What changed in this filing

/stocks — the workspaceLOADING

Item 9A. Controls and Procedures

2026-03-31 compared with 2025-03-28 · 493 added, 365 removed, 762 unchanged (53% of the section changed)

19 unchanged sentences

OTHER INFORMATION

(a) On March 27, 2025, ClearOne, Inc., a Delaware corporation (the “Company”), entered into engagement letter dated as of March 20, 2025 (the “Engagement Letter”) with RBW Capital Partners LLC (“RBW”) and Dawson James Securities, Inc.

(“Dawson James,” and together with RBW, the “Advisor”) to assist the Company with capital raising efforts and the sale of the Company by way of a negotiated merger or consolidation, including a reverse merger, the negotiated sale of all or substantially all of the Company’s assets, the sale, via negotiated tender offer, of the Company’s issued and outstanding shares of stock, or a spin-off of the Company’s current business and operations to its current stockholders (each, a “Strategic Transaction”).

The engagement of the Advisor is part of a comprehensive review of strategic alternatives being conducted by the Company’s Board of Directors (the “Board”) 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.

The Board has formed a special transaction committee of the Board (the “Special Transaction Committee”) consisting of independent and disinterested directors and delegated all power and authority of the Board to the Special Transaction Committee to oversee the Company’s evaluation of strategic alternatives.

There is no set timetable for this process and there can be no assurance that this process will result in the Company pursuing a Strategic Transaction or that any transaction, if pursued, will be completed on attractive terms or at all.

The Company does not expect to disclose developments with respect to this process unless and until the evaluation of strategic alternatives has been completed or the Company has concluded that disclosure is appropriate or legally required.

Pursuant to the terms and conditions of the Company’s Engagement Letter with the Advisor, the Advisor will act as the Company’s exclusive placement agent and financial advisor for a term of six months to assist the Company with capital raising efforts and identifying potential acquisition or merger partners for the Company and negotiating and consummating a Strategic Transaction with one or more such parties.

As consideration for the financial advisory services to be provided by the Advisor to the Company, the Company will pay the Advisor the following fees pursuant to the Engagement Letter:

A success fee payable equal to five percent (5%) of the transaction value of any completed Strategic Transaction with any parties not previously known to the Company prior to the engagement of the Advisor;

In connection with any sale of debt or equity securities contemplated by the Engagement Letter, a cash success fee of eight percent (8%) of the amount of capital raised;

Reimbursement of Advisor’s out-of-pockets fees and expenses up to $150,000.

The Engagement Letter also includes a tail fee provision that requires the Company to pay the foregoing fees to the Advisor with respect to any Strategic Transaction completed within twelve (12) months following the term of the Engagement Letter with a party introduced to the Company by the Advisor.

The Company also has agreed to a customary lock-up provision that prohibits the Company and its affiliates, officers, and directors will not, directly or indirectly, offer, sell, contract to sell, grant any option to purchase, or otherwise dispose of any shares of the Company’s securities until 90 days after the completion of any Strategic Transaction, including any sale of Company securities.

The foregoing summary of the material terms of the Engagement Letter is qualified entirely by reference to Engagement Letter, a copy of which is filed as Exhibit 10.11 to this Annual Report on Form 10-K and incorporated herein by reference.

The foregoing disclosure of the Engagement Letter is set forth in Item 9B of this Form 10-K in lieu of a separate Form 8-K disclosing the Engagement Letter under Items 1.01 and 9.01 of Form 8-K.

DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS.

Not Applicable.

(a) Not applicable.

(b) Not applicable.

DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

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Chairman, and Director *

Youngsun “Sunny” Park

Chief Financial Officer

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Graham is our Chief Executive Officer.

He was appointed as Interim CEO in May 2022 and was confirmed as the permanent CEO in January 2023.

He was appointed as Interim CEO in May 2022 and was confirmed as permanent CEO in January 2023.

He joined our company in July 2003 as Lead Engineer for Conferencing Cameras.

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Graham earned a Bachelor of Science in Electrical Engineering, with highest honors, and a Master’s Degree in Electrical Engineering from the Georgia Institute of Technology.

L Robinson has served as a director of our company since July 2015 and was named Chairman of the Board in February 2022.

L Robinson has served as a director of since July 2015 and Chairman since February 2022.

Robinson spent fourteen years in private practice as a corporate attorney, including eleven years as a partner in the Salt Lake City, Utah law firm of Blackburn & Stoll, LC.

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Dallin Bagley.

Hendricks has served as a director of our Company since June 2003.

Hendricks is a Certified Public Accountant who retired in December 2002 after serving as Vice President of Finance and General Manager of Daily Foods, Inc., a national meat processing company.

During his 30 -year career in accounting, he served as a self-employed CPA and worked for the international accounting firm Peat Marwick & Mitchell.

Hendricks has served on the boards of eight other organizations, including Tunex International, Habitat for Humanity, Daily Foods, Skin Care International, and the National Advisory Board of the Huntsman College of Business at Utah State University.

He earned a Bachelor's Degree in Accounting from Utah State University and a Master of Business Administration Degree from the University of Utah.

Higley was appointed a director of our Company effective July 20, 2020.

Higley was appointed a director effective July 20, 2020.

Higley has been self-employed as a CPA since June 2009.

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Bagley beneficially owns 5.3 % of our issued and outstanding common stock.

Bruce Whaley was appointed a director of our Company effective April 16, 2019.

Bruce Whaley was appointed a director effective April 16, 2019.

Whaley has extensive experience as a stockbroker for nearly five decades.

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He did not graduate with a degree.

Simon Brewer was appointed as Chief Financial Officer of ClearOne Inc.

Eric Boehnke was appointed to the Board on June 20, 2025.

Boehnke is the principal of Big Sky Management Ltd., a corporate finance advisory firm he founded in 1999.

Over his 25-year career, Mr.

Boehnke has served as an officer and director of multiple public companies listed on the Toronto Stock Exchange, Canadian Securities Exchange, and NASDAQ.

He has extensive experience in corporate finance, including debt and equity financings, initial public offerings, and mergers and acquisitions, having raised more than $500 million in capital across various business sectors.

Boehnke holds a B.Sc.

from the University of Toronto.

Youngsun “Sunny” Park was appointed to the Board on June 20, 2025.

Park is a seasoned attorney with over two decades of experience in estate planning, tax law, civil litigation, and legal strategy, supplemented by extensive public policy and governance experience.

She served as Mayor of Buena Park, California (the first Asian American Pacific Islander woman to hold the position) and as a City Council Member from 2018 to 2022.

She currently serves as a housing attorney at Community Legal Aid SoCal, handling civil litigation, federal housing policy, and property-related disputes.

Previously, she was Of Counsel at Asher Law Group in Century City, California, advising high-net-worth individuals and business owners on estate planning, succession strategies, and asset protection from 2007 to 2023.

Park also held appointments to the California Board of Accountancy (2017–2018), the Orange County Fire Authority (2021–2022), and the Southern California Association of Governments (2021–2022).

She holds an LL.M.

in Taxation from New York University School of Law, a J.D.

from Golden Gate University, and a B.A.

from Yonsei University.

Simon Brewer was appointed Chief Financial Officer of ClearOne Inc.

in April 2024, bringing over 25 years of experience in finance, operations, and leadership across technology, manufacturing, e-commerce, biotech, and non-profit sectors.

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Officers, directors, and greater than 10 % shareholders are required to furnish us with copies of all Section 16 (a) reports they file.

Based solely on a review of the reports furnished to us for the year ended December 31, 2024 , we believe that each person who, at any time during such fiscal year was a director, officer, or beneficial owner of more than 10 % of our common stock complied with all Section 16 (a) filing requirements during such period.

Based solely on a review of the reports furnished to us for the year ended December 31, 2025 , we believe that each person who, at any time during such fiscal year was a director, officer, or beneficial owner of more than 10 % of our common stock complied with all Section 16 (a) filing requirements during such period, except for the following forms:

Youngsun “Sunny” Park

First Finance LTD.

Andrew Hromyk

Code of Ethics

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These blackout periods begin 15 days prior to the end of each fiscal quarter and ends at the opening of trading on the first business day after the public dissemination of Company's financial results for that quarter for a full trading day.

In addition, the Insider Trading Policy requires senior officers and key employees to obtain pre-approval of any transactions in Company securities from the Company's Compliance Officer under the Insider Trading Policy, which currently is the Interim Chief Financial Officer.

Nomination Procedures

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Audit and Compliance Committee

The Company has a separate Audit and Compliance Committee and its members are Eric L.

Robinson (Chairman), Larry R.

Hendricks and Bruce Whaley.

