CLEARONE INC
0000840715
false
0000840715
2023-08-10
2023-08-10
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
8-K
CURRENT REPORT
Pursuant to Section 13 OR 15(d) of the Securities Exchange Act of 1934
Date of report (Date of earliest event reported):
August 10, 2023
ClearOne, Inc.
(Exact name of registrant as specified in its charter)
Delaware 001-33660 87-0398877
(State or Other Jurisdiction (Commission (I.R.S. Employer
of Incorporation) File Number) Identification No.)
5225 Wiley Post Way, Suite 500 84116
,
Salt Lake City
,
Utah
(Address of principal executive offices) (Zip Code)
+1
(801)
975-7200
(Registrant's telephone number, including area code)
Not applicable
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of
the following provisions:
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
Pre-commencement communication pursuant to Rule 13e-4
(c)
under the Exchange Act (17 CFR 240.13e-4
(c)
)
Indicate by check mark whether the registrant is an emerging growth company as
defined in Rule 405 of the Securities Act of 1933 ((s)230.405 of this chapter)
or Rule 12b-2 of the Securities Exchange Act of 1934 ((s)240.12b-2 of this
chapter).
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has
elected not to use the extended transition period for complying with any new
or revised financial accounting standards provided pursuant to Section 13(a)
of the Exchange Act.
Securities Registered Pursuant to Section 12(b) of the Act:
Title of each class Trading Symbol(s) Name of each exchange on which registered
Common Stock, $0.001 CLRO The
NASDAQ
Capital Market
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Item 2.02. Results of Operations and Financial Condition
On August 10, 2023 ClearOne, Inc. (the "Company") issued a press release
announcing its financial results for the three and six months ended June 30,
2023. The full text of the press release is attached as Exhibit 99.1.
Item 7.01 Regulation FD Disclosure
On August 10, 2023, the Company conducted a webinar and
posted an updated investor presentation to its website at
https://investors.clearone.com/events-and-presentations. A copy of the
Company's investor presentation is furnished herewith as Exhibit 99.2.
Limitation of Incorporation by Reference
In accordance with General Instruction B.2. of Form 8-K, this information,
including Exhibits 99.1 and 99.2 furnished herewith, is furnished pursuant to
Items 2.02 and 7.01 and shall not be deemed to be "filed" for the purpose of
Section 18 of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), or otherwise subject to the liabilities of that section, nor shall it
be incorporated by reference into a filing under the Securities Act of 1933,
as amended (the "Securities Act"), or the Exchange Act. The information in
these Items 2.02 and 7.01 of this Current Report on Form 8-K (including the
exhibits hereto) will not be deemed an admission as to the materiality of any
information required to be disclosed solely to satisfy the requirements of
Regulation FD.
Cautionary Statements
This Current Report on Form 8-K, including the exhibits furnished herewith,
contains "forward-looking statements" within the meaning of Section 27A of the
Securities Act and Section 21E of the Exchange Act. Such forward-looking
statements relate to, without limitation, our future economic performance,
plans and objectives for future operations and projections of revenue and
other financial items. Forward-looking statements can be identified by the use
of words such as "may," "will," "plan," "potential," "project," "should,"
"expect," "anticipate," "estimate," "target," "continue" or comparable
terminology. Forward-looking statements are inherently subject to certain
risks, trends and uncertainties, many of which we cannot predict with accuracy
and some of which we might not even anticipate. Although we believe that the
expectations reflected in such forward-looking statements are based upon
reasonable assumptions at the time made, we can give no assurance that such
expectations will be achieved. Future events and actual results, financial and
otherwise, may differ materially from the results discussed in the
forward-looking statements as a result of various factors, including those
listed in Exhibit 99.1 on pages 2 and 3 and incorporated by reference herein.
