Item 1. Financial Statements
Item 1 . FINANCIAL STATEMENTS
CLEARONE, INC
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in thousands, except par value)
June 30, 2026
December 31, 2025
ASSETS
Current assets:
Cash and cash equivalents
$
75
$
220
Restricted cash
447
519
Inventories, net
304
353
Prepaid assets
10
—
Current assets related to discontinued operations
140
604
Total current assets
976
1,696
Operating lease - right of use assets, net
—
494
Long term assets related to discontinued operations
14
109
Total assets
$
990
$
2,299
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable
$
244
$
30
Accrued liabilities
185
649
Short term Note Payable
500
—
Current operating lease liability
—
223
Current liabilities related
to discontinued operations
—
585
Total current liabilities
929
1,487
Long term operating lease liability
—
290
Long-term liabilities related to discontinued operations
442
1,236
Total liabilities
1,371
3,013
Shareholders' equity:
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, 2,675,412 and 2,237,912 shares issued and outstanding, respectively
3
2
Additional paid-in capital
37,500
35,767
Accumulated other comprehensive loss
( 340
)
( 340
)
Accumulated deficit
( 37,544
)
( 36,143
)
Total shareholders' equity
( 381
)
( 714
)
Total liabilities and shareholders' equity
$
990
$
2,299
See accompanying notes
3
Table of Contents
CLEARONE, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND
COMPREHENSIVE LOSS
(Dollars in thousands, except per share amounts)
Three months ended June 30,
Six months ended June 30,
2026
2025
2026
2025
Revenue
$
—
$
—
$
—
$
—
Cost of goods sold
70
100
140
127
Gross profit (loss)
( 70
)
( 100
)
( 140
)
( 127
)
Operating expenses:
Sales and marketing
—
—
—
—
Research and product development
—
—
—
—
General and administrative
849
1,092
1,629
1,891
Total operating expenses
849
1,092
1,629
1,891
Operating loss
( 919
)
( 1,192
)
( 1,769
)
( 2,018
)
Interest (expense)
—
( 8
)
—
( 8
)
Other income, net
—
3
—
15
Loss from continuing operations before income taxes
( 919
)
( 1,197
)
( 1,769
)
( 2,011
)
Provision for income taxes
—
8
—
8
Loss from continuing operations
( 919
)
( 1,205
)
( 1,769
)
( 2,019
)
Income (loss) from discontinued operations, net of tax
5
( 3,367
)
368
( 5,387
)
Net loss
$
( 914
)
$
( 4,572
)
$
( 1,401
)
$
( 7,406
)
Basic weighted average shares outstanding
2,675,412
1,733,307
2,530,384
1,691,836
Diluted weighted average shares outstanding
2,675,412
1,733,307
2,530,384
1,691,836
Basic income (loss) per share
From continuing operations
$
( 0.34
)
$
( 0.70
)
$
( 0.70
)
$
( 1.19
)
From discontinued operations
0.00
( 1.94
)
0.15
( 3.19
)
Total
( 0.34
)
( 2.64
)
( 0.55
)
( 4.38
)
Diluted income (loss) per share
From continuing operations
$
( 0.34
)
$
( 0.70
)
$
( 0.70
)
$
( 1.19
)
From discontinued operations
0.00
( 1.94
)
0.15
( 3.19
)
Total
( 0.34
)
( 2.64
)
( 0.55
)
( 4.38
)
Comprehensive loss:
Net loss
$
( 914
)
$
( 4,572
)
$
( 1,401
)
$
( 7,406
)
Change in foreign currency translation adjustment
1
( 10
)
—
( 23
)
Comprehensive loss
$
( 913
)
$
( 4,582
)
$
( 1,401
)
$
( 7,429
)
See accompanying notes
4
Table of Contents
CLEARONE, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands, except per share amounts)
Six months ended June 30,
2026
2025
Cash flows from operating activities:
Net loss
$
( 1,401
)
$
( 7,406
)
Adjustments to reconcile net loss to net cash used in operating activities:
Share-based compensation expense
—
44
Changes in operating assets and liabilities:
Inventories
49
—
Prepaid expenses and other assets
( 10
)
—
Accounts payable
225
92
Accrued liabilities
( 448
)
219
Operating lease liabilities
—
( 1
)
Net cash used in operating activities, continuing operations
( 1,585
)
( 7,052
)
Cash provided by (used in) operating activities, discontinued operations
( 860
)
4,484
Cash flows from investing activities:
Net cash provided by investing activities, continuing operations
—
—
Cash used in investing activities, discontinued operations
—
( 21
)
Cash flows from financing activities:
Proceeds from sale of stock
1,750
1,000
Proceeds from issuance of convertible note
—
3,000
Proceeds from issuance of short-term note
500
Purchases of outstanding warrants
( 22
)
—
Net cash provided by financing activities, continuing operations
2,228
4,000
Cash provided by financing activities, discontinued operations
—
—
Effect of exchange rate changes on cash and cash equivalents
—
( 18
)
Net increase (decrease) in cash and cash equivalents
( 217
)
1,393
Cash, cash equivalents and restricted cash at the beginning of the period
739
1,417
Cash, cash equivalents and restricted cash at the end of the period
$
522
$
2,810
See accompanying notes
5
Table of Contents
CLEARONE, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands, except per share amounts)
