What changed in this filing

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Item 1. Financial Statements

2025-11-14 compared with 2025-08-14 · 262 added, 228 removed, 301 unchanged (62% of the section changed)

3 unchanged sentences

(Dollars in thousands, except par value)

June 30, 2025

September 30, 2025

December 31, 2024

2 unchanged sentences

Restricted cash

Receivables, net of allowance of $ 267 and $ 405

Inventories, net

Income tax receivable

Prepaid expenses and other assets

Assets held for sale

Current assets related to discontinued operations

Total current assets

Long-term inventories, net

Property and equipment, net

Operating lease - right of use assets, net

Intangibles, net

Long term assets related to discontinued operations

LIABILITIES AND SHAREHOLDERS' EQUITY

2 unchanged sentences

Accrued liabilities

Short-term note payable

Deferred product revenue

Current operating lease liability

Current liabilities related

to discontinued operations

Total current liabilities

Operating lease liability, net of current

Other long-term liabilities

Long term operating lease liability

Long-term liabilities related to discontinued operations

Total liabilities

Temporary equity

Class A redeemable preferred stock, $ 0.001 par value, 2,069,065 shares issued and outstanding, redeemable 100 % upon completion of asset sale (Note 3 )

Shareholders' equity:

Class B convertible preferred stock, par value $ 0.001 , 5,100 shares authorized, 3,026 and 0 shares issued and outstanding, respectively

Common stock, par value $ 0.001 , 150,000,000 shares authorized, 1,734,250 and 1,599,534 shares issued and outstanding, respectively

3 unchanged sentences

Total shareholders' equity

Total liabilities and shareholders' equity

Total liabilities, temporary equity and shareholders' equity

See accompanying notes

3 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

8 unchanged sentences

Other income, net

Loss before income taxes

Loss from continuing operations before income taxes

Provision for income taxes

Loss from continuing operations

Loss from discontinued operations, net of tax

Basic weighted average shares outstanding

1 unchanged sentence

Basic loss per share

From continuing operations

From discontinued operations

Diluted loss per share

From continuing operations

From discontinued operations

Comprehensive loss:

6 unchanged sentences

(Dollars in thousands, except per share amounts)

Six months ended June 30,

Nine months ended September 30,

Cash flows from operating activities:

Adjustments to reconcile net loss to net cash used in operating activities:

Depreciation and amortization expense

Net loss from discontinued operations

Amortization of right-of-use assets

Share-based compensation expense

Provision for doubtful accounts, net

Change of inventory to net realizable value

Non-cash interest expense

Gain on sale of capitalized assets

Gain on sale of marketable securities

Changes in operating assets and liabilities:

Prepaid expenses and other assets

Accounts payable

Accrued liabilities

Income taxes receivable

Deferred product revenue

Operating lease liabilities

Net cash used in operating activities

Net cash used in operating activities, continuing operations

Cash used in operating activities, discontinued operations

Cash flows from investing activities:

1 unchanged sentence

Purchase of intangibles

Proceeds from maturities and sales of marketable securities

Proceeds from sale of capitalized assets

Proceeds from maturities and sales of marketable securities

Purchases of marketable securities

Net cash provided by (used in) investing activities

Net cash provided by (used in) investing activities, continuing operations

Cash provided by (used in) investing activities, discontinued operations

Cash flows from financing activities:

1 unchanged sentence

Proceeds from issuance of convertible note

Purchases of outstanding warrants

Net proceeds from equity-based compensation programs

Dividend Payment

Net cash provided by (used in) financing activities

Net cash provided by (used in) financing activities, continuing operations

Cash provided by (used in) financing activities, discontinued operations

Cash used in discontinued operations

Effect of exchange rate changes on cash and cash equivalents

Net increase (decrease) in cash and cash equivalents

Net decrease in cash and cash equivalents

Cash and cash equivalents at the beginning of the period

4 unchanged sentences

(Dollars in thousands, except per share amounts)

The following is a summary of supplemental cash flow activities:

Six months ended June 30,

The following is a summary of supplemental cash flow information:

Nine months ended September 30,

Cash paid for income taxes

Cash paid for interest

Interest paid as non-cash dividend

Conversion of debt to Series B Preferred stock

Issuance of Class A redeemable preferred stock – temporary equity

See accompanying notes

4 unchanged sentences

Business Description:

ClearOne, Inc., together with its subsidiaries (collectively, “ClearOne” or the “Company”), is a global market leader enabling conferencing, collaboration, and AV streaming solutions for voice and visual communications.

The performance and simplicity of our advanced, comprehensive solutions offer unprecedented levels of functionality, reliability and scalability.

ClearOne, Inc., together with its subsidiaries (collectively, “ClearOne” or the “Company”), was a global market competitor providing conferencing, collaboration, and AV streaming solutions supporting voice and visual communications.

The performance and simplicity of its advanced, comprehensive solutions offered functionality, reliability, and scalability to enterprise and professional customers.

See discussion of going concern and discontinued operations below.

Going Concern:

As of June 30, 2025 , our cash and cash equivalents were approximately $ 2.8 million compared to $ 1.4 million as of December 31, 2024.

Our working capital was $ 9.4 million as of June 30, 2025 .

Net cash used in operating activities was ($ 2.6 ) million for the six months ended June 30, 2025 , compared to ($ 2.7 ) million of cash used in operating activities for the six months ended June 30, 2024 .