The Board of Directors has determined that Eric L.

Robinson is an “audit committee financial expert” and each member is independe nt in accordance with applicable rules and regulations of NASDAQ and the SEC.

The Company has a separate Audit and Compliance

Committee and its members are Eric L.

Robinson (Chairman) and Bruce Whaley.

Board has determined that Eric L.

Robinson is an “audit committee financial

expert” and each member is independent in accordance with applicable rules and

regulations of Nasdaq and the SEC.

EXECUTIVE COMPENSATION

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Bonuses reflect achievement of specific performance metrics approved by the Compensation Committee.

Executive Separations and Rehirings (Subsequent

On December 31, 2025 , the Company terminated the employment of Derek Graham (Chief Executive Officer).

Graham received severance of $57,500 (three months base salary), which was accrued at December 31, 2025.

Graham was rehired effective January 2, 2026 under a new employment agreement.

A retention bonus was granted to Mr.

Graham, contingent upon finishing projects on an agreed upon timeframe.

On December 31, 2025 the Company terminated the employment of Simon Brewer (Chief Financial Officer).

Brewer received no material severance.

Brewer was rehired effective January 1, 2026 under a new employment agreement.

Brewer received a $75,000 sign-on bonus paid on January 9, 2026.

A retention bonus was granted to Mr.

Brewer, contingent upon the closing of a future transaction of the Company.

OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END

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One -third of the shares underlying each stock option vest on the first anniversary of the grant date and the remaining shares vest equally over a period of 24 months following the first anniversary of the grant date.

All of the shares underlying each stock option vest on the first anniversary of the grant date or upon a change of control;

whichever occurs first.

OPTION EXERCISES AND STOCK VESTED

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Other Compensation

Youngsun Park

All directors are reimbursed by the Company for their out-of-pocket travel and related expenses, if any, incurred in attending all Board of Directors and committee meetings.

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Shares that could be acquired within 60 days

Percent ( 2 )

Name of Beneficial Owner ( 1 )

Directors and Executive Officers:

Youngsun Park

Total (Directors and Officers)

5 % Shareholders:

First Finance Ltd.

Except as otherwise indicated, each person named in the table has sole voting and investment power, subject to applicable community property law.

Except as otherwise indicated, each person may be reached at our corporate offices c/o ClearOne, Inc., 5225 Wiley Post Way, Suite 500 , Salt Lake City, Utah 84116 .

Except as otherwise indicated, each person may be reached at our corporate offices c/o ClearOne, Inc., 5225 Wiley Post Way, Suite 500, Salt Lake City, UT 84116.

The percentages shown in Column (B) are calculated based on shares of common stock outstanding on March 31, 2026 .

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Higley do not include 437 shares owned by her spouse and 150,175 shares held by a trust in which she is a co-trustee.

Bagley may be deemed to own an additional 355,257 shares of common stock that Carolyn Bagley owns individually.

Beneficial ownership information for First Finance Ltd.

based on a Schedule 13D/A filed by First Finance Ltd.

On November 26, 2025 and a Schedule 13D/A filed on March 6, 2026.

According to the Schedule 13D Amendments, First Finance Ltd.

exercises sole investment and dispositive power with respect to all shares.

By virtue of his pecuniary interest in First Finance Ltd., Andrew Hromyk may be deemed to beneficially own all of the shares beneficially owned by First Finance Ltd.

resulting from Mr.

Hromyk’s pecuniary interest in First Finance Ltd.

as its controlling shareholder and director.

The principal business address of First Finance Ltd.

Hromyk is 520 Newport Center Drive, Suite 650, Newport Beach CA, 92660..

Bagley may be deemed to own an additional 23,684 shares of Common Stock that his spouse Carolyn Bagley owns individually.

Bagley, however, disclaims beneficial ownership of these shares that may be indirectly beneficially owned by Mr.

Bagley and they are excluded from the amounts reported in the table above.

Bagley has sole voting and dispositive power over 13,314,156 shares (including the shares that may be acquired pursuant to exercise of options to purchase 38,333 shares of common stock, and warrants to purchase 685,295 shares of common stock).

This information is based upon a Form 4 as filed by Mr.

Bagley with the SEC on February 28, 2025 and a Schedule 13D Amendment filed by Mr.

Bagley with the SEC on February 28, 2025.

Bryan Bagley, who resigned as Director effective November 6, 2012, is the son of Edward D.

Bagley, and each of them has previously disclaimed beneficial ownership of common stock beneficially owned by the other.

Bagley has sole voting and dispositive power over 142,669 shares (including the shares that may be acquired pursuant to exercise of options to purchase 2,001 shares of Common Stock).

This information is based upon a Schedule 13D Amendment filed by Mr.

Bagley with the SEC on November 26, 2025.

Lisa Higley, who was appointed a Director effective July 20, 2020, is the daughter of Edward D.

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Related Party Transactions

Consulting Agreement with Edward D.

On June 3, 2015, the Company entered into a Consulting Agreement with Edward D.

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During 2025, he did not receive any grant of stock options.

This consulting agreement was terminated in November 2025.

Subsequent to year-end, on March 11, 2026, the Company closed a private placement with First Finance Ltd.

(its largest stockholder) for aggregate gross proceeds of $1.75 million through the issuance of 437,500 shares of common stock at $4.00 per share and a warrant to purchase up to 437,500 additional shares at $5.00 per share.

Of the proceeds, $500,000 became immediately available, with the remaining $1.25 million available upon completion of the Company’s reincorporation from Delaware to Nevada.

This financing provides an additional source of short-term liquidity.

Director Independence

Our Board of Directors has determined, after considering all the relevant facts and circumstances, that Larry Hendricks, Eric Robinson and Bruce Whaley are independent directors, in accordance with the definition of “independence” under the listing standards of NASDAQ, because they have no relationship with us that would interfere with their exercise of independent judgment.

Our Board of Directors has determined, after considering all the relevant facts and circumstances, that Eric Robinson, Bruce Whaley

and Youngsun “Sunny” Park

are independent directors, in accordance with the definition of “independence” under the listing standards of NASDAQ, because they have no relationship with us that would interfere with their exercise of independent judgment.

PRINCIPAL ACCOUNTING FEES AND SERVICES

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Certificate of Incorporation of ClearOne, Inc.

Certificate of Amendment to Certificate of Incorporation dated June 2, 2025.

Certificate of Amendment to Certificate of Incorporation dated June 20, 2025.

Certificate of Designation for Class A Redeemable Preferred Stock

Certificate of Designation for Class B Convertible Preferred Stock

Amendment No.

Description of Securities Registered Pursuant to Section 12 of the Securities Exchange Act of 1934

1997 Employee Stock Purchase Plan

1998 Stock Option Plan

2007 Equity Incentive Plan

Form of Warrant

ClearOne, Inc.

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Employee Stock Purchase Plan

Form of Registration Rights Agreement

Registration Rights Agreement.

Confidential Settlement and License Agreement.

1 unchanged sentence

and Sennheiser electronic GmbH & C0.

Engagement Letter dated March 20, 2025 by and between ClearOne, Inc .

, RBW Capital Partners LLC and Dawson James Securities, Inc.

Securities Purchase Agreement

Registration Rights Agreement

Code of Ethics, approved by the Board of Directors on August 23, 2006

1 unchanged sentence

Statement of Policy Regarding Compliance with Insider Trading Laws

Subsidiaries of the registrant

Consent of Tanner LLC, Independent Registered Public Accounting Firm

Consent of Tanner LLP, Independent Registered Public Accounting Firm

Section 302 Certification of Chief Executive Officer

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Section 906 Certification of Chief Financial Officer

Executive Compensation Clawback Policy

XBRL Instance Document

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The cover page from this Annual Report on Form 10-K formatted in Inline XBRL

* Certain confidential portions of this exhibit have been excluded from this exhibit in accordance with Rule 24b-2 because such information is (1) not material, and (2) the Company customarily and actually treats that information as private or confidential.

* Certain confidential portions of this exhibit have been excluded from this exhibit in accordance with Rule 24b-2

because such information is (1) not material, and (2) the Company customarily and actually treats that information as private or confidential.

† Filed herewith

+ Schedules and exhibits have been omitted pursuant to Item 601(a)(5) Regulation S-K.

The Company hereby undertakes to furnish supplemental copies of any of the omitted schedules and exhibits upon request by the SEC.

‡ Information furnished herewith shall not be deemed to be “filed” for the purposes of Section 18 of the 1934 Act

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March 31, 2026

/s/ Eric Boehnke

Director and Chairman of the Board

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March 31, 2026

/s/ Youngsun “Sunny” Park

Youngsun “Sunny” Park

March 31, 2026

CLEARONE, INC.

