Utah
|
87-0398877
|
|
(State
or other jurisdiction of
incorporation
or organization)
|
(I.R.S.
employer
identification
number)
|
5225 Wiley Post Way, Suite 500
Salt Lake City, Utah
|
84116
|
|
(Address
of principal executive offices)
|
(Zip
Code)
|
Common
Stock
|
8,888,580
|
Title
of Class
|
Number
of Shares
|
Outstanding
at November 11, 2008
|
Page
Number
|
||
PART
I – FINANCIAL INFORMATION
|
||
Item
1
|
Consolidated
Financial Statements
|
|
Consolidated
Balance Sheets as of September 30, 2008 and June 30, 2008
|
1
|
|
Consolidated
Statements of Operations for the three months ended September 30, 2008 and
2007
|
2
|
|
Consolidated
Statements of Cash Flows for the three months ended September 30, 2008 and
2007
|
4
|
|
Notes
to Condensed Consolidated Financial Statements
|
6
|
|
Item
2
|
Management’s
Discussion and Analysis of Financial Condition and Results of
Operations
|
12
|
Item
3
|
Quantitative
and Qualitative Disclosures About Market Risk
|
17
|
Item
4
|
Controls
and Procedures
|
17
|
PART
II – OTHER INFORMATION
|
||
Item
1
|
Legal
Proceedings
|
18
|
Item
1A
|
Risk
Factors
|
20
|
Item
2
|
Unregistered
Sales of Equity Securities and Use of Proceeds
|
20
|
Item
3
|
Defaults
Upon Senior Securities
|
20
|
Item
4
|
Submission
of Matters to a Vote of Security Holders
|
20
|
Item
5
|
Other
Information
|
20
|
Item
6
|
Exhibits
|
21
|
Signatures
|
22
|
(unaudited)
|
(audited)
|
|||||||
September
30,
|
June
30,
|
|||||||
2008
|
2008
|
|||||||
ASSETS
|
||||||||
Current
assets:
|
||||||||
Cash
and cash equivalents
|
$ | 1,731 | $ | 3,327 | ||||
Marketable
securities
|
707 | 5,922 | ||||||
Accounts
receivable, net of allowance for doubtful accounts
|
||||||||
of
$110 and $87, respectively
|
6,786 | 7,238 | ||||||
Deposit,
bond for preliminary injunction
|
908 | 908 | ||||||
Note
receivable
|
14 | 43 | ||||||
Inventories,
net
|
10,757 | 7,799 | ||||||
Deferred
income taxes
|
2,773 | 2,828 | ||||||
Prepaid
expenses
|
468 | 820 | ||||||
Total
current assets
|
24,144 | 28,885 | ||||||
Long-term
marketable securities
|
10,861 | 11,168 | ||||||
Property
and equipment, net
|
2,646 | 2,554 | ||||||
Intangible
assets, net
|
44 | 47 | ||||||
Long-term
deferred tax asset
|
1,388 | 1,639 | ||||||
Other
assets
|
10 | 7 | ||||||
Total
assets
|
$ | 39,093 | $ | 44,300 | ||||
LIABILITIES
AND SHAREHOLDERS' EQUITY
|
||||||||
Current
liabilities:
|
||||||||
Accounts
payable
|
$ | 2,561 | $ | 2,187 | ||||
Accrued
taxes
|
135 | 72 | ||||||
Accrued
liabilities
|
3,652 | 3,600 | ||||||
Deferred
product revenue
|
4,432 | 4,547 | ||||||
Total
current liabilities
|
10,780 | 10,406 | ||||||
Deferred
rent
|
661 | 700 | ||||||
Other
long-term liabilities
|
1,175 | 1,054 | ||||||
Total
liabilities
|
12,616 | 12,160 | ||||||
Shareholders'
equity:
|
||||||||
Common
stock, par value $0.001, 50,000,000 shares authorized,
|
||||||||
8,888,454
and 10,228,902 shares issued and outstanding, respectively
|
9 | 10 | ||||||
Additional
paid-in capital
|
38,023 | 44,618 | ||||||
Accumulated
other comprehensive loss
|
(895 | ) | (694 | ) | ||||
Accumulated
deficit
|
(10,660 | ) | (11,794 | ) | ||||
Total
shareholders' equity
|
26,477 | 32,140 | ||||||
Total
liabilities and shareholders' equity
|
$ | 39,093 | $ | 44,300 | ||||
See
accompanying notes to condensed consolidated financial
statements
|
Three
Months Ended September 30,
|
||||||||
2008
|
2007
|
|||||||
Revenue
|
$ | 10,258 | $ | 9,442 | ||||
Cost
of goods sold
|
3,625 | 4,299 | ||||||
Gross
profit
|
6,633 | 5,143 | ||||||
Operating
expenses:
|
||||||||
Sales
& marketing
|
1,977 | 1,601 | ||||||
Research
and product development
|
1,776 | 1,756 | ||||||
General
and administrative
|
1,072 | 2,895 | ||||||
Total
operating expenses
|
4,825 | 6,252 | ||||||
Operating
income (loss)
|
1,808 | (1,109 | ) | |||||
Total
other income, net
|
65 | 341 | ||||||
Income
(loss) from continuing operations before income taxes
|
1,873 | (768 | ) | |||||
(Provision)
for income taxes
|
(739 | ) | (171 | ) | ||||
Income
(loss) from continuing operations
|
1,134 | (939 | ) | |||||
Income
from discontinued operations
|
0 | 15 | ||||||
Net
income (loss)
|
$ | 1,134 | $ | (924 | ) | |||
See
accompanying notes to condensed consolidated financial
statements
|
Three Months Ended
|
||||||||
September
30,
|
September
30,
|
|||||||
2008
|
2007
|
|||||||
Basic
earnings per common share from continuing operations
|
$ | 0.11 | $ | (0.09 | ) | |||
Diluted
earnings per common share from continuing operations
|
$ | 0.11 | $ | (0.08 | ) | |||
Basic
earnings per common share from discontinued operations
|
$ | - | $ | - | ||||
Diluted
earnings per common share from discontinued operations
|
$ | - | $ | - | ||||
Basic
earnings per common share
|
$ | 0.11 | $ | (0.08 | ) | |||
Diluted
earnings per common share
|
$ | 0.11 | $ | (0.08 | ) | |||
Basic
weighted average shares
|
10,112,787 | 10,961,256 | ||||||
Diluted
weighted average shares
|
10,206,652 | 11,072,565 | ||||||
See
accompanying notes to condensed consolidated financial
statements
|
Three Months Ended
|
||||||||
September
30,
|
September
30,
|
|||||||
2008
|
2007
|
|||||||
Cash
flows from operating activities:
|
||||||||
Net
income (loss) from continuing operations
|
$ | 1,134 | $ | (940 | ) | |||
Adjustments
to reconcile net income (loss) from continuing operations
|
||||||||
to
net cash provided by operating activities:
|
||||||||
Depreciation
and amortization expense
|
181 | 188 | ||||||
Stock-based
compensation
|
160 | 171 | ||||||
Write-off
of inventory
|
27 | 331 | ||||||
(Gain)
loss on disposal of assets and fixed assets write-offs
|
(5 | ) | 3 | |||||
Provision
for doubtful accounts
|
23 | 2 | ||||||
Changes
in operating assets and liabilities:
|
||||||||
Accounts
receivable
|
409 | (133 | ) | |||||
Deferred
taxes
|
427 | |||||||
Note
receivable - Ken-A-Vision
|
29 | 40 | ||||||
Inventories
|
(2,985 | ) | (558 | ) | ||||
Prepaid
expenses and other assets
|
337 | (123 | ) | |||||
Accounts
payable
|
394 | 557 | ||||||
Accrued
liabilities
|
52 | 1,537 | ||||||
Income
taxes
|
198 | (942 | ) | |||||
Deferred
product revenue
|
(115 | ) | 1,003 | |||||
Net
change in other assets/liabilities
|
(3 | ) | 1 | |||||
Net
cash provided by operating activities
|
263 | 1,137 | ||||||
Cash
flows from investing activities:
|
||||||||
Purchase
of property and equipment
|
(304 | ) | (155 | ) | ||||
Proceeds
from the sale of property and equipment
|
- | - | ||||||
Purchase
of marketable securities
|
- | (5,681 | ) | |||||
Sale
of marketable securities
|
5,201 | 4,450 | ||||||
Net
cash used in continuing investing activities
|
4,897 | (1,386 | ) | |||||
Net
cash provided by discontinued investing activities
|
- | 15 | ||||||
Net
cash provided by (used in) investing activities
|
4,897 | (1,371 | ) | |||||
Cash
flows from financing activities:
|
||||||||
Proceeds
from common stock
|
6 | 455 | ||||||
Common
stock purchased and retired
|
(6,762 | ) | (566 | ) | ||||
Tax
benefit attributable to exercise of stock options
|
- | 69 | ||||||
Net
cash (used in) financing activities
|
