What changed in this filing

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Item 1. Financial Statements

2026-08-14 compared with 2026-05-15 · 540 added, 200 removed, 298 unchanged (71% of the section changed)

3 unchanged sentences

(Dollars in thousands, except par value)

March 31, 2026

June 30, 2026

December 31, 2025

12 unchanged sentences

Accrued liabilities

Short term Note Payable

Current operating lease liability

18 unchanged sentences

(Dollars in thousands, except per share amounts)

Three months ended March 31,

Three months ended June 30,

Six months ended June 30,

Cost of goods sold

27 unchanged sentences

(Dollars in thousands, except per share amounts)

Three months ended March 31,

Six months ended June 30,

Cash flows from operating activities:

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

Amortization of right-of-use assets

Share-based compensation expense

11 unchanged sentences

Proceeds from sale of stock

Proceeds from issuance of convertible note

Proceeds from issuance of short-term note

Purchases of outstanding warrants

3 unchanged sentences

Net increase (decrease) in cash and cash equivalents

Cash and cash equivalents at the beginning of the period

Cash and cash equivalents at the end of the period

Cash, cash equivalents and restricted cash at the beginning of the period

Cash, cash equivalents and restricted cash at the end of the period

See accompanying notes

3 unchanged sentences

The following is a summary of supplemental cash flow information:

Three months ended March 31,

Six Months Ended June 30,

Cash paid for income taxes

6 unchanged sentences

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

Following the October 24, 2025 disposition of certain intellectual property, product inventory, and non-exclusive rights to customer data to Biamp Systems, LLC, the Company no longer manufactures or sells products and maintains only limited continuing operations consisting of warranty and technical support for legacy products, collecting accounts receivable and recovering prepaid assets, public-company compliance, and evaluation of strategic alternatives.

See discussion of going concern and discontinued operations below.

Following the October 24, 2025 disposition of substantially all operating assets and intellectual property to Biamp Systems, LLC, the Company no longer sells products.

The Company’s continuing operations are now limited to (i) fulfilling warranty and technical support obligations for legacy products, (ii) maintaining public-company compliance and governance, (iii) collecting accounts receivable and recovering prepaid assets and (iv) and pursuing strategic alternatives to maximize stockholder value.

On July 1, 2026, the Company entered into an Agreement and Plan of Merger by and among the Company, CLRO Merger Sub, Inc., Cortigent, Inc.

and Vivani Medical, Inc.

See Note 14 — Subsequent Events.

See also the discussion of going concern below and Note 2 — Discontinued Operations and Assets Held for Sale.

Going Concern:

The 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.

The accompanying condensed consolidated

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

going concern, which contemplates the realization of assets and the

satisfaction of liabilities in the normal course of business.

Following the Asset

Sale (as described below) completed on October 24, 2025, the Company has no revenue-generating

The Company has incurred recurring losses and negative cash flows

from operations, and its continuing operations are not expected to generate

revenue at levels sufficient to fund its ongoing costs, which consist primarily

of public-company reporting and compliance, professional and advisory fees, and

residual warranty support for legacy products.

As of June 30, 2026, the Company

had cash and cash equivalents of $ 75 , restricted cash of $ 447 , and a note

payable to a related party of $ 500 .

Disbursement of the restricted loan

proceeds is subject to the approval of the related-party lender.

2026, the Company entered into a Loan Agreement with First Finance Ltd.

(“First Finance”) providing for advances of up to $ 1,000 , of which $ 500 was received on June 29,

2026 and the remaining $ 500 was received on July 16, 2026.

outstanding under the Loan Agreement bear interest at 11 % per annum and mature

on the earlier of December 30, 2026 , which is within twelve months after the date these

condensed consolidated financial statements are issued, or such date as the parties may mutually agree in writing.

See Note 4 — Notes

These conditions

raise substantial doubt about the Company's ability to continue as a going

concern within one year after the date these condensed consolidated financial

statements are issued.

Management's plans to

address these conditions consist principally of the transactions contemplated

by the Merger Agreement entered into on July 1, 2026, including the concurrent

registered offering of a minimum of $ 10,000 and a maximum of $ 15,000 described

in Note 14 — Subsequent Events.

Consummation of those transactions is subject

to conditions that are not within the Company's control, including

effectiveness of a registration statement on Form S-1, completion of the

offering, approval by Nasdaq of the initial listing application required as a

result of the Change of Control determination described in Note 14, and

satisfaction of the remaining closing conditions under the Merger Agreement.

Because the execution and ultimate success of these plans depend on the occurrence of significant events that are outside the Company's control, management cannot conclude that the plans will be effectively implemented in a manner that alleviates the conditions giving rise to substantial doubt.

Accordingly, substantial doubt about the Company's ability to continue as a going concern is not alleviated as of the date these condensed consolidated financial statements are issued.

The condensed consolidated financial

statements do not include any adjustments relating to the recoverability and

classification of recorded asset amounts or the amount and classification of

liabilities that might result from the outcome of this uncertainty.

Basis of Presentation:

11 unchanged sentences

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

The accompanying condensed consolidated financial statements contain all adjustments, consisting of normal recurring accruals, necessary for a fair presentation of our financial position as of March 31, 2026 and December 31, 2025, the results of operations for the three months ended March 31, 2026 and 2025 , and the cash flows for the three months ended March 31, 2026 and 2025 .

The results of operations for the three months ended March 31, 2026 and 2025 are not necessarily indicative of the results for a full-year period.

The accompanying condensed consolidated financial statements contain all adjustments, consisting of normal recurring accruals, necessary for a fair presentation of our financial position as of June 30, 2026 and December 31, 2025 , the results of operations for the three and six months ended June 30, 2026 and 2025 , and the cash flows for the six months ended June 30, 2026 and 2025 .

The results of operations for the three and six months ended June 30, 2026 and 2025 are not necessarily indicative of the results for a full-year period.

These interim unaudited condensed consolidated financial statements should be read in conjunction with the financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2025 filed with the SEC.

On April 22, 2026 (subsequent to the balance sheet date), the Company completed its reincorporation from Delaware to Nevada by conversion pursuant to the Plan of Conversion approved by stockholders on March 12, 2026.

The Company is now a Nevada corporation, and all references to the Company’s governing law and stockholder rights in these financial statements should be read in light of Nevada law.

See Note 15 — Subsequent Events for additional information .

On April 22, 2026 the Company completed its reincorporation from Delaware to Nevada by conversion pursuant to the Plan of Conversion approved by stockholders on March 12, 2026.

The Company is now a Nevada corporation, and all references to the Company's

governing law and stockholder rights in these financial statements should be read in light of Nevada law.

The conversion was a

change in legal domicile only;

the Company's assets and liabilities were

carried forward at their historical carrying amounts, and the conversion had no

effect on the Company's financial position, results of operations, or cash

See Note 10 — Shareholders' Equity.

Reverse Stock Split

8 unchanged sentences

Restricted Cash

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 .

As of March 31, 2026, restricted cash totaled $ 297 and consisted entirely of remaining proceeds from the $ 3,000 convertible note issued to First Finance Ltd.

on June 20, 2025 (compared to $ 0 as of March 31, 2025).

