What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2025-05-15 compared with 2024-11-14 · 310 added, 78 removed, 108 unchanged (78% of the section changed)

7 unchanged sentences

Our actual results will vary, and may vary materially, from those projected or assumed in the forward-looking statements.

infringement of our technology or assertion that our technology infringes the rights of other parties;

termination of supplier relationships, or failure of suppliers to perform;

our expectations regarding the ongoing transition of manufacturing of our products from China to Singapore by our electronics manufacturing services provider;

inability to successfully manage growth;

delays in obtaining regulatory approvals or the failure to maintain such approvals;

concentration of our revenue among a few customers, products or procedures;

development of new products and technology that could render our products obsolete;

market acceptance of new products;

introduction of products in a timely fashion;

price and product competition, availability of labor and materials, cost increases, and fluctuations in and obsolescence of inventory;

volatility of the market price of our common stock;

foreign currency fluctuations;

changes in key personnel;

work stoppage or transportation risks;

integration of business acquisitions;

Future financial condition and results of operations, as well as any forward-looking statements, are subject to inherent risks and uncertainties, many of which we cannot predict with accuracy and some of which we might not anticipate, including, without limitation, descriptions of our review of strategic alternatives and the timing and impact of any potential strategic transactions, the proposed development, manufacturing, and sale of our products;

statements that describe expectations regarding pricing trends, the markets for our products, our anticipated capital expenditures, our cost reduction and operational restructuring initiatives, and future impact of regulatory developments;

statements with regard to the nature and extent of competition we may face in the future;

statements with respect to the anticipated sources of and need for future financing;

and statements with respect to future strategic plans, goals, and objectives and forecasts of future growth and value;

and other factors referred to in our reports filed with the SEC, including our Annual Report on Form 10-K for the year ended December 31, 2024 .

All subsequent forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by these cautionary statements.

Additional factors that may have a direct bearing on our operating results are discussed in Part II, Item 1 A “Risk Factors” in this Quarterly Report on Form 10-Q for the period ended September 30, 2024 and in Part I , Item 1 A “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2023 .

Additional factors that may have a direct bearing on our operating results are discussed in Part I , Item 1 A “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2024 .

BUSINESS OVERVIEW

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On September 9, 2024, ClearOne recorded a 31% increase in unique visitors at our 2024 Infocomm India trade show booth, while the overall annual increase of all attendees at that trade show was only 17%.

Overall revenue decreased by 49 % in the third quarter of 2024 when compared to the third quarter of 2023 , primarily due to a significant decrease in revenues from the audio-conferencing category.

On January 16, 2025, we launched the BMA

360DX ceiling tile beamforming microphone array with an integrated DSP

processor that provides everything needed to combine, route, and process all

the audio signals with no compromises.

Like the other members of the BMA 360

product family, the BMA 360DX includes FiBeam(TM) technology that provides

truly ultra-wideband, frequency-invariant performance with uniform-gain

response across all frequency bands and DsBeam(TM) technology that provides

unparalleled sidelobe depth, below -40 dB, resulting in superior rejection of

reverb and noise in difficult spaces for superb clarity and intelligibility.

built-in power amplifiers, selectable as 4x15 Watt or 2x30 Watt, simplify

installations with loudspeakers.

Setting up the BMA 360DX is incredibly quick

and easy with auto-detection of additional beamforming microphone arrays and

peripherals such as USB expanders, analog audio I/Os, and HDMI audio

de-embedders.

With everything on board, its scalable design easily adapts to a

variety of meeting spaces.

The BMA 360DX won a Best of Show award in the AV

Technology category at the Integrated Systems Europe 2025 exhibition in

Barcelona, Spain.

On January 20, 2025, we announced the

launch of the Versa® 120D USB-C Docking Station with Dante®, designed to

simplify and enhance hybrid meeting experiences.

The Versa 120D is a versatile

collaboration solution combining a USB-C docking station and Dante audio

networking into a single, easy-to-use device.

This innovative solution is

specifically designed to meet the needs of Pro AV integrators and streamline BYOD

(Bring Your Own Device) workflows in a variety of meeting spaces.

It includes support

for dual 4K60 displays or a single 8K30 display, ensuring crystal-clear visuals

for presentations and video conferencing.