(6,756 | ) | (42 | ) | ||||
Net
(decrease) in cash and cash equivalents
|
(1,596 | ) | (276 | ) | ||||
Cash
and cash equivalents at the beginning of the period
|
3,327 | 2,782 | ||||||
Cash
and cash equivalents at the end of the period
|
$ | 1,731 | $ | 2,506 | ||||
See
accompanying notes to condensed consolidated financial
statements
|
Three Months Ended
|
||||||||
September
30,
|
September
30,
|
|||||||
2008
|
2007
|
|||||||
Supplemental
disclosure of cash flow information:
|
||||||||
Cash
paid for income taxes
|
$ | 101 | $ | 1,052 | ||||
Supplemental
disclosure of non-cash financing activities:
|
||||||||
Exchanged
accounts receivable from a vendor with
|
||||||||
acccounts
payable to the same vendor
|
$ | 20 | $ | 103 | ||||
Adoption
of FIN48
|
$ | - | $ | 295 | ||||
See
accompanying notes to condensed consolidated financial
statements
|
September 30,
|
June 30,
|
|||||||
2008
|
2008
|
|||||||
Raw
materials
|
$ | 686 | $ | 724 | ||||
Finished
goods
|
8,145 | 5,356 | ||||||
Consigned
inventory
|
1,926 | 1,719 | ||||||
Total
inventory
|
$ | 10,757 | $ | 7,799 |
Three
months Ended
|
||||||||
September
30,
|
||||||||
2008
|
2007
|
|||||||
Cost
of goods sold
|
$ | 24 | $ | 17 | ||||
Sales
& marketing
|
14 | 22 | ||||||
Research
& development
|
8 | 32 | ||||||
General
&administrative
|
114 | 100 | ||||||
Total
stock-based compensation
|
$ | 160 | $ | 171 |
Three Months Ended
|
||||||||
September 30,
|
September 30,
|
|||||||
2008
|
2007
|
|||||||
Gain
on disposal of discontinued operations:
|
||||||||
OM
Video
|
$ | - | $ | 24 | ||||
Total
gain on disposal of discontinued operations
|
- | 24 | ||||||
Income
tax (provision) benefit:
|
||||||||
OM
Video
|
$ | - | $ | (9 | ) | |||
Total
income tax (provision) benefit
|
- | (9 | ) | |||||
Total
income from discontinued operations, net of income taxes:
|
||||||||
OM
Video
|
$ | - | $ | 15 | ||||
Total
income from discontinued operations,
|
||||||||
net
of income taxes
|
$ | - | $ | 15 |
Description
of Securities
|
Total
- All Less than 12 Months
|
|||||||
Fair
Value
|
Unrealized
Losses
|
|||||||
Investments: Auction
Rate Securities and Corporate Bonds
|
11,568 | 1,427 |
Three Months Ended
|
||||||||
September 30,
|
September 30,
|
|||||||
2008
|
2007
|
|||||||
Balance,
beginning of period
|
$ | (694 | ) | $ | - | |||
Unrealized
holding (losses), in equity securities
|
(321 | ) | - | |||||
Income
tax benefit
|
120 | - | ||||||
Balance,
end of period
|
$ | (895 | ) | $ | - |
Three Months Ended
|
||||||||
September
30,
|
September
30,
|
|||||||
2008
|
2007
|
|||||||
Net
income (loss)
|
$ | 1,134 | $ | (924 | ) | |||
Other
comprehensive income (loss):
|
||||||||
Unrealized
gain (loss) on available-for-sale investment
|
(321 | ) | 0 | |||||
Income
tax benefit
|
120 | 0 | ||||||
Comprehensive
Income (loss)
|
$ | 933 | $ | (924 | ) |
(in
thousands)
|
||||||||||||
Quoted
Prices in Active Markets for Identical Assets (Level 1)
|
Significant
other
observable
inputs
(Level
2)
|
Total
|
||||||||||
Short-term
available-for-sale securities
|
$ | 707 | $ | - | $ | 707 | ||||||
Long-term
available-for-sale securities
|
- | 10,861 | 10,861 | |||||||||
Total
|
$ | 707 | $ | 10,861 | $ | 11,568 |
Deferred Revenue
|
Deferred Cost of Goods Sold
|
Deferred Gross Profit
|
||||||||||
September
30, 2008
|
$ | 4,432 | $ | 1,926 | $ | 2,506 | ||||||
June
30, 2008
|
4,547 | 1,719 | 2,828 | |||||||||
March
31, 2008
|
4,206 | 1,757 | 2,449 | |||||||||
December
31, 2007
|
4,980 | 1,859 | 3,121 | |||||||||
September
30, 2007
|
5,875 | 2,149 | 3,726 |