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We have audited the accompanying consolidated balance sheets of ClearOne, Inc.

and subsidiaries (collectively, the Company) as of December 31, 2024 and 2023 , and the related consolidated statements of operations and comprehensive loss, shareholders’ equity, and cash flows for each of the years in the two-year period ended December 31, 2024 , and the related notes (collectively referred to as the consolidated financial statements).

In our opinion, the consolidated financial statements present fairly, in all material aspects, the financial position of the Company as of December 31, 2024 and 2023 , and the results of its operations and its cash flows for each of the years in the two-year period ended December 31, 2024 , in conformity with accounting principles generally accepted in the United States of America.

and subsidiaries (the “Company” ) as of December 31, 2025 and 2024 , and the related consolidated statements of operations and comprehensive loss, shareholders’ equity, and cash flows for each of the years in the two-year period ended December 31, 2025 , and the related notes (collectively referred to as the

“ consolidated financial statements ” ).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2025 and 2024 , and the results of its operations and its cash flows for each of the years in the two-year period ended December 31, 2025 , in conformity with accounting principles generally accepted in the United States of America.

Substantial Doubt about the Company’s Ability to

Continue as a Going Concern

The accompanying financial

statements have been prepared assuming that the Company will continue as a

going concern.

As discussed in Note 1 to the financial statements, the Company

incurred a net loss from operations and had negative cash flows from

operations, which raise substantial doubt about its ability to continue as a

going concern.

Management's plans in regard to these matters are also described

The financial statements do not include any adjustments that might

result from the outcome of this uncertainty.

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern.

As discussed in Note 1 to the consolidated financial statements, the Company’s present financial situation raises substantial doubt about its ability to continue as a going concern.

Management's plans in regard to these matters are described in Note 1.

The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Basis for Opinion

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We believe that our audits provide a reasonable basis for our opinion.

Emphasis of Matter – Discontinued Operations

As discussed in Note 2 to the consolidated financial statements, the Company completed the sale of substantially all of its operating intellectual property, product inventory, and related production assets in October 2025.

The results of operations related to the disposed assets have been reported as discontinued operations for all periods presented.

Our opinion is not modified with respect to this matter.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that:

(1) relate to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinions on the critical audit matter or on the account or disclosure to which it relates.

Assessment of lower of cost or net realizable value of inventories

As described in Notes 1 and 4 to the consolidated financial statements, inventories totaling $ 16.1 million as of December 31, 2024 are stated at the lower of cost or market.

The Company performs analyses to identify and estimate the net realizable value of excess or slow-moving inventories based on forecasted future product demand.

We identified the valuation of slow-moving inventory as a critical audit matter because of the significant balance of inventory held by the Company and because forecasting future product demand involves significant judgement by management.

This required a high degree of auditor judgement, subjectivity and effort in performing procedures and evaluating audit evidence to evaluate management’s assumptions related to estimating the reserve of obsolete and slow-moving inventory.

Addressing this critical audit matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the financial statements.

These procedures included, among others:

(1) evaluating management’s process for estimating obsolete and slow moving inventory levels, (2) comparing historical sales trends and inventory consumption reports for selected products to quantities on hand in order to evaluate potential excess or obsolete inventory, (3) evaluating and discussing forecasts and expectations with management as well as assumptions regarding alternative uses, and (4) evaluating the reasonableness of management’s assumptions.

/s/ TANNER LLC

Salt Lake City, Utah

Critical audit matters are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.

We determined that there were no critical audit matters.

/s/ TANNER LLP

March 31, 2026

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Cash and cash equivalents

Marketable securities

License receivable

Receivables, net of allowance for credit losses of $ 405 and $ 326

Restricted cash

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 marketable securities

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

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Accrued liabilities

Deferred product revenue

Current operating lease liability

Current liabilities related to discontinued operations

Total current liabilities

Op erat ing lease liability, net of current

Other long-term liabilities

Long-term liabilities related to discontinued operations

Total liabilities

Shareholders’ equity:

Common stock, par val ue $ 0.001 , 50,000,000 shares authorized, 23,992,995 and 23,958,194 shares i ssued and outstanding , respectively

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

Common stock, par value $ 0.001 , 150,000,000 shares authorized, 2,237,912 and 1,599,534 shares issued and outstanding, respectively

Additional paid-in capital

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Year ended December 31,

Continuing operations

Cost of goods sold

Operating expenses:

Sales and marketing

Research and product development

General and administrative

Legal expense

Professional fees

Total operating expenses

Operating loss

Interest income (expense)

Interest income (expense), net

Other income, net

Loss before income taxes

Loss from continuing

operations before income taxes

Provision for income taxes

Loss from continuing

Loss from discontinued

operations, net of tax

Basic loss per common share

Diluted loss per common share

From continuing operations

From discontinued

Diluted loss per common

From continuing operations

From discontinued

Basic weighted average shares outstanding

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Dividends paid

Issuance of common stock for cash

Issuance of common stock

for convertible note

Issuance of common stock for interest

Repurchase and cancellation of warrants

Share-based compensation expense

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Cash flows from operating activities:

Adjustments to reconcile net loss to net cash provided by (used in) operating activities:

Depreciation and amortization expense

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

Amortization of right of use of assets

Share-based compensation expense

Provision for doubtful accounts, net

Change of inventory to net realizable value

Non-cash interest expense

Loss on disposal of assets

Patent license proceeds

Changes in operating assets and liabilities:

Legal settlement receivable

Prepaid expenses and other assets

Accounts payable

Accrued liabilities

Income taxes receivable

Deferred product revenue

Operating lease liabilities

Other long-term liabilities

Net cash provided by (used in) operating activities

Net cash used in operating activities

Cash flows from investing activities:

Purchase of marketable securities

Purchase of property and equipment

Purchase of intangibles

Proceeds from maturities and sales of marketable securities

Net cash provided by (used in) investing activities

Purchases of marketable

Net cash provided by investing activities

Cash flows from financing activities:

Dividend payment

Principal payments of long-term debt

Proceeds from sale of stock

Proceeds from issuance of convertible note

Purchases of outstanding warrants

Proceeds from equity-based compensation programs

Net cash used in financing activities

Effect of exchange rate changes on cash and cash equivalents

Net decrease in cash and cash equivalents

Cash and cash equivalents at the beginning of the year

Cash and cash equivalents at the end of the year

Net cash provided by (used) in financing activities

Cash flows from discontinued operations

Net cash provided by

operating activities

Net cash provided by investing

Net cash provided by financing

Net cash provided by

discontinued operations

Effect of exchange rate changes on cash and cash equivalents and restricted cash

Net decrease in cash and cash equivalents and restricted cash

Cash and cash equivalents and restricted cash at the beginning of the year

Cash and cash equivalents and restricted cash at the end of the year

CLEARONE, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

The following is a summary of supplemental cash

flow information:

Year ended December 31,

1 unchanged sentence

Cash paid for income taxes

Cash paid for interest

Interest paid as non-cash dividend

Conversion of debt to Series B Preferred stock

See accompanying notes

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(Dollars in thousands, except share and per share amounts)

Business Description, Basis of Presentation and Significant Accounting Policies

Note 1 - Business Description, Basis of Presentation and Significant Accounting Policies

Business Description:

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

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 previously engaged in the design, development, and marketing of professional audio conferencing, microphone, and video collaboration solutions.

On October 24, 2025, the Company completed the sale of a significant portion of its operating assets (the "Asset Sale").

Following the Asset Sale, the Company no longer manufactures or sells products and maintains a limited inventory and provides customer support services to satisfy warranty claims.

Its continuing activities consist solely of fulfilling warranty and technical support obligations on legacy products, managing and liquidating remaining assets, collecting accounts receivable, satisfying outstanding liabilities, and maintaining public-company compliance.

These activities are transitional in nature and are not expected to generate material revenue.

Going Concern:

As of December 31, 2024 , cash and cash equivalents were approximately $ 1,417 compared to $ 17,835 as of December 31, 2023 .

Our working capital was $ 15,208 as of December 31, 2024 compared to $ 39,052 as of December 31, 2023 .

Net cash used in operating activities was $ 6,116 for the twelve months ended December 31, 2024 , a decrease in cashflows of $ 60,744 from $ 54,628 of cash provided by operating activities in the twelve months ended December 31, 2023 .

These 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 in order 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 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 .

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

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.

The consolidated financial statements as of December 31, 2024 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.

T he accompanying consolidated financial statements have been prepared assuming the Company will continue as a going concern.

The Company has incurred significant losses, has negative cash flows from operations, and its continuing operations are limited and not expected to generate revenue at levels sufficient to fund ongoing costs.