High-speed USB-C connectivity

delivers blazing-fast data transfer speeds of up to 40 Gbps, enabling seamless

device operation.

Simplified network integration with 10/100/1000 Base-T

auto-negotiation and Ethernet pass-through over USB-C provides reliable,

high-speed network connectivity directly to your device.

The Versa 120D

simplifies deployment and configuration with automatic discovery and native

integration with Audinate’s Dante Controller software.

It boasts broad

interoperability, seamlessly integrating with a wide range of AV systems and

Enhanced security features include support for HDCP versions 1.4, 2.2,

and 2.3 ensuring encrypted transmission of high-definition video and audio

while meeting content protection standards.

Additionally, the Versa 120D meets

TAA requirements, making it ideal for US government and educational

On January 22, 2025, we introduced the

DIALOG® AERO, a wideband UHF 2-channel encrypted digital wireless microphone

solution with over 100 MHz of RF tuning range.

The DIALOG® AERO features an

intuitive interface with a large, easy-to-read LCD display that provides

real-time information on critical settings.

Aero Console software provides

remote configuration, monitoring and management of the receiver and smart dock

via Ethernet.

DIALOG® AERO microphones offer flexible powering options.

can be powered with the included rechargeable Li-Ion AA batteries, NiMH AA

rechargeable batteries, common AA battery types, or USB-C.

Microphones and Dock

can charge Li-Ion and NiMH AA batteries and the dock also charges spare AA

batteries for added convenience.

The system features a modular expandable 2-bay

smart dock, allowing for easy expansion up to eight channels by linking

multiple docks together, simplifying installation and minimizing cabling.

Larger systems can be further expanded using optional accessories, including a

four-channel antenna distributor with ceiling mount antennas, antenna

combiners, and a joining kit for mounting two receivers in a single rack space.

The auto-scan feature finds open channels for optimal reception.

also includes detachable antennas with a 5-foot extension kit for added

flexibility in system placement and signal optimization.

DIALOG® AERO is ideal

for a wide range of applications, including town hall meetings, company

all-hands meetings, management retreats, school award ceremonies, rallies,

houses of worship, hybrid training and presentation sessions, sound

reinforcement and voice lift scenarios.

On January 24, 2025, we introduced the

UNITE 260N Pro, a professional 4K Ultra HD camera with NDI®|HX, designed to

meet the requirements of NDI® workflows.

NDI – Network Device Interface – is

used by millions of customers worldwide and has been adopted by more media

organizations than any other IP standard, creating the industry’s largest IP

ecosystem of products.

NDI allows multiple video systems to identify and

communicate with one another over IP;

it can encode, transmit, and receive many

streams of high-quality, low-latency, frame-accurate video and audio in real

The growth of NDI is backed by a growing community of installers,

developers, AV professionals, and users who are deeply engaged with the company

through community events and initiatives.

NDI-enabled UNITE 260N Pro Cameras

are instantly discoverable within a standard IP network, eliminating the need

for complex setups.

These cameras can seamlessly send or receive high-quality,

low-latency video, audio, controls, and metadata all within a single stream.

Also, UNITE 260N Pro Cameras seamlessly integrate with a vast ecosystem of

thousands of NDI-compatible hardware and software products.

On January 27, 2025, we announced the

addition of a 4-channel Access Point and a 4-bay Dock to our award-winning

DIALOG® UVHF Wireless Microphone System.

With these new additions, the Dialog

UVHF Wireless Microphone System now offers the flexibility to choose between an

Access Point with 8 or 4 Dante channels and a Charger Dock capable of charging

8 or 4 microphones.

The 4-channel Access Point and 4-bay Dock offer significant

benefits like lower cost, system flexibility and a smaller form factor for the

This translates to increased value for our customers, making our

high-quality wireless audio solutions more accessible and a better fit for

applications that require fewer microphones.

Overall revenue decreased by 36 % in the first quarter of 2025 when compared to the first quarter of 2024 , primarily due to a significant decrease in revenues from product shortages that resulted in delayed product shipments.

The revenue decline was also caused by significantly reduced demand for our products in many regions including USA, Europe and China when compared to 2024-Q1 revenues.

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Historically, we have seen a lag of several months between the time that our professional conferencing products are specified for installation and the date when those products are installed.