Three Months Ended
|
||||||||||||||||
(in thousands)
|
||||||||||||||||
September
30,
|
September
30,
|
|||||||||||||||
2008
|
2007
|
|||||||||||||||
%
of Revenue
|
%
of Revenue
|
|||||||||||||||
Revenue:
|
$ | 10,258 | 100% | $ | 9,442 | 100% | ||||||||||
Cost
of goods sold:
|
||||||||||||||||
Total
cost of goods sold
|
3,625 | 35% | 4,299 | 46% | ||||||||||||
Gross
profit
|
6,633 | 65% | 5,143 | 54% | ||||||||||||
Operating
expenses:
|
||||||||||||||||
Sales
& marketing
|
1,977 | 19% | 1,601 | 17% | ||||||||||||
Research
and product development
|
1,776 | 17% | 1,756 | 19% | ||||||||||||
General
and administrative
|
1,072 | 10% | 2,895 | 31% | ||||||||||||
Total
operating expenses
|
$ | 4,825 | 47% | $ | 6,252 | 66% |
Period
|
Total
Number of Shares Purchased
|
Average
Price Paid per Share
|
Total
Number of Shares Purchased as Part of Publicly Announced Plans or
Programs
|
Maximum
Number (or Approximate Dollar Value) of Shares that May by Purchased Under
the Plans or Programs (2)
|
July
1, 2008 – July 31, 2008
|
0
|
N/A
|
0
|
$276,573
|
August
1, 2008 – August 31, 2008
|
0
|
N/A
|
0
|
$276,573
|
September
1, 2008 – September 30, 2008 (1)
|
1,342,620
|
$5.00
|
1,342,620
|
$10,000,000
|
Total
|
1,342,620
|
1,342,620
|
(1)
|
On
August 11, 2008 we announced that our Board of Directors authorized the
repurchase of up to 2,000,000 of our shares in a modified Dutch auction
tender offer at a price per share of no less than $4.00 and no greater
than $5.00 per share. Under the tender offer, which expired on September
16, 2008, we repurchased 1,342,620 shares, or approximately 13% of shares
outstanding, for approximately $6.75 million at a price per share of
$5.00.
|
(2)
|
On
August 30, 2007, we announced that our Board of Directors had approved a
stock repurchase program to purchase up $3,625,000 of our common stock
during the following 12 month period in open market and private block
transactions. On May 1, 2008 we announced that our Board of Directors
authorized the purchase of up to an additional $1 million of our common
stock. The stock repurchase program expired on August 30, 2008. $276,573
of the board approved repurchases remained and were available for purchase
during July and August 2008.
|
Exhibit
|
||
No.
|
Title of Document
|
Location
|
10.13
|
Warehouse
Lease Agreement between CB Center, LLC and ClearOne Communications, Inc.
dated October 13, 2008
|
This
filing
|
31.1
|
Section
302 Certification of Chief Executive Officer
|
This
filing
|
31.2
|
Section
302 Certification of Principal Financial Officer
|
This
filing
|
32.1
|
Section
906 Certification of Chief Executive Officer
|
This
filing
|
32.2
|
Section
906 Certification of Principal Financial Officer
|
This
filing
|
CLEARONE
COMMUNICATIONS, INC.
|
||
November
11, 2008
|
By:
|
/s/ Zeynep Hakimoglu
|
Zeynep
Hakimoglu
|
||
President
and Chief Executive Officer
|
||
(Principal
Executive Officer)
|
||
November
11, 2008
|
By:
|
/s/ Greg A. LeClaire
|
Greg
A. LeClaire
|
||
Chief
Financial Officer
|
||
(Principal
Financial and Accounting Officer)
|
|
(a) BASE
RENT: Seven Thousand One
Hundred Thirteen and 60/100 Dollars
($ 7,113.60 ) per
month for the first 12 months,
as provided in Section 3.01, and shall be increased on the first day of
the 13th, 25th, 37th, and 49th month(s)
after the Commencement Date, either (i) as provided in Section 3.02, or
(ii) per the
rent schedule below. (If (ii) is completed, then (i) and
Section 3.02 are inapplicable.) Base Rent shall
commence December 1, 2008.
