the prior version of the software incorrectly calculated stock-based compensation expense by continuing to apply a weighted average forfeiture rate to the vested portion of stock option awards until the grant's final vest date, rather than reflecting actual forfeitures as awards vested, resulting in an understatement of stock-based compensation expense in certain periods prior to the grant's final vest date. The Company's correction of the error will result in changes to the timing of stock-based compensation expense over the vesting period of the awards during the relevant periods, but does not change the total stock-based compensation expense to be recognized. As stock-based compensation expense is a non-cash item, there is no impact to net cash provided by operations in any period.

As a result of identifying the error, on November 13, 2009, the Company concluded that accounting adjustments were necessary to correct certain previously issued financial statements. Accordingly, the total cumulative additional stock-based compensation expense to be recorded is approximately $2.2 million for the fiscal years ended December 31, 2007 and 2008 and the quarter ended March 31, 2009. Specifically, the Company will record increases in stock-based compensation expense of approximately $737,000 in fiscal 2007, $1.2 million in fiscal 2008 and $180,000 in the quarter ended March 31, 2009.

As a result of identifying the error, on November 13, 2009, the Company concluded that accounting adjustments were necessary to correct certain previously issued financial statements. Accordingly, the Company will record increases in interest income of approximately $769,000 in fiscal 2007 and $128,000 in fiscal 2008 and will record a reduction in interest income of approximately $128,000 in the quarter ended March 31, 2009.

The Audit Committee of the Board of Directors of the Company, after consultation with management, concluded on November 13, 2009, that in light of the errors described above, the Company's previously issued consolidated financial statements as of and for the year ended December 31, 2007 and auditor's report thereon, and previously issued unaudited financial statements for the periods ended March 31, 2007, June 30, 2007, September 30, 2007 and December 31, 2007, should no longer be relied upon.

The decision to restate the Company's previously issued financial statements was made by the Audit Committee of the Company's Board of Directors, following consultation with and upon the recommendation of management. The Company discussed these matters with the Company's independent registered public accounting firm.

As a result of these matters, Immersion is also in the process of reassessing the effectiveness of its internal control over financial reporting.

The Company previously reported on Form 8-K that the Audit Committee of the Board of Directors of the Company, after consultation with management concluded on August 10, 2009 that its previously issued consolidated financial statements as of and for the year ended December 31, 2008 and auditor's report thereon, and previously issued unaudited financial statements as of and for the periods ended March 31, 2009, December 31, 2008, September 30, 2008, June 30, 2008 and March, 2008, should no longer be relied upon because of one or more errors in such financial statements as a result of certain findings in the ongoing previously announced investigation, undertaken by the Audit Committee, of certain revenue transactions in Immersion's Medical line of business.

Item 9.01   Financial Statements and Exhibits.

     (d)    Exhibits.

Exhibit No.   Exhibit Title

99.01         Press Release dated November 17, 2009