These conditions, together with the mandatory redemption obligation for the Class A Redeemable Preferred Stock (triggered by the closing of the Asset Sale on October 24, 2025), raise substantial doubt about the Company’s ability to continue as a going concern within one year after the issuance date of these financial statements.

Management is actively evaluating strategic alternatives intended to enhance stockholder value and improve liquidity.

These alternatives may include one or more special transactions or other actions that maximize value for stockholders.

The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Basis of Presentation:

Fiscal Year – This report on Form 10-K includes consolidated balance sheets for t he years ended December 31, 2024 and 2023 and the related consolidated statements of operations and comprehensive income (loss), shareholders' equity, and cash flows for each of the years ended December 31, 2024 and 2023 .

Consolidation – These consolidated financial statements include the financial statements of ClearOne, Inc.

The consolidated financial statements include the accounts of ClearOne, Inc.

and its wholly owned subsidiaries.

All inter-Company accounts and transactions have been eliminated in consolidation.

Use of Estimates – The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (GAAP) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of sales and expenses during the reporting periods.

Key estimates in the accompanying consolidated financial statements include, among others, revenue recognition, allowances for doubtful accounts receivable and product returns, provisions for obsolete inventory, potential impairment of long-lived assets, and deferred income tax asset valuation allowances.

Actual results could differ materially from these estimates.

All intercompany accounts and transactions have been eliminated.

The financial statements are prepared in accordance with U.S.

The year ended December 31, 2025 includes the results of the disposed assets as discontinued operations that were sold on October 24, 2025.

No allocation or smoothing of results between continuing and discontinued operations has been applied.

Reverse Stock Split:

The Company completed a 1-for-15 reverse stock split of the Company's issued and outstanding common stock, par value $ 0.001 per share, effective at 5:00 p.m.

Eastern Time on June 9, 2025.

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 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 rounded up to the next whole share).

The reverse stock split did not change the par value of the common stock or the authorized number of shares 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.

For additional details, 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 thereto.

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.

Restricted Cash consists of $ 519 in remaining proceeds from a $ 3,000 convertible note issued to First Finance Ltd.

on June 20, 2025 (with no restricted cash balance as of March 31, 2025).

These funds are subject to enforceable contractual restrictions per the disbursement schedule in Schedule 8.5 of the Note Purchase Agreement, which allocates proceeds to specific uses such as advisory fees, warrant holder payments, legal and audit expenses, staff costs (e.g., board fees, accounting staff, operations/sales staff bonuses), shutdown costs for foreign subsidiaries, and severance/PTO for employee layoffs.

The funds are held in a segregated account and released only upon meeting specified milestones, with penalties for non-compliance.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except share and per share amounts)

Foreign Currency Translation – We are exposed to foreign currency exchange risk through our foreign subsidiaries.

Other than our subsidiaries in India and Spain, all other foreign subsidiaries are U.S.

dollar functional, for which gains and losses arising from remeasurement are included in earnings.

Our Spanish subsidiary is Euro functional, for which gains and losses arising from translation are included in accumulated other comprehensive income or loss.

Our Indian subsidiary is Indian Rupee functional, for which gains and losses arising from translation are included in accumulated other comprehensive income or loss.

We translate and remeasure foreign assets and liabilities at exchange rates in effect at the balance sheet dates.

We translate revenue and expenses using average rates during the year.

Concentration Risk – We depend on an outsourced manufacturing strategy for our products.

We outsource the manufacture of all of our products to third party manufacturers located in Asia.

If any of these manufacturers experience difficulties in obtaining sufficient supplies of components, component prices significantly exceeding the anticipated costs, an interruption in their operations, or otherwise suffer capacity constraints, we would experience a delay in production and shipping of these products, which would have a negative impact on our revenues.

Should there be any disruption in services due to natural disaster, economic or political difficulties, transportation restrictions, acts of terror, quarantine or other restrictions associated with infectious diseases, or other similar events, or any other reason, such disruption may have a material adverse effect on our business.

Operating in the international environment exposes us to certain inherent risks, including unexpected changes in regulatory requirements and tariffs, and potentially adverse tax consequences, which could materially affect our results of operations.

Currently, we have no second source of manufacturing for most of our products.

Significant Accounting Policies:

The Company includes restricted cash with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows, in accordance with ASU 2016-18.

Restricted cash as of September 30, 2025, disbursed for severances, deal fees, legal fees, and compliance fees, resulting in the ending restricted cash balance.

Full disbursement of the remaining restricted cash is expected by December 2025 as additional milestones are achieved.

Restricted cash is classified as a current asset on the balance sheet and included in the total cash, cash equivalents, and restricted cash balances in the statement of cash flows.

Changes in restricted cash are not presented as separate cash flows but are reconciled in this note.

This classification and presentation provide transparency regarding the Company's liquidity, as the restricted funds are not available for general corporate purposes.

S ignificant Accounting Policies:

Cash Equivalents – The Company considers all highly-liquid investments with a maturity of three months or less, when purchased, to be cash equivalents.

1 unchanged sentence

At times, such investments may be in excess of the Federal Deposit Insurance Corporation insurance limits.

As of December 31, 2024 , there was one cash account in the United States that exceeded federally insured limits, in the amount of $ 977 .

As of December 31, 2025 , there were no cash accounts in the United States that exceeded federally insured limits.

In addition, there were foreign cash accounts in the amount of $ 46 that were not covered by Federal Deposit Insurance Corporation insurance.

23 unchanged sentences

The Company’s allowance for doubtful accounts activity for the years ended December 31, 2025 and 2024 is as follows

(see Note 2, as accounts

receivable and the allowance for doubtful accounts are included in current

assets related to discontinued operations) :

Year Ended December 31,

6 unchanged sentences

Consideration is given to obsolescence, excessive levels, deterioration, direct selling expenses, and other factors in evaluating net realizable value.

The inventory also includes advance replacement units (valued at cost) provided by the Company to end-users to service defective products under warranty.

The inventory includes advance replacement units (valued at cost) provided by the Company to end-users to service defective products under warranty.

The value of advance replacement units included i n the inventory was $ 353 and $ 392 , as of December 31, 2025 and 2024 , respectively.

The inventory consists of current inventory of $ 11,224 and long-term inventory of $ 4,920 .

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.

Property and Equipment – Property and equipment are stated at cost less accumulated depreciation and amortization.

48 unchanged sentences

This typically occurs when products are shipped or delivered, depending on the delivery terms, or when products that are consigned at customer locations are sold to dealers or end users.

Revenue recognized during the twelve months ended December 31, 2024 for equipment sales was $ 11,373 , and for software, licenses, etc.

Sales returns and allowances are estimated based on historical experience.

22 unchanged sentences

The inventory due from the customer is accounted at cost or market value whichever is lower.

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

The following table disaggregates the Company’s revenue into primary product groups (see Note 2, as all revenue is classified in discontinued operations):

Year Ended December 31,

19 unchanged sentences

Advertising costs consist of trade shows, magazine advertisements, and other forms of media.

Advertising expenses for t he years ended December 31, 2024 and 2023 totaled $ 526 and $ 661 , respectively, and are included in sales and marketing on the consolidated statements of operations and comprehensive income (loss).

Advertising expenses for t he years ended December 31, 2025 and 2024 totaled $ 227 and $ 526 , respectively, and are included in discontinued operations on the consolidated statements of operations and comprehensive income (loss).

Income Taxes – The Company uses the asset and liability method of accounting for income taxes.

16 unchanged sentences

Year Ended December 31,

Loss from continuing operations

Loss from discontinued operations

Interest adjustment under if-converted method

Adjusted net income

Basic weighted average shares

1 unchanged sentence

Diluted weighted average shares

Basic loss per common share:

Diluted loss per common share:

Weighted average options and warrants outstanding

Basic income (loss) per common share:

From continuing operations

From discontinued operations

Diluted income (loss) per common share:

From continuing operations

From discontinued operations

Weighted average options, warrants and convertibles outstanding

Anti-dilutive options and warrants not included in the computation

26 unchanged sentences

The ASU is effective for annual periods beginning after December 15, 2024, with early adoption permitted, and should be applied prospectively, though retrospective application is optional.

The Company is currently evaluating the impact of ASU 2023-09 on its financial statement disclosures.

Adoption of this standard is expected to require updates to our income tax disclosure processes, including the collection and reporting of additional data to comply with the enhanced disaggregation requirements.

While the standard does not affect the recognition or measurement of income taxes, it will increase the level of detail provided in the notes to our consolidated financial statements.