The following is a summary of supplemental cash flow information:
Six Months Ended June 30,
2026
2025
Cash paid for income taxes
$
—
$
—
See accompanying notes
6
Table of Contents
CLEARONE, INC.
UNAUDITED NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited - Dollars in thousands, except per share amounts)
1 . Business Description, Basis of Presentation and Significant Accounting Policies
Business Description:
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 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 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
operations. 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. On June 30,
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. All amounts
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
Payable.
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:
The fiscal year for ClearOne is the twelve months ending on December 31. The condensed consolidated financial statements include the accounts of ClearOne and its subsidiaries. All significant inter-company accounts and transactions have been eliminated.
7
Table of Contents
UNAUDITED NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except per share amounts)
On October 24, 2025, the Company completed the sale of certain intellectual property, product inventory, and non-exclusive rights to customer data (the “Asset Sale”). The disposal represented a strategic shift that has had a major effect on the Company’s operations and financial results. Accordingly, the related operating results are presented as discontinued operations in accordance with ASC 205 - 20 for all periods presented. Prior-period amounts in the unaudited condensed consolidated statements of operations and cash flows have been recast to conform to this presentation. See Note 2 — Discontinued Operations and Assets Held for Sale for additional information.
These accompanying interim unaudited condensed consolidated financial statements have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) and are not audited. Certain information and footnote disclosures that are usually included in financial statements prepared in accordance with generally accepted accounting principles in the United States (“GAAP”) have been either condensed or omitted in accordance with SEC rules and regulations. The accompanying condensed consolidated financial statements contain all adjustments, consisting of normal recurring accruals, necessary for a fair presentation of our financial position as of June 30, 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 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
flows. See Note 10 — Shareholders' Equity.
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 18506 U 203 . The reverse stock split was primarily intended to increase the per share market price of the common stock in order to regain compliance with the minimum bid price requirement for continued listing on the Nasdaq Capital Market. As a result of the reverse stock split, every 15 shares of issued and outstanding common stock were automatically combined into one share, with no fractional shares issued (any fractional interests were 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
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.
As of
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
disbursement
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,
2026. 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.
8
Table of Contents
UNAUDITED NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except per share amounts)
Product Warranties
The Company provides assurance-type warranties on previously sold products and records a liability for the estimated cost to repair or replace products under warranty at the time of sale in accordance with ASC 460 . The liability is based on historical claim experience, the nature of the underlying products, current information on repair costs and expected failure rates. The Company reviews warranty estimates each period and records adjustments to the liability when facts and circumstances indicate changes in expected claims or costs.
Significant Accounting Policies
The significant accounting policies were described in Note 1 to the audited consolidated financial statements included in the Company’s annual report on Form 10-K for the year ended December 31, 2025 . 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
incurred
.
Recent Accounting Pronouncements
ASU 2024 - 03 , Income Statement—Reporting Comprehensive Income (Topic 220 ): Disaggregation of Income Statement Expenses
In November 2024, the FASB issued ASU No.
2024-03, Income Statement—Reporting Comprehensive Income (Topic 220):
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.