The consistency in the usage of cash is primarily due to a decrease in sales and ongoing operational challenges.

These and other conditions raise substantial doubt about our ability to continue

as a going concern.

We will need to complete one or more strategic transactions , including the pursuit of an Asset Sale

(defined as the sale of all or substantially all of our current assets and

operations), generate additional revenue through inventory sales,

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.

In 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 several 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 operate our business and otherwise implement our growth initiatives.

In February 2025, the Company raised $ 1.0 million in a private placement transaction.

On June 20, 2025, the Company entered into a Note Purchase Agreement with First Finance Ltd., pursuant to which First Finance Ltd.

purchased $ 3.0 million aggregate principal amount of convertible notes, providing restricted proceeds intended for working capital, potential warrant repurchases, and operational needs as we pursue the Asset Sale.

In connection with this financing, we are required to use reasonable best efforts to complete the Asset Sale within 180 days of issuing Class A Redeemable Preferred Stock as a dividend to common stockholders (which occurred July 18, 2025 - see Note13), with net proceeds from any Asset Sale to be distributed pro rata to holders of such preferred stock.

Additionally, on June 20, 2025, we implemented a reduction in force affecting a significant portion of our workforce to scale operations and reduce expenses in alignment with the Asset Sale pursuit, which may result in short-term severance and related costs estimated at approximately $ 1.9 million and are expected to be incurred primarily in the third quarter of 2025.

On June 24, 2025, we regained compliance with Nasdaq's minimum bid price requirement following our 1-for-15 reverse stock split .

We may be unable to complete the Asset Sale or other strategic transactions 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, including successful inventory sales, additional investments, or the completion of long-term asset sales.

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.

The consolidated financial statements as of June 30, 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.

The accompanying unaudited condensed consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business for the twelve months following the date these financial statements are issued.

The Company has incurred net losses and used cash in operating activities for the periods presented, and as of September 30, 2025 had limited cash resources and ongoing obligations associated with public-company compliance, legacy product warranty support, and restructuring activities (see Note 2 — Discontinued Operations and Assets Held for Sale).

In September 2025, the Company’s Board of Directors approved a plan (the “Strategic Plan”) to seek the sale of a significant portion of the Company’s operating assets related to its product business, reduce the Company’s continuing operations to warranty and product support, and position the Company as a reverse merger vehicle for a possible strategic transaction (a “Strategic Transaction”).

Accordingly, as of September 30, 2025, the Company has classified a significant portion of its assets as held for sale, measured at the lower of carrying amount or fair value less costs to sell.

After quarter-end, on October 24, 2025, the Company closed the sale of certain inventory and intellectual property (the “Asset Disposition”) to Biamp Systems, LLC (“Biamp”) for cash consideration (see Subsequent Events).

Pursuant to the terms of the Class A Redeemable Preferred Stock issued in July 2025, net proceeds from a qualifying asset sale are payable to Class A holders upon redemption (see Note 3 — Class A Redeemable Preferred (Temporary Equity)).

As a result, the net proceeds of the Asset Disposition to Biamp are not expected to be available to fund ongoing operations other than for permitted transaction costs.

These conditions, including (i) historical operating losses and negative operating cash flows, (ii) limited liquidity at September 30, 2025, (iii) the requirement to redeem Class A from asset-sale net proceeds, and (iv) the Company’s go-forward profile consisting primarily of warranty support, public-company compliance, and restructuring activities, raise substantial doubt about the Company’s ability to continue as a going concern within one year after the issuance of these financial statements.

Management is (a) executing a restructuring in furtherance of the Asset Disposition to Biamp and a possible Strategic Transaction, including monetization of residual assets not included in the sale (e.g., fixed assets, leaseholds) and collection of accounts receivable and prepaids;

(b) maintaining a lean corporate infrastructure to satisfy reporting and governance requirements;

(d) managing and, where feasible, terminating or assigning facility leases to reduce ongoing cash burn;

(e) completing the Class A redemption in accordance with its terms;

and (f) evaluating additional financing or strategic alternatives as necessary to satisfy obligations as they come due.

There can be no assurance these plans will be successful, timely, or sufficient to alleviate the conditions raising substantial doubt.

Accordingly, management has concluded that substantial doubt exists about the Company’s ability to continue as a going concern for the twelve-month period following the issuance of these unaudited condensed consolidated financial statements.

The financial statements do not include any adjustments to the carrying amounts and classification of assets and liabilities that might result if the Company were unable to continue as a going concern.

Basis of Presentation:

4 unchanged sentences

(Dollars in thousands, except per share amounts)

In connection with the Strategic Plan to sell certain significant assets of the Company described above, management determined that the disposal group of assets met the held-for-sale criteria in ASC 360-10-45-9 and, accordingly, classified the group as assets held for sale and measured it at the lower of carrying amount or fair value less costs to sell (“FVLCTS,” also referred to as fair value less cost of disposal, “FVLCOD”).

Because the planned disposal represents a strategic shift that will have a major effect on the Company’s operations and financial results, the related operating results are presented as discontinued operations in accordance with ASC 205-20.

Prior-period amounts in the unaudited condensed consolidated statements of operations and cash flows have been recast to conform to this presentation.

Amortization of long-lived assets included in the disposal group ceased upon classification as held for sale, and any loss recognized to measure the group to FVLCTS is included within loss from discontinued operations.