|
Months
|
Base
Rent
|
Thirteen
(13) through Twenty Four (24)
|
$7,824.96
|
Twenty
Five (25) through Thirty Six (36)
|
$8,062.08
|
Thirty
Seven (37) through Forty Eight (48)
|
$8,299.20
|
Forty
Nine (49) through Sixty (60)
|
$8,536.32
|
|
(b) OTHER
PERIODIC PAYMENTS: (i) Real Property Taxes (See Section 4.02); (ii)
Utilities (See Section 4.03); (iii) Insurance Premiums (See Section 4.04);
(iv) Tenant's Initial Pro Rata Share of Common Area Expenses 11.1% (See
Section 4.05); (v) Impounds for Insurance Premiums and Property Taxes (See
Section 4.08); (vi) Maintenance, Repairs and Alterations (see Article
Six).
|
|
Section
3.02. Intentionally
Omitted
|
|
(a)
Upon the execution of this Lease, Tenant shall deposit with Landlord a
cash Security Deposit in the amount set forth in Section 1.10
above. Landlord may apply all or part of the Security Deposit
to any unpaid rent or other charges due from Tenant or to cure any other
defaults of Tenant. If Landlord uses any part of the Security
Deposit, Tenant shall restore the Security Deposit to its full amount
within ten (10) days after Landlord's written request. Tenant's
failure to do so shall be a material default under this
Lease. No interest shall be paid on the Security
Deposit. Landlord shall not be required to keep the Security
Deposit separate from its other accounts and no trust relationship is
created with respect to the Security
Deposit.
|
|
(b)
Each Time the Base Rent is increased, Tenant shall deposit additional
funds with Landlord sufficient to increase the Security Deposit to an
amount which bears the same relationship to the adjusted Base Rent as the
initial Security Deposit bore to the initial Base
Rent.
|
|
(a)
Real Property
Taxes. Tenant shall pay all real property taxes on the
Property (including any fees, taxes or assessments against, or as a result
of, any tenant improvements installed on the Property by or for the
benefit of Tenant) during the Lease Term. Subject to Paragraph
4.02 (c) and Section 4.08 below, such payment shall be made at least ten
(10) days prior to the delinquency date of the taxes. Within
such ten (10) –day period, Tenant shall furnish Landlord with satisfactory
evidence that the real property taxes have been paid. Landlord
shall reimburse Tenant for any real property taxes paid by Tenant covering
any period of time prior to or after the Lease Term. If Tenant
fails to pay the real property taxes when due, Landlord may pay the taxes
and Tenant shall reimburse Landlord for the amount of such tax payment as
Additional Rent.
|
|
(b)
Definition of "Real
Property Tax." "Real property tax" means: (i) any fee,
license fee, license tax, business license fee, commercial rental tax,
levy, charge, assessment, penalty or tax imposed by any taxing authority
against the Property; (ii) any tax on the Landlord's right to receive, or
the receipt of, rent or income from the Property or against Landlord's
business of leasing the Property; (iii) any tax or charge for fire
protection, streets, sidewalks, road maintenance, refuse or other services
provided to the Property by any governmental agency; (iv) any tax imposed
upon this transaction or based upon a re-assessment of the Property due to
a change of ownership, as defined by applicable law, or other transfer of
all or part of Landlord's interest in the Property; and (v) any charge or
fee replacing any tax previously included within the definition of real
property tax. "Real property tax" does not, however, include
Landlord's federal or state income, franchise, inheritance or estate
taxes.
|
|
(c)
Joint
Assessment. If the Property is not separately assessed,
Landlord shall reasonably determine Tenant's share of the real property
tax payable by Tenant under Paragraph 4.02(a) from the assessor's
worksheets or other reasonably available information. Tenant
shall pay such share to Landlord within fifteen (15) days after receipt of
Landlord's written statement.
|
|
(d) Personal Property
Taxes.
|
|
(i) Tenant
shall pay all taxes charged against trade fixtures, furnishings, equipment
or any other personal property belonging to
Tenant. Tenant shall try to have personal property taxes
separately from the Property.