2. Discontinued Operations and Assets Held for Sale
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 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.
9
Table of Contents
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 June 30,
Six months ended June 30,
2026
2025
2026
2025
Revenue
$
—
$
1,916
$
—
$
4,229
Cost of goods sold
107
2,047
195
4,212
Gross profit (loss)
( 107
)
( 131
)
( 195
)
17
Operating expenses
( 92
)
3,236
172
5,404
Other
(income) expenses, net
( 50
)
—
28
—
Income
(loss) from discontinued operations before income taxes
35
( 3,367
)
( 395
)
( 5,387
)
Provision
(benefit) for income taxes
30
—
( 763
)
—
Income (Loss) from discontinued operations, net of tax
$
5
$
( 3,367
)
$
368
$
( 5,387
)
The following table disaggregates the Company’s revenue into primary product groups:
Three months ended June 30,
Six months ended June 30,
2026
2025
2026
2025
Audio conferencing
$
—
$
625
$
—
$
1,579
Microphones
—
971
—
2,089
Video products
—
320
—
561
$
—
$
1,916
$
—
$
4,229
The following table disaggregates the Company’s revenue into major regions:
Three months ended June 30,
Six months ended June 30,
2026
2025
2026
2025
North and South America
$
—
$
1,331
$
—
$
2,291
Asia Pacific (includes Middle East, India and Australia)
—
230
—
1,418
Europe and Africa
—
355
—
520
$
—
$
1,916
$
—
$
4,229
Assets grouped into discontinued operations (unaudited):
June 30, 2026
December 31, 2025
Accounts receivable, net
$
—
$
353
Inventories, net
—
—
Prepaids and other current assets
140
251
Property, plant and equipment, net
—
80
Other long-term assets
14
29
Total assets
$
154
$
713
10
Table of Contents
UNAUDITED NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited - Dollars in thousands, except per share amounts)
Liabilities grouped into discontinued operations (unaudited):
June 30, 2026
December 31, 2025
Accounts payable
$
—
$
63
Accrued liabilities, current
—
521
Other long-term liabilities
442
1,236
Total liabilities
$
442
$
1,820
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.
3. Capital Structure: Class A Redeemable Preferred Stock
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.
11
Table of Contents
UNAUDITED NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except per share amounts)
4. 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 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.
12
Table of Contents
UNAUDITED NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except per share amounts)
5. Warrants Repurchased (and Related Party)
September 2025 Repurchases
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
Lind Global Fund II, LP – 24,155 underlying shares (September 10, 2025) for $ 16
Edward Dallin Bagley (related party) – 18,940 underlying shares (September 17, 2025) for $ 12
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
condensed
consolidated
statement of operations.
March
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 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
$ 0.9108 per
underlying share, representing an aggregate cash purchase price of $ 22 . Upon settlement, the warrants were cancelled and are of no further force or effect.
The repurchase was
accounted for as an equity transaction with no effect on the condensed
consolidated statements of operations.
Underlying
shares
Outstanding as of December 31, 2025
211,357
Issued
437,500
Repurchased and cancelled
( 24,155
)
Exercised
-
Outstanding as of
June 30, 2026
624,702
Warrants outstanding
as of June 30, 2026 consist of
( 187,202 underlying shares
issued in
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 June 30 , 2026 .
13
Table of Contents
UNAUDITED NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except per share amounts)
6. Revenue Information
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.
7. 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 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.