See Note 2 — Discontinued Operations and Assets Held for Sale for additional information.

These accompanying interim unaudited condensed consolidated financial statements have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) and are not audited.

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, 2025 and December 31, 2024 , the results of operations for the three and six months ended June 30, 2025 and 2024 , and the cash flows for the six months ended June 30, 2025 and 2024 .

The results of operations for the three and six months ended June 30, 2025 and 2024 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, 2025 and December 31, 2024 , the results of operations for the three and nine months ended September 30, 2025 and 2024 , and the cash flows for the nine months ended September 30, 2025 and 2024 .

The results of operations for the three and nine months ended September 30, 2025 and 2024 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, 2024 filed with the SEC.

29 unchanged sentences

total amounts shown on the statement of cash flows, in accordance with ASU

Restricted cash as of June 30, 2025, consists of $ 1,678 in remaining

Restricted cash as of September 30, 2025 , consists of $ 663 in remaining

proceeds from a $ 3,000 convertible note issued to First Finance Ltd.

8 unchanged sentences

upon meeting specified milestones, with penalties for non-compliance.

the quarter ended June 30, 2025, $ 1,322 was disbursed for severances, deal

the quarter ended September 30, 2025 , $ 1,322 was disbursed for severances, deal

fees, legal fees, and compliance fees, resulting in the ending restricted cash

Full disbursement of the remaining restricted cash is expected by

November 2025 as additional milestones are achieved.

December 2025 as additional milestones are achieved.

Restricted cash is

6 unchanged sentences

available for general corporate purposes.

UNAUDITED NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share amounts)

Product warranties

The Company provides assurance-type warranties on previously sold products and records a liability for the estimated cost to repair or replace products under warranty at the time of sale in accordance with ASC 460.

The liability is based on historical claim experience, the nature of the underlying products, current information on repair costs and expected failure rates.

The Company reviews warranty estimates each period and records adjustments to the liability when facts and circumstances indicate changes in expected claims or costs.

Significant Accounting Policies:

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, 2024 .

There have been no changes to these policies during the quarter ended June 30, 2025 that are of significance or potential significance to the Company.

There have been no changes to these policies during the quarter ended September 30, 2025 that are of significance or potential significance to the Company, other than presentation of discontinued operations as described above and in Note 2.

Recent accounting pronouncements:

5 unchanged sentences

The adoption of this ASU did not change the way the Company evaluates its reportable segments and, as a result, did not have a material impact on the Company’s segment-related disclosures.

UNAUDITED NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share amounts)

ASU 2023 - 09 , Income Taxes (Topic 740 ):

29 unchanged sentences

(Dollars in thousands, except per share amounts)

Revenue Information

Discontinued Operations and Assets Held for Sale

As discussed above in Note 1 - Business Description, Basis of Presentation and Significant Accounting Policies – Going Concern, in September 2025 the Board of Directors approved a Strategic Plan to sell various operating assets related to its product business, including inventory and certain intellectual property (developed technology, trademarks and related intangibles).

Management determined the criteria in ASC 360-10-45- 9 were met as of September 30, 2025 (probable sale within one year, assets available for immediate sale in present condition, active program to locate buyer and complete plan).

Accordingly, the disposal group was classified as held for sale and measured at FVLCTS.

At September 30, 2025 , the disposal group of asset ’s carrying amount was $ 13,641 , consisting primarily of inventory of $ 12,856 and intangible assets of $ 785 .

Based on an executed asset purchase agreement subsequently closed on October 24, 2025, for cash consideration of $ 3,000 and estimated transaction costs of $ 100 , management recorded an impairment of $ 10,741 to reduce the disposal group of assets to FVLCTS at September 30, 2025 .

The impairment is presented in “Loss from discontinued operations” in the unaudited condensed consolidated statements of operations.

Because the disposal represents a strategic shift that will have a significant effect on the Company’s operations and financial results, the related operating results are presented as discontinued operations for all periods presented in the accompanying unaudited condensed consolidated financial statements (ASC 205 - 20 ).

Carrying amounts classified as held for sale (unaudited):

Assets held for sale — $ 2,900 at September 30, 2025 (comprised primarily of inventory $ 12,856 and intangibles $ 785 , less impairment to FVLCTS of $ 10,741 and transaction costs of $ 100 ).

Liabilities held for sale — $ 0 at September 30, 2025 (no obligations transferred).

Major line items of results of discontinued operations (unaudited):

Revenue — $ 1,262 and $ 5,491 for the three and nine months ended September 30, 2025 , respectively;

$ 2,504 and $ 8,430 for the comparable 2024 periods.

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

3 unchanged sentences

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

Cost of goods sold — $ 2,148 and $ 6,435 for the three and nine months ended September 30, 2025 , respectively;

$ 1,865 and $ 6,607 for the comparable 2024 periods.

Gross profit / (loss) — ($ 886 ) and ($ 944 ) for the three and nine months ended September 30, 2025 , respectively;

$ 639 and $ 1,823 for the comparable 2024 periods.

Operating expenses directly attributable — $ 1,238 and $ 6,179 for the three and nine months ended September 30, 2025 , respectively;

$ 1,985 and $ 6,517 for the comparable 2024 periods.

Impairment on held for sale — $ 10,741 (Q 3 2025 only).

