CLEARONE INC

ClearOne, Inc. was previously engaged in the design, development, and marketing of professional audio conferencing, microphone, and video collaboration solutions. On October 24, 2025, the Company completed the sale of certain intellectual property, product inventory, and non-exclusive rights to customer data to Biamp Systems, LLC for gross cash consideration of $3.0 million ¹. Following the Asset Sale, the Company no longer manufactures or sells products and its continuing activities consist solely of fulfilling warranty and technical support obligations on legacy products, managing and liquidating remaining assets, evaluating potential strategic transactions, collecting accounts receivable and recovering prepaid assets, satisfying outstanding liabilities, and maintaining public-company compliance. These activities are transitional in nature and are not expected to generate material revenue.

The Company is actively evaluating strategic alternatives intended to enhance stockholder value. These alternatives may include without limitation one or more special transactions, an investment in, or an acquisition of a private operating company, additional asset sales, or other actions that maximize value for stockholders. The closing of the Asset Sale on October 24, 2025 triggered the mandatory redemption of all outstanding shares of the Company's Class A Redeemable Preferred Stock. The Company currently estimates the final redemption amount will be approximately $50 ² after permitted expenses and net asset recoveries. On November 24, 2025, Edward D. Bagley sold 700,000 ³ shares of common stock to First Finance Ltd. As of December 31, 2025, First Finance Ltd. beneficially owned approximately 53.8% ⁴ of our outstanding common stock.

The Company generates revenue from sales of its audio and video conferencing equipment to distributors, system integrators and value-added resellers. The Company also generates revenue, to a much lesser extent, from sale of software and licenses to distributors, system integrators, value-added resellers and end-users. The Company recognizes revenue when it satisfies a performance obligation in an amount reflecting the consideration to which it expects to be entitled. For sales agreements, the Company has identified the promise to transfer products, each of which are distinct, to be the performance obligation. The Company applies a five-step approach in determining the amount and timing of revenue to be recognized. Substantially all of the Company's revenue is recognized at the time control of the products transfers to the customer. Sales to distributors are typically made pursuant to agreements that provide return rights with respect to discontinued or slow-moving products, referred to as stock rotation. Sales to distributors can also be subject to price adjustment on certain products, primarily for distributors with drop-shipping rights. Although payment terms vary, most distributor agreements require payment within 45 days of invoicing. The Company offers rebates and market development funds to certain of its distributors, dealers/resellers, and end-users based upon the volume of product purchased by them.

The Company's revenue from discontinued operations is disaggregated into three primary product groups. Audio Conferencing generated $2,187 ⁵ in 2025 and $4,287 ⁶ in 2024. Microphones generated $3,017 ⁷ in 2025 and $5,195 ⁸ in 2024. Video products generated $805 ⁹ in 2025 and $1,904 ¹⁰ in 2024. The Company's revenue from discontinued operations is also disaggregated into major regions. North and South America generated $3,613 ¹¹ in 2025 and $4,178 ¹² in 2024. Asia (including Middle East) and Australia generated $1,458 ¹³ in 2025 and $5,959 ¹⁴ in 2024. Europe and Africa generated $938 ¹⁵ in 2025 and $1,249 ¹⁶ in 2024.

On October 24, 2025, the Company completed the sale of certain intellectual property, product inventory, and non-exclusive rights to customer data to Biamp Systems, LLC for gross cash consideration of $3.0 million ¹⁷ pursuant to an Asset Purchase Agreement dated the same date. Biamp did not assume any warranty or technical support obligations. The Company retained its books and records, all equity interests in subsidiaries, certain minor assets (including a limited amount of inventory held solely to service warranties), and all public-company assets and obligations. 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. 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 reduced the number of issued and outstanding shares from approximately 26.0 million to approximately 1.7 million ¹⁸, with proportional adjustments to outstanding stock options, warrants, and shares reserved under equity incentive plans. On July 21, 2025, the Company's $3.0 million ¹⁹ convertible note issued on June 20, 2025 to First Finance Ltd. (together with $26 ²⁰ of accrued interest) automatically converted into 3,026 ²¹ shares of Class B Convertible Preferred Stock pursuant to its original terms. On November 24, 2025, First Finance Ltd. converted all 3,026 ²² shares of Class B Convertible Preferred Stock into 503,662 ²³ shares of common stock at the fixed conversion price of $6.008 ²⁴ per share. The Company's Board of Directors declared and paid another special dividend of $0.50 ²⁵ per share of the Company's common stock and eligible warrants that was paid on April 10, 2024 to shareholders and warrant holders of record on April 2, 2024. Subsequent to year-end, on March 11, 2026, the Company closed a private placement with First Finance Ltd. (its largest stockholder) for aggregate gross proceeds of $1.75 million ²⁶ through the issuance of 437,500 ²⁷ shares of common stock at $4.00 ²⁸ per share and a warrant to purchase up to 437,500 ²⁹ additional shares at $5.00 ³⁰ per share. Of the proceeds, $500,000 ³¹ became immediately available, with the remaining $1.25 million ³² available upon completion of the Company's reincorporation from Delaware to Nevada.