Since our product availability was constrained through a significant part of Q 4 2023 , we believe our revenue was impacted negatively by these market dynamics through much of Q 3 2024 .

Since our product availability was constrained through a significant part of Q4 2023, we believe our revenue was impacted negatively by these market dynamics through much of 2024.

We have also faced sales headwinds from our products’ lack of Microsoft Teams certification, despite their longtime functional compatibility with this platform.

Our work through the first nine months of 2024 has focused on mitigating these impacts through maintaining consistent dialogues, product demonstrations, and feedback cycles with end users and channel partners, along with improving our visibility at key industry events.

In Q1 2025, we were unable to maintain an uninterrupted flow of inventory from our contract manufacturers and suppliers due to insufficient cash on hand.

This issue negatively affected new products that we introduced in Q1 2025 as well as older products with consistent demand.

Our work through the first three months of 2025 has focused on mitigating these impacts through maintaining consistent dialogues, product demonstrations, and feedback cycles with end users and channel partners, along with improving our visibility at key industry events.

In addition, we saw a reduction in sales in the Middle East region, where we had previously experienced consistent sales growth, as we transitioned to a new distributor for the Middle East region.

We believe o ur revenue performance in 2024 -Q 3 compared to 2023-Q3 also was to a small extent impacted negatively due to increased costs associated with electronic raw materials that have affected the global manufacturing of high tech products.

We expect these increased costs in various degrees to continue through the remainder of 2024 and 2025 .

Our gross profit margin decreased to 24.4 % during the third quarter of 2024 from 33.1 % during the third quarter of 2023 .

Our gross profit margin decreased to 20.7 % during the first nine months of 2024 compared to 32.8 % during the first nine months of 2023 .

This is due to scrapping of inventory items and selling aged inventory at larger discounts.

Net loss increased from $( 1.4 ) million in the third quarter of 2023 to $( 2.1 ) million in the third quarter of 2024 .

The increase in net loss was mainly due to (a) decrease in revenues and decrease in gross margin from purchase price variances from increasing vendor costs and sales price discounts.

Net loss increased from $( 3.2 ) million for the first nine months of 2023 to $( 6.8 ) million for the first nine months of 2024 .

The increase was mainly due to (a) decrease in revenue by $6.1 million, (b) significant decrease in Gross margin from 32.8% to 20.7% and (c) decrease in interest income.

We believe, although there can be no assurance, that we can return to generating operating profits through our strategic initiatives namely product innovation and cost reduction.

We believe our revenue performance in 2025-Q1 compared to 2024-Q1 also was to a small extent impacted negatively due to anticipated cost increases, whether realized or unrealized, associated with the tariffs on electronic raw materials that have affected the global manufacturing of high-tech products.

We do expect to realize some of these increased costs in various degrees through the remainder of 2025.

Our gross profit margin decreased to 5.2 % during the first quarter of 2025 from 31.8 % during the first quarter of 2024 .

The reduction in gross margin is the result of revenue decreasing by a higher percentage than cost of goods sold.

The Company experienced a significant reduction in inventory levels, with a decrease of approximately $1.4 million compared to December 31, 2024.

This reduction was primarily driven by supply chain pauses from our cash flow constraints.

As a result, there was insufficient new inventory to absorb the Company’s standard overhead allocation, which is typically applied to inventory production.

This led to unabsorbed overhead costs being recognized as an expense in the period, directly impacting cost of goods sold.

The increase in unabsorbed overhead

reflects the temporary misalignment between production levels and fixed

overhead costs, which are generally allocated to inventory under our standard

costing methodology.

Management is actively evaluating strategies to optimize

inventory levels and production schedules to mitigate similar impacts in future

Net loss increased from $( 1.9 ) million in the first quarter of 2024 to $( 2.8 ) million in the first quarter of 2025 .

The increase in net loss was mainly due to the decrease in revenues and decrease in gross margin.

In November 2024, we announced that our

board of directors had formed a Special Transaction Committee (the “Special

Transaction Committee”) to conduct a comprehensive review of strategic

alternatives focused on maximizing shareholder value, including but not limited

to, equity or debt financing alternatives, merger and acquisition transactions,

divestiture of assets, licensing opportunities, joint ventures, collaborations

or other partnerships with other companies, or a spin-off of the Company’s

current business and operations to its current stockholders (each, a “Strategic

Transaction”).