(Loss) income before income taxes — ($ 12,865 ) and ($ 17,864 ) for the three and nine months ended September 30, 2025 , respectively;

($ 1,346 ) and ($ 4,694 ) for the comparable 2024 periods.

(Loss) income from discontinued operations, net of tax — ($ 12,865 ) and ($ 17,864 ) for the three and nine months ended September 30, 2025 , respectively;

($ 1,346 ) and ($ 4,694 ) for the comparable 2024 periods.

Assets grouped into discontinued operations (unaudited):

Accounts receivable, net - $ 865 and $ 2,218 for the periods ended September 30, 2025 and December 31, 2024 , respectively.

Inventories short and long term and intangible assets - $ 0 and $ 14,391 for the periods ended September 30, 2025 and December 31, 2024 , respectively.

Prepaids and other current assets - $ 3,678 and $ 3,894 for the periods ended September 30, 2025 and December 31, 2024 , respectively.

Property, plant and equipment, net - $ 259 and $ 500 for the periods ended September 30, 2025 and December 31, 2024 , respectively.

Other long-term assets - $ 69 and $ 82 for the periods ended September 30, 2025 and December 31, 2024 , respectively.

Liabilities grouped into discontinued operations (unaudited):

Accounts payable - $ 2,778 and $ 1,728 for the periods ended September 30, 2025 and December 31, 2024 , respectively.

Accrued liabilities, current - $ 444 and $ 1,107 for the periods ended September 30, 2025 and December 31, 2024 , respectively.

Deferred revenue - $ 12 and $ 17 for the periods ended September 30, 2025 and December 31, 2024 , respectively.

Other long-term liabilities - $ 1,155 and $ 1,154 for the periods ended September 30, 2025 and December 31, 2024 , respectively.

Management concluded the disposal constitutes a component and a strategic shift since it eliminates significant revenue-generating activities.

The Company will continue to provide product support and warranty services as it pursues a Strategic Transaction in the fourth quarter of 2025 .

Capital Structure:

Class A Redeemable Preferred Stock (Temporary Equity)

On July 18, 2025, following Board authorization on June 20, 2025, filing of the Certificate of Designation on June 24, 2025, and Nasdaq Corporate Data Operations approval on July 11, 2025 (the record date), the Company issued 2,069,065 shares of its Class A Redeemable Preferred Stock as a one -time special stock dividend ( one Class A share for each common share and common stock equivalent outstanding as of the record date);

2,069,066 shares are authorized and 2,069,065 were issued and outstanding as of September 30, 2025.

Under the Certificate of Designation, the Class A shares are mandatorily redeemable upon an Asset Sale for 100 % of the net proceeds as defined therein;

accordingly, the Class A is presented in temporary equity (mezzanine) in accordance with ASC 480 -10-S 99 .

As of September 30, 2025 , the Company recorded the fair value of the Series A preferred stock as its expected redemption amount (based on anticipated proceeds of a qualifying asset sale after payment of other liabilities).

The Class A is a participating security only in the liquidation of sale proceeds and does not receive dividends other than redemption;

therefore it is excluded from diluted EPS as anti-dilutive for the periods presented.

As of September 30, 2025 , the Asset Sale was probable and estimable at $ 3.0 million, and the Company recorded $ 756 as Preferred stock Class A redeemable preferred stock in temporary equity and a reduction to retained earnings.

The ultimate redemption amount will equal the actual net proceeds received .

See Note 2 — Discontinued Operations and Assets Held for Sale and Note 16 for additional information regarding the asset sale and redemption mechanics .

Temporary equity — Class A Redeemable Preferred

(dollars in thousands, shares in whole amounts)

Beginning balance, July 1, 2025

Issuance via special stock dividend, par value (7/18/2025)

Record temporary equity at fair value

Ending balance, September 30, 2025

UNAUDITED NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

Debt and Equity:

Conversion of Convertible Note

On July 21, 2025, the Company’s $ 3.0 million convertible note issued on June 20, 2025 to First Finance Ltd.

(together with $ 26 of accrued interest) automatically converted into 3,026 shares of Class B Convertible Preferred Stock pursuant to its original terms.

The conversion ratio of 166.44474 common shares per Class B share was determined at issuance based on the Nasdaq closing price and 5 -day average closing prices on June 19, 2025 (the trading day immediately preceding execution of the note and purchase agreement) and is fixed (subject only to customary anti-dilution).

Because the conversion option is indexed to, and will be settled in, the Company’s own equity, it qualifies for the ASC 815 - 40 “own-equity” scope exception;

accordingly, no derivative liability was recorded and the full conversion amount was recognized in equity, with no gain or loss recognized on conversion.

The Company has 5,100 Class B shares authorized and 3,026 issued and outstanding as of September 30, 2025 .

This conversion represents a non-cash financing activity and is disclosed in the supplemental cash flow information.

Class B Convertible Preferred Stock is convertible into common stock in accordance with its Certificate of Designation filed as Exhibit 3.2 to the Company’s Current Report on Form 8-K as filed with the SEC on June 25, 2025

Warrants Repurchased (and Related Party)

During September 2025, the Company repurchased and cancelled outstanding warrants from (i) Intracoastal Capital, LLC ( 6,039 underlying shares) on September 2, 2025 for an aggregate purchase price of $ 4 , (ii) Lind Global Fund II, LP ( 24,155 underlying shares) on September 10, 2025 for $ 15 , (iii) Edward Dallin Bagley (related party;

18,940 underlying shares) on September 17, 2025 for $ 12 , and (iv) Edward Bryan Bagley ( 3,788 underlying shares) on September 16, 2025 for $ 2 .

