CLEARONE INC

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. The performance and simplicity of its advanced, comprehensive solutions offered functionality, reliability, and scalability to enterprise and professional customers. See discussion of going concern and discontinued operations below.

Going Concern:

The accompanying unaudited condensed consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business for the twelve months following the date these financial statements are issued. The Company has incurred net losses and used cash in operating activities for the periods presented, and as of September 30, 2025 had limited cash resources and ongoing obligations associated with public-company compliance, legacy product warranty support, and restructuring activities (see Note 2 — Discontinued Operations and Assets Held for Sale).

In September 2025, the Company’s Board of Directors approved a plan (the “Strategic Plan”) to seek the sale of a significant portion of the Company’s operating assets related to its product business, reduce the Company’s continuing operations to warranty and product support, and position the Company as a reverse merger vehicle for a possible strategic transaction (a “Strategic Transaction”). Accordingly, as of September 30, 2025, the Company has classified a significant portion of its assets as held for sale, measured at the lower of carrying amount or fair value less costs to sell. After quarter-end, on October 24, 2025, the Company closed the sale of certain inventory and intellectual property (the “Asset Disposition”) to Biamp Systems, LLC (“Biamp”) for cash consideration (see Subsequent Events). Pursuant to the terms of the Class A Redeemable Preferred Stock issued in July 2025, net proceeds from a qualifying asset sale are payable to Class A holders upon redemption (see Note 3 — Class A Redeemable Preferred (Temporary Equity)). As a result, the net proceeds of the Asset Disposition to Biamp are not expected to be available to fund ongoing operations other than for permitted transaction costs.

These conditions, including (i) historical operating losses and negative operating cash flows, (ii) limited liquidity at September 30, 2025, (iii) the requirement to redeem Class A from asset-sale net proceeds, and (iv) the Company’s go-forward profile consisting primarily of warranty support, public-company compliance, and restructuring activities, raise substantial doubt about the Company’s ability to continue as a going concern within one year after the issuance of these financial statements.

Management is (a) executing a restructuring in furtherance of the Asset Disposition to Biamp and a possible Strategic Transaction, including monetization of residual assets not included in the sale (e.g., fixed assets, leaseholds) and collection of accounts receivable and prepaids; (b) maintaining a lean corporate infrastructure to satisfy reporting and governance requirements; (c) a providing product support and warranty services with a small service inventory and technical support team; (d) managing and, where feasible, terminating or assigning facility leases to reduce ongoing cash burn; (e) completing the Class A redemption in accordance with its terms; and (f) evaluating additional financing or strategic alternatives as necessary to satisfy obligations as they come due. There can be no assurance these plans will be successful, timely, or sufficient to alleviate the conditions raising substantial doubt.

Accordingly, management has concluded that substantial doubt exists about the Company’s ability to continue as a going concern for the twelve-month period following the issuance of these unaudited condensed consolidated financial statements. The financial statements do not include any adjustments to the carrying amounts and classification of assets and liabilities that might result if the Company were unable to continue as a going concern.

Basis of Presentation:

The fiscal year for ClearOne is thetwelve 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.

In connection with the Strategic Plan to sell certain significant assets of the Company described above, management determined that the disposal group of assets met the held-for-sale criteria in ASC 360-10-45-9 and, accordingly, classified the group as assets held for sale and measured it at the lower of carrying amount or fair value less costs to sell (“FVLCTS,” also referred to as fair value less cost of disposal, “FVLCOD”). Because the planned disposal represents a strategic shift that will have a major effect on the Company’s operations and financial results, the related operating results are presented as discontinued operations in accordance with ASC 205-20. Prior-period amounts in the unaudited condensed consolidated statements of operations and cash flows have been recast to conform to this presentation. Amortization of long-lived assets included in the disposal group ceased upon classification as held for sale, and any loss recognized to measure the group to FVLCTS is included within loss from discontinued operations. 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 September 30, 2025 and December 31, 2024, the results of operations for thethree and nine months ended September 30, 2025 and 2024, and the cash flows for thenine months ended September 30, 2025 and 2024. The results of operations for thethree and nine months ended September 30, 2025 and 2024 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, 2024 filed with the SEC.