Readers are cautioned not to place undue reliance on these forward-looking
statements. Unless required by U.S. federal securities laws, we do not intend
to update any of the forward-looking statements to reflect circumstances or
events that occur after the statements are made or to conform the statements
to actual results. The information contained in this Current Report on Form
8-K, including the exhibit filed herewith, should be viewed in conjunction
with the consolidated financial statements and notes thereto appearing in the
Company's Annual Reports on Form 10-K and Quarterly Reports on Form 10-Q.
In connection with the foregoing, the Company hereby furnishes the following
documents:
Item 9.01
Financial Statements and Exhibits
(d) Exhibits
Exhibit Exhibit
Number Title
99.1 Press Release of ClearOne, Inc. dated August 10, 2023.
99.2 Investor Presentation.
104.1 The cover page from this Current Report on Form 8-K, formatted in Inline XBRL.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
CLEARONE, INC.
Date: By: /s/
August 10 Narsi Narayanan
,
202
3
Narsi Narayanan
Chief
Financial
Officer (Principal
Accounting and Principal Financial
Officer)
Exhibit 99.1
ClearOne, Inc.
Reports
Second
Quarter
2023
Financial
Results
-
Total Revenue Increased 31% Quarter-Over-Quarter
, Supported by Continued Sequential and Year-Over-Year
OpEx
Reductions
-
-
Progress with
Backlog Shi
pments and New Product Launches Improve Foundation for Growth in the Second
Half of 2023 -
SALT LAKE CITY, UTAH -
August 9, 2023
- ClearOne (NASDAQ: CLRO), a global provider of audio and visual communication
solutions, reported financial results for the three-month period ended June
30, 2023.
"Our performance in the second quarter reflects our continued focus on
evolving our innovative communication solutions, supported by our work to
maintain an optimized cost structure," said Derek Graham, CEO of ClearOne. "We
delivered strong sequential growth in our revenue and gross profit margin,
driven by increased shipments of orders from the backlog due to improved
manufacturing output relative to the first quarter of this year. Though we
remain underway with the transition of our outsourced manufacturing from China
to Singapore-which continued to compress our revenue performance year-over-year-
we made progress with shipping backlog orders for our core audio conferencing
products. We continue to see strong demand and minimal cancellations within
our backlog, and we believe we are on track to resolve our contract
manufacturing interruptions during the third quarter.
"We also continued to streamline our cost and capital structure. During the
second quarter, we reduced operating expenses both sequentially and
year-over-year, and we completed the distribution of our special one-time cash
dividend. Supported by our sequential improvements, right-sized operational
framework, and $22.1 million in cash and investments at the end of the second
quarter, we believe we remain on track to drive improved top-line performance
in the second half of this year."
Operational Highlights
* Launched the
BMA 360D beamforming microphone array ceiling tile
that offers unrivaled audio performance and native compatibility with any
Dante(R)-enabled digital signal processor (DSP) mixer.
* Debuted the
DIALOG
(R)
UVHF wireless microphone system
, which provides businesses and institutions with professional-quality audio
conferencing, video collaboration and sound reinforcement for rooms of all
sizes.
* Exhibited a
comprehensive portfolio
of conferencing, collaboration and communication solutions at InfoComm 2023.
Products on display included the recently launched CHAT(R) 150 BT
Speakerphone, the Ceiling Microphone Array, CONVERGE(R) Huddle, LS5WT Wall
and LS6CT Ceiling Speakers, Versa Mediabar" Video Soundbar, COLLABORATE(R)
Versa" 60, and the UNITE(R) 60, 180 and 20 Pro cameras.
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Graham continued: "We maintained our cadence of new product launches during
the second quarter. Through unveiling our DIALOG(R) UVHF wireless microphone
system and BMA 360D beamforming microphone array ceiling tile, we have
expanded our selection of high-quality, innovative audio solutions for rooms
and enterprises of all sizes. These solutions helped drive the strong
reception our products received at the Orlando InfoComm show in June. We were
proud to return to this significant industry trade show, and we look forward
to further enhancing our products' visibility in the market.