14
Table of Contents
UNAUDITED NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited - Dollars in thousands, except per share amounts)
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. See Note 3
— 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 June 30,
Six months ended June 30,
2026
2025
2026
2025
Numerator:
Loss from continuing operations
$
( 919
)
$
( 1,205
)
$
( 1,769
)
$
( 2,019
)
Income (loss) from discontinued operations
$
5
$
( 3,367
)
$
368
$
( 5,387
)
Net loss
$
( 914
)
$
( 4,572
)
$
( 1,401
)
$
( 7,406
)
Denominator:
Basic weighted average shares outstanding
2,675,412
1,733,307
2,530,384
1,691,836
Dilutive common stock equivalents using treasury stock method
—
—
—
—
Diluted weighted average shares outstanding
2,675,412
1,733,307
2,530,384
1,691,836
Basic income (loss) per share
From continuing operations
$
( 0.34
)
$
( 0.70
)
$
( 0.70
)
$
( 1.19
)
From discontinued operations
$
0.00
$
( 1.94
)
$
0.15
$
( 3.19
)
Total
$
( 0.34
)
$
( 2.64
)
$
( 0.55
)
$
( 4.38
)
Diluted income (loss) per share
From continuing operations
$
( 0.34
)
$
( 0.70
)
$
( 0.70
)
$
( 1.19
)
From discontinued operations
$
0.00
$
( 1.94
)
$
0.15
$
( 3.19
)
Total
$
( 0.34
)
$
( 2.64
)
$
( 0.55
)
$
( 4.38
)
Weighted average options, warrants and convertibles outstanding
630,011
435,551
500,930
404,319
Anti-dilutive options, warrants and convertibles not included in the computation
630,011
435,551
500,930
404,319
15
Table of Contents
UNAUDITED NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited - Dollars in thousands, except per share amounts)
8 . Inventories
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
Current:
Finished goods
$
304
$
353
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.
9 . Leases
The Company
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,
2026
2025
2026
2025
Rent expense
Continuing operations
$
—
$
—
$
—
$
—
Discontinued operations
292
101
402
213
Total rent expense
$
292
$
101
$
402
$
213
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,
Utah. 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
$ 300 . 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
30, 2026.
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.
16
Table of Contents
UNAUDITED NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except per share amounts)
Supplemental cash flow information related to leases was as follows:
Six Months Ended June 30,
2026
2025
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from operating leases
$
( 176
)
$
( 167
)
Right-of-use assets obtained in exchange for lease obligations:
Operating leases
$
—
$
—
Supplemental balance sheet information related to leases was as follows:
June 30, 2026
December 31, 2025
Operating lease right-of-use assets
$
—
$
494
Current portion of operating lease liabilities, included in accrued liabilities
$
—
$
223
Operating lease liabilities, net of current portion
—
290
Total operating lease liabilities
$
—
$
513
Weighted average remaining lease term for operating leases (in years)
—
2.17
Weighted average discount rate for operating leases
—
%
6.76
%
The Company had no remaining operating lease payment obligations as of June 30, 2026 .
10. Shareholders' Equity
Three months ended June 30,
Six months ended June 30,
2026
2025
2026
2025
Preferred stock, common stock and additional paid-in capital
Balance, beginning of period
$
37,503
$
32,726
$
35,769
$
31,696
Return of dividend
—
—
6
—
Repurchase of warrants
—
—
( 22
)
—
Issuance of common stock and warrants, net
—
—
1,750
1,000
Share-based compensation expense
—
21
—
44
Proceeds from employee stock purchase plan
—
( 7
)
—
—
Balance, end of period
$
37,503
$
32,740
$
37,503
$
32,740
Accumulated other comprehensive loss
Balance, beginning of period
$
( 341
)
$
( 319
)
$
( 340
)
$
( 306
)
Foreign currency translation adjustment
1
( 10
)
—
( 23
)
Balance, end of period
$
( 340
)
$
( 329
)
$
( 340
)
$
( 329
)
Accumulated deficit
Balance, beginning of period
$
( 36,630
)
$
( 12,893
)
$
( 36,143
)
$
( 10,059
)
Net income (loss) – discontinued operations
5
( 3,367
)
368
( 5,387
)
Net loss – continuing operations
( 919
)
( 1,205
)
( 1,769
)
( 2,019
)
Balance, end of period
$
( 37,544
)
$
( 17,465
)
$
( 37,544
)
$
( 17,465
)
Total shareholders' equity
$
( 381
)
$
14,946
$
( 381
)
$
14,946
17
Table of Contents
UNAUDITED NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except per share amounts)
Issue of Common Stock
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 133,334 shares of the Company’s common stock, par value $ 0.001 per share, at a purchase price of $ 7.50 per share of common stock. The Company received $ 1,000 in cash in connection with the sale. Mr. Bagley is an affiliate of the Company and was the Company’s single largest stockholder.