We may be unable to complete a strategic transaction within a

reasonable timeframe, on attractive terms or at all, and market conditions,

including the historical volatility in our common stock will likely limit our

ability to raise capital on favorable terms, or at all, and the terms of any

public or private offerings of debt or equity securities likely would be

significantly dilutive to existing stockholders.

There is no set timetable for

the overall process given the anticipated timelines for different strategic

alternatives may vary, and there can be no assurance that this process will

result in us pursuing a transaction or that any transaction, if pursued, will

be completed on attractive terms or at all.

Given these challenges, if we are

unable to complete a strategic transaction, we may not be able to continue to

execute our business plan to be able to continue as a going concern.

We will need to complete one or more

strategic transactions or raise additional working capital to continue our

normal and planned operations.

We will need to generate and sustain significant

revenue levels in future periods in order to become profitable, and, even if we

do, we may not be able to maintain or increase our level of profitability.

addition, as a public company, we will incur accounting, legal and other

These expenditures will make it necessary for us to continue to raise

additional working capital.

Our efforts to grow our business may be costlier

than we expect, and we may not be able to generate sufficient revenue to offset

our increased operating expenses.

We may incur significant losses in the future

for a number of reasons, including unforeseen expenses, difficulties,

complications and delays and other unknown events.

Accordingly, substantial

doubt exists about our ability to continue as a going concern and we cannot

assure you that we will achieve sustainable operating profits as we continue to

expand our business and otherwise implement our growth initiatives.

The financial statements included with

this quarterly report on Form 10-Q have been prepared on a going concern basis.

may not be able to generate profitable operations in the future and/or obtain

the necessary financing to meet our obligations and pay liabilities arising

from normal business operations when they come due.

The outcome of these

matters cannot be predicted with any certainty at this time.

These factors

raise substantial doubt that we will be able to continue as a going concern.

plan to continue to provide for our capital needs through sales of our

securities and/or one or more strategic transactions, however there can be no

assurance that we will be successful in completing any such transactions on

attractive terms or at all.

Our financial statements do not include any

adjustments to the amounts and classification of assets and liabilities that

may be necessary should we be unable to continue as a going concern

Industry conditions

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We expect our strategy of making our products more interoperable with other audio-visual products, continuing to improve the quality of our high-end audio-conferencing products and microphones, and offering a wide range of innovative professional cameras will generate growth in the near future.

We derive a significant portion of our revenue (approximately 61.6% in the first nine months of 2024 ) from operations outside North and South America and expect this trend to continue in the future.

We derive a significant portion of our revenue (approximately 58.5% in the first three months of 2025 ) from operations outside North and South America and expect this trend to continue in the future.

Most of our revenue from ou tside the U.S.

4 unchanged sentences

Dollar denominated prices of our products less competitive.

Recent and proposed increases in U.S.

tariffs on imports from

China and Singapore may materially impact our operations, cost structure, and

financial performance.

As of May 2025, tariffs on Chinese goods have risen to

145%, with China imposing retaliatory tariffs of 125% on U.S.

Singapore faces a 10% baseline tariff under the U.S.

reciprocal tariff regime,

unaffected by a 90-day pause on tariffs for other countries, though potential

retaliatory measures remain a risk due to the U.S.-Singapore Free Trade

These tariffs could increase the cost of goods sourced from these

countries, disrupt supply chains, and elevate operating expenses.

a portion of our cameras and wireless products is imported from China, and

higher tariffs may lead to increased procurement costs or necessitate sourcing

from alternative markets, potentially at higher prices or with logistical

In Singapore, which serves as a key hub for the majority of our

product lines, tariff-related uncertainties may impact trade flows and regional

Additionally, retaliatory tariffs or trade restrictions from China

and Singapore could affect our ability to export goods to these markets,

potentially reducing revenue from international sales.

The broader economic

implications, including potential inflation and reduced consumer demand, may

further impact our financial condition.

Deferred Product Revenue

Deferred product revenue decreased to $ 22 thousand on September 30, 2024 compared to $ 30 thousand on December 31, 2023 .

Deferred product revenue decreased to $ 12 thousand on March 31, 2025 compared to $ 17 thousand on December 31, 2024 .