"As we move into the second half of the year, we will continue working to both
increase our share and expand our addressable segments of the professional AV
market. During the third quarter, we expect to begin shipping a Bluetooth
group USB speakerphone and a Dante(R)-enabled beamforming microphone solution
that can interoperate with most DSPs, and we expect these shipments to serve
as near-term revenue growth drivers. We aim to continue delivering on our
strategic initiatives as we expand our library of innovative collaboration
products."
Financial Summary
The Company uses certain non-GAAP financial measures and reconciles those to
GAAP measures in the attached tables.
Q2 2023 revenue was $5.5 million, compared to $7.4 million in Q2
2022 and $4.2 million in Q1 2023. The 31% sequential increase was
driven by increased shipments of orders from the backlog due to
improved manufacturing output. The year-over-year decrease was
mainly due to sustained inventory sourcing and order fulfillment
challenges for the Company's core audio conferencing and
beamforming microphone arrays as a result of ongoing delays in the
transition of outsourced manufacturing from China to Singapore.
GAAP gross profit in Q2 2023 was $1.8 million, compared to $2.8
million in Q2 2022 and $1.3 million in Q1 2023. GAAP gross profit
margin was 34% in Q2 2023, compared to 31% Q1 2023 and 38% in Q2
2022. Gross profit margin improved by approximately 300 basis
points sequentially due to the aforementioned quarter-over-quarter
revenue growth. Gross profit margin decreased year-over-year
due to increased administration and overhead costs as a percentage
of revenue, as well as increased inventory obsolescence costs.
Operating expenses in Q2 2023 improved to $3.2 million,
compared to $4.5 million in Q2 2022 and $3.5 million
in Q1 2023. Non-GAAP operating expenses in Q2 2023
improved to $3.1 million compared to $3.4 million
in Q1 2023 and $4.0 million in Q2 2022. The sequential
and year-over-year decrease in non-GAAP operating
expenses was mainly due to the continued benefits
of the cost-cutting measures initiated in 2022.
GAAP net loss in Q2 2023 was $(1.0) million, or $(0.04) per share, compared to a net loss
of $(0.3) million, or $(0.01) per share, in Q2 2022 and a net loss of $(0.8) million,
or $(0.03) per share, in Q1 2023. The sequential increase in net loss was primarily due
to the recognition of a $1.35 million gain from a legal settlement in Q1 2023. The
year-over-year increase in net loss was primarily due to the aforementioned year-over-year
decrease in revenue and gross profit, along with the recognition of $1.5 million in gain
from the forgiveness of CARES Act Paycheck Protection Program Loan in the year-ago quarter,
partially offset by a decrease in operating expenses and increase in interest income.
Non-GAAP net loss in Q2 2023 improved to
$(0.9) million, or $(0.04) per share, compared
to a Non-GAAP net loss of $(1.1) million, or
$(0.04) per share, in Q2 2022 and a Non-GAAP
net loss of $(2.0) million, or $(0.09) per
share, in Q1 2023. The sequential and
year-over-year improvements were driven by the
aforementioned operating expense reductions.