We are assessing the necessary changes to our systems and controls to ensure compliance and do not anticipate a material impact on our financial position or results of operations beyond the additional disclosure requirements.

The Company adopted the new

standard on January 1, 2025, using the retrospective transition method.

adoption modified the presentation of our income tax disclosures (see Note 14)

but did not have a material impact on our consolidated financial position or

results of operations.

ASU 2024 - 03 , Income Statement—Reporting Comprehensive Income (Topic 220 ):

7 unchanged sentences

An update in ASU 2025 - 01 clarified that interim period disclosures are not required until annual periods beginning after December 15, 2027.

The Company is in the process of evaluating the impact of ASU 2024-03 on its consolidated financial statements.

We expect adoption to necessitate modifications to our financial reporting processes and systems to capture and disclose the required disaggregated expense information in the footnotes.

Management anticipates that this will enhance the granularity of expense disclosures but does not expect a material effect on our reported financial position or results of operations.

We are reviewing our current expense classification practices and data collection capabilities to ensure compliance with the new requirements upon adoption.

The Company is currently

developing its implementation plan and evaluating the impact of this standard

on its consolidated financial statement disclosures.

While we expect

adoption to necessitate modifications to our financial reporting processes and

systems to capture the required disaggregated information, management does not

expect a material effect on our reported financial position or results of operations.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except share and per share amounts)

Marketable Securities

The Company has classified its marketable securities as available-for-sale securities.

These debt securities are carried at estimated fair value with unrealized holding gains and losses included in accumulated other comprehensive income (loss) in shareholders’ equity until realized.

Gains and losses on marketable security transactions are reported on the specific-identification method.

Dividend and interest income are recognized when earned.

All such securities were liquidated during the year for working capital, and, as such, we have $ 0.0 in marketable securities as of December 31, 2024, compared to $ 4,396 as of December 31, 2023.

The amortized cost, gross unrealized holding gains, gross unrealized holding losses, and fair value for available-for-sale securities by major security type and class of securities at December 31, 2023 were as follows:

Amortized cost

Gross unrealized

holding gains

Gross unrealized

holding losses

Estimated fair

December 31, 2023

Available-for-sale securities:

US Treasury securities

Certificates of deposit

Corporate bonds and notes

Total available-for-sale securities

Intangible Assets

Intangibl e assets as of December 31, 2024 an d 2023 consisted of the following:

Estimated useful lives

As of December 31,

Patents and technological know-how

Proprietary software

Total intangible assets, gross

Accumulated amortization

Total intangible assets, net

During t he years ended December 31, 2024 and 2023 , amortization of these intangible assets were $ 260 and $ 517 respectively.

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

Years ending December 31,

Discontinued Operations:

See Note 2 for a full description of the Asset Sale and presentation of discontinued operations.

Use of Estimates :

Preparation of financial statements in conformity with U.S.

GAAP requires management to make estimates and assumptions that affect reported amounts.

Key estimates include valuation of retained warranty inventory, warranty reserves, legal contingencies, and the going-concern assessment.

Actual results could differ materially from these estimates.

Note 2 – Discontinued Operations and Asset Sale

On October 24, 2025, the Company completed the sale of substantially all of its operating intellectual property, product inventory, and related production assets to Biamp Systems, LLC (“Biamp”) for gross cash consideration of $ 3,000 (the “Asset Sale”).

Biamp did not assume any warranty or technical support obligations.

The Company retained its books and records, all equity interests in subsidiaries, approximately $ 390 of inventory solely to service warranty obligations, and all public-company assets and obligations.

See the Company’s Current Report on Form 8-K filed October 30, 2025 for additional information.

The sale represents the disposal of a component that qualifies as discontinued operations under ASC 205 - 20 .

The results of the disposed assets are presented as discontinued operations for all periods presented, with a hard cutoff on the legal closing date of October 24, 2025.

No allocation or smoothing of results has been applied.

At September 30, 2025, the disposal group was classified as held for sale and measured at fair value less costs to sell.

The carrying amount of the disposal group was $ 13,641 (primarily inventory of $ 12,856 and intangible assets of $ 785 ).

Based on the executed asset purchase agreement for $ 3,000 cash consideration and estimated transaction costs of $ 100 , management recorded an impairment of $ 10,741 to reduce the disposal group to fair value less costs to sell.

The impairment is included in “Loss from discontinued operations” in the consolidated statements of operations.

Carrying amounts classified as held for sale

Assets held for sale at September 30, 2025 totaled $ 2,900 (comprised primarily of inventory $ 12,956 and intangibles $ 785 , less impairment to fair value less costs to sell of $ 10,741 and transaction costs of $ 100 ).

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

The carrying value of net assets sold at the October 24, 2025 closing date, after the Q 3 impairment and additional changes in October, was $ 14,055 .

The loss on sale recognized in the fourth quarter of 2025 was calculated as follows (in thousands):

Gross proceeds from Asset Sale

Transaction costs

Carrying value of net assets sold (after impairment)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except share and per share amounts)

Inventories, net of reserves, consisted of the following:

As of December 31,

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 have developed programs to reduce the inventory to normal operating levels in the near future .

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.

The losses incurred on valuation of inventory at the lower of cost or market value and write-off of obsolete inv entory amounted to $ 1,079 and $ 281 during t he years ended December 31, 2024 and 2023 , respectively.

Property and Equipment

Major classifications of property and equipment and estimated useful lives were as follows:

Estimated useful lives

As of December 31,

The major classes of assets and liabilities of the disposed assets as of the October 24, 2025 closing date (gross carrying value before impairment allocation) were as follows (in thousands):

Inventories, net

Property and equipment, net

Intangible assets, net

Total assets disposed

Accounts payable and accrued liabilities

Other liabilities

Total liabilities disposed

Net assets disposed

The difference between the gross carrying value of $ 17,638 and the post-impairment carrying value of $ 14,055 used in the loss on sale calculation is attributable to the Q 3 impairment of $ 10,741 and additional net asset activity in October 2025.

The results of discontinued operations for the years ended December 31, 2025 and 2024 are summarized as follows (in thousands):

Year Ended December 31,2025

Year Ended December 31,2024

Cost of goods sold

Gross profit (loss)

Operating expenses

Operating loss

Loss before income taxes

Income tax benefit (provision)

Loss from discontinued operations, net of tax

Fo llowing the Asset Sale, the Company continues to fulfill warranty and technical support obligations on products sold October 24, 2025 in accordance with published policies.

The Company retained a limited amount of inventory solely to service these obligations.

These activities are reported within continuing operations and do not constitute ongoing operations of the disposed assets.

Cash flows from discontinued operations are included in the consolidated statements of cash flows.

For the year ended December 31, 2025, net cash provided by discontinued operations was $ 9,944 .

Net proceeds from the Asset Sale are contractually earmarked to redeem the C lass A Redeemable Preferred Stock.

Redemption occurred after December 31, 2025 and is treated as a subsequent event.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except share and per share amounts)

Note 3 - Marketable Securities

All marketable securities were liquidated during 2025 to support working capital needs.

There were no marketable securities as of December 31, 2025 or 2024.

Note 4 - Intangible Assets

All intangible assets were sold as part of the Asset Sale on October 24, 2025.

There were no intangible assets remaining as of December 31, 2025

Note 5 - Inventories

Inventories consist solely of the limited amount

retained to service warranty obligations:

December 31, 2025

December 31, 2024

Current (warranty servicing)

Note 6 - Property and Equipment

All property and equipment associated with the

disposed operations were sold as part of the Asset Sale.

All remaining property and

equipment consist primarily of office supplies and aged computer equipment which was written off as de minumus:

December 31, 2025

December 31, 2024

Office furniture and equipment

Leasehold improvements

Manufacturing and test equipment

Accumulated depreciation and amortization

Warehouse equipment

Accumulated depreciation

Property and equipment, net

Depreciation expense on property and equipment for t he years ended December 31, 2024 and 2023 was $ 226 and $ 238 , respectively.

Depreciation expense included in discontinued

operations totaled $ 232 thousand

for the years ended December 31, 2025 and 2024 respectively.

No depreciation expense was recorded in

continuing operations for either period.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except share and per share amounts)

Note 7 - Leases

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

Rent expense for the years ended December 31, 2025 and 2024 was as follows:

W e occup y a 1,350 square-foot facility in Gainesville, Florida under the terms of an operating lease expiring in February 2028 .

The Gainesville facility is used primarily to support our research and development activities.

We occupy a 21,443 square-foot facility in Salt Lake City, Utah under the terms of an operating lease, which has been amended in February 2023 to expire in February 2028.

Under the terms of this amendment, we reduced our space to approximately 9,402 square feet.