A detailed discussion of our results of operations follows below.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Results of Operations for the three and nine months ended September 30, 2024

The following table sets forth certain items from our unaudited condensed consolidated statements of operations for the three and nine months ended September 30, 2024 (“ 2024 - Q3 ”) (" 2024 - YTD ") and 2023 (" 2023 - Q3 ") (" 2023 - YTD ") , respectively, together with the percentage of total revenue which each such item represents:

Three months ended September 30,

Nine months ended September 30,

Results of Operations for the three months ended March 31, 2025

The following table sets forth certain items from our unaudited condensed consolidated statements of operations for the three months ended March 31, 2025 (“ 2025 - Q1 ”) and 2024 (" 2024 - Q1 ") , respectively, together with the percentage of total revenue which each such item represents:

Three months ended March 31,

(dollars in thousands)

Change Favorable (Adverse) in %

Cost of goods sold

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Loss before income taxes

Provision for income taxes

Provision (benefit) for income taxes

Our revenue decreased to $ 2.3 million in 2025 - Q1 compared to $ 3.6 million in 2024 - Q1 due to a 37 % decline in audio conferencing, a 54 % decline in video products, and a 29 % decrease in microphones.

Our traditional ceiling mics, personal audio-conferencing products, and video cameras suffered revenue declines due to lack of demand and the loss of the major customer.

When comparing 2024-Q 3 to 2023-Q 3 , all sales regions suffered revenue loss.

Our traditional ceiling mics, personal audio-conferencing products, and video cameras suffered revenue declines due to lack of product availability and the transition of

business from one major customer in the Middle East to another one .

When comparing 2025-Q1 to 2024-Q1, all

sales regions suffered revenue loss.

Revenues from Americas declined by 12 %, from Europe and Africa by 69 %, and from Asia Pacific (including Middle East, India and Australia) by 41 %.

Our revenues decreased to $ 8.4 million in 2024 - YTD compared to $ 14.6 million 2023 - YTD due to a 48 % decline in audio conferencing, a 30 % decline in video products, and a 39 % decrease in microphones.

Our traditional ceiling mics, personal audio-conferencing products.

and video cameras suffered revenue declines due to lack of demand.

When comparing 2024 - YTD to 2023 - YTD , all sales regions suffered revenue loss.

Revenues from Americas decline by 56 %, from Europe and Africa by 44 %, and from Asia Pacific (including Middle east, India and Australia) by 23 %.

Costs of Goods Sold and Gross Profit

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Our gross profit margin decreased from 31.8 % during 2024 - Q1 to 5.2 % during 2025 - Q1 .

The decline was due to discounting products to close sales and an increase in purchase price variances from increasing vendor costs.

Our gross profit margin decreased from 32.8 % during 2023 - YTD to 20.7 % during 2024 - YTD .

The decline was due to increased inventory scrap and write-off costs, discounting products to close sales, and an increase in purchase price variance from increasing vendor costs.

The reduction in gross margin is the result of revenue

decreasing by a higher percentage than cost of goods sold.

The Company experienced a significant

reduction in inventory levels, with a decrease of approximately $1.4 million

compared to December 31, 2024.

This reduction was primarily driven by supply chain

pauses from our cash flow constraints.

As a result, there was insufficient new

inventory to absorb the Company’s standard overhead allocation, which is

typically applied to inventory production.

This led to unabsorbed overhead

costs being recognized as an expense in the period, directly impacting cost of

The increase in unabsorbed overhead reflects the

temporary misalignment between production levels and fixed overhead costs,

which are generally allocated to inventory under our standard costing

Management is actively evaluating strategies to optimize inventory

levels and production schedules to mitigate similar impacts in future periods.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

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Total operating expenses in 2025 - Q1 were $ 3.0 million compared to $ 3.2 million in 2024 - Q1 .

Total operating expenses were $ 8.9 million for 2024 - YTD compared to $ 9.8 million for 2023 - YTD .

The following contains a more detailed discussion of expenses related to sales and marketing, research and product development, general and administrative, and other items.

Sales and Marketing - S&M expenses include selling, customer service, and marketing expenses such as employee-related costs, allocations of overhead expenses, trade shows, and other advertising and selling expenses.

S&M expenses remained consistent in 2024 - Q3 , $ 1.1 million compared to $ 1.1 million in 2023 - Q3 .