Reverse Stock Split:

The Company completed a 1-for-15 reverse stock split of the Company's issued and outstanding common stock, par value $0.001 per share, effective at 5:00 p.m. Eastern Time on June 9, 2025. The common stock began trading on a split-adjusted basis on the Nasdaq Capital Market on June 10, 2025, under the symbol "CLRO" and a new CUSIP number of 18506U203. The reverse stock split was primarily intended to increase the per share market price of the common stock in order to regain compliance with the minimum bid price requirement for continued listing on the Nasdaq Capital Market. As a result of the reverse stock split, every 15 shares of issued and outstanding common stock were automatically combined intoone share, withno 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 statement of cash flows, in accordance with ASU 2016-18. Restricted cash as of September 30, 2025, consists of $663 in remaining proceeds from a $3,000 convertible note issued to First Finance Ltd. on June 20, 2025 (withno restricted cash balance as of March 31, 2025). These funds are subject to enforceable contractual restrictions per the disbursement schedule in Schedule 8.5 of the Note Purchase Agreement, which allocates proceeds to specific uses such as advisory fees, warrant holder payments, legal and audit expenses, staff costs (e.g., board fees, accounting staff, operations/sales staff bonuses), shutdown costs for foreign subsidiaries, and severance/PTO for employee layoffs. The funds are held in a segregated account and released only upon meeting specified milestones, with penalties for non-compliance. During the quarter ended September 30, 2025, $1,322 was disbursed for severances, deal fees, legal fees, and compliance fees, resulting in the ending restricted cash balance. Full disbursement of the remaining restricted cash is expected by December 2025 as additional milestones are achieved. Restricted cash is classified as a current asset on the balance sheet and included in the total cash, cash equivalents, and restricted cash balances in the statement of cash flows. Changes in restricted cash are not presented as separate cash flows but are reconciled in this note. This classification and presentation provide transparency regarding the Company's liquidity, as the restricted funds are not available for general corporate purposes.

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, 2024. There have been no changes to these policies during the quarter ended September 30, 2025 that are of significance or potential significance to the Company, other than presentation of discontinued operations as described above and in Note 2.

Recent accounting pronouncements:

ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures

In November 2023, the FASB issued Accounting Standards Update (“ASU”)2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which improves reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses. The standard is effective for full year 2024 reporting, and for interim reporting beginning in 2025. The adoption of this ASU did not change the way the Company evaluates its reportable segments and, as a result, did not have a material impact on the Company’s segment-related disclosures.

ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures

In December 2023, the FASB issued ASU 2023-09 “Income Taxes (Topic 740): Improvements to Income Tax Disclosures” on the topic of income taxes. The standard requires additional disclosure for income taxes. These requirements include: (i) requiring a public entity to disclose specific categories in the rate reconciliation; (ii) disclosure of additional information for reconciling items that meet a quantitative threshold (if the effect of those reconciling items is equal to or greater than 5% of the amount computed by multiplying pretax income or loss by the applicable statutory income tax rate); (iii) annual disclosure of the amount of income taxes paid (net of refunds received) disaggregated by federal (national), state, and foreign taxes; (iv) annual disclosure of the amount of income taxes paid (net of refunds received) disaggregated by individual jurisdictions in which income taxes paid (net of refunds received) is equal to or greater than 5% of total income taxes paid (net of refunds received); (v) annual disclosure of income (or loss) from continuing operations before income tax expense (or benefit) disaggregated between domestic and foreign; and (vi) annual disclosure of income tax expense (or benefit) from continuing operations disaggregated by federal (national), state, and foreign. For public entities, theguidance is effective for annual periods beginning after December 15, 2024. The Company will adopt this guidance in fiscal 2025 and is in the process of evaluating the new requirements. As a result, the Company has not yet determined the impact this new ASU will have on its disclosures.

