What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2023-11-08 compared with 2023-08-10 · 63 added, 60 removed, 388 unchanged (24% of the section changed)

3 unchanged sentences

(Dollars in thousands, except par value)

June 30, 2023

September 30, 2023

December 31, 2022

35 unchanged sentences

(Dollars in thousands, except per share amounts)

Three months ended June 30,

Six months ended June 30,

Three months ended September 30,

Nine months ended September 30,

Cost of goods sold

6 unchanged sentences

Interest expense

Other income, net

Other income (loss), net

Loss before income taxes

12 unchanged sentences

(Dollars in thousands, except per share amounts)

Six Months Ended June 30,

Nine Months Ended September 30,

Cash flows from operating activities:

5 unchanged sentences

Gain recognized on Paycheck Protection Plan Loan forgiveness

Gain (loss) on disposal of assets and sale of marketable securities

Changes in operating assets and liabilities:

29 unchanged sentences

The following is a summary of supplemental cash flow activities:

Six Months Ended June 30,

Nine Months Ended September 30,

Cash paid for income taxes

2 unchanged sentences

CLEARONE, INC.

UNAUIDTED NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

UNAUDITED NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited - Dollars in thousands, except per share amounts)

9 unchanged sentences

Certain information and footnote disclosures that are usually included in financial statements prepared in accordance with generally accepted accounting principles in the United States (“GAAP”) have been either condensed or omitted in accordance with SEC rules and regulations.

The accompanying condensed consolidated financial statements contain all adjustments, consisting of normal recurring accruals, necessary for a fair presentation of our financial position as of June 30, 2023 and December 31, 2022, the results of operations for the three and six months ended June 30, 2023 and 2022, and the cash flows for the six months ended June 30, 2023 and 2022.

The results of operations for the three and six months ended June 30, 2023 and 2022 are not necessarily indicative of the results for a full-year period.

The accompanying condensed consolidated financial statements contain all adjustments, consisting of normal recurring accruals, necessary for a fair presentation of our financial position as of September 30, 2023 and December 31, 2022 , the results of operations for the three and nine months ended September 30, 2023 and 2022 , and the cash flows for the nine months ended September 30, 2023 and 2022 .

The results of operations for the three and nine months ended September 30, 2023 and 2022 are not necessarily indicative of the results for a full-year period.

These interim unaudited condensed consolidated financial statements should be read in conjunction with the financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2022 filed with the SEC.

1 unchanged sentence

The significant accounting policies were described in Note 1 to the audited consolidated financial statements included in the Company’s annual report on Form 10-K for the year ended December 31, 2022 .

There have been no changes to these policies during the quarter ended June 30, 2023 that are of significance or potential significance to the Company.

There have been no changes to these policies during the quarter ended September 30, 2023 that are of significance or potential significance to the Company.

Recent accounting pronouncements:

11 unchanged sentences

(Dollars in thousands, except per share amounts)

As of June 30, 2023, our cash and cash equivalents were approximately $ 15,086 compared to $ 984 as of December 31, 2022.

Our working capital was $ 37,473 as of June 30, 2023.

Net cash provided by operating activities was $ 52,920 for the six months ended June 30, 2023, an increase of $ 55,612 compared to $ 2,692 of cash used in operating activities for the six months ended June 30, 2022.

The Company believes, although there can be no assurance, that the current cash position and effective management of working capital, will provide the liquidity needed to meet our operating needs through at least August 10, 2024.

As of September 30, 2023 , our cash and cash equivalents were approximately $ 13,694 compared to $ 984 as of December 31, 2022 .

Our working capital was $ 36,746 as of September 30, 2023 .

Net cash provided by operating activities was $ 51,143 for the nine months ended September 30, 2023 , an increase of $ 53,203 compared to $ 2,060 of cash used in operating activities for the nine months ended September 30, 2022 .

The Company also believes that its strong portfolio of intellectual property and its solid brand equity in the market will enable it to raise additional capital if and when needed to meet its short and long-term financing needs;

3 unchanged sentences

The following table disaggregates the Company’s revenue into primary product groups:

Three months ended June 30,

Six months ended June 30,

Three months ended September 30,

Nine months ended September 30,

Audio conferencing

1 unchanged sentence

The following table disaggregates the Company’s revenue into major regions:

Three months ended June 30,

Six months ended June 30,

Three months ended September 30,

Nine months ended September 30,

North and South America

10 unchanged sentences

The following table sets forth the computation of basic and diluted earnings (loss) per common share:

Three months ended June 30,

Six months ended June 30,

Three months ended September 30,

Nine months ended September 30,

Basic weighted average shares outstanding

12 unchanged sentences

Dividend and interest income are recognized when earned.