2
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($ in 000, except per share) Three months ended June 30, Six months ended June 30,
2023 2022 Change in % 2023 2022 Change in % Favorable/
Favorable/ (Adverse)
(Adverse)
GAAP
Revenue $ 5,483 $ 7,375 (26 ) $ 9,661 $ 14,920 (35 )
Gross profit 1,848 2,807 (34 ) 3,163 5,623 (44 )
Operating expenses 3,203 4,456 28 6,707 9,125 26
Operating loss (1,355 ) (1,649 ) 18 (3,544 ) (3,502 ) (1 )
Net loss (1,019 ) (257 ) (296 ) (1,851 ) (2,224 ) 17
Diluted loss per share (0.04 ) (0.01 ) (300 ) (0.08 ) (0.09 ) 11
Non-GAAP
Non-GAAP operating expenses 3,051 $ 3,746 19 $ 6,416 $ 7,712 (17 )
$
Non-GAAP operating loss (1,202 ) (937 ) (28 ) (3,250 ) (2,085 ) (56 )
Non-GAAP net loss (86 ) (1,073 ) 19 (2,907 ) (2,335 ) (24 )
5
Non-GAAP Adjusted EBITDA (71 ) (892 ) 20 (2,389 ) (1,961 ) (22 )
0
Non-GAAP diluted loss per share (0.04 ) (0.04 ) - (0.12 ) (0.10 ) (2 )
0
Balance Sheet Highlights
As of June 30, 2023, cash, cash equivalents and investments were $22.1
million, as compared with $1.0 million as of December 31, 2022. As of June 30,
2023, the Company carried an aggregate debt of $1.4 million on account of
senior convertible notes issued in December 2019.
On May 31, 2023, the Company completed the distribution of a special one-time
cash dividend of $1.00 per share of its common stock or eligible warrants, as
declared on May 8, 2023. The dividend distribution generated cash outflows of
approximately $29.0 million.
Nasdaq Minimum Bid Price Requirement
On August 1, 2023, ClearOne received a letter from the Listing Qualifications
Department of the Nasdaq Stock Market informing the Company that because the
closing bid price for its common stock was below $1.00 for 30 consecutive
trading days, the Company is not in compliance with the minimum bid price
requirement for continued listing on the Nasdaq Capital Market, as set forth
in Nasdaq Marketplace Rule 5550(a)(2) (the "Minimum Bid Price Requirement").
In accordance with Nasdaq Marketplace Rule 5810(c)(3)(A), the Company has a
period of 180 calendar days from August 1, 2023, or until January 29, 2024, to
regain compliance with the Minimum Bid Price Requirement. If at any time
before January 29, 2024, the closing bid price of the Company's common stock
closes at or above $1.00 per share for a minimum of 10 consecutive trading
days (which number days may be extended by Nasdaq), Nasdaq will provide
written notification that the Company has achieved compliance with the Minimum
Bid Price Requirement, and the matter would be resolved.
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ClearOne intends to continue actively monitoring the closing bid price for its
common stock between now and January 29, 2024, and the Company will consider
available options to resolve the deficiency and regain compliance with the
Minimum Bid Price Requirement. Further details can be found in ClearOne's
related Form 8-K filed on August 3, 2023 and in the Company's Form 10-Q for
the three and six months ended June 30, 2023.
About ClearOne
ClearOne is a global company that designs, develops, and sells conferencing,
collaboration, and network streaming solutions for voice and visual
communications. The performance and simplicity of its advanced comprehensive
solutions offer unprecedented levels of functionality, reliability, and
scalability. Visit ClearOne at
www.clearone.com
.
Non-GAAP Financial Measures
To supplement our consolidated financial statements presented on a GAAP basis,
ClearOne uses non-GAAP measures of gross profit, operating income (loss), net
income (loss), adjusted Earnings Before Interest, Taxes, Depreciation and
Amortization (EBITDA) and net income (loss) per share, which are adjusted to
exclude certain costs, expenses, gains and losses we believe appropriate to
enhance an overall understanding of our past financial performance from period
to period and also our prospects for the future. These adjustments to our
current period GAAP results are made with the intent of providing both
management and investors a more complete understanding of ClearOne's
underlying operational results and trends and our marketplace performance. The
non-GAAP results are an indication of our baseline performance before certain
gains, losses, or other charges that are considered by management to be
outside of our core operating results. In addition, these adjusted non-GAAP
results are among the primary indicators management uses as a basis for our
planning and forecasting of future periods. The presentation of this
additional non-GAAP financial information is not meant to be considered in
isolation or as a substitute for gross profit, operating income (loss), net
income (loss), income (loss) per share or other financial measures prepared in
accordance with GAAP. There are limitations to the use of non-GAAP financial
measures. Other companies, including companies in ClearOne's industry, may
calculate non-GAAP financial measures differently than ClearOne does, limiting
the usefulness of those measures for comparative purposes. A detailed
reconciliation of non-GAAP financial measures to the most directly comparable
GAAP financial measures is included in this release below.