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 public business entities, such as the Company, to provide disaggregated disclosure of specific natural expense categories underlying certain income statement expense line items in the notes to the financial statements. The standard identifies five required natural expense categories for disaggregation—employee compensation, depreciation, amortization, inventory expense, and other manufacturing expenses—along with a residual "other" category for remaining amounts within relevant expense captions (e.g., cost of sales, selling, general and administrative expenses). ASU 2024-03 does not alter the expense captions presented on the face of the income statement but enhances footnote disclosures to improve transparency. The standard is effective for annual periods beginning after December 15, 2026, with early adoption permitted, and must be applied prospectively, though retrospective application is optional. An update in ASU 2025-01 clarified that interim period disclosures are not required until annual periods beginning after December 15, 2027. The Company is in the process of evaluating the impact of ASU 2024-03 on its consolidated financial statements. We expect adoption to necessitate modifications to our financial reporting processes and systems to capture and disclose the required disaggregated expense information in the footnotes. Management anticipates that this will enhance the granularity of expense disclosures but does not expect a material effect on our reported financial position or results of operations. We are reviewing our current expense classification practices and data collection capabilities to ensure compliance with the new requirements upon adoption.

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

As discussed above in Note 1 - Business Description, Basis of Presentation and Significant Accounting Policies – Going Concern, in September 2025 the Board of Directors approved a Strategic Plan to sell various operating assets related to its product business, including inventory and certain intellectual property (developed technology, trademarks and related intangibles). Management determined the criteria in ASC 360-10-45-9 were met as of September 30, 2025 (probable sale withinone year, assets available for immediate sale in present condition, active program to locate buyer and complete plan). Accordingly, the disposal group was classified as held for sale and measured at FVLCTS.

At September 30, 2025, the disposal group of asset’scarrying amount was $13,641, consisting primarily of inventory of $12,856 and intangible assets of $785. Based on an executed asset purchase agreement subsequently closed on October 24, 2025, for cash consideration of $3,000 and estimated transaction costs of $100, management recorded an impairment of $10,741 to reduce the disposal group of assets to FVLCTS at September 30, 2025. The impairment is presented in “Loss from discontinued operations” in the unaudited condensed consolidated statements of operations.

Because the disposal represents a strategic shift that will have a significant effect on the Company’s operations and financial results, the related operating results are presented as discontinued operations for all periods presented in the accompanying unaudited condensed consolidated financial statements (ASC 205-20).

Carrying amounts classified as held for sale (unaudited):

• Assets held for sale — $2,900 at September 30, 2025 (comprised primarily of inventory $12,856 and intangibles $785, less impairment to FVLCTS of $10,741 and transaction costs of $100).

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

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

• Revenue — $1,262 and $5,491 for the three and nine months ended September 30, 2025, respectively; $2,504 and $8,430 for the comparable 2024 periods.

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

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

• Cost of goods sold — $2,148 and $6,435 for the three and nine months ended September 30, 2025, respectively; $1,865 and $6,607 for the comparable 2024 periods.

• Gross profit / (loss) — ($886) and ($944) for the three and nine months ended September 30, 2025, respectively; $639 and $1,823 for the comparable 2024 periods.

• Operating expenses directly attributable — $1,238 and $6,179 for the three and nine months ended September 30, 2025, respectively; $1,985 and $6,517 for the comparable 2024 periods.

• Impairment on held for sale — $10,741 (Q3 2025 only).

• (Loss) income before income taxes — ($12,865) and ($17,864) for the three and nine months ended September 30, 2025, respectively; ($1,346) and ($4,694) for the comparable 2024 periods.

• (Loss) income from discontinued operations, net of tax — ($12,865) and ($17,864) for the three and nine months ended September 30, 2025, respectively; ($1,346) and ($4,694) for the comparable 2024 periods.

Assets grouped into discontinued operations (unaudited):

• Accounts receivable, net - $865 and $2,218 for the periods ended September 30, 2025 and December 31, 2024, respectively.

• Inventories short and long term and intangible assets - $0 and $14,391 for the periods ended September 30, 2025 and December 31, 2024, respectively.

• Prepaids and other current assets - $3,678 and $3,894 for the periods ended September 30, 2025 and December 31, 2024, respectively.

• Property, plant and equipment, net - $259 and $500 for the periods ended September 30, 2025 and December 31, 2024, respectively.

• Other long-term assets - $69 and $82 for the periods ended September 30, 2025 and December 31, 2024, respectively.

Liabilities grouped into discontinued operations (unaudited):

• Accounts payable - $2,778 and $1,728 for the periods ended September 30, 2025 and December 31, 2024, respectively.