The facility supports our principal administrative, sales, marketing, customer support, and research and product development activities.

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

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

We occupy a 40,000 square-foot warehouse in Salt Lake City, Utah under the terms of an operating lease expiring in April 2025, which serves 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.

The lease is an operating lease expiring in February 2028.

This facility serves as our primary warranty and repair center.

Year ended December 31,

We occupy approximately 9,402 square feet of office space in Salt Lake City, Utah under an operating lease expiring in February 2028.

This facility supports the Company’s remaining administrative functions, public company compliance activities, and limited operational support functions.

The Company previously occupied a 1,350 square-foot facility in Gainesville, Florida under an operating lease that had been extended to February 29, 2029.

On March 2, 2026, the Company entered into a Settlement, Release and Agreement to Terminate Lease with the landlord.

Pursuant to the settlement, the Company paid $ 30 and forfeited its security deposit in exchange for full termination of the lease and a mutual release of all obligations.

The Company has no further liability under this lease.

The Company previously occupied a 2,590 square-foot warehouse facility in Salt Lake City, Utah ( 363 West 2720 South, Suite B) under an operating lease scheduled to expire in February 2028.

On February 24, 2026, the Company entered into an Early Termination Agreement with the landlord that terminated the lease effective midnight February 28, 2026.

In connection with the early termination, the Company paid a buyout of $ 43 and forfeited its security deposit.

The Company has no further liability under this lease after February 28, 2026.

This facility previously supported warranty servicing and repair activities related to products sold prior to the October 2025 asset disposition.

The Company previously occupied a 6,175 square-foot facility in Chennai, India under the terms of an operating lease which expired September 2025.

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

We did not renew the lease and vacated these premises on November 15, 2025 and the deposit was refunded in January 2026.

Supplemental cash flow information related to leases was as follows:

19 unchanged sentences

Imputed interest

Accrued Liabilities

Subsequent Events

Subsequent to December 31, 2025, the Company terminated two of its operating leases:

(i) the Gainesville, Florida facility was terminated on March 2, 2026 via a settlement agreement with a $ 30 cash payment and forfeiture of the security deposit;

and (ii) the Salt Lake City warehouse facility was terminated effective February 28, 2026 via an early termination agreement with a $ 43 buyout and forfeiture of the security deposit.

The Company has no further liability under either lease.

See Note 17 – Subsequent Events for additional information.

Note 8 - Accrued Liabilities

Accrued liabilities consist of the following:

1 unchanged sentence

Accrued salaries and other compensation

Sales and marketing programs and customer credit balances

Product warranty

Current portion of operating lease liabilities

Warranty reserve

Severance obligation

Other accrued liabilities

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except share and per share amounts)

Commitments and Contingencies

We establish contingent liabilities when a particular contingency is both probable and estimable.

The Company is not aware of any pending claims or assessments, other than as described below, which may have a material adverse impact on the Company’s financial position or results of operations.

Outsource Manufacturers.

We have manufacturing agreements with electronics manufacturing service (“EMS”) providers related to the outsourced manufacturing of our products.

Certain manufacturing agreements establish annual volume commitments.

We are also obligated to repurchase Company-forecasted but unused materials.

The Company has non-cancellable, non-returnable, and long-lead time commitments with its EMS providers and certain suppliers for inventory components that will be used in production.

The Company’s purchase commitments under such agreements is approximately $ 4,300 million as of December 31, 2024 .

Uncertain Tax Positions.

As further discussed in Note 13 - Income Taxes , we had $ 969 of uncertain tax positions as of December 31, 2024 .

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

Note 9 - Commitments and Contingencies

Legal Proceedings

Intellectual Property Litigation

The Company settled an intellectual property matter by entering into a cross licensing agreement in December 2023 and accepting a one -time payment of $ 4,000 in March 2024.

The amount is recognized and included under other income in the consolidated statement of operations and in the consolidated balance sheet under License receivable as of December 31, 2023.

In addition, the Company is also involved from time to time in various claims and legal proceedings which arise in the normal course of our business.

Such matters are subject to many uncertainties and outcomes that are not predictable.

However, based on the information available to us, we do not believe any such other proceedings will have a material adverse effect on our business, results of operations, financial position, or liquidity.

We believe there are no other items that will have a material adverse impact on the Company’s financial position or results of operations.

Legal proceedings are subject to all of the risks and uncertainties of legal proceedings and there can be no assurance as to the probable result of any legal proceedings.

The Company believes it has adequately accrued for the aforementioned contingent liabilities.

If adverse outcomes were to occur, our financial position, results of operations and cash flows could be negatively affected materially for the period in which the adverse outcomes are known.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except share and per share amounts)

Senior Convertible Notes and Warrants

On December 17, 2019, the Company completed the issuance and sale of $ 3,000 aggregate principal amount of secured convertible notes of the Company (the “Notes”) and warrants (the “Warrants”) to purchase 340,909 shares of common stock, par value $ 0.001 per share of the Company (the “Common Stock”), in a private placement transaction.

The Notes and Warrants were issued and sold to Edward D.

Bagley, an affiliate of the Company, on the terms and conditions of a Note Purchase Agreement dated December 8, 2019 between the Company, certain subsidiary guarantors of the Company, and Mr.

Bagley is an affiliate of the Company and was the beneficial owner of approximately 49.60 % of the Company’s issued and outstanding shares of Common Stock.

The Notes matured on December 17, 2023 (the “Maturity Date”) and accrued interest at a variable rate adjusted on a quarterly basis and equal to two and one -half percent ( 2.5 %) over the greater of (x) five and one -quarter percent ( 5.25 %) and (y) the Prime Rate as published in the Wall Street Journal (New York edition) as of the beginning of such calendar quarter.

The Notes may be converted into shares of the Company’s Common Stock at any time at the election of Mr.

Bagley at an initial conversion price of $ 2.11 per share (the “Conversion Price”), or 120 % of the closing price of the Common Stock on December 6, 2019 as reported on the Nasdaq Capital Market.

Also, the Company can cause a mandatory conversion of the Notes if the volume weighted average closing price of the Common Stock over 90 consecutive trading days exceeds 200 % of the Conversion Price.

In addition, the Notes may be redeemed by the Company for cash at any time after December 17, 2020 upon payment of the outstanding principal balance of the Notes and any unpaid and accrued interest.

The Company also is required to redeem the Notes upon the occurrence of a change in control of the Company.

The Notes were fully repaid as per the terms of the Note on December 17, 2023.

No part of the Note was converted into a common stock.

The Warrants have an initial exercise price equal to $ 1.76 , the closing price of the Common Stock on December 6, 2019 as reported on the Nasdaq Capital Market, and are exercisable until December 17, 2026.

The Warrants must be exercised for cash, unless at the time of exercise there is not a then effective registration statement for the resale of the shares of Common Stock issuable upon exercise of the Warrants, in which case the Warrants may be exercised via a cashless exercise feature that provides for net settlement of the shares of Common Stock issuable upon exercise.

Concurrent with the issuance of the Notes and Warrants pursuant to the Note Purchase Agreement, the Company, the Guarantors and Mr.

Bagley entered into a Guaranty and Collateral Agreement (the “Collateral Agreement”) pursuant to which the Company and the Guarantors granted Mr.

Bagley a first priority lien interest in all of the Company’s assets as security for the Company’s performance of its obligations under the Notes and Warrants.

In accounting for the issuance of the Notes, the Company separated Notes and Warrants into liability and equity components.

The carrying amount of Warrants, being an equity component, was calculated using Black-Scholes method with the following assumptions:

Risk-free interest rate

Expected life of Warrants (years)

Expected price volatility

Expected dividend yield

See Item 3 – Legal Proceedings for incorporation by reference.

Spain Employee Settlement

ClearOne Spain, S.L.

(“ClearOne Spain”), a wholly owned subsidiary, entered into a binding settlement agreement with eight former employees to resolve wrongful termination and severance claims arising from a collective dismissal implemented in August 2025.

The settlement agreement was executed on December 29, 2025.

The Board of Directors of ClearOne, Inc.

approved the settlement on December 31, 2025.

The agreement fixed the Company’s obligation to pay net settlement proceeds of € 393 (€ 362 compensation + € 31 severance).

Management concluded the obligation was both probable and reasonably estimable as of December 31, 2025 under ASC 450-20 and therefore accrued the full amount at year-end.

The USD equivalent recorded at the December 31, 2025 spot rate was $ 461 .

Due to ClearOne Spain being part of the discontinued

operations, this accrual is included in current liabilities related to

discontinued operations on the balance sheet.

Payment of the settlement was made on January 14, 2026 (value date January 16, 2026) and the formal ratification occurred at the Zaragoza SMAC conciliation hearing on January 21, 2026.