These funds are subject to enforceable contractual restrictions under Schedule 8.5 of the related Note Purchase Agreement, which requires disbursement only upon achievement of specified milestones for uses such as advisory fees, warrant holder payments, legal and audit expenses, staff costs, foreign subsidiary shutdown costs, and severance/PTO payments.

The funds are held in a segregated account and are released only upon meeting these milestones.

During the three months ended March 31, 2026, $ 222 was disbursed in accordance with the agreement, resulting in the ending restricted cash balance of $ 297 .

The Company expects the remaining restricted cash to be fully disbursed by December 2026 as milestones are achieved.

In contrast, the proceeds received from the March 2, 2026 Securities Purchase Agreement with First Finance Ltd.

(totaling $ 1,750 ) are not subject to the same contractual disbursement restrictions.

Following stockholder approval of the Company’s reincorporation on March 12, 2026, these proceeds became available for general corporate purposes and are therefore classified within Cash and cash equivalents on the balance sheet.

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

Changes in restricted cash are not reported as separate cash flow activities but are disclosed in this note.

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 condensed

consolidated statements

of cash flows, in accordance with ASU 2016 - 18 .

Restricted cash was

$ 447 as of June 30, 2026 and $ 519 as of December 31, 2025.

December 31, 2025 , restricted cash consisted of the remaining proceeds of the $ 3,000 convertible note issued to First Finance on June 20, 2025, which were subject to contractual

restrictions under the related Note Purchase Agreement, and were fully disbursed

during the six months ended June 30, 2026.

As of June 30, 2026, restricted cash consisted of

proceeds of the Loan Agreement entered into with First Finance on June 30,

Under the terms of the Loan Agreement, disbursement of the loan proceeds

is subject to review and approval by the lender.

See Note 4 — Notes Payable.

UNAUDITED NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

6 unchanged sentences

The significant accounting policies were described in Note 1 to the audited consolidated financial statements included in the Company’s annual report on Form 10-K for the year ended December 31, 2025 .

There have been no changes to these policies during the quarter ended March 31, 2026 that are of significance or potential significance to the Company, other than presentation of discontinued operations as described above and in Note 2 .

There have been no changes to these policies during the quarter ended June 30, 2026 that are of significance or potential significance to the Company, other than presentation of discontinued operations as described above and in Note 2 ,

and the addition of

the Company's accounting for the related party note payable described in Note 4,

which is recorded at amortized cost with interest expense recognized as

Recent Accounting Pronouncements

3 unchanged sentences

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

Disaggregation of Income Statement Expenses," which requires public business entities, such as the Company, to provide disaggregated disclosure of specific natural expense categories underlying certain income statement expense line items in the notes to the financial statements.

The standard identifies five required natural expense categories for disaggregation—employee compensation, depreciation, amortization, inventory expense, and other manufacturing expenses—along with a residual "other" category for remaining amounts within relevant expense captions (e.g., cost of sales, selling, general and administrative expenses).

ASU 2024 - 03 does not alter the expense captions presented on the face of the income statement but enhances footnote disclosures to improve transparency.

The standard is effective for annual periods beginning after December 15, 2026, with early adoption permitted, and must be applied prospectively, though retrospective application is optional.

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.

Disaggregation of Income Statement Expenses , which requires disaggregated

disclosure of specified natural expense categories underlying certain income

statement expense captions.

The standard is effective for annual periods

beginning after December 15, 2026 and interim periods beginning after December

15, 2027, with early adoption permitted, and may be applied prospectively or

retrospectively.

The Company is evaluating the impact of the standard and does

not expect adoption to have a material effect on its financial position or

results of operations.

The Company has determined that recently issued accounting standards, other than the above discussed, will not have a material impact on its consolidated financial position, results of operations or cash flows.

UNAUDITED NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share amounts)

Discontinued Operations and Assets Held for Sale

On October 24, 2025, the Company completed the sale of substantially all of its operating assets and intellectual property related to its product business to Biamp Systems, LLC (the “Asset Sale”).

The transaction represented a strategic shift that had (and continues to have) a major effect on the Company’s operations and financial results.

On October 24, 2025, the Company completed the Asset Sale .

The transaction represented a strategic shift that had a major effect on the Company's

operations and financial results.

Accordingly, the results of the disposed component are presented as discontinued operations in the accompanying condensed consolidated statements of operations and cash flows for all periods presented, in accordance with ASC 205 - 20 .

The disposal group was sold prior to December 31, 2025.

As a result, the carrying value of the remaining disposal group was $ 0 at both December 31, 2025 and March 31, 2026 .

The Company continues to fulfill limited warranty and technical support obligations for legacy products sold prior to the Asset Sale.

These activities are reflected in continuing operations, along with residual collections.

Liability settlements are reflected within discontinued operations.

For a full description of the Asset Sale, including the Strategic Plan approved by the Board in September 2025, the mandatory redemption of the Class A Redeemable Preferred Stock (classified as a current liability — see Note 3 ), and the classification of assets and liabilities as held for sale, see Note 2 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2025.

The disposal of the product business was completed prior to December 31, 2025, and the Company generated no revenue from discontinued operations in the three or six months ended June 30, 2026.

Product returns and related credits are reflected within cost of goods sold.

The amounts reported within discontinued operations in the 2026 periods relate to the settlement and wind-down of the previously disposed business rather than to any continuing activity, and consist principally of (i) a benefit from the release of liabilities for uncertain tax positions upon the lapse of statutes of limitations, (ii) product warranty and returns cost adjustments, and (iii) costs associated with the wind-down of the Company’s former foreign subsidiaries.

These amounts are presented as adjustments to amounts previously reported in discontinued operations in accordance with ASC 205-20-45-4.

Residual assets and liabilities of the disposed component remain on the condensed consolidated balance sheets and are presented separately as assets and liabilities related to discontinued operations pending final collection and settlement.

UNAUDITED NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share amounts)

The Company continues to fulfill limited

warranty and technical support obligations for legacy products sold prior to

the Asset Sale.

Those activities, together with residual collections, are

reflected in continuing operations.

Settlements of liabilities of the disposed

component are reflected within discontinued operations.

Cash flows of

discontinued operations were as follows:

net cash (used in) provided by

operating activities of $ ( 860 ) and $ 4,484 , and net cash used in investing

activities of $ 0 and $ ( 21 ) , for the six months ended June 30, 2026 and 2025,

respectively.

For a full description of the Asset Sale, including the Strategic Plan approved by the Board in September 2025, and the classification of assets and liabilities as held for sale, see Note 2 to the Company's

Annual Report on Form 10-K for the year ended December 31, 2025.