• Accrued liabilities, current - $444 and $1,107 for the periods ended September 30, 2025 and December 31, 2024, respectively.

• Deferred revenue - $12 and $17 for the periods ended September 30, 2025 and December 31, 2024, respectively.

• Other long-term liabilities - $1,155 and $1,154 for the periods ended September 30, 2025 and December 31, 2024, respectively.

Management concluded the disposal constitutes a component and a strategic shift since it eliminates significant revenue-generating activities. The Company will continue to provide product support and warranty services as it pursues a Strategic Transaction in the fourth quarter of 2025.

3.Capital Structure: Class A Redeemable Preferred Stock (Temporary Equity)

On July 18, 2025, following Board authorization on June 20, 2025, filing of the Certificate of Designation on June 24, 2025, and Nasdaq Corporate Data Operations approval on July 11, 2025 (the record date), the Company issued 2,069,065 shares of its Class A Redeemable Preferred Stock as aone-time special stock dividend (one Class A share for each common share and common stock equivalent outstanding as of the record date);2,069,066 sharesare authorized and 2,069,065 were issued and outstanding as of September 30, 2025. Under the Certificate of Designation, the Class A shares are mandatorily redeemable upon an Asset Sale for 100%of the net proceeds as defined therein; accordingly, the Class A is presented in temporary equity (mezzanine) in accordance with ASC 480-10-S 99. As of September 30, 2025, the Company recorded the fair value of the Series A preferred stock as its expected redemption amount (based on anticipated proceeds of a qualifying asset sale after payment of other liabilities). The Class A is a participating security only in the liquidation of sale proceeds and does not receive dividends other than redemption; therefore it is excluded from diluted EPS as anti-dilutive for the periods presented. As of September 30, 2025, the Asset Sale was probable and estimable at $3.0 million, and the Company recorded $756 as Preferred stock Class A redeemable preferred stock in temporary equity and a reduction to retained earnings. The ultimate redemption amount will equal the actual net proceeds received. See Note 2 — Discontinued Operations and Assets Held for Sale and Note 16 for additional information regarding the asset sale and redemption mechanics.

4. Debt and Equity: Conversion of Convertible Note

On July 21, 2025, the Company’s $3.0 million convertible note issued on June 20, 2025 to First Finance Ltd. (together with $26 of accrued interest) automatically converted into 3,026 shares of Class B Convertible Preferred Stock pursuant to its original terms. The conversion ratio of 166.44474 common shares per Class B share was determined at issuance based on the Nasdaq closing price and 5-day average closing prices on June 19, 2025 (the trading day immediately preceding execution of the note and purchase agreement) and is fixed (subject only to customary anti-dilution). Because the conversion option is indexed to, and will be settled in, the Company’s own equity, it qualifies for the ASC 815-40 “own-equity” scope exception; accordingly, no derivative liability was recorded and the full conversion amount was recognized in equity, withno gain or loss recognized on conversion. The Company has 5,100 Class B shares authorized and 3,026 issued and outstanding as of September 30, 2025. This conversion represents a non-cash financing activity and is disclosed in the supplemental cash flow information. Class B Convertible Preferred Stock is convertible into common stock in accordance with its Certificate of Designation filed as Exhibit 3.2 to the Company’s Current Report on Form 8-K as filed with the SEC on June 25, 2025

5. Warrants Repurchased (and Related Party)

During September 2025, the Company repurchased and cancelled outstanding warrants from (i) Intracoastal Capital, LLC (6,039 underlying shares) on September 2, 2025 for an aggregate purchase price of $4, (ii) Lind Global Fund II, LP (24,155 underlying shares) on September 10, 2025 for $15, (iii) Edward Dallin Bagley (related party;18,940 underlying shares) on September 17, 2025 for $12, and (iv) Edward Bryan Bagley (3,788 underlying shares) on September 16, 2025 for $2. The repurchased warrants were cancelled upon settlement and accounted for as equity transactions with no effect on the statement of operations. As of September 30, 2025, warrants to purchase an aggregate of 218,887 shares of common stock remained outstanding. The Company did not issue new warrants during the quarter.