Forward Looking Statements
This release contains "forward-looking" statements that are based on present
circumstances and on ClearOne's predictions with respect to events that have
not occurred, that may not occur, or that may occur with different
consequences and timing than those now assumed or anticipated. Such
forward-looking statements and any statements of the plans and objectives of
management for future operations and forecasts of future growth and value and
the possible outcomes of litigation, are not guarantees of future performance
or results and involve risks and uncertainties that could cause actual events
or results to differ materially from the events or results described in the
forward-looking statements. Such forward-looking statements are made only as
of the date of this release and ClearOne assumes no obligation to update
forward-looking statements to reflect subsequent events or circumstances.
Readers should not place undue reliance on these forward-looking statements.
The information in this press release should be read in conjunction with and
is modified in its entirety by, the Annual Report on Form 10-K (the "10-K")
filed by the Company for the same period with the Securities and Exchange
Commission (the "SEC") and all of the Company's other public filings with the
SEC (the "Public Filings").
In particular, the financial information contained herein is subject to and
qualified by reference to the financial statements contained in the 10-Q,
including the footnotes thereto, as well as the Company's annual report on
Form 10-K for the year ended December 31, 2022 (the "10-K"), the footnotes
thereto and the limitations set forth therein. Investors may not rely on the
press release without reference to the 10-Q, the 10-K, and the Public Filings.
4
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CLEARONE, INC
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in thousands, except par value)
June 30, December 31,
2023 2022
ASSETS
Current
assets:
Cash and cash $ 15,086 $ 984
equivalents
Current marketable 6,408 -
securities
Legal settlement - 55,000
receivable
Receivables, net of 4,232 3,603
allowance of $326
Inventories, 7,547 8,961
net
Income tax 6,381 1,071
receivable
Prepaid expenses 4,273 7,808
and other assets
Total current 43,927 77,427
assets
Long-term marketable 586 -
securities
Long-term 3,361 2,707
inventories, net
Property and 614 383
equipment, net
Operating lease - right 1,171 1,047
of use assets, net
Intangibles, 1,903 2,071
net
Other assets 114 115
Total assets $ 51,676 $ 83,750
LIABILITIES AND
SHAREHOLDERS' EQUITY
Current
liabilities:
Accounts $ 2,435 $ 1,284
payable
Accrued 2,587 3,041
liabilities
Deferred product 52 63
revenue
Short-term 1,380 3,732
debt
Total current 6,454 8,120
liabilities
Operating lease 848 492
liability, net of current
Other long-term 1,008 1,008
liabilities
Total 8,310 9,620
liabilities
Shareholders'
equity:
Common stock, par value $0.001, 50,000,000 shares authorized, 24 24
23,958,979 and 23,955,767 shares issued and outstanding, respectively
Additional 45,979 74,910
paid-in capital
Accumulated other (270 ) (288 )
comprehensive loss
Accumulated (2,367 ) (516 )
deficit
Total shareholders' 43,366 74,130
equity
Total liabilities and $ 51,676 $ 83,750
shareholders' equity
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CLEARONE, INC.