|
|
(ii) If
any of Tenant's personal property is taxed with the Property, Tenant shall
pay Landlord the taxes for the personal property within fifteen (15) days
after Tenant receives a written statement from Landlord for such personal
property taxes.
|
|
(a)
Liability
Insurance. During the Lease Term, Tenant shall maintain
a policy of commercial general liability insurance (sometimes known as
broad form comprehensive general liability insurance) insuring Tenant
against liability for bodily injury, property damage (including loss of
use of property) and personal injury arising out of the operation, use or
occupancy of the Property. Tenant shall name Landlord as an
additional insured under such policy. The initial amount of
such insurance shall be One Million Dollars ($1,000,000) per occurrence
and shall be subject to periodic increase based upon inflation, increased
liability awards, recommendation of Landlord's professional insurance
advisers and other relevant factors. The liability insurance
obtained by Tenant under this Paragraph 4.04(a) shall (i) be primary and
non-contributing; (ii) contain cross-liability endorsements; and (iii)
insure Landlord against Tenant's performance under Section 5.05, if the
matters giving rise to the indemnity under Section 5.05 result from the
negligence of Tenant. The amount and coverage of such insurance
shall not limit Tenant's liability nor relieve Tenant of any other
obligation under this Lease. Landlord may also obtain
comprehensive public liability insurance in an amount and with coverage
determined by Landlord insuring Landlord against liability arising out of
ownership, operation, use or occupancy of the Property. The
policy obtained by Landlord shall not be contributory and shall not
provide primary insurance.
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(b)
Property and Rental
Income Insurance. During the Lease Term, Landlord shall
maintain policies of insurance covering loss of or damage to the Property
in the full amount of its replacement value. Such policy shall
contain an Inflation Guard Endorsement and shall provide protection
against all perils included within the classification of fire, extended
coverage, vandalism, malicious mischief, special extended perils (all
risk), sprinkler leakage and any other perils which Landlord deems
reasonably necessary. Landlord shall have the right to obtain
flood and earthquake insurance if required by any lender holding a
security interest in the Property. Landlord shall not obtain
insurance for Tenant's fixtures or equipment or building improvements
installed by Tenant on the Property. During the Lease Term,
Landlord shall also maintain a rental income insurance policy, with loss
payable to Landlord, in an amount equal to one year's Base Rent, plus
estimated real property taxes and insurance premiums. Tenant
shall be liable for the payment of any deductible amount under Landlord's
or Tenant's insurance policies maintained pursuant to this Section 4.04,
in an amount not to exceed Ten Thousand Dollars
($10,000).
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(c) Payment of
Premiums. Subject to Section 4.08, Tenant shall pay all
premiums for the insurance policies described in Paragraphs 4.04(a) and
(b) (whether obtained by Landlord or Tenant) within fifteen (15) days
after Tenant’s receipt of a copy of the premium statement or other
evidence of the amount due, except Landlord shall pay all premiums for
non-primary comprehensive public liability insurance which Landlord elects
to obtain as provided in Paragraph 4.04(a). For insurance
policies maintained by Landlord which cover improvements on the entire
Project, Tenant shall pay Tenant’s prorated share of the premiums, in
accordance with the formula in Paragraph 4.05(e) for determining Tenant’s
share of Common Area costs. If insurance policies maintained by
landlord cover improvements on real property other than the Project,
Landlord shall deliver to Tenant a statement of the premium applicable to
the Property showing in reasonable detail how Tenant’s share of the
premium was computed. If the Lease Term expires before the
expiration of an insurance policy maintained by Landlord, Tenant shall be
liable for Tenant’s prorated share of the insurance
premiums. Before the Commencement Date, Tenant shall deliver to
Landlord the expiration of any such policy, Tenant shall deliver to
Landlord a renewal of such policy. As an alternative to
providing a policy of insurance, Tenant shall have the right to provide
Landlord a certificate of insurance, executed by an authorized officer of
the insurance company, showing that the insurance which Tenant is required
to maintain under this Section 4.04 is in full force and effect and
containing such other information which Landlord reasonably
requires.
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(d) General Insurance
Provisions.
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(i) Any
insurance which Tenant is required to maintain under this Lease shall
include a provision which requires the insurance carrier to give Landlord
not less than thirty (30) days' written notice prior to any cancellation
or modification of such coverage.