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

Three months ended March 31,

Three months ended June 30,

Six months ended June 30,

Cost of goods sold

1 unchanged sentence

Operating expenses

Other expenses

(income) expenses, net

(loss) from discontinued operations before income taxes

2 unchanged sentences

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

Three months ended March 31,

Three months ended June 30,

Six months ended June 30,

Audio conferencing

1 unchanged sentence

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

Three months ended March 31,

Three months ended June 30,

Six months ended June 30,

North and South America

1 unchanged sentence

Europe and Africa

UNAUDITED NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

Assets grouped into discontinued operations (unaudited):

March 31, 2026

June 30, 2026

December 31, 2025

4 unchanged sentences

Other long-term assets

UNAUDITED NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

Liabilities grouped into discontinued operations (unaudited):

March 31, 2026

June 30, 2026

December 31, 2025

3 unchanged sentences

Total liabilities

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

The Company will continue to provide product support and warranty services as it pursues a Strategic Transaction in fiscal 2026 .

Management concluded

the disposal constituted a component and a strategic shift because it

eliminated significant revenue-generating activities.

The Company continues to

provide limited product support and warranty services.

On July 1, 2026, the Company entered into an Agreement and Plan of Merger by and among the Company, CLRO Merger Sub, Inc., Cortigent, Inc.

and Vivani Medical, Inc.;

see Note 14 — Subsequent Events.

Capital Structure:

Class A Redeemable Preferred Stock

On July 18, 2025, the Company issued

2,069,065 shares of Class A Redeemable Preferred Stock as a one-time special

stock dividend to holders of common stock and common stock equivalents of

record as of July 11, 2025 (one Class A share for each common share and common

stock equivalent then outstanding).

The Class A shares have a par value of

$ 0.001 per share and rank senior to common stock.

2,069,066 shares are authorized and were

issued and outstanding as of March 31, 2026 .

Pursuant to the Certificate of Designation, the Class A shares are mandatorily redeemable at par value upon the occurrence of an Asset Sale (as defined).

The Asset Sale to Biamp Systems, LLC closed on October 24, 2025.

As a result, the redemption obligation became unconditional and the Class A shares are classified as a current liability at par value ($ 2 ) as of March 31, 2026 in accordance with ASC 480-10-S99.

The redemption occurred on April 21, 2026.

The ultimate redemption amount equaled the actual net proceeds received from the Asset Sale after permitted expenses.

See Note 15 — Subsequent Events for additional information.

On July 18, 2025, following the Board of Directors' 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 Class A Redeemable Preferred Stock as a one -time special stock dividend to holders of common stock and common stock equivalents of record as of the record date, consisting of one Class A share for each common share and common stock equivalent then outstanding.

The Class A shares had a par value of $ 0.001 per share and ranked senior to common stock.

Pursuant to the Certificate of Designation, the Class A shares were mandatorily redeemable upon an Asset Sale for 100 % of the net proceeds as defined therein, subject to a minimum of the par value of $ 0.001 per share.

The closing of the Asset Sale to Biamp Systems, LLC on October 24, 2025 triggered the mandatory redemption obligation and rendered it unconditional.

Accordingly, the Class A Redeemable Preferred Stock was reclassified from temporary equity to a current liability in accordance with ASC 480 -10-S 99 and was subsequently measured at the amount expected to be paid, with changes in the estimated redemption amount recognized in discontinued operations.

The net proceeds of the Asset Sale, after permitted expenses and net asset recoveries, were not sufficient to provide any distribution to holders of the Class A Redeemable Preferred Stock in excess of par value.

The estimated redemption obligation was accordingly reduced from $ 758 at the date of reclassification to $ 50 as of December 31, 2025, and further to $ 2 as of March 31, 2026.

The $ 48 adjustment recognized during the three months ended March 31, 2026 is included in the six months ended June 30, 2026.

No remeasurement was recognized during the three months ended June 30, 2026.

On April 10, 2026, the Board of Directors approved the redemption of all 2,069,065 outstanding shares of Class A Redeemable Preferred Stock.

The redemption was completed on April 21, 2026 at the par value of $ 0.001 per share, for aggregate consideration of $ 2 , and all Class A shares were cancelled upon redemption.

Holders of the Class A Redeemable Preferred Stock received no distribution of Asset Sale proceeds.

No shares of Class A Redeemable Preferred Stock were issued or outstanding as of June 30, 2026.

As of December 31, 2025, 2,069,066 shares were authorized and 2,069,065 shares were issued and outstanding, with a redemption payable of $ 50 recorded as a current liability.

The Class A Redeemable Preferred Stock participated only in liquidation or sale proceeds and did not receive dividends other than the redemption amount.

It was excluded from the computation of diluted earnings per share as anti-dilutive for all periods in which it was outstanding.

See Note 7 — Income (Loss) per Share.

UNAUDITED NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

Debt and Equity:

Conversion of Convertible Note

On June 20, 2025, the Company issued a $ 3,000 convertible note to First Finance Ltd.

The note accrued interest at 10 % per annum and was mandatorily convertible into shares of newly designated Class B Convertible Preferred Stock upon the issuance of Class A Redeemable Preferred Stock (which occurred on July 18, 2025).

On July 21, 2025, the convertible note (together with accrued interest) automatically converted into 3,026 shares of Class B Convertible Preferred Stock.

(Dollars in thousands, except per share amounts)

Notes Payable

Convertible Note — First Finance

On June 20, 2025, the Company issued a $ 3,000 convertible note to First Finance .

The note accrued interest at 10 % per annum and was mandatorily convertible into shares of newly designated Class B Convertible Preferred Stock upon the issuance of the Class A Redeemable Preferred Stock, which occurred on July 18, 2025.

Interest expense on the convertible note of $ 8 and $ 8 was recognized during the three and six months ended June 30, 2025, respectively.

On July 21, 2025, the note, together with accrued interest automatically converted into 3,026 shares of Class B Convertible Preferred Stock.

The conversion was recognized in equity with no gain or loss.

The conversion ratio was fixed at issuance and qualified for the ASC 815-40 own-equity scope exception.

As of March 31, 2026 , there is no outstanding convertible note liability.

All Class B Convertible Preferred Stock has been converted or redeemed (see Note 11 – Shareholders’ Equity).

This conversion was a non-cash financing activity and is disclosed in the supplemental cash flow information (in the nine months ended September 30, 2025).

The conversion ratio was fixed at issuance and the instrument qualified for the own-equity scope exception under ASC 815 - 40 .

Because the conversion occurred after June 30, 2025, it is not reflected as a non-cash financing activity in the supplemental cash flow information for either period presented.

No convertible note liability was outstanding as of June 30, 2026 or December 31, 2025, and all Class B Convertible Preferred Stock has been converted or redeemed.

See Note 10 — Shareholders' Equity.

Note Payable — Related Party

On June 30, 2026, the Company entered into a Loan Agreement with First Finance, the Company's largest stockholder, pursuant to which First Finance agreed to lend the Company up to $ 1,000 in the aggregate.

The loan is advanced in tranches consisting of an initial tranche of $ 500 and additional tranches of $ 250 each, in each case on dates mutually agreed by the parties.

Amounts advanced bear interest at 11 % per annum, calculated daily on the basis of a 360 -day year and accruing from the applicable advance date until repayment in full.

Overdue interest is compounded and added to principal .

The loan matures on the earlier of December 30, 2026 or such other date as the parties may mutually agree in writing and may be prepaid in whole or in part at any time without notice, bonus or penalty, provided no event of default is outstanding.