UNAUDITED CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS AND
COMPREHENSIVE LOSS
(Dollars in thousands, except per share amounts)
Three months ended June 30, Six months ended June 30,
2023 2022 2023 2022
Revenue $ 5,483 $ 7,375 $ 9,661 $ 14,920
Cost of goods sold 3,635 4,568 6,498 9,297
Gross profit 1,848 2,807 3,163 5,623
Operating expenses:
Sales and marketing 1,323 1,562 2,515 3,122
Research and product development 873 1,177 1,916 2,530
General and administrative 1,007 1,717 2,276 3,473
Total operating expenses 3,203 4,456 6,707 9,125
Operating loss (1,355 ) (1,649 ) (3,544 ) (3,502 )
Interest expense (91 ) (94 ) (383 ) (195 )
Other income, net 437 1,505 2,103 1,508
Loss before income taxes (1,009 ) (238 ) (1,824 ) (2,189 )
Provision for income taxes 10 19 27 35
Net loss $ (1,019 ) $ (257 ) $ (1,851 ) $ (2,224 )
Basic weighted average shares outstanding 23,955,802 23,948,631 23,955,785 23,923,110
Diluted weighted average shares outstanding 23,955,802 23,948,631 23,955,785 23,923,110
Basic loss per share $ (0.04 ) $ (0.01 ) $ (0.08 ) $ (0.09 )
Diluted loss per share $ (0.04 ) $ (0.01 ) $ (0.08 ) $ (0.09 )
Comprehensive loss:
Net loss $ (1,019 ) $ (257 ) $ (1,851 ) $ (2,224 )
Unrealized loss on available-for-sale securities, net of tax 14 26 14 (2 )
Change in foreign currency translation adjustment (1 ) (12 ) 4 (23 )
Comprehensive loss $ (1,006 ) $ (243 ) $ (1,833 ) $ (2,249 )
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CLEARONE, INC.
UNAUDITED RECONCILIATION OF GAAP MEASURES TO NON-GAAP MEASURES
(Dollars in thousands, except per share values)
Three months Six months
ended June 30, ended June 30,
2023 2022 2023 2022
GAAP operating $ (1,355 ) $ (1,649 ) $ (3,544 ) $ (3,502 )
loss
Stock-based 25 30 47 65
compensation
Amortization 129 682 247 1,352
of intangibles
Non-GAAP $ (1,201 ) $ (937 ) $ (3,250 ) $ (2,085 )
operating loss
GAAP net $ (1,019 ) $ (257 ) $ (1,851 ) $ (2,224 )
loss
Stock-based 25 30 47 65
compensation
Amortization 129 682 247 1,352
of intangibles
Other income - - (1,350 ) -
adjustment
CARES Act PPP - (1,528 ) - (1,528 )
loan forgiveness
Non-GAAP $ (865 ) $ (1,073 ) $ (2,907 ) $ (2,335 )
net loss
GAAP net $ (1,019 ) $ (257 ) $ (1,851 ) $ (2,224 )
loss
Number of shares used in computing 23,955,802 23,948,631 23,955,785 23,923,110
GAAP diluted loss per share
GAAP diluted $ (0.04 ) $ (0.01 ) $ (0.08 ) $ (0.09 )
loss per share
Non-GAAP $ (865 ) $ (1,073 ) $ (2,907 ) $ (2,335 )
net loss
Number of shares used in computing 23,955,802 23,948,631 23,955,785 23,923,110
Non-GAAP diluted loss per share
Non-GAAP diluted $ (0.04 ) $ (0.04 ) $ (0.12 ) $ (0.10 )
loss per share
GAAP net $ (1,019 ) $ (257 ) $ (1,851 ) $ (2,224 )
loss
Stock-based 25 30 47 65
compensation
Interest 91 94 383 195
expense
Depreciation 54 68 108 144
Amortization 129 682 247 1,352
of intangibles
Other income - - (1,350 ) -
adjustment
CARES Act PPP - (1,528 ) - (1,528 )
loan forgiveness
Provision for (benefit 10 19 27 35
from) income taxes
Non-GAAP $ (710 ) $ (892 ) $ (2,389 ) $ (1,961 )
Adjusted EBITDA
Contact:
Narsi Narayanan
385-426-0565
investor_relations@clearone.com
http://investors.clearone.com
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Exhibit 99.2
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