The repurchased warrants were cancelled upon settlement and accounted for as equity transactions with no effect on the statement of operations.

As of September 30, 2025 , warrants to purchase an aggregate of 218,887 shares of common stock remained outstanding.

The Company did not issue new warrants during the quarter.

The repurchase price and other terms of the warrants repurchase from Edward Dallin Bagley were approved by the Board of Directors in accordance with the Company’s policy regarding related person transactions.

No amounts were outstanding with Mr.

Bagley related to these warrants as of September 30, 2025 .

Revenue Information

The Company recognized no revenue from continuing operations for the three and nine months ended September 30, 2025 and the comparable 2024 periods.

Revenue formerly reported by product group and region is presented within discontinued operations (see Note 2).

Loss per share

Loss per common share is computed based on the weighted-average number of common shares outstanding and, when appropriate, dilutive potential common stock outstanding during the period.

Stock options, warrants and the convertible portion of senior convertible notes are considered to be potential common stock.

The computation of diluted loss per share does not assume exercise or conversion of securities that would have an anti-dilutive effect.

Basic loss per common share is the amount of net loss for the period available to each weighted-average share of common stock outstanding during the reporting period.

Diluted loss per common share is the amount of loss for the period available to each weighted-average share of common stock outstanding during the reporting period and to each share of potential common stock outstanding during the period, unless inclusion of potential common stock would have an anti-dilutive effect.

Basic net loss per share is computed by dividing net loss attributable to common stockholders by the weighted-average number of common shares outstanding during the period.

Diluted net loss per share includes the effect of potentially dilutive common shares (e.g., convertible securities, warrants, options) using the if-converted and treasury stock methods, as applicable.

Because the Company reported a net loss for all periods presented, all potential common shares were anti-dilutive and therefore excluded from the computation of diluted loss per share.

Accordingly, diluted loss per share equals basic loss per share for all periods.

All share and per-share amounts have been retroactively adjusted to reflect the Company’s reverse stock split (see Note 1 ).

UNAUDITED NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

As discussed in Note 2 — Discontinued Operations and Assets Held for Sale, the Company presents basic and diluted loss per share separately for continuing operations, discontinued operations, and total, for each period presented.

The Company issued Class A Redeemable Preferred Stock via a special stock dividend in July 2025 (see Note 3 ).

Class A is redeemable for net proceeds of a qualifying asset sale and does not participate in current-period earnings or losses other than its redemption preference.

Management concluded that Class A is not a participating security for purposes of the two -class method for the periods presented;

therefore, no allocation of earnings (loss) was made to Class A in computing loss per share.

Anti-dilutive securities (excluded from diluted loss per share).

Class B Convertible Preferred Stock (if-converted) — 503,661 common share equivalents.

Common stock warrants — 281,887 common share equivalents.

Stock options — 36,152 common share equivalents

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

Three months ended June 30,

Six months ended June 30,

Three months ended September 30,

Nine months ended September 30,

Loss from continuing operations

Loss from discontinued operations

Basic weighted average shares outstanding

1 unchanged sentence

Diluted weighted average shares outstanding

Basic loss per common share

Diluted loss per common share

Weighted average options and warrants outstanding

Anti-dilutive options and warrants not included in the computation

Intangible Assets

Intangible assets as of June 30, 2025 and December 31, 2024 consisted of the following:

Estimated useful lives (years)

June 30, 2025

December 31, 2024

Patents and technological know-how

Proprietary software

Total intangible assets

Accumulated amortization

Total intangible assets, net

The amortization of intangible assets for three and six months ended June 30, 2025 and 2024 was as follows:

Three months ended June 30,

Six months ended June 30,

Amortization of intangible assets

Basic loss per share

From continuing operations

From discontinued operations

Diluted loss per share

From continuing operations

From discontinued operations

Weighted average options, warrants and convertibles outstanding

Anti-dilutive options, warrants and convertibles not included in the computation

UNAUDITED NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share amounts)

The estimated future amortization expense of intangible assets is as follows:

Years ending December 31,

2025 (Remainder)

Inventories, net of reserves, as of June 30, 2025 and December 31, 2024 consisted of the following:

June 30, 2025

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

Intangible Assets

As of September 30, 2025 , inventories and certain intangible assets were classified as assets held for sale and are therefore excluded from continuing operations disclosures.

As of September 30, 2025 , significant inventories were classified as assets held for sale and are therefore excluded from continuing operations disclosures.

Some inventories were retained to service warranty liabilities.

Inventories, net of reserves, as of September 30, 2025 and December 31, 2024 consisted of the following:

September 30, 2025

December 31, 2024

Raw materials

Finished goods

Raw materials

Finished goods

Long-term inventory represents inventory held in excess of our current (next 12 months) requirements based on our recent sales and forecasted level of sales.

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 net realizable value and write-off of obsolete inventory for three and six months ended June 30, 2025 and 2024 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 net realizable value and write-off of obsolete inventory for three and nine months ended September 30, 2025 and 2024 was as follows:

Three months ended September 30,

Nine months ended September 30,

Net loss (recovery) incurred on valuation of inventory at lower of cost or net realizable 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, 2025 and 2024 was as follows:

Three months ended June 30,

Six months ended June 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 .