The year ended December 31, 2025 was a transformational period for ClearOne, Inc. On October 24, 2025, the Company completed the sale of certain intellectual property, product inventory, and non-exclusive rights to customer data. As a result of the Asset Sale, the Company no longer manufactures or sells products and maintains a limited inventory and provides customer support services to satisfy warranty claims. The financial results of the disposed operations are reflected as discontinued operations in the Company's consolidated financial statements for all periods presented. The discontinued operations incurred operating losses during 2025 and prior periods. In connection with the Asset Sale, the Company recognized a loss on sale in the fourth quarter of 2025 (primarily driven by inventory carrying values exceeding the $3.0 million ³³ gross proceeds, after the $10.7 million ³⁴ impairment charge recorded in the third quarter of 2025). The results of discontinued operations include operating losses incurred prior to closing, inventory write-downs, severance and restructuring costs, and the loss on sale. Revenue from discontinued operations was $6,009 ³⁵ in 2025 and $11,386 ³⁶ in 2024. Gross profit (loss) from discontinued operations was $(3,021) ³⁷ in 2025 and $2,823 ³⁸ in 2024. Operating loss from discontinued operations was $(10,317) ³⁹ in 2025 and $(7,076) ⁴⁰ in 2024. Loss on sale of assets from discontinued operations was $(11,143) ⁴¹ in 2025 and $— ⁴² in 2024. Loss from discontinued operations, net of tax was $(21,460) ⁴³ in 2025 and $(7,076) ⁴⁴ in 2024. Continuing operations generated no revenue during the fourth quarter of 2025. Operating expenses consisted primarily of public-company compliance costs, legal and professional fees, warranty servicing and technical support costs, and general and administrative expenses related to the significantly reduced workforce. Net loss was $(26,084) ⁴⁵ for 2025 and $(8,983) ⁴⁶ for 2024. Basic and diluted loss per common share total was $(14.77) ⁴⁷ for 2025 and $(5.61) ⁴⁸ for 2024.

The Company is actively evaluating strategic alternatives intended to enhance stockholder value. These alternatives may include without limitation one or more special transactions, an investment in, or an acquisition of a private operating company, additional asset sales, or other actions that maximize value for stockholders. There can be no assurance that any strategic transaction will be completed on favorable terms or at all. Following the disposition of certain operating assets in October 2025 and the resulting transition to a reduced, transitional operating posture, the Company's ability to enhance stockholder value and improve its liquidity position is highly dependent on the successful evaluation and execution of one or more Strategic Transactions. The Company may be unable to complete a Strategic Transaction within a reasonable timeframe, on attractive terms, or at all. There is no set timetable for the overall process, as anticipated timelines for different strategic alternatives may vary, and there can be no assurance that this process will result in us pursuing a transaction or that any transaction, if pursued, will be completed on attractive terms or at all.

The Company's continuing activities are not expected to generate revenue at levels sufficient to fund ongoing operating costs. As a result, the Company's ability to sustain operations depends on available cash resources, access to additional capital, and/or the successful completion of one or more Strategic Transactions. If the Company is unable to obtain additional capital or complete a Strategic Transaction on acceptable terms or at all, the Company may be required to significantly curtail operations or pursue an orderly wind-down of the Company, which could result in reduced recoveries for stockholders. The Company will require additional financing and/or the completion of one or more Strategic Transactions to fund ongoing operating costs, professional fees, compliance costs, and other obligations as they become due.

Following the October 2025 asset disposition, the Company operates with a significantly reduced workforce. Maintaining effective internal control over financial reporting and complying with public company reporting obligations requires significant management attention and resources. If the Company is unable to maintain effective controls or comply with applicable reporting requirements, the Company could be subject to regulatory scrutiny. The Company has terminated or settled two of its prior operating leases and continues to evaluate sublease or mitigation opportunities for its remaining facility where appropriate. The Company leases approximately 9,402 ⁴⁹ square feet of office space in Salt Lake City, Utah under an operating lease expiring in February 2028. This facility supports the Company's remaining administrative functions, public company compliance activities, and limited operational support functions. The Company is evaluating sublease opportunities with respect to this facility.

The Company's share-based compensation expense was $79 ⁵⁰ for 2025 and $98 ⁵¹ for 2024. The Company did not have committed sources of financing during 2025. Subsequent to year-end, on March 11, 2026, the Company closed a private placement with its largest stockholder for aggregate gross proceeds of $1.75 million ⁵². The Company does not currently anticipate paying regular cash dividends on its common stock. Any future determination regarding the declaration and payment of dividends will be at the discretion of the Board of Directors and will depend on the Company's financial condition, results of operations, capital requirements, contractual restrictions, and other factors deemed relevant by the Board.