S&M expenses remained consistent in 2024 - YTD $ 3.6 million compared to $ 3.6 million in 2023 - YTD .

S&M expenses were lower in 2025 - Q1 , $ 1.1 million compared to $ 1.3 million in 2024 - Q1 , because of decreasing

commissions on fewer sales .

Research and Product Development - R&D expenses include research and development, product line management, engineering services, and test and application expenses, including employee-related costs, outside services, expensed materials, depreciation, and an allocation of overhead expenses.

R&D expenses remained consistent in 2024-Q3, $ 0.8 million compared to $0.8 million in 2023 - Q3 .

R&D expenses decreased to $ 2.5 million in 2024 - YTD compared to $ 2.8 million for 2023 - YTD.

R&D expenses were lower in 2025-Q1, $ 0.7 million compared to $ 0.9 million in 2024 - Q1 .

The reduction was primarily due to a reduction in personnel.

General and Administrative - G&A expenses include employee-related costs, professional service fees, allocations of overhead expenses, litigation costs, and corporate administrative costs, including costs related to finance and human resources teams.

G&A expenses decreased to $ 1.0 million in 2024 - Q3 compared to $ 1.1 million in 2023 - Q3 .

The reduction was primarily due to (a) decrease in insurance expenses, (b) and a reduction in amortization expense.

G&A expenses decreased to $ 2.8 million in 2024 - YTD compared to $ 3.4 million in 2023 - YTD .

The reduction was primarily due to (a) a decrease in legal expenses, (b) and a decrease in insurance expenses, (c) reduction in employee-related expenses, (d) and a reduction in amortization expense.

Interest Expense

I nterest expense was $ 0 in 2024 - Q3 compared to $ 0.1 million in 2023 - Q3 .

I nterest expense decreased to $ 0.3 million in 2024 - YTD compared to $ 0.5 million in 2023 - YTD .

The interest expense was $0.0 due to repayment of all the debts in full in 2023 .

G&A expenses increased to $ 1.2 million in 2025 - Q1 compared to $ 1.0 million in 2024 - Q1 .

The increase was primarily due to an increase in legal

and regulatory expenses related to the exploration of strategic alternatives.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

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Other income for 2025 - Q1 included $ 0.0 million of interest income received on marketable securities compared to $ 0.2 million in 2024 - Q1

Other income of 2024-Q3 includes $0.087 million of gain on disposal of inventory compared to $(0.08) million of interest expense on debt in 2023-Q3.

Provision for income taxes

During each of the nine months ended September 30, 2024 and 2023 , we did not recognize any benefit from the losses incurred due to setting up a full valuation allowance.

During each of the three months ended March 31, 2025 and 2024 , we did not recognize any benefit from the losses incurred due to setting up a full valuation allowance.

LIQUIDITY AND CAPITAL RESOURCES

As of September 30, 2024 , our cash and cash equivalents were approximately $ 1.7 million compared to $ 17.8 million as of December 31, 2023 .

Our working capital was $ 19.7 million and $ 39.1 million as of September 30, 2024 and December 31, 2023 , respectively.

Cash used in opera ting activities was approximately $ 4.6 million in the nine months ended September 30, 2024 , a decrease of approximately $ 55.7 million from $ 51.1 million of cash provided by operating activities in the nine months ended September 30, 2023 .

The decrease in cash inflow was primarily due to the difference between $55 million in receipts from legal settlements received in first half of 2023 and $ 0 received in first nine months of 2024 .

Cash provided by investing activities in the nine months ended September 30, 2024 was $ 2.9 million compared to $ 6.8 million of cash used in investing activities in the nine months ended September 30, 2023 .

The increase in cash provided by investing activities was primarily due to proceeds from sale of marketable securities of $7.9 million offset by purchases of marketable securities of $(4.7) million in the nine months ended September 30, 2024 compared to $3 million and $(9.3) million respectively for the nine months ended September 30, 2023 .

Cash used in financing activities in the nine months ended September 30, 2024 was $( 14.5 ) million compared to $( 31.7 ) million of cash being used in the nine months ended September 30, 2023 .

This was comprised primarily of dividend distributions payments made.

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 November 14, 2025 .

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;

however, there can be no assurance that, if needed, the Company will be successful in obtaining the necessary funds through equity or debt financing on favorable terms or at all.