The amortized cost, gross unrealized holding gains, gross unrealized holding losses, and fair value for available-for-sale securities by major security type and class of securities as of June 30, 2023 were as follows:

Amortized cost

2 unchanged sentences

Estimated fair value

June 30, 2023

September 30, 2023

Available-for-sale securities:

12 unchanged sentences

(Dollars in thousands, except per share amounts)

Debt securities in an unrealized loss position as of June 30, 2023 were not deemed impaired at acquisition and subsequent declines in fair value are not deemed attributed to declines in credit quality.

Debt securities in an unrealized loss position as of September 30, 2023 were not deemed impaired at acquisition and subsequent declines in fair value are not deemed attributed to declines in credit quality.

Management believes that it is more likely than not that the securities will receive a full recovery of par value, although there can be no assurance that such recovery will occur.

8 unchanged sentences

Gross unrealized holding losses

As of June 30, 2023

As of September 30, 2023

US Treasury securities

Corporate bonds and notes

Intangible Assets

Intangible assets as of June 30, 2023 and December 31, 2022 consisted of the following:

Intangible assets as of September 30, 2023 and December 31, 2022 consisted of the following:

Estimated useful lives (years)

June 30, 2023

September 30, 2023

December 31, 2022

4 unchanged sentences

Total intangible assets, net

The amortization of intangible assets for the three and six months ended June 30, 2023 and 2022 was as follows:

Three months ended June 30,

Six months ended June 30,

The amortization of intangible assets for the three and nine months ended September 30, 2023 and 2022 was as follows:

Three months ended September 30,

Nine months ended September 30,

Amortization of intangible assets

4 unchanged sentences

(Dollars in thousands, except per share amounts)

Inventories, net of reserves, as of June 30, 2023 and December 31, 2022 consisted of the following:

June 30, 2023

Inventories, net of reserves, as of September 30, 2023 and December 31, 2022 consisted of the following:

September 30, 2023

December 31, 2022

5 unchanged sentences

We expect to sell the above inventory, net of reserves, at or above the stated cost and believe that no loss will be incurred on its sale, although there can be no assurance of the timing or amount of any sales.

Net loss incurred on valuation of inventory at lower of cost or market value and write-off of obsolete inventory for three and six months ended June 30, 2023 and 2022 was as follows:

Three months ended June 30,

Six months ended June 30,

Net loss incurred on valuation of inventory at lower of cost or market value and write-off of obsolete inventory for three and nine months ended September 30, 2023 and 2022 was as follows:

Three months ended September 30,

Nine months ended September 30,

Net loss incurred on valuation of inventory at lower of cost or market value and write-off of obsolete inventory

Rent expense is recognized on a straight-line basis over the period of the lease taking into account future rent escalation and holiday periods.

Rent expense for three and six months ended June 30, 2023 and 2022 was as follows:

Three months ended June 30,

Six months ended June 30,

Rent expense for three and nine months ended September 30, 2023 and 2022 was as follows:

Three months ended September 30,

Nine months ended September 30,

The Company occup ies a 1,350 square-foot facility in Gainesville, Florida under the terms of an operating lease expiring in F ebruary 2028 .

9 unchanged sentences

Supplemental cash flow information related to leases was as follows:

Six months ended June 30,

Nine months ended September 30,

Cash paid for amounts included in the measurement of lease liabilities

3 unchanged sentences

Supplemental balance sheet information related to leases was as follows:

June 30, 2023

September 30, 2023

December 31, 2022

5 unchanged sentences

Weighted average discount rate for operating leases

The following represents maturities of operating lease liabilities as of June 30, 2023:

The following represents maturities of operating lease liabilities as of September 30, 2023 :

Years ending December 31,

5 unchanged sentences

Shareholders' Equity

Three months ended June 30,

Six Months Ended June 30,

Three months ended September 30,

Nine Months Ended September 30,

Common stock and additional paid-in capital

26 unchanged sentences

On May 8, 2023 , the Company announced that the Company’s Board of Directors had declared a special one -time cash dividend of $ 1.00 per share of the Company’s common stock or eligible warrants and paid $ 28,978 of cash dividends on May 31, 2023 to shareholders of record on May 22, 2023 .

Nasdaq Delisting Notification

On August 1, 2023, the Company received a letter (the “Notice”) from the Listing Qualifications Department (the “Staff”) of the Nasdaq Stock Market (“Nasdaq”) informing management that because the closing bid price for the Company’s common stock listed on Nasdaq was below $ 1.00 for 30 consecutive trading days, the Company is not in compliance with the minimum bid price requirement for continued listing on the Nasdaq Capital Market, as set forth in Nasdaq Marketplace Rule 5550 (a)( 2 ) (the “Minimum Bid Price Requirement”).