The Gainesville facility is used primarily to support the Company's research and development activities.

The Company occupies a 9,402 square-foot facility in Salt Lake City, Utah under the terms of an operating lease expiring in February 2028.

The facility supports the Company's principal administrative, sales, marketing, customer support, and research and product development activities.

Rent expense for three and nine months ended September 30, 2025 and 2024 was as follows:

Three months ended September 30,

Nine months ended September 30,

The Company leases a 1,350 -square-foot facility in Gainesville, Florida under an operating lease that expires in F ebruary 2028 .

The facility has been used primarily for research and development.

The Company is seeking a third party to assume the remaining lease term.

The Company leases a 9,402 square-foot facility in Salt Lake City, Utah under the terms of an operating lease expiring in February 2028.

The facility supported the Company's principal administrative, sales, marketing, customer support, and research and product development activities.

The Company is seeking a third party to assume the remaining lease term.

UNAUDITED NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share amounts)

We occupy a 6,175 square-foot facility in Chennai, India under the terms of an operating lease expiring in September 2025.

This facility supports our administrative, marketing, customer support, and research and product development activities.

We occupied a 40,000 square-foot warehouse in Salt Lake City, Utah under the terms of an operating lease expiring in April 2025, which served as our primary inventory fulfillment center.

This lease was cancelled on January 31, 2025.

We entered into a new lease on December 1, 2024 to occupy a 2,590 square-foot warehouse in Salt Lake City Utah.

We entered into a lease on December 1, 2024 to occupy a 2,590 square-foot warehouse in Salt Lake City Utah.

The lease is an operating lease expiring in February 2028.

1 unchanged sentence

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, 2025

September 30, 2025

December 31, 2024

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Weighted average discount rate for operating leases

The following represents maturities of operating lease liabilities as of June 30, 2025 :

The following represents maturities of operating lease liabilities as of September 30, 2025 :

Years ending December 31,

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purchased $ 3,000,000 aggregate principal amount of convertible notes in a private placement exempt from registration under Section 4 (a)( 2 ) of the Securities Act of 1933 , as amended.

The convertible notes accrue interest at 10 % per annum and are mandatorily convertible into shares of newly designated Class B Convertible Preferred Stock upon the issuance of Class A Redeemable Preferred Stock as a dividend to common stockholders (which occurred July 18, 2025 –

The convertible notes accrued interest at 10 % per annum and were mandatorily convertible into shares of newly designated Class B Convertible Preferred Stock upon the issuance of Class A Redeemable Preferred Stock as a dividend to common stockholders (which occurred July 18, 2025 –

see Note 13).

The Class B Convertible Preferred Stock is further convertible into common stock at a conversion price of the lower of:

(i) the closing price (as reflected on Nasdaq.com);

or (ii) the average closing price of the Common Stock (as reflected on Nasdaq.com) for the five trading days immediately preceding June 20, 2025 (subject to adjustment for stock splits, dividends, and similar events).

The Class B Convertible Preferred Stock is further convertible into common stock at an initial conversion ratio of 166.44474 shares of common stock for each share of Class B Convertible Preferred Stock (subject to adjustment for stock splits, dividends, and similar events).

First Finance Ltd.

is also granted an option to purchase up to an additional $ 2,000,000 of Class B Convertible Preferred Stock.

was granted an option to purchase up to an additional $ 2,000,000 of Class B Convertible Preferred Stock.

The proceeds from the convertible notes are restricted to a specified disbursement schedule.

In accordance with the note provisions, interest expense was computed for the days the note was in place during the end of June.

This interest was added to the loan balance as of June 30, 2025 in the amount of $ 8 , resulting in a total note payable balance of $ 3,008 being reported on the balance sheet

On July 21, 2025, the Company’s convertible note (June 20, 2025) issued to First Finance Ltd.

(together with accrued interest) automatically converted into 3,026 shares of Class B Convertible Preferred Stock pursuant to the original terms.

For additional details, refer to the Company's Current Report on Form 8-K filed with the SEC on June 25, 2025, including the Certificates of Designation attached as Exhibits 3.1 and 3.2 , the Note Purchase Agreement attached as Exhibit 10.1 , and the Convertible Note attached as Exhibit 10.2 thereto.

2 unchanged sentences

Maturity Date

June 30, 2025

September 30, 2025

December 31, 2024

8 unchanged sentences

Shareholders' Equity

Three months ended June 30,

Six months ended June 30,

Common stock and additional paid-in capital

Three months ended September 30,

Nine months ended September 30,

Temporary equity

Balance, beginning of period

Dividends declared

Issue temporary equity Class A redeemable preferred stock

Balance, end of period

Preferred stock, common stock and additional paid-in capital

Balance, beginning of period

Conversion of debt to Class B convertible preferred stock (non-cash)

Dividends Paid

Repurchase of warrants

Issuance of common stock, net

9 unchanged sentences

Balance, beginning of period

Net loss – discontinued operations

Net loss – continuing operations

Adjustment to retained earnings related to temporary equity accretion

Balance, end of period

7 unchanged sentences

(Dollars in thousands, except per share amounts)

Amendments to Certificate of Incorporation and

Reverse Stock Split

At the special meeting of stockholders held on May 30,

2025, stockholders approved amendments to the Certificate of Incorporation to:

Amendments to Certificate of Incorporation and Reverse Stock Split

At the special meeting of stockholders held on May 30, 2025, stockholders approved amendments to the Certificate of Incorporation to:

(i) increase the authorized number of shares of common stock from 50,000,000 to 150,000,000 ;

150,000,000 ;

(ii) authorize 50,000,000 shares of "blank check"

preferred stock;

(iii) effect a reverse stock split at a ratio between 1-for-10

and 1-for-15, with the exact ratio to be determined by the Board of Directors ;

and (iv) eliminate the prohibition on stockholder action by written consent and

to allow such actions.