The repurchase price and other terms of the warrants repurchase from Edward Dallin Bagley were approved by the Board of Directors in accordance with the Company’s policy regarding related person transactions. No amounts were outstanding with Mr. Bagley related to these warrants as of September 30, 2025.

6. Revenue Information

The Company recognizedno revenue from continuing operations for the three andnine months ended September 30, 2025 and the comparable 2024 periods. Revenue formerly reported by product group and region is presented within discontinued operations (see Note 2).

7. Loss per share

Basic net loss per share is computed by dividing net loss attributable to common stockholders by the weighted-average number of common shares outstanding during the period. Diluted net loss per share includes the effect of potentially dilutive common shares (e.g., convertible securities, warrants, options) using the if-converted and treasury stock methods, as applicable. Because the Company reported a net loss for all periods presented, all potential common shares were anti-dilutive and therefore excluded from the computation of diluted loss per share. Accordingly, diluted loss per share equals basic loss per share for all periods. All share and per-share amounts have been retroactively adjusted to reflect the Company’s reverse stock split (see Note 1).

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

The Company issued Class A Redeemable Preferred Stock via a special stock dividend in July 2025 (see Note 3). Class A is redeemable for net proceeds of a qualifying asset sale and does not participate in current-period earnings or losses other than its redemption preference. Management concluded that Class A is not a participating security for purposes of thetwo-class method for the periods presented; therefore, no allocation of earnings (loss) was made to Class A in computing loss per share.

Anti-dilutive securities (excluded from diluted loss per share).

The following table sets forth the computation of basic and diluted lossper common share:

8. Intangible Assets

As of September 30, 2025, inventories and certain intangible assets were classified as assets held for sale and are therefore excluded from continuing operations disclosures. See Note 2.

9. Inventories

As of September 30, 2025, significant inventories were classified as assets held for sale and are therefore excluded from continuing operations disclosures. See Note 2. Some inventories were retained to service warranty liabilities.

Inventories, net of reserves, as of September 30, 2025 and December 31, 2024 consisted of the following:

Net loss incurred on valuation of inventory at lower of cost or net realizable value and write-off of obsolete inventory forthree and nine months ended September 30, 2025 and 2024 was as follows:

10. Leases

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

Rent expense forthree and nine months ended September 30, 2025 and 2024 was as follows:

The Company leases a 1,350-square-foot facility in Gainesville, Florida under an operating lease that expires in February 2028. The facility has been used primarily for research and development. The Company is seeking a third party to assume the remaining lease term.

The Company leases a 9,402 square-foot facility in Salt Lake City, Utah under the terms of an operating lease expiring in February 2028. The facility supportedthe Company's principal administrative, sales, marketing, customer support, and research and product development activities. The Company is seeking a third party to assume the remaining lease term.

We entered into a lease on December 1, 2024 to occupy a 2,590 square-foot warehouse in Salt Lake City Utah. The lease is an operating lease expiring in February 2028. This facility serves as our primary warranty and repair center.

Supplemental cash flow information related to leases was as follows:

Supplemental balance sheet information related to leases was as follows:

The following represents maturities of operating lease liabilities as of September 30, 2025:

11. Convertible Notes Payable

On June 25, 2025, the Company filed a Current Report on Form 8-K disclosing several material events. On June 20, 2025, the Company entered into a Note Purchase Agreement with First Finance Ltd., pursuant to which First Finance Ltd. purchased $3,000,000 aggregate principal amount of convertible notes in a private placement exempt from registration under Section 4(a)(2) of the Securities Act of 1933, as amended. The convertible notes accrued interest at 10% per annum and were mandatorily convertible into shares of newly designated Class B Convertible Preferred Stock upon the issuance of Class A Redeemable Preferred Stock as a dividend to common stockholders (which occurred July 18, 2025– see Note 13). The Class B Convertible Preferred Stock is further convertible into common stock at an initial conversion ratio of 166.44474 shares of common stock for each share of Class B Convertible Preferred Stock (subject to adjustment for stock splits, dividends, and similar events). First Finance Ltd. was granted an option to purchase up to an additional $2,000,000 of Class B Convertible Preferred Stock. The proceeds from the convertible notes are restricted to a specified disbursement schedule.