In accordance with Nasdaq Marketplace Rule 5810 (c)( 3 )(A), the Company was granted a period of 180 calendar days from August 1, 2023, or until January 29, 2024, to regain compliance with the Minimum Bid Price Requirement.

The Company’s common stock has continued to trade below $ 1.00 per share.

UNAUDITED NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

31 unchanged sentences

(Dollars in thousands, except per share amounts)

June 30, 2023

September 30, 2023

December 31, 2022

9 unchanged sentences

Debt discount and issuance costs are amortized over the life of the note to interest expense using the effective interest method.

During the three and six months ended June 30, 2023 amortization of debt discount and issuance costs was $ 49 and $ 98 , respectively and for the three and six months ended June 30, 2022 amortization of debt discount and issuance costs was $ 49 and $ 98 , respectively.

The following table represents schedule of maturities of principal amount contained in the Notes as of June 30, 2023:

During the three and nine months ended September 30, 2023 amortization of debt discount and issuance costs was $ 49 and $ 147 , respectively and for the three and nine months ended September 30, 2022 amortization of debt discount and issuance costs was $ 49 and $ 147 , respectively.

The following table represents schedule of maturities of principal amount contained in the Notes as of September 30, 2023 :

Year ending December 31,

25 unchanged sentences

Share-based Compensation

As of June 30, 2023 , the Company had 245,685 options with contractual lives of ten years and 400,000 options with contractual lives of six years offered under the Company’s 2007 Equity Incentive Plan (the “2007 Plan”), which was restated and approved by the shareholders on December 12, 2015.

As of June 30, 2023 , the 2007 Plan had 813,585 authorized unissued options.

As of September 30, 2023 , the Company had 218,810 options with contractual lives of ten years and 393,229 options with contractual lives of six years offered under the Company’s 2007 Equity Incentive Plan (the “ 2007 Plan”), which was restated and approved by the shareholders on December 12, 2015.

As of September 30, 2023 , the 2007 Plan had 852,815 authorized unissued options.

The Company uses judgment in determining the fair value of the share-based payments on the date of grant using an option-pricing model with assumptions regarding a number of highly complex and subjective variables.

6 unchanged sentences

Expected dividend yield

A summary of the stock option activity under the Company’s plans for the six months ended June 30, 2023 , is as follows:

A summary of the stock option activity under the Company’s plans for the nine months ended September 30, 2023 , is as follows:

Number of shares

3 unchanged sentences

Canceled or expired

Options outstanding at June 30, 2023

Options exercisable at end of June 30, 2023

As of June 30, 2023 , the total remaining unrecognized compensation cost related to non-vested stock options, net of forfeitures, was approximately $ 221 , which will be recognized over a weighted average period of 3.67 year s .

Options outstanding at September 30, 2023

Options exercisable at end of September 30, 2023

As of September 30, 2023 , the total remaining unrecognized compensation cost related to non-vested stock options, net of forfeitures, was approximately $ 186 , which will be recognized over a weighted average period of 2.42 year s .

Share-based compensation expense has been recorded as follows:

Three months ended June 30,

Six months ended June 30,

Three months ended September 30,

Nine months ended September 30,

Cost of goods sold

6 unchanged sentences

The valuation allowance was recorded as we concluded that it was more likely than not that our deferred tax assets were not realizable primarily due to the Company's recent pre-tax losses.

Provision for income taxes for the six months ended June 30, 2023 mostly represents income tax expense recorded for jurisdictions outside the United States.

The Company had approximately $ 962 of uncertain tax positions as of June 30, 2023.

Provision for income taxes for the nine months ended September 30, 2023 mostly represents income tax expense recorded for jurisdictions outside the United States.

The Company had approximately $ 962 of uncertain tax positions as of September 30, 2023 .

Due to the inherent uncertainty of the underlying tax positions, it is not possible to forecast the payment of this liability for any particular year.

12 unchanged sentences

The Company’s financial instruments are valued using observable inputs.

The following table sets forth the fair value of the financial instruments re-measured by the Company as of June 30, 2023:

June 30, 2023

The following table sets forth the fair value of the financial instruments re-measured by the Company as of September 30, 2023:

September 30, 2023

US Treasury securities

3 unchanged sentences

Subsequent events

In accordance with Nasdaq Marketplace Rule 5810(c)(3)(A), the Company was granted a period of 180 calendar days from August 1, 2023, or until January 29, 2024, to regain compliance with the Minimum Bid Price Requirement.

The Company’s common stock has continued to trade below $ 1.00 per share, and the closing price of the Company’s common stock on August 4, 2023 was $ 0.8083 .

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements