CLEARONE INC
For the period ended Dec 31, 2024. Filed Mar 28, 2025.
View on SEC.govAbout this filing
A company's yearly report to the SEC, with audited financial statements. It is the fullest account a company gives of its business, its finances and the risks it sees.
FY2024 · Filed Mar 28, 2025
CLRO$5.01+10.4%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-K
Period ended 2023-12-31; filed 2024-04-01.
0001753926-24-000656
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-K
Period ended 2024-12-31; filed 2025-03-28.
0001753926-25-000516
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 87 previous paragraphs and 87 current paragraphs.
53 unchanged; 28 reworded; 6 added; 6 removed; 0 previous and 0 current paragraphs rearranged.
Tables are not compared: 3 previous and 3 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (6)
Current report
In January 2024, we introduced the DIALOG 20 USB. This solution is ideal for hybrid meetings that require a dedicated presenter microphone and a shared audience microphone with simultaneous sound reinforcement, such as any type of hybrid training or presentation session. The DIALOG 20 USB works in spaces up to 2500 square feet.
Current report
Our gross profit margin decreased to 23% during 2024 from 34% in 2023. Net loss of $0.6 million in 2023 changed to net loss of $9.0 million in 2024. The increase in the loss is attributed to decreasing revenue and an inability to capture cost reductions as rapidly as the decrease in revenue combined with compressed margins, falling 11% year over year.
Current report
Interest income (expense)
Current report
Other income in 2024 included ($0.15) million due to foreign currency expenses. Other income in 2023 included $51.3 million from a legal settlement, $4 million from a license agreement, and $1.9 million of interest income received on marketable securities.
Current report
These conditions raise substantial doubt about continuing as a going concern. We will need to complete one or more strategic transactions or raise additional working capital to continue our normal and planned operations. We will need to generate and sustain significant revenue levels in future periods in order to become profitable, and, even if we do, we may not be able to maintain or increase our level of profitability. In addition, as a public company, we will incur accounting, legal and other expenses. These expenditures will make it necessary for us to continue to raise additional working capital. Our efforts to grow our business may be costlier than we expect, and we may not be able to generate sufficient revenue to offset our increased operating expenses. We may incur significant losses in the future for a number of reasons, including unforeseen expenses, difficulties, complications and delays and other unknown events. Accordingly, substantial doubt exists about our ability to continue as a going concern and we cannot assure you that we will achieve sustainable operating profits as we continue to expand our business, and otherwise implement our growth initiatives. In February 2025, the Company raised $1,000 in a private placement transaction. We may be unable to complete a strategic transaction within a reasonable timeframe, on attractive terms or at all, and market conditions, including the historical volatility in our common stock will likely limit our ability to raise capital on favorable terms, or at all, and the terms of any public or private offerings of debt or equity securities likely would be significantly dilutive to existing stockholders. There is no set timetable for the overall process given the anticipated timelines for different strategic alternatives may vary, and there can be no assurance that this process will result in us pursuing a transaction or that any transaction, if pursued, will be completed on attractive terms or at all. The Company’s ability to continue as a going concern is dependent on the outcome of these uncertainties.
Current report
As a result, management has concluded that substantial doubt exists about the Company’s ability to continue as a going concern for 12 months from the date these consolidated financial statements are issued. The consolidated financial statements as of December 31, 2024 have been prepared under the assumption that the Company will continue as a going concern for the next 12 months after these financial statements are issued, and that contemplates the realization of assets and satisfaction of liabilities and commitments in the normal course of business. These Consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Removed paragraphs (6)
Previous report
In May 2023, we launched eight new COLLABORATE® Versa® packaged hardware systems to provide optimized audio and video performance for conference rooms and personal office spaces. The updated lineup of bundled solutions empowers businesses of all sizes and means to leverage powerful conferencing capabilities that include automatic voice tracking, face tracking and echo cancellation. The new lineup of COLLABORATE Versa solutions offers an ideal package for every small-to-medium sized conferencing space or personal office, giving business owners and IT staff mission-specific options that ensure maximum value, utility and performance in any room. The solutions launched were COLLABORATE Versa Room CT 160, COLLABORATE Versa Room CT, COLLABORATE Versa 20, COLLABORATE Versa 20 Plus, COLLABORATE Versa 160, COLLABORATE Versa 60, COLLABORATE Versa Pro 160, and COLLABORATE Versa Pro 60.
Previous report
In June 2023, we returned to Infocomm for the first time since 2019 with a complete suite of products, programs, and on-site demonstrations designed to help partners grow their business across every vertical market where increased collaboration is a priority. We exhibited our solutions in Booth #3061 in the Orange County Convention Center from June 14-16, 2023 in Orlando, Florida.
Previous report
Our gross profit margin decreased to 34% during 2023 from 38% in 2022. Net income of $20.6 million in 2022 changed to net loss of $0.6 million in 2023. The change from net income to net loss was primarily due to the recognition in 2022 of a gain of $33.6 million included under other income related to theone-time legal settlement receivable of $55 million net of unamortized capitalized legal expenses of $21.4 million. This gain was partially offset by (a) a decrease in the tax provision by $6.5 million (b) recognition of settlement gains fromtwo separate settlements of $5.3 million, (c) increase in interest income by $1.7 million, and (d) increase in operating income by $0.4 million.
Previous report
In December 2019, a novel strain of coronavirus (“COVID-19”) started spreading from China and was declared a pandemic. The COVID-19 pandemic caused severe global disruptions and had varying impact on our business. The installed audio conferencing market was negatively impacted due to lockdowns, postponement of projects and restrictions on installers to visit commercial sites. On the other hand, COVID-19 generated higher than normal demand in 2020 for our video products and personal conferencing products due to the significant expansion of work-from-home market. The extent of COVID-19’s effect on our operational and financial performance keeps evolving and depends on multiple factors including the severity and infectiousness of current and future virus strains, effectiveness of vaccines especially on novel strains of COVID-19, government regulations, etc., all of which are uncertain and difficult to predict considering the rapidly evolving landscape. Supply chain disruptions resulting from COVID-19 have caused significant fluctuations in our costs of goods resulting in a reduction of our gross margins. If the pandemic continues to be a severe worldwide health crisis, the disease could have a material adverse effect on our business, results of operations, financial condition and cash flows and adversely impact the trading price of our common stock.
Previous report
Interest expense
Previous report
Other income in 2023 included (a) $5.3 million from two separate legal settlements, and (b) $1.9 million of interest income received on marketable securities. Other income in 2022 included (a)a gain recognized of $33.6 million related to the one-time legal settlement receivable of $55 million, net of unamortized capitalized legal expenses of $21.4 million (b)$1.5 million in gain from the forgiveness of CARES Act Paycheck Protection Program Loan, and (c)$1.9 million of interest income received on marketable securities.
Reworded paragraphs (28)
Previous wording
In April 2023 we announced the immediate market availability of the Versa UCS2100 Collaboration Switcher Kit. Designed for use in small to mid-sized meeting rooms, board rooms, and executive offices, the Versa UCS2100 automatically detects HDMI and USB-C sources, such as a dedicated in-room PC or a Bring-Your-Own-Meeting (BYOM) laptop and offers the flexibility for users to access the same set of in-room AV peripherals, such as cameras and audio devices. Its USB-C input provides up to 60 watts charging and provides simultaneous 1 x HDMI output and 1 x HDBaseT output. When combined with ClearOne UNITE series PTZ cameras, INTERACT, CONVERGE® Pro 2, CONVERGE® HUDDLE, and CHAT series audio conferencing devices, the Versa UCS2100 delivers guaranteed performance and a streamlined user experience that supports automatic source detection and switching and is controllable via RS-232, TCP/IP, or front panel buttons.
Current wording
In April 2023 we announced the immediate market availability of the Versa UCS 2100 Collaboration Switcher Kit. Designed for use in small to mid-sized meeting rooms, board rooms, and executive offices, the Versa UCS 2100 automatically detects HDMI and USB-C sources, such as a dedicated in-room PC or a Bring-Your-Own-Meeting (BYOM) laptop and offers the flexibility for users to access the same set of in-room AV peripherals, such as cameras and audio devices. Its USB-C input provides up to 100 watts charging and provides simultaneous 1 x HDMI output and 1 x HDBaseT output. When combined with ClearOne UNITE series PTZ cameras, INTERACT, CONVERGE® Pro 2, CONVERGE® HUDDLE, and CHAT series audio conferencing devices, the Versa UCS 2100 delivers guaranteed performance and a streamlined user experience that supports automatic source detection and switching and is controllable via RS-232, TCP/IP, or front panel buttons.
Previous wording
At Infocomm 2023, we unveiled the BMA 360 D, the newest member of the world’s most advanced beamforming microphone array ceiling tile family. The BMA 360 D offers unrivaled audio performance and native compatibility with any Dante-enabled DSP mixer. The new Dante-compatible beamforming microphone array allows integrators and users to leverage ClearOne’s industry-leading microphone innovations in more projects and spaces than ever before. The BMA 360 D takes our groundbreaking product to the next level by leveraging standard IP networking infrastructure in an enterprise, empowering AV and IT practitioners to upgrade existing room solutions to use more powerful microphones and expanding flexibility that enables third-party DSP integrations in new system designs. The added power and advanced beamforming also enhance the performance of critical modern functions such as voice lift and camera tracking. Dante integration in the BMA 360 D enhances the array’s functionality by delivering unprocessed beam audio on individual Dante transmit channels. Additionally, a smart-switched output is delivered on a separate Dante channel to provide the optimal mix of active inputs while enabling ClearOne’s full suite of audio enhancements, which include echo cancellation, noise cancellation, and level control. The BMA 360 D incorporates the industry’s only ultra-wideband, frequency-invariant beamforming mic array technology with uniform gain response across all frequency bands. With proprietary FiBeam™ and DsBeam™ technology, participants experience natural and full-fidelity audio across all beams and within a single beam. DsBeam delivers superb clarity and intelligibility through unparalleled sidelobe depth below -40 dB, resulting in superior rejection of reverb and noise even in challenging environments. Integrator setup is simplified by convenient preset beam patterns for common room layouts, while custom beam patterns can be created for unique floor plans. Combined with adaptive steering that focuses audio pickup on active speakers, the adjustable beam patterns provide impeccable coverage of every meeting or conference participant. The exceptional accuracy of ClearOne’s beamforming and adaptive steering technologies also enhance the performance of voice lift and camera tracking functions for any attached DSP mixer.
Current wording
At Infocomm 2023, we unveiled the BMA 360 D, the newest member of the world’s most advanced beamforming microphone array ceiling tile family. The BMA 360 D offers unrivaled audio performance and native compatibility with any Dante-enabled DSP mixer. The new Dante-compatible beamforming microphone array allows integrators and users to leverage ClearOne’s industry-leading microphone innovations in more projects and spaces than ever before. The BMA 360 D takes our groundbreaking product to the next level by leveraging standard IP networking infrastructure in an enterprise, empowering AV and IT practitioners to upgrade existing room solutions to use more powerful microphones and expanding flexibility that enables third-party DSP integrations in new system designs. The added power and advanced beamforming also enhance the performance of critical modern functions such as voice lift and camera tracking. Dante integration in the BMA 360 D enhances the array’s functionality by delivering unprocessed beam audio on individual Dante transmit channels. Additionally, a smart-switched output is delivered on a separate Dante channel to provide the optimal mix of active inputs while enabling ClearOne’s full suite of audio enhancements, which include echo cancellation, noise cancellation, and level control. The BMA 360 D incorporates the industry’s only ultra-wideband, frequency-invariant beamforming mic array technology with uniform gain response across all frequency bands. With proprietary FiBeam™ and DsBeam™ technology, participants experience natural and full-fidelity audio across all beams and within a single beam. DsBeam delivers superb clarity and intelligibility through unparalleled sidelobe depth below -40 dB, resulting in superior rejection of reverb and noise even in challenging environments. Integrator setup is simplified by convenient preset beam patterns for common room layouts, while custom beam patterns can be created for unique floor plans. Combined with adaptive steering that focuses audio pickup on active speakers, the adjustable beam patterns provide impeccable coverage of every meeting or conference participant. The exceptional accuracy of ClearOne’s beamforming and adaptive steering technologies also enhance the performance of voice lift and camera tracking functions for any attached DSP.
Previous wording
During 2023, our overall revenue of $18.7 million decreased by 26% when compared to revenue of $25.2 million during 2022. The decrease in revenue was seen across all product categories and major regions. We believe the revenue decline was primarily due to the decline in demand for video products anddue to our inability in the first half of 2023 to source adequate inventory to meet the demand for professional audio products and BMA due to the transition of manufacturing of our products from China to Singapore by our EMS provider. We believe that many of our channel partners who could not buy our products due to product shortages caused by our manufacturing transition issues are yet to resume their typical buying pattern with us. We also believe that the lack of Microsoft Teams certification for our products is increasingly impacting our ability to sell our conferencing and collaboration solutions.
Current wording
During 2024, our overall revenue of $11.4 million decreased by 39% when compared to revenue of $18.7 million during 2023. The decrease in revenue was seen across all product categories and major regions. We believe the revenue decline was primarily due to the decline in demand for video products anddue to our inability in the first half of 2023 to source adequate inventory to meet the demand for professional audio products and BMA due to the transition of manufacturing of our products from China to Singapore by our EMS provider. We believe that many of our channel partners who could not buy our products due to product shortages caused by our manufacturing transition issues are yet to resume their typical buying pattern with us. We also believe that the lack of Microsoft Teams certification for our products is increasingly impacting our ability to sell our conferencing and collaboration solutions.
Previous wording
We operate in a very dynamic and highly competitive industry which is dominated on theone hand by a few players with respect to certain products like traditional video conferencing appliances while on the other hand influenced heavily by a fragmented reseller market consisting of numerous regional and local players. The industry is also characterized by venture capitalist funded start-ups and private companies willing to fund cumulative cash losses in order to gain market share and achieve certain non-financial goals. It has become increasingly important to have higher interoperability with other products in the audio visual market as well as product certifications with leading video conferencing service providers like Microsoft and Zoom.
Current wording
We operate in a very dynamic and highly competitive industry which is dominated on theone hand by a few players with respect to certain products like video conferencing appliances while on the other hand influenced heavily by a fragmented reseller market consisting of numerous regional and local players. The industry is also characterized by venture capitalist funded start-ups and private companies willing to fund cumulative cash losses in order to gain market share and achieve certain non-financial goals. It has become increasingly important to have higher interoperability with other products in the audio-visual market as well as product certifications with leading video conferencing service providers like Microsoft and Zoom.
Previous wording
The audio-visual products market is characterized by intense competition and rapidly evolving technology. Our competitors vary within each product category. Our installed professional audio conferencing products, which is our flagship product category, continue to be ahead of the competition despite the reduction in revenues. Our strength in this space is largely due to our fully integrated suite of products consisting of DSP mixers, wide range of professional microphone products and video collaboration products. Despite our strong leadership position in the installed professional audio conferencing market, we face challenges to revenue growth due to the limited size of the market, pricing pressures from new competitors attracted to the commercial market due to higher margins, and the lack of certifications from Microsoft.
Current wording
The audio-visual products market is characterized by intense competition and rapidly evolving technology. Our competitors vary within each product category. Our installed professional audio-conferencing products, which is our flagship product category, continue to be ahead of the competition despite the reduction in revenues. Our strength in this space is largely due to our fully integrated suite of products consisting of DSPs, a wide range of professional microphone products and video collaboration products. Despite our strong leadership position in the installed professional audio-conferencing market, we face challenges to revenue growth due to the limited size of the market, pricing pressures from new competitors attracted to the commercial market due to higher margins, and the lack of certifications from Microsoft.
Previous wording
We derive a significant portion of our revenue (approximately 56% in 2023) from international operations and expect this trend to continue in the future. Most of our revenue from outside the U.S. is billed in U.S. dollars and is not exposed to any significant currency risk. However, we are exposed to foreign exchange risk if the U.S. dollar is strong against other currencies as it will make U.S. Dollar denominated prices of our products less competitive.
Current wording
We derive a significant portion of our revenue (approximately 67% in 2024) from international operations and expect this trend to continue in the future. Most of our revenue from outside the U.S. is billed in U.S. dollars and is not exposed to any significant currency risk. However, we are exposed to foreign exchange risk if the U.S. dollar is strong against other currencies as it will make U.S. Dollar denominated prices of our products less competitive.
Previous wording
Deferred revenue decreased from $63 thousand in 2022 to $30 thousand in 2023 due to decrease in new subscriptions to the video conferencing software.
Current wording
Deferred revenue decreased from $30 thousand in 2023 to $17 thousand in 2024 due to decrease in new subscriptions to the video conferencing software.
Previous wording
Our revenue decreased by 26% to$18.7 million in 2023 compared to $25.2 million of revenue in 2022. Revenue from all product categories declined during the year with audio conferencing, microphones and video products declining by 29%, 21% and 27% respectively. Video products suffered a decline in revenues in 2023 compared to 2022 due to alack of demand for video products due to bottoming of demand for the work from home and learn from home markets and due to extreme pricing pressures. Revenue decreases were also due to our inability in the first half of 2023 to source adequate inventory to meet the demand for professional audio products and BMA due to the transition of manufacturing of our products from China to Singapore by our EMS provider. We believe that many of our channel partners who could not buy our products due to product shortages caused by our manufacturing transition issues are yet to resume their typical buying pattern with us. We also believe that the lack of Microsoft Teams certification for our products is increasingly impacting our ability to sell our conferencing and collaboration solutions.
Current wording
Our revenue decreased by 39% to$11.4 million in 2024 compared to $18.7 million of revenue in 2023. Revenue from all product categories declined during the year with audio conferencing, microphones and video products declining by 49%, 33% and 26% respectively. Video products suffered a decline in revenues in 2024 compared to 2023 due to alack of demand for video products as demand for the work from home and learn from home markets contracted as well as experiencing extreme pricing pressures. Revenue decreases were also due to our inability in the first half of 2023 to source adequate inventory to meet the demand for professional audio products and BMA due to the transition of manufacturing of our products from China to Singapore by our EMS provider. We believe that many of our channel partners who could not buy our products due to product shortages caused by our manufacturing transition issues are yet to resume their typical buying pattern with us. We also believe that the lack of Microsoft Teams certification for our products is increasingly impacting our ability to sell our conferencing and collaboration solutions.
Previous wording
The share ofaudio conferencing products in our product mix decreased from 47% in 2022 to 45% in 2023. The share of microphonesin the revenue mix increased slightly from 39% in 2022 to 41% in 2023. Share of video products in the revenue mix remained the same at 14% in 2022 and 2023.
Current wording
The share ofaudio-conferencing products in our product mixdecreased from 45% in 2023 to 38% in 2024. The share of microphonesin the revenue mixincreased slightly from 41% in 2023 to 46% in 2024. Share of video products in the revenue mix increased from 14% in 2023 and 16% in 2024.
Previous wording
During 2023, revenue decreased significantly in all regions of the world. Asia Pacific inclu ding the Middle East decreased by 6%, Europe and Africa decreased by 54% and the Americas decreased by approximately 26%.
Current wording
During 2024, revenue decreased in the Asia Pacific area, including the Middle East, by 19%. Europe and Africa decreased by 46% and the Americas decreased by approximately 54%.
Previous wording
Our gross profit during 2023 was approximately$6.4 million or 34% compared to approximately $9.5 million or 38% in 2022. The gross profit margin was negatively impacteddue to (a) an increase infreight and tariff costs as a percentage of revenue, (b) increased administration costs as a percentage of revenue, and (c) an increase in inventory obsolescence costs. These increases in cost of goods sold as a percentage of revenue was partially offset by reduction in material costs as a percentage of revenue.
Current wording
Our gross profit during 2024 was approximately$2.6 million or 23% compared to approximately $6.4 million or 34% in 2023. The gross profit margin was negatively impacteddue to (a) an increase infreight and tariff costs as a percentage of revenue, (b)increased material costs across all product lines, and (c) an increase in inventory obsolescence costs.
Previous wording
Our profitability in the near-term continues to depend significantly on our revenues from audio conferencing products. We hold long-term inventory and if we are unable to sell our long-term inventory, our profitability might be affected by inventory write-offs and price mark-downs. Our long-term inventory includes approximately $0.2 million of Converge Pro and Beamforming microphone array products, $1.0 million of cameras, and $1.6 million of raw materials that will be used primarily for manufacturing professional audio conferencing products and BMA microphones. Any business changes that are adverse to these product lines could potentially impact our ability to sell our long-term inventory in addition to our current inventory.
Current wording
Our profitability in the near-term continues to depend significantly on our revenues from audio conferencing products. We hold long-term inventory and if we are unable to sell our long-term inventory, our profitability might be affected by inventory write-offs and price mark-downs. Our long-term inventory includes approximately $2.2 million of Converge Pro and Beamforming microphone array products, $0.5 million of cameras, and $1.1 million of raw materials that will be used primarily for manufacturing professional audio conferencing products and BMA microphones. Any business changes that are adverse to these product lines could potentially impact our ability to sell our long-term inventory in addition to our current inventory.
Previous wording
Operating income (loss), or income(loss) from operations, is the surplus or deficit after operating expenses are deducted from gross profits. Operating expenses include sales and marketing (“S&M”) expenses, research and product development (“R&D”) expenses and general and administrative (“G&A”) expenses. Total operating expenses were$13.1 million in 2023, compared to $16.7 million in 2022. The following contains a more detailed discussion of expenses related to sales and marketing, research and product development, general and administrative, and other items.
Current wording
Operating income (loss), or income(loss) from operations, is the surplus or deficit after operating expenses are deducted from gross profits. Operating expenses include sales and marketing (“S&M”) expenses, research and product development (“R&D”) expenses and general and administrative (“G&A”) expenses. Total operating expenses were$11.8 million in 2024, compared to $13.1 million in 2023. The following contains a more detailed discussion of expenses related to sales and marketing, research and product development, general and administrative, and other items.
Previous wording
S&M expenses in 2023 decreased to $4.9 million, compared to $5.5 million in 2022. The decrease was primarily due to (a) decreasesin employment expenses and consultant expenses, (b) a decrease in commissions paid to employees, full-time consultants andindependent manufacturer representatives. This overall decrease was partially offset by (a) an increase in trade-show-related costs, and (b) an increase in travel expenses.
Current wording
S&M expenses in 2024 decreased to $4.6 million, compared to $4.9 million in 2023. The decrease was primarily due to (a) decreasesin employment expenses and consultant expenses, (b) a decrease in commissions paid to employees, full-time consultants andindependent manufacturer representatives. This overall decrease was partially offset by (a) an increase in trade-show-related costs, and (b) an increase in travel expenses.
Previous wording
R&D expenses decreased from $4.4 million in 2022 to$3.7 million in 2023. The decrease was primarily due to (a) a decrease in project-related expenses, (b) a decrease in employment expenses including salaries and bonuses, and (c) a decrease in allocation of common expenses to R&D. This overall decrease was partially offset by an increase in legal expenses incurred on application for new patents.
Current wording
R&D expenses decreased from $3.7 million in 2023 to$3.3 million in 2024. The decrease was primarily due to (a) a decrease in project-related expenses, (b) a decrease in employment expenses including salaries and bonuses, and (c) a decrease in allocation of common expenses to R&D. This overall decrease was partially offset by an increase in legal expenses incurred on application for new patents.
Previous wording
G&A expenses decreased to$4.6 million in 2023, compared to $6.8 million in 2022. The decrease was primarily due to (a)a decrease in amortization of capitalized legal costs related to patents litigation, and (b) a decrease in employment expenses including salaries and bonuses. This decrease was partially offset by (a) an increase in consulting expenses including investor relations costs, and (b) an increase in directors and officers insurance expenses.
Current wording
G&A expenses decreased to$4.0 million in 2024, compared to $4.6 million in 2023. The decrease was primarily due to (a)a decrease in amortization of capitalized legal costs related to patents litigation, and (b) a decrease in employment expenses including salaries and bonuses. This decrease was partially offset by (a) an increase in consulting expenses including investor relations costs, and (b) an increase in directors and officers’ insurance expenses.
Previous wording
Interest expense increased to $0.5 million in 2023 compared to $0.4 million in 2022. The increase was primarily due to interest associated with the prepayment of the $2 million bridge loan in January 2023.
Current wording
Interest income increased to $0.23 million in 2024 compared to expense of ($0.5) million in 2023. The increase was primarily due to interest associated with investments in marketable securities offset by the prepayment of the $2 million bridge loan in January 2023. Interest expense was $0.0 in 2024 compared to $0.5 million in 2023. The decrease was primarily due to a loan being extinguished in 2023.
Previous wording
The effective tax provision rate was below 0% in 2023, comp ared to 25% effective tax benefit rate during 2022. Income tax provision for 2023 was $0.4 million as compared to an income tax provision of $6.9 million in 2022. The significant change in income taxes wasprimarily due to a decrease in net income in 2023 compared to 2022. We have been recording a valuation allowance against net deferred tax assets since 2018 and have not been claiming tax benefit for our lossesas we have concluded that it is more likely than not that our deferred tax assets were not realizable, primarily due to our recent pre-tax losses.