The Loan Agreement contains customary events of default, including failure to pay principal or interest when due, subject to a ten -business day cure period;

repayment of other indebtedness prior to the loan;

assignment for the benefit of creditors;

liquidation or dissolution;

appointment of a receiver;

and bankruptcy proceedings.

Upon an event of default, the outstanding indebtedness becomes immediately due and payable.

The Loan Agreement is governed by the laws of the State of Nevada.

The Company intends to use the proceeds of the loan for general working capital purposes;

however, disbursement of the proceeds is subject to review and approval by First Finance.

As of June 30, 2026, $ 447 of the proceeds remained undisbursed and is classified as restricted cash.

See Note 1 — Restricted Cash.

The Company received the initial tranche of $ 500 on June 29, 2026, in anticipation of execution of the Loan Agreement on June 30, 2026, and the advance is recorded as a note payable to a related party within current liabilities in the accompanying condensed consolidated balance sheet as of June 30, 2026.

Accrued interest as of June 30, 2026, and interest expense for the three and six months ended June 30, 2026, were less than $ 1 and are not presented separately.

The loan is carried at amortized cost, and its carrying amount approximates fair value given its short term and market rate of interest.

Assuming the loan remains outstanding until contractual maturity with no prepayments, the Company expects to pay principal of $ 1,000 and accrued interest of approximately $ 54 on December 30, 2026 .

Because First Finance beneficially owned approximately 61.34 % of the Company's common stock on an as-converted basis as of June 30, 2026, the Loan Agreement constitutes a related party transaction.

The terms of the Loan Agreement were reviewed and approved in accordance with the Company's related person transaction policy.

Subsequent to June 30, 2026, the Company received two additional tranches of $ 250 each, on July 16, 2026, drawing the full $ 1,000 available under the Loan Agreement.

See Note 14 — Subsequent Events.

UNAUDITED NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share amounts)

Warrants Repurchased (and Related Party)

September 2025 Repurchases

During September 2025, the Company repurchased and cancelled all then-outstanding warrants as follows:

During September 2025, the Company repurchased and cancelled certain outstanding

common stock purchase

warrants as follows:

Intracoastal Capital, LLC – 6,039 underlying shares (September 2, 2025) for $ 4

2 unchanged sentences

Edward Bryan Bagley – 3,788 underlying shares (September 16, 2025) for $ 2

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

All repurchased warrants were cancelled upon settlement and accounted for as equity transactions with no effect on the

statement of operations.

2026 Issuance

On March 2, 2026, in connection with the Securities Purchase Agreement with First Finance described in Note 10 — Shareholders' Equity, the Company issued warrants to purchase up to 437,500 shares of common stock.

The warrants had an exercise price of $ 5.00 per share and a term of two years , expiring March 2, 2028 , and became exercisable six months from the date of issuance.

It is a condition to Vivani Medical, Inc.’s obligations to consummate the closing of the Merger Agreement for First Finance to have waived any right to receive value in respect of any warrants held by it or its affiliates.

On August 4, 2026, all warrants issued pursuant to the Securities Purchase Agreement were cancelled.

See Note 14 — Subsequent Events.

March 2026 Repurchase

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

pursuant to which the Company 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 common stock.

The Company paid an aggregate cash purchase price of $ 22 ($ 0.911 per underlying share).

pursuant to which the Company repurchased outstanding common stock purchase warrants originally issued on September 12, 2021, exercisable for an aggregate of 24,155 shares of common stock.

The Company paid

underlying share, representing an aggregate cash purchase price of $ 22 .

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

As of March 31, 2026 , 624,702 warrants are outstanding ( 187,202 from prior financings that were not repurchased and 437,500 new warrants issued on March 2, 2026 to First Finance Ltd., see Note 11).

The Company did not issue any other new warrants during the quarter ended March 31, 2026 .

The repurchase from Edward Dallin Bagley was approved by the Board of Directors in accordance with the Company’s related person transaction policy.

The repurchase was

accounted for as an equity transaction with no effect on the condensed

consolidated statements of operations.

Outstanding as of December 31, 2025

Repurchased and cancelled

Outstanding as of

June 30, 2026

Warrants outstanding

as of June 30, 2026 consist of

( 187,202 underlying shares

prior financings and 437,500 underlying shares

issued on March 2, 2026.

The Company issued no warrants and

repurchased no warrants during the three months ended June 30, 2026.

Related Party

The September 2025

repurchase from Edward Dallin Bagley was approved by the Board of Directors in

accordance with the Company's related person transaction policy.

No amounts were outstanding with Mr.

Bagley related to these warrants as of March 31, 2026 .

Bagley related to these warrants as of June 30 , 2026 .

UNAUDITED NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share amounts)

Revenue Information

The Company recognized no revenue from continuing operations for the three months ended March 31, 2026 (and the comparable 2025 period).

All revenue formerly reported by product group and geographic region is now presented within discontinued operations (see Note 2).

The Company recognized no revenue from

continuing operations

during the three and six months ended June 30, 2026 or during the

comparable periods in 2025.

All revenue formerly reported by product group and

geographic region relates to the disposed product business and is presented

within discontinued operations.

See Note 2 — Discontinued Operations and Assets

Held for Sale for disaggregation of that revenue by primary product group and

major region.

Following the Asset Sale, the Company's

only remaining obligations to customers are assurance-type warranties on

products sold prior to October 24, 2025.

Assurance-type warranties are

accounted for as a cost accrual under ASC 460 rather than as a separate

performance obligation under ASC 606, and no portion of any transaction price

has been allocated to them.

See Note 1 — Product Warranties.

The Company had no

contract assets and no contract liabilities as of June 30, 2026 or December 31,

2025, and deferred product revenue was $ 0 at both dates.

The Company had no

remaining performance obligations as of June 30, 2026.

Income (Loss) per share

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

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

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

Basic net income

(loss) per share is computed by dividing net income (loss) attributable to

common stockholders by the weighted-average number of common shares outstanding

during the period.

Diluted net income (loss) per share reflects the potential

dilution that would occur if outstanding options and warrants were exercised,

using the treasury stock method, except when the effect would be anti-dilutive.

All share and per-share amounts have been retroactively adjusted to reflect the

Company's 1-for-15 reverse stock split (see Note 1).

As discussed in Note

2 — Discontinued Operations and Assets Held for Sale, the Company presents

basic and diluted income (loss) per share separately for continuing operations,

discontinued operations, and total for each period presented.

In accordance with

ASC 260-10-45-18, income (loss) from continuing operations is used as the

control number in determining whether potential common shares are dilutive.

Because the Company reported a loss from continuing operations in each period

presented, all outstanding options and warrants were anti-dilutive and were

excluded from the computation of diluted income (loss) per share for all

periods, including the computation of diluted income per share from

discontinued operations.

Accordingly, diluted income (loss) per share equals

basic income (loss) per share for all periods presented.

UNAUDITED NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

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

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

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

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

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

The Class A Redeemable Preferred Stock was

issued on July 18, 2025 and was not outstanding during the three or six months

ended June 30, 2025.