Following stockholder approval, on June 4, 2025, the

Company filed a Certificate of Amendment to its Certificate of Incorporation to

effect these changes, including the selection of a 1-for-15 reverse stock split

ratio , which became effective at 5:00 p.m.

(ii) authorize 50,000,000 shares of "blank check" preferred stock;

(iii) effect a reverse stock split at a ratio between 1-for-10 and 1-for-15, with the exact ratio to be determined by the Board of Directors ;

and (iv) eliminate the prohibition on stockholder action by written consent and to allow such actions.

Following stockholder approval, on June 4, 2025, the Company filed a Certificate of Amendment to its Certificate of Incorporation to effect these changes, including the selection of a 1-for-15 reverse stock split ratio , which became effective at 5 :

Eastern Time on June 9, 2025.

common stock began trading on a split-adjusted basis on the Nasdaq Capital

Market on June 10, 2025, under the symbol "CLRO" and a new CUSIP

number of 18506U203.

The reverse stock split was primarily intended to increase

the per share market price of the common stock in order to regain compliance

with the minimum bid price requirement for continued listing on the Nasdaq

Capital Market.

As a result of the reverse stock split, every 15 shares of issued

and outstanding common stock were automatically combined into one share, with

no fractional shares issued (any fractional interests were converted to one

whole share).

The reverse stock split did not change the par value of the

common stock but reduced the number of issued and outstanding shares from

approximately 26.0 million to approximately 1.7 million, with proportional

adjustments to outstanding stock options, warrants, and shares reserved under

equity incentive plans.

All share and per-share amounts in these condensed

consolidated financial statements and related notes have been retroactively

adjusted to reflect the reverse stock split for all periods presented.

For additional details, including the Certificate of Amendment, refer to the Company's Current Report on Form

8-K filed with the SEC on June 2, 2025, including the press release attached as

Exhibit 99.1 and the Certificate of Amendment attached as Exhibit 3.1 thereto.

The common stock began trading on a split-adjusted basis on the Nasdaq Capital Market on June 10, 2025, under the symbol "CLRO" and a new CUSIP number of 18506 U 203 .

The reverse stock split was primarily intended to increase the per share market price of the common stock in order to regain compliance with the minimum bid price requirement for continued listing on the Nasdaq Capital Market.

As a result of the reverse stock split, every 15 shares of issued and outstanding common stock were automatically combined into one share, with no fractional shares issued (any fractional interests were converted to one whole share).

The reverse stock split did not change the par value of the common stock but reduced the number of issued and outstanding shares from approximately 26.0 million to approximately 1.7 million, with proportional adjustments to outstanding stock options, warrants, and shares reserved under equity incentive plans.

All share and per-share amounts in these condensed consolidated financial statements and related notes have been retroactively adjusted to reflect the reverse stock split for all periods presented.

For additional details, including the Certificate of Amendment, refer to the Company's Current Report on Form 8-K filed with the SEC on June 2, 2025, including the press release attached as Exhibit 99.1 and the Certificate of Amendment attached as Exhibit 3.1 thereto.

Preferred Stock Designations and Related Matters

In connection with the transaction mentioned in Note 7,

on June 24, 2025, the Company filed Certificates of Designation with the State

of Delaware authorizing up to 2,069,066 shares of Class A Redeemable Preferred

Stock and 5,100 shares of Class B Convertible Preferred Stock.

Redeemable Preferred Stock, which ranks senior to common stock and is

redeemable upon an Asset Sale (defined as the sale of all or substantially all

of the Company's current assets and operations, which the Company is required

to pursue using reasonable best efforts within 180 days of issuance), was issued on July 18, 2025 as a dividend to holders of common stock and common stock equivalents of record as of July 11, 2025.

Net proceeds from any Asset Sale will be

distributed pro rata to holders of Class A Redeemable Preferred Stock.

Class B Convertible Preferred Stock ranks senior to common stock and other

equity (except Class A Redeemable Preferred Stock), with specific rights

including dividends, voting (on an as-converted basis), and liquidation

Additionally, effective June 20, 2025, the Board of

Directors was expanded from four to five members, with Eric Boehnke and

Youngsun Park (a/k/a Sunny Park), nominees of First Finance Ltd., appointed as

directors to serve until the next annual meeting or until their successors are

elected and qualified.

Neither appointee has any material arrangements or

family relationships with the Company requiring disclosure under Item 404(a) of

Regulation S-K, and they will receive standard director compensation.

For additional details, refer to the Company's Current

Report on Form 8-K filed with the SEC on June 25, 2025, including the

Certificates of Designation attached as Exhibits 3.1 and 3.2, the Note Purchase

Agreement attached as Exhibit 10.1, and the Convertible Note attached as

Exhibit 10.2 thereto.

On June 24, 2025, the Company filed Certificates of Designation with the State of Delaware authorizing up to 2,069,066 shares of Class A Redeemable Preferred Stock and 5,100 shares of Class B Convertible Preferred Stock.