On July 21, 2025, the Company’s convertible note (June 20, 2025) issued to First Finance Ltd. (together with accrued interest) automatically converted into 3,026 shares of Class B Convertible Preferred Stock pursuant to the original terms. See Note 4.

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.

Composition of Notes Payable

Schedule of Future Maturities of Notes Payable

12. Shareholders' Equity

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 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 areverse 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 intoone share, withno fractional shares issued (any fractional interests were converted toone 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, which ranks senior to common stock and is redeemable upon an Asset Sale (defined as the sale of all or substantially all of the Company's current assets and operations, which the Company is required to pursue using reasonable best efforts within 180 days of issuance), was issued on July 18, 2025 as a dividend to holders of common stock and common stock equivalents of record as of July 11, 2025. Net proceeds from any Asset Sale will be distributed pro rata to holders of Class A Redeemable Preferred Stock. The Class B Convertible Preferred Stock ranks senior to common stock and other equity (except Class A Redeemable Preferred Stock), with specific rights including dividends, voting (on an as-converted basis), and liquidation preferences.

Additionally, effective June 20, 2025, the Board of Directors was expanded from four tofive members, with Eric Boehnke and Youngsun Park (a/k/a Sunny Park), nominees of First Finance Ltd., appointed as directors to serve until the next annual meeting or until their successors are elected and qualified. Neither appointee has any material arrangements or family relationships with the Company requiring disclosure under Item 404(a) of Regulation S-K, and they will receive standard director compensation.

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.

13. Share-based Compensation

The Company uses judgment in determining the fair value of the share-based payments on the date of grant using an option-pricing model with assumptions regarding a number of highly complex and subjective variables. These variables include, but are not limited to, the risk-free interest rate of the awards, the expected life of the awards, the expected volatility over the term of the awards, and the expected dividends of the awards. The Company uses the Black-Scholes option pricing model to determine the fair value of share-based payments granted under the guidelines of ASC Topic 718.

A summary of the stock option activity under the Company’s plans for thenine months ended September 30, 2025, is as follows:

As of September 30, 2025, the total remaining unrecognized compensation cost related to non-vested stock options, net of forfeitures, was approximately $44, which will be recognized over a weighted average period of 1.22 years.

Share based compensation expense has been recorded as follows:

14. Income Taxes

The Company recorded a full valuation allowance against U.S Federal and State deferred tax assets, which results in no income tax benefit for losses in these jurisdictions. The full domestic valuation allowance was recorded as management concluded that it is more likely than not that these deferred tax assets are not realizable due to the Company's recent pre-tax losses and other sources of negative evidence. Provision for income taxes for thenine months ended September 30, 2025 mostly represents income tax expense (benefit) recorded for jurisdictions outside the United States.

The Company had approximately $969 of uncertain tax positions as of September 30, 2025. Due to the inherent uncertainty of the underlying tax positions, it is not possible to forecast the payment of this liability for any particular year, therefore, it is reflected in other long-term liabilities.

**15. Operating Segment **

The Company operates asone operating segment. Operating segments are defined as components of an entity for which separate financial information is regularly evaluated by the chief operating decision maker ("CODM"), which is the Company's Chief Executive Officer, in deciding how to allocate resources and assess performance. The Company's CODM evaluates financial information and resources and assesses the performance of these resources on a consolidated basis. There is no expense or asset information that is supplemental to information disclosed within the consolidated financial statements, that is regularly provided to the CODM. The allocation of resources and assessment of performance of the operating segment is based on consolidated net loss and functional expenses as reported on our consolidated statements of operations and comprehensive loss. Because the Company operates asone operating segment, financial segment information, including expense and asset information, can be found in the consolidated financial statements.

16. Subsequent Events

On October 24, 2025, the Company completed the sale of a significant portion of its intellectual property and certain inventories to Biamp Systems, LLC for $3,000. There were no escrows or holdbacks. The Company estimates $100 of transaction costs. The Company will continue to provide product support and warranty services while it pursues a Strategic Transaction in the fourth quarter of 2025 as further described in Note 1. Any difference between the carrying amount at September 30, 2025 and the final closing amounts will be recognized in the fourth quarter of 2025.