As of December 31, 2025, the Company had approximately $0.74 million ⁵³ of cash and cash equivalents and restricted cash. The Company has incurred significant losses and experienced negative cash flows, and substantial doubt exists about the Company's ability to continue as a going concern. The Company may not be able to obtain the necessary financing, complete a Strategic Transaction, or otherwise improve its liquidity position on acceptable terms or at all. The Company's primary liquidity requirements relate to ongoing public-company compliance and reporting costs, warranty servicing obligations, professional fees (including legal and investment banking), lease payments on the remaining facilities, the $57,500 ⁵⁴ severance obligation to the former CEO, and the required redemption of the Class A Redeemable Preferred Stock with any net proceeds from the Asset Sale. Global economic conditions, including inflation, rising interest rates, geopolitical conflicts, financial market volatility and tightening credit markets, may adversely affect the Company's ability to raise capital or complete a Strategic Transaction. Volatility in equity markets may negatively impact the trading price of the Company's common stock and limit the Company's ability to issue equity or equity-linked securities on favorable terms, or at all. Adverse economic conditions may also reduce investor appetite for special situation or transitional companies, which could impair the Company's ability to attract potential transaction partners or financing sources.

The Company is at risk for being delisted from the Nasdaq Capital Market for non-compliance with Nasdaq's continued listing standards. As of December 31, 2025, the Company is not in compliance with any of the quantitative continued listing standards under Nasdaq Marketplace Rule 5550, and the Company anticipates receiving a notice of non-compliance from Nasdaq. If the Company is unable to regain compliance with Nasdaq's continued listing standards within any applicable cure period, the Company's common stock could be subject to delisting from the Nasdaq Capital Market. Delisting of the Company's common stock from Nasdaq could significantly reduce the liquidity and market price of the Company's common stock and could make it more difficult for the Company to access the capital markets on acceptable terms, if at all. The Company's largest stockholder has significant influence over corporate matters. As of March 16, 2026, the Company's largest stockholder beneficially owned approximately 61.3% ⁵⁵ of the Company's outstanding common stock. As a result, this stockholder has the ability to control the outcome of matters submitted to stockholders for approval, including the election of directors, approval of mergers or business combinations, and amendments to the Company's organizational documents.

The Company may not be successful in completing a strategic transaction within a reasonable timeframe, on attractive terms or at all, and if unable to complete a strategic transaction, may not be able to continue as a going concern. As of December 31, 2025, the Company had approximately $0.74 million ⁵⁶ of cash and cash equivalents and restricted cash, and its auditor has expressed substantial doubt about its ability to continue as a going concern. The Company is at risk for being delisted from the Nasdaq Capital Market for non-compliance with Nasdaq's continued listing standards, as of December 31, 2025, the Company is not in compliance with any of the quantitative continued listing standards under Nasdaq Marketplace Rule 5550. The Company's largest stockholder beneficially owned approximately 61.3% ⁵⁷ of the Company's outstanding common stock as of March 16, 2026, and has the ability to control the outcome of matters submitted to stockholders for approval, which may discourage, delay, or prevent a change in control transaction that other stockholders may consider favorable. The Company has outstanding warrants that are exercisable into shares of common stock, and the exercise of these warrants would result in dilution to existing common stockholders. The Company currently estimates the final redemption amount for the Class A Redeemable Preferred Stock will be approximately $50,000 ⁵⁸ after permitted expenses and net asset recoveries, and redemption will require the use of cash that might otherwise be available for operations or strategic alternatives.

Management's message emphasizes that the year ended December 31, 2025 was a transformational period for ClearOne, Inc., marked by the completion of the Asset Sale on October 24, 2025, after which the Company no longer manufactures or sells products. Management states that the Company is actively evaluating strategic alternatives intended to enhance stockholder value, which may include without limitation one or more special transactions, an investment in, or an acquisition of a private operating company, additional asset sales, or other actions that maximize value for stockholders. Management acknowledges that the Company has incurred significant losses and negative cash flows from operations, and that these conditions, the limited nature of continuing operations, the mandatory redemption obligation for the Class A Redeemable Preferred Stock, and the absence of committed sources of financing raise substantial doubt about the Company's ability to continue as a going concern within one year after the issuance date of the consolidated financial statements. Management notes that subsequent to year-end, on March 11, 2026, the Company closed a private placement with its largest stockholder for aggregate gross proceeds of $1.75 million ⁵⁹, which provides a partial source of short-term liquidity. Management's strategic priorities for the period ahead are focused on evaluating and executing one or more Strategic Transactions, managing liquidity through available cash resources and access to additional capital, and maintaining public-company compliance while operating with a significantly reduced workforce.