Amendments to Certificate of Incorporation and Reverse Stock Split
At the special meeting of stockholders held on May 30, 2025, stockholders approved amendments to the Certificate of Incorporation to: (i) increase the authorized number of shares of common stock from 50,000,000 to 150,000,000 ; (ii) authorize 50,000,000 shares of "blank check" preferred stock; (iii) effect a reverse stock split at a ratio between 1-for-10 and 1-for-15, with the exact ratio to be determined by the Board of Directors ; and (iv) eliminate the prohibition on stockholder action by written consent and to allow such actions. Following stockholder approval, on June 4, 2025, the Company filed a Certificate of Amendment to its Certificate of Incorporation to effect these changes, including the selection of a 1-for-15 reverse stock split ratio , which became effective at 5 : 00 p.m. 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 18506 U 203 . The reverse stock split was primarily intended to increase the per share market price of the common stock in order to regain compliance with the minimum bid price requirement for continued listing on the Nasdaq Capital Market. As a result of the reverse stock split, every 15 shares of issued and outstanding common stock were automatically combined into one share, with no fractional shares issued (any fractional interests were converted to one whole share). The reverse stock split did not change the par value of the common stock but reduced the number of issued and outstanding shares from approximately 26.0 million to approximately 1.7 million, with proportional adjustments to outstanding stock options, warrants, and shares reserved under equity incentive plans. All share and per-share amounts in these condensed consolidated financial statements and related notes have been retroactively adjusted to reflect the reverse stock split for all periods presented.
For additional details, including the Certificate of Amendment, refer to the Company's Current Report on Form 8-K filed with the SEC on June 2, 2025, including the press release attached as Exhibit 99.1 and the Certificate of Amendment attached as Exhibit 3.1 thereto.
Preferred Stock Designations and Related Matters
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 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.
18
Table of Contents
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
value. 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
proceeds. No shares of Class A Redeemable Preferred Stock were issued or
outstanding as of June 30, 2026. See Note 3 — Capital Structure: Class A
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,
2025. 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, 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 . The warrant is classified in stockholders’ equity in accordance with ASC 815 - 40 . The Company received gross proceeds of $ 1,750 . The fair value of the warrants was determined using the Black-Scholes option pricing model. The Company allocated the proceeds between the common stock and the warrants based on their relative fair values. 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 providing for the registration of the shares and warrant shares for resale. 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.
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. The transaction was approved by the Board of Directors (with interested directors recusing themselves as appropriate).
19
Table of Contents
UNAUDITED NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except per share amounts)
11 . Share-based Compensation
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
Weighted average exercise price
Options outstanding at beginning of year
19,716
$
35.33
Granted
—
—
Less:
Exercised
—
—
Forfeited prior to vesting
—
—
Canceled or expired
( 14,215
)
12.58
Options outstanding at June 30, 2026
5,501
96.60
Options exercisable at end of June 30, 2026
5,501
$
96.60
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 June 30,
Six months ended June 30,
2026
2025
2026
2025
Cost of goods sold
$
—
$
1
$
—
$
1
Sales and marketing
—
( 1
)
—
—
Research and product development
—
3
—
7
General and administrative
—
18
—
36
$
—
$
21
$
—
$
44
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.
20
Table of Contents
UNAUDITED NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except per share amounts)
12 . Income Taxes
The Company maintains
a full valuation allowance against its U.S. federal and state deferred tax
assets. 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:
Six Months ended June 30,
2026
Balance – beginning of year
$
1,030
Additions based on tax positions related to current quarter
—
Reductions for tax positions of prior years
( 61
)
Lapse in statues of limitations
( 595
)
Uncertain tax positions, ending balance
$
374
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. 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.
21
Table of Contents
UNAUDITED NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except per share amounts)
13 . Operating Segment
The Company operates as a single operating
and reportable
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")
") 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. The
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.
There are no
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. All
of the Company's remaining assets are located in the United States.
14. Subsequent Events
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.
22
Table of Contents
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.
23
Table of Contents
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. Mr. 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. Mr. 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. Mr. 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.
24
Table of Contents
Text extracted from the filing as submitted to EDGAR. Formatting, tables and exhibits are simplified for reading; the original document is authoritative for anything you rely on.