If the Company needs additional capital and is unable to secure financing, it may be required to further reduce expenses, or delay product development and enhancement.

As of September 30, 2024 , we had open purchase orders of approximately $3.5 million, mostly for the purchase of inventory.

As of September 30, 2024 , we had inventory totaling $ 16.5 million, of which non-current inventory accounted for $ 2.2 million.

As of March 31, 2025 , our cash and cash equivalents were approximately $ 0.9 million compared to $ 1.4 million as of December 31, 2024 .

Our working capital was $ 13.5 million and $ 15.2 million as of March 31, 2025 and December 31, 2024 , respectively.

Cash used in opera ting activities was approximately $ 1.4 million in the three months ended March 31, 2025 , a decrease of approximately $ 1.8 million from $ 0.4 million of cash provided by operating activities in the three months ended March 31, 2024 .

The decrease in cash inflow was primarily due to the net loss partially offset by the reduction in

inventory purchases.

Cash used in investing activities in the three months ended March 31, 2025 was $( 0.0 ) million compared to $ 0.3 million of cash provided by investing activities in the three months ended March 31, 2024 .

The decrease in cash provided by investing activities was primarily due to no proceeds from sale of marketable securities and no offset by purchases of marketable securities in the three months ended March 31, 2025 compared to $2.3 million and $(1.9) million respectively for the three months ended March 31, 2024 .

Cash provided by financing activities in the three months ended March 31, 2025 was $ 1.0 million compared to $ 0.0 million of cash provided by financing activities in the three months ended March 31, 2024 .

The 2025 amount was comprised primarily of a stock sale.

These and other conditions raise substantial doubt

about continuing as a going concern.

We will need to complete one or more

strategic transactions or raise additional working capital to continue our

normal and planned operations.

We will need to generate and sustain significant

revenue levels in future periods to become profitable, and, even if we do, we

may not be able to maintain or increase our level of profitability.

addition, as a public company, we will incur accounting, legal and other expenses.

These expenditures will make it necessary for us to continue to raise

additional working capital.

Our efforts to grow our business may be costlier

than we expect, and we may not be able to generate sufficient revenue to offset

our increased operating expenses.

We may incur significant losses in the future

for a number of reasons, including unforeseen expenses, difficulties,

complications and delays and other unknown events.

Accordingly, substantial

doubt exists about our ability to continue as a going concern and we cannot

assure you that we will achieve sustainable operating profits as we continue to

expand our business and otherwise implement our growth initiatives.

2025, the Company raised $1,000 in a private placement transaction.

be unable to complete a strategic transaction within a reasonable timeframe, on

attractive terms or at all, and market conditions, including the historical

volatility in our common stock will likely limit our ability to raise capital

on favorable terms, or at all, and the terms of any public or private offerings

of debt or equity securities likely would be significantly dilutive to existing

stockholders.

There is no set timetable for the overall process given the

anticipated timelines for different strategic alternatives may vary,

and there can be no assurance that this process will result in us pursuing a

transaction or that any transaction, if pursued, will be completed on

attractive terms or at all.

The Company’s ability to continue as a going

concern is dependent on the outcome of these uncertainties.

As a result, management has concluded that substantial

doubt exists about the Company’s ability to continue as a going concern for 12

months from the date these consolidated financial statements are issued.

consolidated financial statements as of March 31, 2025 have been prepared under

the assumption that the Company will continue as a going concern for the next

12 months after these financial statements are issued, and that contemplates

the realization of assets and satisfaction of liabilities and commitments in

the normal course of business.

These Consolidated financial statements do not

include any adjustments that might result from the outcome of this uncertainty.

As of March 31, 2025 , we had open purchase orders of approximately $4.2 million, mostly for the purchase of inventory.

As of March 31, 2025 , we had inventory totaling $ 14.8 million, of which non-current inventory accounted for $ 4.9 million.

This compares to total inventories of $ 16.1 million, which includes non-current inventory of $ 4.9 million as of December 31, 2024 .

1 unchanged sentence

Contractual Obligations and Commitments

The following table summarizes our contractual obligations as of September 30, 2024 (in millions):

The following table summarizes our contractual obligations as of March 31, 2025 (in millions):

Payment Due by Period

14 unchanged sentences

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 2. Management’s Discussion and Analysis