Current wording
The effective tax provision rate was below 0% in 2024, comp ared to 25% effective tax benefit rate during 2023. Income tax provision for 2024 was $0.2 million as compared to an income tax provision of $0.4 million in 2023. The significant change in income taxes wasprimarily due to a decrease in net income in 2024 compared to 2023. We have been recording a valuation allowance against net deferred tax assets since 2018 and have not been claiming tax benefit for our lossesas we have concluded that it is more likely than not that our deferred tax assets were not realizable, primarily due to our recent pre-tax losses.
Previous wording
As of December 31, 2023, our cash and cash equivalents were approximately$17.8 million compared to $1.0 million as of December 31, 2022. Our working capitalwas$39.1 million and $69.3 million as of December 31, 2023 and 2022, respectively.
Current wording
As of December 31, 2024, our cash and cash equivalents were approximately$1.4 million compared to $17.8 million as of December 31, 2023. Our working capitalwas$15.2 million and $39.1 million as of December 31, 2024 and 2023, respectively.
Previous wording
Net cash flows used in operating activities were approximately$54.6 million during 2023, an increaseof approximately$58.8 million from $4.2 million used in opera ting activities in 2022. The increase in cash provided was primarily due to receipt of settlement proceeds of $56.3 million from two separate settlements and income tax refunds, partially offset by change in operating assets and liabilities.
Current wording
Net cash flows used in operating activities were approximately ($6.1) million during 2024, a decreaseof approximately ($60.7) million from $54.6 million provided by opera ting activities in 2023. The decrease in cash provided was primarily due to receipt of settlement proceeds of $55 million from a legal settlement, a license agreement and income tax refunds in 2023, partially offset by change in operating assets and liabilities.
Previous wording
Net cash used in investing activities was $4.9 million in 2023 compared to$2.1 million provided by investing activities in 2022, an increase in cash used of $7.0 million. The increase in cash used in investing activities in 2023 was primarily due toan increase in net cash outflows from purchase of marketable securities net of sale of marketable securities of approximately $7.4 million partially offset by a decrease of $0.7 million in capitalized legal spending.
Current wording
Net cash provided by investing activities was $4.2 million in 2024 compared to ($4.9) million used in investing activities in 2023, an increase in cash provided of $9.1 million. The increase in cash used in investing activities in 2024 was primarily due to an increase in net cash inflows from sale of marketable securities net of purchase of marketable securities.
Previous wording
Net cash used in financing activities was $32.9 million during 2023 compared to net cash provided by financing activities of $2.1 million during 2022, adecrease in cash provided of $34.9 million. The decrease was primarily due to payment of a special dividend of $29.0 million and an increase in principal payments of debt. This decrease was further increased by lack of any capital raise in 2023 compared to capital raised through equity and debt issuances of $2.0 million in 2022.
Current wording
Net cash used in financing activities was ($14.5) million during 2024 compared to net cash used in financing activities of ($32.9) million during 2023, adecrease in cash used of ($18.4) million. The decrease was primarily due to payment of a special dividend of $14.5 million in 2024 compared to a special dividend issued of $29.0 million in 2023.
Previous wording
In order to maintain liquidity, the Company has been actively engaged in preserving cash by implementing company-wide cost reduction measures and raising additional capital. The company raised additional capital in 2019 by issuing senior convertible notes, in 2020 by borrowing through the CARES Act Paycheck Protection Program and issuing common stock and warrants and in 2021 by issuing short-term notes and issuing common stock and warrants. In January 2022, the Company issued $2 million in common stock as consideration for the cancellation and termination of the short-term notes. In October 2022, the Company issued short term notes to raise $2 million. The Company paid a specialone-time cash dividend of $1.00 per share of ClearOne common stock or the eligible warrants on June 1, 2023 amounting to $29 million. On March 11, 2024 the Company's Board of Directors declared another special dividend of $0.50 per share of the Company's stock and eligible warrants amounting to $14.5 million to be paid on April 10, 2024. The Company also believes that the Company's core strategies of product innovation and prudent cost management will bring the company back to profitability in the future. The Company believes, although there can be no assurance, that all of these measures and effective management of working capital, along with the current cash balance after the receipt of proceeds from legal settlement, will provide the liquidity needed to meet our operating needs through at least April 1, 2025.