The Class A Redeemable Preferred Stock, which ranks senior to common stock and is redeemable upon an Asset Sale (defined as the sale of all or substantially all of the Company's current assets and operations, which the Company is required to pursue using reasonable best efforts within 180 days of issuance), was issued on July 18, 2025 as a dividend to holders of common stock and common stock equivalents of record as of July 11, 2025.

Net proceeds from any Asset Sale will be distributed pro rata to holders of Class A Redeemable Preferred Stock.

The Class B Convertible Preferred Stock ranks senior to common stock and other equity (except Class A Redeemable Preferred Stock), with specific rights including dividends, voting (on an as-converted basis), and liquidation preferences.

Additionally, effective June 20, 2025, the Board of Directors was expanded from four to five members, with Eric Boehnke and Youngsun Park (a/k/a Sunny Park), nominees of First Finance Ltd., appointed as directors to serve until the next annual meeting or until their successors are elected and qualified.

Neither appointee has any material arrangements or family relationships with the Company requiring disclosure under Item 404 (a) of Regulation S-K, and they will receive standard director compensation.

UNAUDITED NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

4 unchanged sentences

The Company uses the Black-Scholes option pricing model to determine the fair value of share-based payments granted under the guidelines of ASC Topic 718 .

A summary of the stock option activity under the Company’s plans for the six months ended June 30, 2025 , is as follows:

A summary of the stock option activity under the Company’s plans for the nine months ended September 30, 2025 , is as follows:

Number of shares

3 unchanged sentences

Canceled or expired

Options outstanding at June 30, 2025

Options exercisable at end of June 30, 2025

As of June 30, 2025 , the total remaining unrecognized compensation cost related to non-vested stock options, net of forfeitures, was approximately $ 66 , which will be recognized over a weighted average period of 1.23 years.

Options outstanding at September 30, 2025

Options exercisable at end of September 30, 2025

As of September 30, 2025 , the total remaining unrecognized compensation cost related to non-vested stock options, net of forfeitures, was approximately $ 44 , which will be recognized over a weighted average period of 1.22 years.

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 full domestic valuation allowance was recorded as management concluded that it is more likely than not that these deferred tax assets are not realizable due to the Company's recent pre-tax losses and other sources of negative evidence.

Provision for income taxes for the six months ended June 30, 2025 mostly represents income tax expense (benefit) recorded for jurisdictions outside the United States.

The Company had approximately $ 969 of uncertain tax positions as of June 30, 2025 .

Provision for income taxes for the nine months ended September 30, 2025 mostly represents income tax expense (benefit) recorded for jurisdictions outside the United States.

The Company had approximately $ 969 of uncertain tax positions as of September 30, 2025 .

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, therefore, it is reflected in other long-term liabilities.

6 unchanged sentences

Because the Company operates as one operating segment, financial segment information, including expense and asset information, can be found in the consolidated financial statements.

Restructuring and Other Charges

On June 20, 2025, the Company implemented a reduction in force affecting

a significant portion of its workforce as part of operational scaling in

connection with the pursuit of the Asset Sale, while continuing sales,

inventory management, customer support, and public reporting obligations.

result in severance and related costs estimated at approximately $ 1.9 million

and are expected to be incurred primarily in the third quarter of 2025.

UNAUDITED NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share amounts)

Subsequent Events

On June 30, 2025, the Company filed a Current Report on Form 8-K announcing that its Board of Directors had declared a one -time special stock dividend on the Company's issued and outstanding shares of common stock, par value $ 0.001 per share, and any common stock equivalents with dividend rights (the “Special Stock Dividend”).

The Special Stock Dividend consisted of one share of the Company's Class A Redeemable Preferred Stock, par value $ 0.001 per share, for every issued and outstanding share of common stock and common stock equivalent.

The record date for the Special Stock Dividend was July 11, 2025, and the dividend was paid on July 18, 2025, to stockholders of record as of the record date.

This Special Stock Dividend is part of the Company's ongoing strategic process to pursue an Asset Sale (defined as the sale of all or substantially all of the Company's current assets and operations), with the Class A Redeemable Preferred Stock to be redeemed for 100 % of the net proceeds from any such Asset Sale upon its completion.

No additional dividends are authorized or contemplated at this time, and future dividends remain at the discretion of the Board of Directors.

For additional details, refer to the Company's Current Report on Form 8-K filed with the SEC on June 30, 2025, including the press release attached as Exhibit 99.1 thereto.

Following the issuance of the Special Stock Dividend, on July 21, 2025, the aggregate $ 3,025 outstanding principal amount and accrued interest under the convertible note issued to First Finance Ltd.

on June 20, 2025 automatically converted into 3,026 shares of Class B preferred stock pursuant to the terms and conditions of the Note Purchase Agreement described under Note 7 – Convertible Notes Payable.

On October 24, 2025, the Company completed the sale of a significant portion of its intellectual property and certain inventories to Biamp Systems, LLC for $ 3,000 .

There were no escrows or holdbacks.

Company estimates $ 100 of transaction costs.

The Company will continue to provide product support and warranty services while it pursues a Strategic Transaction in the fourth quarter of 2025 as further described in Note 1.

Any difference between the carrying amount at September 30, 2025 and the final closing amounts will be recognized in the fourth quarter of 2025.

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