These events are treated as non-recognized subsequent events with respect to cash disbursement timing only.

No adjustment to the year-end accrual was required.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except share and per share amounts)

Short-term Bridge Loan

O n October 28, 2022 the Company obtained a bridge loan in the principal amount of $ 2,000 from Edward D.

Bagley (the “ 2022 Bridge Loan”), an affiliate of the Company.

The 2022 Bridge Loan was evidenced by a promissory note dated October 28, 2022 (the “ 2022 Note”) issued by the Company to Mr.

The 2022 Note bore interest at a rate of 12.0 % per annum and had a maturity date of October 28, 2023 .

Bagley is an affiliate of the Company and the Company’s single largest stockholder.

This Bridge Loan of $ 2,000 is included under short-term debt as of December 31, 2022.

In January 2023, the 2022 Bridge loan of $ 2,000 along with applicable interest was repaid in full.

Share-Based Payments

The settlement is disclosed in the Discontinued Operations footnote (Note 2) to the extent it relates to the disposed business, as well as in Subsequent Events (Note 17) and Legal Proceedings (Item 3).

Executive Retention Bonuses

In connection with post-transaction leadership restructuring, the Company granted retention bonuses to Derek Graham and Simon Brewer contingent upon the completion of certain projects and duration of employment and the closing of a future transaction of the Company, respectively.

These bonuses are not probable or estimable as of December 31, 2025 and are therefore disclosed only.

Other Contingencies

The Company is involved from time to time in claims and legal proceedings arising in the ordinary course of business.

Management does not believe any such matters will have a material adverse effect on the Company’s financial position, results of operations, or cash flows.

Note 10 - Debt

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.

There was no debt outstanding as of December 31, 2025 or 2024 .

On November 24, 2025, First Finance Ltd.

converted all 3,026 shares of Class B Convertible Preferred Stock into 503,662 shares of common stock at the fixed conversion price of $6.008 per share.

This non-cash conversion is reflected in the consolidated financial statements as of December 31, 2025, with no Class B Convertible Preferred Stock remaining outstanding.

Note 11 - Share-Based Payments

Employee Stock Option Plans

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As of December 31, 2025 , the Company had 2,769 options with contractual lives of ten years and 16,947 options with contractual lives of six years .

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except share and per share amounts)

As of December 31, 2025 , there were 19,716 options outstanding under the 2007 Plan.

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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 .

In applying the Black-Scholes methodology to the 160,000 options granted during the year ended December 31, 2023 , the Company used the following assumptions:

Risk free interest rate, average

Expected option life, average

Expected price volatility, average

Expected dividend yield

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except share and per share amounts)

In applying the Black-Scholes methodology to the 10,667 options granted during the year ended December 31, 2024 , the Company used the following assumptions:

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Expected dividend yield

There were no options granted during the year ended December 31, 2025 .

The risk-free interest rate is determined using the U.S.

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Employee Stock Purchase Plan

During the years ended December 31, 2024 and 2023 , the Company issued shares to employees under the Company’s 2016 Employee Stock Purchase Plan (the “ESPP”).

During the years ended December 31, 2025 and 2024 , the Company maintained a 2016 Employee Stock Purchase Plan (the “ESPP”).

The ESPP was approved by the Company’s shareholders on December 12, 2016.

As of December 31, 2024 , and December 31, 2023 , 340,518 and 382,143 , respectively of the originally approved 500,000 shares were available for offerings under the ESPP.

Offering periods under the ESPP commence on each Jan 1 and July 1 and continue for a duration of six months.

The ESPP is available to all employees who do not own, or are deemed to own, shares of stock making up an excess of 5 % of the combined voting power of the Company, its parent or subsidiary.

During each offering period, each eligible employee may purchase shares under the ESPP after authorizing payroll deductions.

Under the ESPP, each employee may purchase up to the lesser of 2,500 shares or $ 25 of fair market value (based on the established purchase price) of the Company’s stock for each offering period.

Unless the employee has previously withdrawn from the offering, his or her accumulated payroll deductions will be used to purchase common stock on the last business day of the period at a price equal to 85 % (or a 15 % discount) of the fair market value of the common stock on the first or last day of the offering period, whichever is lower.

Shares purchased and compensation expense associated with Employee Stock Purchase Plans were as follows:

Offering periods under the ESPP commenced on each January 1 and July 1 and continued for a duration of six months.

The ESPP was available to all employees who did not own, or were deemed to own, shares of stock making up an excess of 0 % of the combined voting power of the Company, its parent or subsidiary.

In connection with the significant reduction in force completed in June 2025, the Company terminated the ESPP effective July 2025.

All participant contributions were refunded to employees in May and June 2025, totaling approximately $ 1 .

No shares were issued under the ESPP during the year ended December 31, 2025.

Shares purchased and compensation expense associated with the ESPP were as follows:

Shares purchased under ESPP plan

Plan compensation expense

As of December 31, 2025, the ESPP has been terminated and no shares remain available for future issuance.

Issuance of Common Stock and Warrants

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Each warrant became immediately exercisable and will expire on March 15, 2027.

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.

Subsequent to December 31, 2025, the Company repurchased and cancelled 24,155 of the September 12, 2021 warrants (see Note 17 – Subsequent Events).

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except share and per share amounts)

Significant Customers

During the year ended December 31, 2024 one of our distributors, customer A, accounted for 17 % of total sales.

For the year ended December 31, 2023 no distributor accounted for more than 10 % of our total consolidated revenue.

As of December 31, 2024, customer A accounted for 30 % and customer B accounted for 12 % of trade account receivables.

No customer accounted for more than 10 % of receivables as of December 31, 2023.

Fair Value Measurements

Note 12 - Significant Customers

following customer concentration information relates to the discontinued

operations for the periods presented.

During the year ended December 31, 2025 , three of our distributors accounted for 10 % or more of total sales.

Customer A accounted for 12 %, Customer B accounted for 13 %, and Customer C accounted for 10 % .

For the year ended December 31, 2024 , one distributor , customer D,

accounted for more than 17 % of our total consolidated revenue.

As of December 31, 2025 , customer E accounted for 16 %, customer A accounted for 13 %, customer F accounted for 11 %, customer G accounted for 11 %, and customer H accounted for 11 % of trade accounts receivable.

As of December 31, 2024 , customer D accounted for 30 % and customer A accounted for 12 % of trade accounts receivable.

Note 13 - Fair Value Measurements

The fair value of the Company’s financial instruments reflects the amounts that the Company estimates it will receive in connection with the sale of an asset or pay in connection with the transfer of a liability in an orderly transaction between market participants at the measurement date (exit price).

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Level 3 - Unobservable inputs.

The substantial majority of the Company’s financial instruments are valued using quoted prices in active markets or based on other observable inputs.

The following tables set forth the fair value of the financial instruments re-measured by the Company as of December 31, 2024 and 2023 .

December 31, 2024

US Treasury securities

Certificates of deposit

Corporate debt securities

December 31, 2023

US Treasury securities

Certificates of deposit

Corporate debt securities

As of December 31, 2025 the Company had no financial instruments requiring fair value measurement under the three-level hierarchy.

Note 14 - Income Taxes

Consolidated income (loss) before income taxes, continuing operations, for domestic and foreign operations consisted of the following:

Year ended December 31,

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except share and per share amounts)

Consolidated income (loss) before taxes for domestic and foreign operations consisted of the following:

Year ended December 31,

The Company’s provision for income taxes consisted of the following:

The Company’s provision for income taxes, continuing operations, consisted of the following:

Year ended December 31,

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Tax provision

The income tax provision differs from that computed at the federal statutory corporate income tax rate as follows:

In accordance with the retrospective adoption of ASU 2023 - 09 , the following table provides a tabular reconciliation of the income tax provision for continuing operations compared to the federal statutory rate for the years ended December 31, 2025 and 2024 :

Year ended December 31,

Tax benefit (provision) at federal statutory rate

State income tax benefit (provision), net of federal benefit

Research and development tax credits

Foreign earnings or losses taxed at different rates

Tax rate change

Change in valuation allowance

Tax benefit (provision)

federal statutory income tax rate at 21.0 %

State and local income tax, net of federal (national) income tax effect

Foreign tax effects

Effect of changes in tax laws or rates enacted in the current period

Effect of cross-border tax laws

Tax credits - R&D

Changes in valuation allowances

Nontaxable or nondeductible items

Intercompany Loan Interest

Stock-based Compensation

Nontaxable or nondeductible items - Other

Changes in unrecognized tax benefits

Tax Provision (Benefit) - Continuing Ops:

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except share and per share amounts)

The tax effects of significant temporary differences representing net deferred tax assets and liabilities consisted of the following:

In connection with the retrospective adoption of ASU 2023 - 09 , the following table presents the tax effects of significant temporary differences that give rise to the Company’s net deferred tax assets and liabilities as of December 31, 2025 and 2024 ::

Inventory of deferreds:

Deferred revenue

Basis difference in intangible assets

Inventory reserve

Inventory reserve and UNICAP

Net operating loss carryforwards

Research and development tax credits

Accrued expenses

Stock-based compensation

Accumulated research and development credits

Accrued liabilities

Non-deductible ASC 718 compensation expense

Allowance for sales returns and doubtful accounts

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Convertible Debt

Capitalized research expenditure

Business Interest Expense

Capitalized research expenditures

Total net deferred income tax asset

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Net deferred income tax asset (liability)

Taxes Paid by Jurisdiction (ASU 2023 - 09 ) (in thousands):

Foreign (India)

Total taxes paid

The Company has not provided for foreig n withholding taxes on undistributed earnings of its non-U.S.