Current wording
The Company paid a specialone-time cash dividend of $1.00 per share of ClearOne common stock or the eligible warrants on June 1, 2023 amounting to $29 million. On March 11, 2024 the Company's Board of Directors declared another special dividend of $0.50 per share of the Company's stock and eligible warrants amounting to $14.5 million to be paid on April 10, 2024. The Company has experienced a decline in sales from 2023 to 2024, along with increasing product costs in 2024.
Previous wording
As of December 31, 2023, we had open purchase orders of approximately $3.6 million mostly for purchase of inventory.
Current wording
As of December 31, 2024, we had open purchase orders of approximately $4.3 million mostly for the purchase of inventory.
Previous wording
As of December 31, 2023, we had inventory totaling $13.8 million, of which non-current inventory accounted for $3.1 million. This compares to total inventories of $11.7 million and non-current inventory of $2.7 million as of December 31, 2022.
Current wording
As of December 31, 2024, we had inventory totaling $16.1 million, of which non-current inventory accounted for $4.9 million. This compares to total inventories of $13.8 million and non-current inventory of $3.1 million as of December 31, 2023.
Previous wording
The Company recognizes revenue when it satisfies a performance obligation. The Company recognizes revenue from sales agreements upon transferring control of a product to the customer. This typically occurs when products are shipped or delivered, depending on the delivery terms, or when products that are consigned at customer locations are sold to dealers or end users. Revenue recognized during the twelve months ended December 31, 2023 for audio and video conferencing equipment saleswas$18.6 million, and for software, licenses, etc. was$0.1 million. Sales returns and allowances are estimated based on historical experience. Provisions for discounts and rebates to customers, estimated returns and allowances, ship and credit claims and other adjustments are provided for in the same period the related revenues are recognized, and are netted against revenues. For returns, the Company recognizes a related asset for the right to recover returned products with a corresponding reduction to cost of goods sold. The Company reviews warranty and related claims activity and records provisions, as necessary.
Current wording
The Company recognizes revenue when it satisfies a performance obligation. The Company recognizes revenue from sales agreements upon transferring control of a product to the customer. This typically occurs when products are shipped or delivered, depending on the delivery terms, or when products that are consigned at customer locations are sold to dealers or end users. Revenue recognized during the twelve months ended December 31, 2024 for audio and video conferencing equipment saleswas$11.4 million, and for software, licenses, etc. was$0.0 million. Sales returns and allowances are estimated based on historical experience. Provisions for discounts and rebates to customers, estimated returns and allowances, ship and credit claims and other adjustments are provided for in the same period the related revenues are recognized, and are netted against revenues. For returns, the Company recognizes a related asset for the right to recover returned products with a corresponding reduction to cost of goods sold. The Company reviews warranty and related claims activity and records provisions, as necessary.
Previous wording
To the extent we establish a valuation allowance in a period, we must include and expense the allowance within the tax provision in the consolidated statement of operations. In accordance with ASC Topic 740, “Accounting for Income Taxes”, we analyzed our valuation allowance at December 31, 2023 and determined that based upon available evidence it is more likely than not that certain of our net deferred tax assets will not be realized and, accordingly, we have recorded a full valuation allowance against these deferred tax assets in the amount of $13.8 million. Please refer to Note 13 - Income Taxes in the Notes to Consolidated Financial Statements for additional information.
Current wording
To the extent we establish a valuation allowance in a period, we must include and expense the allowance within the tax provision in the consolidated statement of operations. In accordance with ASC Topic 740, “Accounting for Income Taxes”, we analyzed our valuation allowance at December 31, 2024 and determined that based upon available evidence it is more likely than not that certain of our net deferred tax assets will not be realized and, accordingly, we have recorded a full valuation allowance against these deferred tax assets in the amount of $16.0 million. Please refer to Note 13 - Income Taxes in the Notes to Consolidated Financial Statements for additional information.
Previous wording
The inventory consists of current inventory of $10.6 million and long-term inventory of $3.1 million. Long term inventory represents inventory held in excess of our current (next 12 months) requirements based on our recent sales and forecasted level of sales. If we are unable to sell our long-term inventory including due to changes in business conditions, our profitability might be affected by inventory write-offs and price mark-downs.
Current wording
The inventory consists of current inventory of $11.2 million and long-term inventory of $4.9 million. Long term inventory represents inventory held in excess of our current (next 12 months) requirements based on our recent sales and forecasted level of sales. If we are unable to sell our long-term inventory including due to changes in business conditions, our profitability might be affected by inventory write-offs and price mark-downs.