Upon the closing of the Asset Sale on October 24, 2025 it

was reclassified from temporary equity to a current liability and ceased to be

an equity instrument, and it was redeemed in full at par value on April 21,

2026 with holders receiving no distribution of Asset Sale proceeds.

Accordingly, no income or loss was allocated to the Class A Redeemable

Preferred Stock under the two-class method in any period presented.

— Capital Structure:

Class A Redeemable Preferred Stock .

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

Three months ended March 31,

Three months ended June 30,

Six months ended June 30,

Loss from continuing operations

13 unchanged sentences

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

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

In October 2025, significant inventories were sold, and no inventory remains in assets related to discontinued operations as of December 31, 2025 and March 31, 2026.

Some inventories were retained to service warranty liabilities.

Inventories, net of reserves, as of March 31, 2026 and December 31, 2025 consisted of the following:

March 31, 2026

Inventories consist solely of finished goods retained to service warranty obligations on products sold prior to the Asset Sale.

Inventories are stated at the lower of cost and net realizable value, with cost determined on a first-in, first-out (FIFO) basis.

In connection with the Asset Sale completed on October 24, 2025, substantially all product inventory was sold to Biamp Systems, LLC.

No inventory is included in assets related to discontinued operations as of June 30, 2026 or December 31, 2025.

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

Inventories, net of reserves, consisted of the following:

June 30, 2026

December 31, 2025

Finished goods

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

Rent expense for three months ended March 31, 2026 and 2025 was as follows:

Three months ended March 31,

During the three months ended June 30, 2026, the Company consumed in warranty servicing $ 29 of inventory, recorded within cost of goods sold, and $ 304 inventory remained as of June 30, 2026.

See Note 1 — Product Warranties.

recognizes operating lease cost on a straight-line basis over the lease term,

taking into account future rent escalations and rent holiday periods.

Rent expense for three and six months ended June 30, 2026 and 2025 was as follows:

Three months ended June 30,

Six months ended June 30,

Continuing operations

1 unchanged sentence

Total rent expense

As of March 31, 2026, the Company had one remaining operating lease — the Edgewater Corporate Park facility at 5225 Wiley Post Way, Salt Lake City, Utah (approximately 9,402 square feet), which supported administrative, sales, marketing, customer support, and warranty operations.

The lease was scheduled to expire in February 2028 .

Subsequent to March 31, 2026, on April 7, 2026, the Company terminated the Edgewater lease for a $ 300 termination fee (see Note 15 — Subsequent Events).

The other two leases (Gainesville, FL and the Salt Lake City warehouse at 363 West 2720 South) had already been terminated prior to March 31, 2026.

As of December 31,

2025, the Company had three operating leases:

the Edgewater Corporate Park facility at 5225 Wiley Post Way, Salt Lake City, Utah (approximately 9,402 square feet), which supported administrative, sales, marketing, customer support, and warranty operations and was scheduled to expire in February 2028 ;

a facility in

Gainesville, Florida;

and a warehouse at 363 West 2720 South, Salt Lake City,

The Gainesville and warehouse leases were terminated during the three

months ended March 31, 2026.

On April 7, 2026,

the Company entered into a lease termination agreement with Edgewater Corporate

Park, LLC terminating the Edgewater lease in exchange for a termination fee of

Upon termination, the Company derecognized the remaining operating lease

right-of-use asset of $ 321 and the related operating lease liability of $ 337

and recognized a net gain of $ 16 , which is included in the condensed

consolidated statements of operations for the three and six months ended June

Following these

terminations, the Company had no operating leases, no operating lease

right-of-use assets, and no operating lease liabilities as of June 30, 2026.

UNAUDITED NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1 unchanged sentence

Supplemental cash flow information related to leases was as follows:

Three months ended March 31,

Six Months Ended June 30,

Cash paid for amounts included in the measurement of lease liabilities

3 unchanged sentences

Supplemental balance sheet information related to leases was as follows:

March 31, 2026

June 30, 2026

December 31, 2025

5 unchanged sentences

Weighted average discount rate for operating leases

The following represents maturities of operating lease liabilities as of March 31, 2026 :

Years ending December 31,

2026 (Remainder)

Total lease payments

Imputed interest

Convertible Note Payable

On June 20, 2025, the Company issued a

$ 3,000 convertible note to First Finance Ltd.

The note accrued interest at 10 % per annum and was mandatorily convertible into Class B Convertible Preferred Stock upon the issuance of Class A Redeemable Preferred Stock (which occurred July 18, 2025).

On July 21, 2025, the note (together with accrued interest) automatically converted into 3,026 shares of Class B Convertible Preferred Stock.

The conversion was recognized in equity with no gain or loss recorded.

As of March 31, 2026, there is no outstanding convertible note liability.

See Note 4 – Debt and Equity for additional information

UNAUDITED NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share amounts)

The Company had no remaining operating lease payment obligations as of June 30, 2026 .

Shareholders' Equity

Three months ended March 31,

Three months ended June 30,

Six months ended June 30,

Preferred stock, common stock and additional paid-in capital

16 unchanged sentences

Total shareholders' equity

UNAUDITED NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share amounts)

Issue of Common Stock

3 unchanged sentences

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

UNAUDITED NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share amounts)

Amendments to Certificate of Incorporation and Reverse Stock Split

14 unchanged sentences

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

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

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

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

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

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

Redeemable Preferred Stock ranked senior to common stock and was mandatorily

redeemable upon an Asset Sale.

The Class B Convertible Preferred Stock ranked

senior to common stock and to other equity, except the Class A Redeemable

Preferred Stock, and carried dividend, voting (on an as-converted basis), and

liquidation rights.

The issuance, reclassification, redemption, and conversion

of these securities during 2025 and 2026 are described below.

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

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

UNAUDITED NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share amounts)

On July 18, 2025, the

Company issued 2,069,065 shares of Class A Redeemable Preferred Stock, par

value $ 0.001 per share, as a one-time special stock dividend to holders of

common stock and common stock equivalents of record as of July 11, 2025,

consisting of one Class A share for each common share and common stock

equivalent then outstanding.

The Class A shares ranked senior to common stock

and were mandatorily redeemable upon an Asset Sale for 100 % of the net proceeds

as defined in the Certificate of Designation, subject to a minimum of par

Upon the closing of the Asset Sale on October 24, 2025, the redemption

obligation became unconditional and the Class A Redeemable Preferred Stock was

reclassified from temporary equity to a current liability in accordance with

ASC 480-10-S99.

On April 21, 2026, the Company redeemed all 2,069,065

outstanding shares at par value for aggregate consideration of $ 2 , and all

Class A shares were cancelled;

holders received no distribution of Asset Sale

No shares of Class A Redeemable Preferred Stock were issued or

outstanding as of June 30, 2026.

See Note 3 — Capital Structure:

Redeemable Preferred Stock.

On July 21, 2025, the

Company's $ 3,000 convertible note issued to First Finance on June 20,

2025, together with $ 26 of accrued interest, automatically converted into 3,026

shares of Class B Convertible Preferred Stock pursuant to its original terms,

at a fixed conversion ratio of 166.44474 common shares per Class B share

determined at issuance.