13 unchanged sentences

Accordingly, the Company recorded a full valuation allowance at December 31, 2025 .

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except share and per share amounts)

As of December 31, 2025 the Company has federal net operating loss (“NOL”) carryforwards of approximately $ 74,344 (pre-tax), state NOL carryforwards of approximately $ 76,036 (pre-tax) and Spain NOL carryforwards of approximately $ 15,034 (pre-tax).

2 unchanged sentences

The state NOL carryforwards expire over various periods.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except share and per share amounts)

Effective July 1, 2007, the Company adopted the accounting standards related to uncertain tax positions.

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Liabilities recorded as a result of this analysis must generally be recorded separately from any current or deferred income tax accounts.

The total amount of unrecognized tax benefits at December 31, 2024 and 2023 , that would favorably impact our effective tax rate if recognized was $ 1,101 and $ 1,034 , respectively.

The total amount of unrecognized tax benefits for continuing operations at December 31, 2025 and 2024 , that would favorably impact our effective tax rate if recognized was $ 1,162 and $ 1,101 , respectively.

As of December 31, 2025 and 2024 , we acc rued $ 279 and $ 198 , respectively, in interest and penalties related to unrecognized tax benefits.

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income tax examinations by tax authorities for years prior to 2017 .

Geographic Sales Information

Note 15 - Capital Structure:

Class A Redeemable Preferred Stock

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 December 31, 2025.

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

The closing of the Asset Sale on October 24, 2025 (see Note 2) triggered this mandatory redemption obligation.

As of December 31, 2025, the redemption had not yet been completed.

The Company currently estimates the final redemption amount will be approximately $ 50 after permitted expenses and net asset recoveries.

Accordingly, the Class A Redeemable Preferred Stock has been reclassified from temporary equity to a current liability on the consolidated balance sheet as of December 31, 2025.

The Class A Redeemable Preferred Stock is a participating security only in the liquidation or sale proceeds and does not receive dividends other than the redemption amount.

Therefore, it is excluded from the computation of diluted earnings per share as anti-dilutive for the periods presented.

The actual cash redemption payment is expected to occur after December 31, 2025 and is treated as a non-recognized subsequent event (see Note 17 – Subsequent Events).

Class A Redeemable Preferred

(dollars in thousands, shares in whole amounts)

Beginning balance, July 1, 2025

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

Record temporary equity at estimated redemption value

Reclassification to current liability upon Asset Sale closing (October 24, 2025)

Balance, December 31, 2025

Class A Redeemable Preferred Stock redemption payable (current liability, discontinued operations)

Note 16 - Geographic Sales Information

The following geographic sales information relates to

the discontinued operations for the periods presented.

The United States was the only country to contribute more than 10 percent of total revenues in each fiscal year.

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All other countries

Subsequent events

On February 26, 2025 the Company entered into a securities purchase agreement with Edward D.

Bagley, pursuant to which the Company agreed to issue and sell, in a private placement at-the-market offering of 2,000,000 shares of the Company’s common stock, par value $ 0.001 per share, at a purchase price of $ 0.50 per share of Common Stock.

The Company received $ 1,000 in cash in connection with the sale.

Bagley is an affiliate of the Company and the Company’s single largest stockholder.

On March 27, 2025, the Company entered into an agreement with RBW Capital Partners LLC and Dawson James Securities, Inc.

to act as exclusive placement agent for a proposed offering of the Company’s common stock.

The agreement has a six -month term.

Included are also the following fees:

a success fee payable equal to five percent ( 5 %) of the transaction value of any completed transaction with any parties not previously known to the Company prior to the engagement of the advisor, a cash success fee of eight percent ( 8 %) of the amount of capital raised, in connection with any sale of debt or equity securities, and reimbursement of advisor’s out-of-pockets fees and expenses up to $ 150,000 .

No adjustments to the accompanying financial statements are required as a result of this event.

Note 17 - Subsequent events

Class A Redeemable Preferred Stock Redemption

Net proceeds from the October 2025 Asset Sale, after permitted expenses, are contractually required to be used to redeem all outstanding shares of the Company’s Class A Redeemable Preferred Stock.

As of the date these consolidated financial statements were issued, the redemption had not yet occurred.

The exact net proceeds available for redemption could not be determined as of December 31, 2025 because permitted expenses were still being finalized.

The Company currently estimates that the final net amount available for redemption will be approximately $ 50 .

The redemption is expected to occur after the issuance of these financial statements and will be recognized in the period in which it takes place.

See Note 15 – Capital Structure for additional information regarding the Class A Redeemable Preferred Stock.

On January 1, 2026, Simon Brewer was rehired as Chief Financial Officer and Principal Financial Officer under a new employment agreement.

On January 2, 2026, Derek Graham was rehired as part-time Chief Executive Officer and Principal Executive Officer under a new employment agreement.

On January 9, 2026, the Company paid Simon Brewer a $ 75,000 sign-on bonus with no clawback or retention conditions.

The Company granted retention bonuses to Derek Graham and Simon Brewer contingent upon the completion of projects and the duration of employment, and the closing of a future transaction, respectively.

Lease Terminations

On February 24, 2026, the Company entered into an Early Termination Agreement for the 2,590 square-foot warehouse facility in Salt Lake City, Utah ( 363 West 2720 South, Suite B).

The lease terminated effective midnight February 28, 2026.

The Company paid a buyout of $ 42,556.50 and forfeited its security deposit.

The Company has no further liability under this lease.

In March, 2026, the Company entered into a Settlement, Release and Agreement to Terminate Lease for the 1,350 square-foot facility in Gainesville, Florida ( 2610 NW 43 rd Street, Suite 2-C).

The Company paid $ 30,000 and forfeited its $ 2,236.50 security deposit in exchange for full termination of the lease and a mutual release of all obligations.

The Company has no further liability under this lease.

On March 2, 2026, the Company entered into a Securities Purchase Agreement with First Finance Ltd.

(its largest stockholder) and issued 437,500 shares of common stock at $ 4.00 per share and a warrant to purchase up to 437,500 additional shares at $ 5.00 per share for aggregate gross proceeds of $ 1,750 .

Of the proceeds, $ 500 became immediately available to the Company, and the remaining $ 1,250 will become available upon completion of the Company’s reincorporation from Delaware to Nevada.

Warra nt Repurchase

On March 9, 2026, the Company entered into a Warrant Repurchase Agreement with CVI Investments, Inc.

and repurchased certain outstanding common stock purchase warrants originally issued on September 12, 2021.

The repurchased warrants were exercisable for an aggregate of 24,155 shares of the Company’s common stock.

The Company paid an aggregate cash purchase price of $ 22,000 ($ 0.9108 per underlying share).

Upon settlement, the warrants were cancelled and are of no further force or effect.

Nevada Reincorporation

On March 12, 2026, stockholders holding a majority of the voting power of the Company’s outstanding capital stock entitled to vote and a majority of the outstanding shares of Class A Redeemable Preferred Stock approved, by written consent in lieu of a meeting, the reincorporation of the Company from the State of Delaware to the State of Nevada by conversion (the “Nevada Reincorporation”).

The reincorporation is expected to become effective no earlier than twenty ( 20 ) calendar days after the mailing of the Information Statement on Schedule 14 C to the Company’s stockholders.

This action satisfies the condition precedent in the March 2, 2026 Securities Purchase Agreement with First Finance Ltd.

for the release of the remaining $ 1.25 million of proceeds from the $ 1.75 million private placement.

See the Company’s Current Report on Form 8-K filed March 17, 2026 for additional information.

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-K

Item 9A. Controls and Procedures