Because the conversion option was indexed to, and

settled in, the Company's own equity, it qualified for the own-equity scope

exception under ASC 815-40;

accordingly, no derivative liability was recorded

and the full conversion amount was recognized in equity with no gain or loss.

On November 24, 2025, First Finance 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.

No shares of Class B Convertible

Preferred Stock were issued or outstanding as of June 30, 2026 or December 31,

See Note 4 — Notes Payable.

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

March 2, 2026 Private Placement

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

the Company’s largest stockholder, pursuant to which the Company issued and sold 437,500 shares of common stock at a purchase price of $ 4.00 per share and a warrant to purchase up to 437,500 additional shares of common stock at an exercise price of $ 5.00 per share.

On March 2, 2026, the Company entered into a Securities Purchase Agreement with First Finance, the Company’s largest stockholder, pursuant to which the Company issued and sold 437,500 shares of common stock at a purchase price of $ 4.00 per share and a warrant to purchase up to 437,500 additional shares of common stock at an exercise price of $ 5.00 per share.

The warrant has a two-year term expiring on March 2, 2028 and becomes exercisable on September 2, 2026 .

4 unchanged sentences

The portion of the proceeds allocated to the warrants, $ 618 , was recorded in additional paid-in capital – warrants.

The Company also entered into a Registration Rights Agreement with First Finance Ltd.

providing for the registration of the shares and warrant shares for resale.

The Company also entered into a Registration Rights Agreement with First Finance providing for the registration of the shares and warrant shares for resale.

On August 4, 2026, all warrants issued pursuant to the Securities Purchase Agreement were cancelled.

See Note 14 — Subsequent Events.

The issuance was made in reliance on the exemption from registration provided by Section 4 (a)( 2 ) of the Securities Act of 1933 , as amended, and Rule 506 (b) promulgated thereunder.

3 unchanged sentences

Share-based Compensation

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

These variables include, but are not limited to, the risk-free interest rate of the awards, the expected life of the awards, the expected volatility over the term of the awards, and the expected dividends of the awards.

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

A summary of the stock option activity under the Company’s plans for the three months ended March 31, 2026 , is as follows:

The Company determines the fair value of share-based payments on the date of grant using the Black-Scholes option pricing model in accordance with ASC Topic 718, which requires assumptions regarding the risk-free interest rate, the expected life of the awards, expected volatility over the term of the awards, and expected dividends.

No stock options were granted during the three and six months ended June 30, 2026 or 2025.

A summary of the stock option activity under the Company’s plans for the six months ended June 30, 2026 , is as follows:

Number of shares

1 unchanged sentence

Options outstanding at beginning of year

Forfeited prior to vesting

Canceled or expired

Options outstanding at March 31, 2026

Options exercisable at end of March 31, 2026

As of March 31, 2026 , the total remaining unrecognized compensation cost related to non-vested stock options, net of forfeitures, was $ 0 .

Options outstanding at June 30, 2026

Options exercisable at end of June 30, 2026

All outstanding options were fully vested and exercisable as of June 30, 2026, and had no aggregate intrinsic value as the exercise price exceeded the market price of the Company's common stock.

As of June 30, 2026 , total remaining unrecognized compensation cost related to non-vested stock options, net of forfeitures, was $ 0 .

Share based compensation expense has been recorded as follows:

Three months ended March 31,

Three months ended June 30,

Six months ended June 30,

Cost of goods sold

2 unchanged sentences

General and administrative

On July 17, 2026, the Board of Directors adopted the Company's 2026 Omnibus Incentive Plan.

No awards had been granted under the plan as of the date of this report.

See Note 14 — Subsequent Events.

UNAUDITED NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share amounts)

The Company recorded a full valuation allowance against U.S Federal and State deferred tax assets, which results in no income tax benefit for losses in these jurisdictions.

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

Provision for income taxes for the three months ended March 31, 2026 mostly represents income tax expense (benefit) recorded for jurisdictions outside the United States.

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

This standard requires that tax positions be assessed using a two -step process.

A tax position is recognized if it meets a “more likely than not” threshold and is measured at the largest amount of benefit that is greater than 50 percent likely of being realized.

Uncertain tax positions must be reviewed at each balance sheet date.

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 for continuing operations as of March 31, 2026, that would favorably impact our effective tax rate if recognized was $ 417 .

As of March 31, 2026, we accrued $ 80 in interest and penalties related to unrecognized tax benefits.

We account for interest expense and penalties for unrecognized tax benefits as part of our income tax provision.

Although we believe our estimates are reasonable, we can make no assurance that the final tax outcome of these matters will not be different from that which we have reflected in our historical income tax provisions and accruals.

Such difference could have a material impact on our income tax provision and operating results in the period in which we make such determination.

The Company maintains

a full valuation allowance against its U.S.

federal and state deferred tax

Management concluded that it is more likely than not that these

deferred tax assets will not be realized based on the Company's cumulative

pre-tax losses and other sources of negative evidence.

Accordingly, no income

tax benefit is recognized for losses in those jurisdictions.

Tax positions are

recognized when it is more likely than not that the position will be sustained

on examination, and are measured at the largest amount of benefit that is

greater than 50 percent likely of being realized.

Uncertain tax positions are

reviewed at each balance sheet date.

Liabilities recorded as a result of this

analysis are recorded separately from current and deferred income tax accounts.

The Company accounts for interest and penalties related to unrecognized tax

benefits as a component of its income tax provision.

The total amount of unrecognized tax benefits as of June 30, 2026 , that would favorably impact the effective tax rate if recognized was $ 417 .

As of June 30, 2026 ,

the Company had

accrued $ 80 in interest and penalties related to unrecognized tax benefits.

A reconciliation of the beginning and ending amount of liabilities associated with uncertain tax positions is as follows:

Quarter ended March 31,

Six Months ended June 30,

Balance – beginning of year

3 unchanged sentences

Uncertain tax positions, ending balance

Although the Company believes its estimates

are reasonable, no assurance can be given that the final tax outcome of these

matters will not differ from the amounts reflected in its historical income tax

provisions and accruals.

Such differences could have a material impact on the

Company's income tax provision and operating results in the period in which

such determination is made.

The Company's U.S.

federal income tax returns

for 2022 through 2025 are subject to examination.

Company also files in various state and foreign jurisdictions.

exceptions, the Company is no longer subject to federal, state, or non-U.S.

federal income tax returns for 2022 through 2025 are subject to examination.

The Company also files in various state and foreign jurisdictions.

With few exceptions, the Company is no longer subject to federal, state, or non-U.S.

income tax examinations by tax authorities for years prior to 2022.

The Merger described in Note 14 — Subsequent

Events, together with prior issuances of common stock, is expected to result in

an ownership change under Section 382 of the Internal Revenue Code, which would

substantially limit the Company's ability to utilize its net operating loss

carryforwards and other tax attributes.

Because the Company maintains a full

valuation allowance against its deferred tax assets, any such limitation is not

expected to have a material effect on the Company's financial position or results

of operations.

UNAUDITED NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1 unchanged sentence

Operating Segment

The Company operates as one operating segment.

Operating segments are defined as components of an entity for which separate financial information is regularly evaluated by the chief operating decision maker ("CODM"), which is the Company's Chief Executive Officer, in deciding how to allocate resources and assess performance.

The Company's CODM evaluates financial information and resources and assesses the performance of these resources on a consolidated basis.

There is no expense or asset information that is supplemental to information disclosed within the consolidated financial statements, that is regularly provided to the CODM.

The allocation of resources and assessment of performance of the operating segment is based on consolidated net loss and functional expenses as reported on our consolidated statements of operations and comprehensive loss.

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

The Company operates as a single operating

and reportable

Operating segments are defined as components of an entity for which separate financial information is regularly evaluated by the chief operating decision maker ("CODM")

") in deciding

how to allocate resources and assess performance.

The Company's CODM is its

Chief Executive Officer.

The CODM evaluates

financial information and assesses performance on a consolidated basis.

measure of segment profit or loss used by the CODM is consolidated net loss,

together with functional expenses, as reported in the accompanying condensed

consolidated statements of operations and comprehensive loss.

The CODM uses

that measure to monitor the Company's remaining obligations and cash

requirements and to allocate resources among the Company's remaining warranty

support, residual collection, and public-company compliance activities.

significant segment expenses, other segment items, or asset information

regularly provided to the CODM that are supplemental to the amounts disclosed

in the condensed consolidated financial statements.

Accordingly, segment

expense information is the same as the corresponding consolidated amounts, and

segment assets are equal to total assets as presented in the accompanying

condensed consolidated balance sheets.

Following the Asset

Sale completed on October 24, 2025, the Company recognized no revenue from

continuing operations in any period presented.

Revenue of the disposed product

business, disaggregated by primary product group and major geographic region,

is presented in Note 2 — Discontinued Operations and Assets Held for Sale.

of the Company's remaining assets are located in the United States.

Subsequent Events

April 1, 2026 – CEO Transition

The Company entered into a letter agreement with Derek L.

Graham to provide for his continued service as Chief Executive Officer on a transitional consulting basis following the expiration of his employment agreement on March 31, 2026.

Under the agreement, Mr.

Graham provides consulting services for up to ten hours per week at a rate of $ 160 per hour while continuing to perform all functions of the CEO.

The agreement has no fixed term and may be terminated by either party at any time.

April 7, 2026 – Lease Termination and Nasdaq Notice

The Company entered into a lease termination agreement with Edgewater Corporate Park, LLC, terminating its lease at 5225 Wiley Post Way, Salt Lake City, Utah for a $ 300 termination fee.

The termination released the Company from approximately $ 376 in remaining rent and $ 53 in restoration charges.

See Note 9 – Leases for additional details.

On the same date, the Company received a letter from Nasdaq informing it that it is not in compliance with the continued listing standards under Nasdaq Marketplace Rule 5550 (b).

The Company has 45 calendar days (until May 22, 2026) to submit a compliance plan.

See “Risk Factors” in Item 1 A for additional information.

April 10, 2026 – Class A Preferred Redemption

The Company’s Board of Directors approved the redemption of all 2,069,065 outstanding shares of Class A Redeemable Preferred Stock on April 21, 2026 at the par value of $ 0.001 per share (aggregate redemption amount of approximately $ 2 ).

See Note 3 – Class A Redeemable Preferred Stock (Current Liability) for additional details.

April 22, 2026 – Nevada Reincorporation

The Company completed its reincorporation from Delaware to Nevada by conversion, effective on or about April 22, 2026, pursuant to the Plan of Conversion approved by stockholders on March 12, 2026.

The Company is now a Nevada corporation.

See Note 1 – Business Description for additional information regarding the impact on governing law and stockholder rights.

The Company has evaluated events and transactions occurring after June 30, 2026 through August 14, 2026, the date these condensed consolidated financial statements were available to be issued.

Related Party Loan — Additional Advance

As described in Note 4 — Notes Payable, on June 30, 2026 the Company entered into a Loan Agreement with First Finance, the Company's largest stockholder, providing for advances of up to $ 1,000 in the aggregate.

The Company received the initial tranche of $ 500 on June 29, 2026, in anticipation of execution of the Loan Agreement on June 30, 2026, which is reflected as a note payable to a related party in the accompanying condensed consolidated balance sheet as of June 30, 2026.

On July 16, 2026, the Company received two additional tranches of $ 250 each, totaling $ 500 , and as of the date of this report the full $ 1,000 available under the Loan Agreement has been advanced.

Amounts outstanding bear interest at 11 % per annum and mature on the earlier of December 30, 2026 or such other date as the parties may mutually agree in writing.

Agreement and Plan of Merger

On July 1, 2026, the Company entered into an Agreement and Plan of Merger (the "Merger Agreement") by and among the Company, CLRO Merger Sub, Inc., a wholly owned subsidiary of the Company ("Merger Sub"), Cortigent, Inc.

("Cortigent"), and Vivani Medical, Inc.

("Vivani"), pursuant to which, subject to satisfaction or waiver of certain conditions, Merger Sub will merge with and into Cortigent, with Cortigent surviving as a wholly owned subsidiary of the Company (the "Merger").

Following the Merger, the Company is expected to be renamed "Cortigent Holdings, Inc." and to trade on The Nasdaq Capital Market under the symbol "CRGT."

As consideration for all issued and outstanding shares of Cortigent common stock, Vivani will receive 12,500,000 shares of the Company's common stock (the "Consideration Shares").

No fractional shares will be issued.

Fifty percent of the Consideration Shares are subject to a one -year lock-up and the remaining fifty percent to a two -year lock-up following closing, together with registration rights as set forth in the Merger Agreement.

Based on 2,675,412 shares of common stock outstanding, the Consideration Shares and up to 855,000 shares of the Company’s common stock issuable pursuant to agreements with the Company in connection with past advisory services provided to the Company and to be provided on an ongoing basis would represent approximately 82 % of the Company's common stock on a pro forma basis, excluding any shares issued in the Financing described below.

UNAUDITED NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share amounts)

In connection with the Merger, the Company filed a registration statement on Form S- 1 on August 10, 2026 for a best-efforts offering of a minimum of 2,857,142 units and a maximum of 4,285,714 units (“Units”) at $ 3.50 per Unit, to raise a minimum aggregate gross proceeds of $ 10,000 and maximum aggregate gross proceeds of $ 15,000 (the "Financing").

Each Unit is comprised of one share of the Company’s common stock and one warrant to purchase one share of common stock.

The warrants will initially have an exercise price of $ 10.00 per share of common stock, will be exercisable immediately, and will expire six months from the date of issuance.

The Company has also agreed to grant at closing up to 1,400,000 stock options to certain individuals affiliated with Cortigent, and will be subject to a 12 -month equity issuance moratorium following closing, subject to certain permitted exceptions.

At the effective time, the board of directors of the combined company will consist of five members, and the officers will be Jonathan Adams (President and Chief Executive Officer), Simon Brewer (Chief Financial Officer and Principal Accounting Officer), and Rachel Evans (Corporate Secretary).

Stockholders collectively holding at least 50.1 % of the Company's outstanding common stock have entered into voting support agreements, and Vivani has entered into a corresponding voting support agreement.

Consummation of the Merger is subject to customary closing conditions, including (i) approval by the stockholders of the Company and of Vivani, (ii) completion of the Financing, (iii) the Company's continued listing on The Nasdaq Capital Market, (iv) effectiveness of the Form S- 1 , and (v) other customary conditions, including forgiveness of Cortigent's intercompany balance owed to Vivani immediately prior to the effective time.

The Merger Agreement may be terminated by either party if the transaction has not been consummated within 180 days of July 1, 2026, subject to extension in certain circumstances, and contains a break-up fee provision.

ThinkEquity LLC acted as sole financial advisor to the Company and is entitled to a fee of $ 1,875 upon closing.

On July 2, 2026, the Company issued a press release announcing execution of the Merger Agreement.

Because the former owner of Cortigent will obtain a majority voting interest in the combined company, the Merger is expected to be accounted for as a reverse recapitalization, with Cortigent treated as the accounting acquirer and the Company treated as the accounting acquiree, notwithstanding that the Company is the surviving legal registrant.

No goodwill is expected to be recognized.

The Merger has not closed as of the date these financial statements were available to be issued, and no assets, liabilities, results of operations, or equity of Cortigent are reflected in the accompanying condensed consolidated financial statements.

Nasdaq Change of Control Determination

On July 8, 2026, the Company received a letter from the Nasdaq Listing Qualifications Staff determining that the proposed transaction with Vivani constitutes a business combination resulting in a "Change of Control" under Nasdaq Listing Rule 5110 (a).

Staff's determination was based on the combined company's management, board composition, ownership and voting power resting with Vivani — specifically, that the Chief Executive Officer, Chief Financial Officer and four of five directors will be appointed by Vivani, and that Vivani will hold between approximately 59.4 % and 67.5 % of the combined company's shares and voting power.

As a result, the post-transaction entity will be required to satisfy all of Nasdaq's initial listing criteria and to complete Nasdaq's initial listing process, including payment of all applicable fees, prior to consummation of the Merger.

If the Merger is consummated and the post-transaction company fails to qualify for listing or to timely complete the initial listing process, Nasdaq Listing Qualifications Staff will issue a Staff Determination Letter, trading in the Company's securities will be suspended, and a Form 25 -NSE will be filed to remove the Company's securities from listing and registration.

The Company submitted an initial listing application on July 22, 2026.

There can be no assurance that the post-transaction entity will satisfy Nasdaq's initial listing requirements.

This determination is in addition to the continued listing deficiency described in Part II, Item 1A.

On May 22, 2026, the Company submitted a compliance plan to Nasdaq.

UNAUDITED NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share amounts)

Stockholder Written Consent, 2026 Omnibus Incentive Plan, and Schedule 14 C

On July 17, 2026, the Company's Board of Directors adopted resolutions approving the Company's 2026 Omnibus Incentive Plan, which permits the grant of stock options, stock appreciation rights, restricted stock units, restricted stock awards, cash-based awards and dividend equivalent rights, and authorizing the preparation and filing of an information statement on Schedule 14 C.

O n August 11, 2026, the Company filed a definitive information statement on Schedule 14 C disclosing that holders representing approximately 61.3 % of the Company's voting capital stock, together with the Board of Directors, approved by written consent in lieu of a meeting (i) the issuance of the Consideration Shares, which will represent more than 20 % of the outstanding common stock and result in a change of control under Nasdaq Listing Rules 5635 (a) and 5635 (b), and (ii) the adoption of the Company’s 2026 Omnibus Incentive Plan under Nasdaq Listing Rule 5635 (c).

Pursuant to Rule 14 c- 2 under the Exchange Act, these actions may not be effected until at least 20 calendar days after the information statement is mailed to stockholders.

The stockholders did not approve the Merger itself, only the share issuance and the adoption of the plan.

No awards had been granted under the 2026 Omnibus Incentive Plan as of date of this Form 10-Q was filed.

Employment Agreement

On July 31, 2026, the Company entered into an employment agreement with Simon Brewer (the “Employment Agreement”), the Chief Financial Officer of the Company, whereby the Company has retained Mr.

Brewer as the Chief Financial Officer of the Company to be effective upon completion of the acquisition of Cortigent for an indefinite period, provided that either party may terminate the Employment Agreement upon providing the other party with 30 days’ prior written notice.

Brewer is to be paid an annual base salary of $ 300,000 and is eligible for an annual discretionary performance bonus.

The Company has agreed to grant to Mr.

Brewer stock options to purchase up to 200,000 shares of common stock at an exercise price equal to the price of the financing to be completed in connection with the acquisition of Cortigent, which options will vest as to 25 % on each anniversary of the Employment Agreement.

Brewer is eligible to participate in any benefit plans offered by the Company.

The Company may terminate the Employment Agreement with cause at any time by paying any unpaid salary and expenses/benefits.

The Company may terminate the Employment Agreement without cause, or Mr.

Brewer may resign for good reason (as defined in the Employment Agreement), on 30 days prior written notice, by paying any unpaid salary and expenses/benefits plus a severance payment of six months of the annual salary and continuing any COBRA benefits for such six month period.

Brewer has agreed to not solicit employees or customers for a period of 12 months following any termination of the Employment Agreement and not to disparage the Company or its past or present officers, directors, managers, employees, products, services or business.

Warrant Cancellation Agreement

On August 4, 2026, the Company entered into a warrant cancellation agreement (the “Warrant Cancellation Agreement”) with First Finance, whereby the Company and First Finance agreed that warrants to purchase up to 437,500 shares of the Company’s common stock at an exercise price of $ 5.00 per share for a period of two years following issuance are cancelled and extinguished as of August 4, 2026.

The Warrant Cancellation Agreement was entered into in connection with the Merger Agreement.

Advisor Agreements

On August 7, 2026, the Company entered into advisor agreements (the “Advisor Agreements”) with each of First Finance, Betelgeuse Capital Advisors Inc., Gang 3 Capital Ltd.

and JJK Holdings Ltd.

(the “Advisors”) in connection with past advisory services provided to the Company and to be provided on an ongoing basis.

As compensation for each of the Advisors’ services, the Company agreed to issue (i) 25,000 shares of its common stock, par value $ 0.001 to First Finance, (ii) 90,000 shares of its common stock to Betelgeuse Capital Advisors Inc., (iii) 140,000 shares of its common stock to Gang 3 Capital Ltd.

and (iv) 600,000 shares of its common stock to JJK Holdings Ltd.

Each Advisor Agreement is effective as of June 1, 2026 and will continue until the earlier of (i) final completion of the services set out in each Advisor Agreement, or (ii) the Advisor providing ten business days’ prior written notice to the Company, which period may be waived in whole or in part at the Company’s sole discretion.

The Advisor Agreements were entered into in connection with the Merger Agreement.

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

What changed 10-Q

Item 1. Financial Statements