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(ii) If
Tenant fails to deliver any policy, certificate or renewal to Landlord
required under this Lease within the prescribed time period or if any such
policy is canceled or modified during the Lease Term without Landlord's
consent, Landlord may obtain such insurance, in which case Tenant shall
reimburse Landlord for the cost of such insurance within fifteen (15) days
after receipt of a statement that indicates the cost of such
insurance.
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(iii) Tenant
shall maintain all insurance required under this Lease with companies
holding a "General Policy Rating" of A-12 or better, as set forth in the
most current issue of "Best Key Rating Guide." Landlord and
Tenant acknowledge the insurance markets are rapidly changing and that
insurance in the form and amounts described in this Section 4.04 may not
be available in the future. Tenant acknowledges that the
insurance described in this Section 4.04 is for the primary benefit of
Landlord. If at any time during the Lease Term, Tenant is
unable to maintain the insurance required under the Lease, Tenant shall
nevertheless maintain insurance coverage which is customary and
commercially reasonable in the insurance industry for Tenant's type of
business, as that coverage may change from time to
time. Landlord makes no representation as to the adequacy of
such insurance to protect Landlord's or Tenant's
interests. Therefore, Tenant shall obtain any such additional
property or liability insurance which Tenant deems necessary to protect
Landlord and Tenant.
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(a)
Common
Areas. As used in this Lease, "Common Areas" shall mean
all areas within the Project which are available for the common use of
tenants of the Project and which are not leased or held for the exclusive
use of Tenant or other tenants, including, but not limited to, parking
areas, driveways, sidewalks, loading areas, access roads, corridors,
landscaping and planted areas. Landlord, from time to time, may
change the size, location, nature and use of any of the Common Areas,
convert Common Areas into leasable areas, construct additional parking
facilities (including parking structures) in the Common Areas, and
increase or decrease Common Area land and/or facilities. Tenant
acknowledges that such activities may result in inconvenience to
Tenant. Such activities and changes are permitted if they do
not materially affect Tenant's use of the
Property.
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(b)
Use of Common
Areas. Tenant shall have the nonexclusive right (in
common with other tenants and all others to whom Landlord has granted or
may grant such rights) to use the Common Areas for the purposes intended,
subject to such reasonable rules and regulations as Landlord may establish
from time to time. Tenant shall abide by such rules and
regulations and shall use its best effort to cause others who use the
Common Areas with Tenant's express or implied permission to abide by
Landlord's rules and regulations. At any time, Landlord may
close any Common Areas to perform any acts in the Common Areas as, in
Landlord's judgment, are desirable to improve the
Project. Tenant shall not interfere with the rights of
Landlord, other tenants or any other person entitled to use the Common
Areas.
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(c)
Specific Provision re:
Vehicle Parking. Tenant shall be entitled to use the
number of vehicle parking spaces in the Project allocated to Tenant in
Section 1.11 of the Lease without paying any additional
rent. Tenant shall have 6 reserved spots as identified on
Exhibit A and shall be limited to vehicles no larger than standard size
automobiles or pickup utility vehicles. Tenant shall not cause
large trucks or other large vehicles to be parked within the Project
except within their dock area or on the adjacent public
streets. Temporary parking of large delivery vehicles in the
Project may be permitted by the rules and regulations established by
Landlord. Vehicles shall be parked only in striped parking
spaces and not in driveways, loading areas or other locations not
specifically designated for parking. Handicapped spaces shall
only be used by those legally permitted to use them. Tenant
shall not be allowed to park more vehicles in the parking area than the
number set forth in Section 1.11 of this Lease without consent of
Landlord. In addition to Landlord's other remedies under the
Lease, Tenant shall pay a daily charge determined by Landlord for each
such additional vehicle.
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(d)
Maintenance of Common
Areas. Landlord shall maintain the Common Areas in good
order, condition and repair and shall operate the Project, in Landlord's
sole discretion, as a first-class industrial/commercial real property
development. Tenant shall pay Tenant's pro rata share (as
determined below) of all costs incurred by Landlord for the operation and
maintenance of the Common Areas. Common Area costs include, but
are not limited to, costs and expenses for the
following: gardening and landscaping; utilities, water and
sewage charges; maintenance of signs (other than tenants' signs); premiums
for liability, property damage, fire and other types of casualty insurance
on the Common Areas and worker's compensation insurance; all property
taxes and assessments levied on or attributable to the Common Areas and
all Common Area improvements; all personal property taxes levied on or
attributable to personal property used in connection with the Common
Areas; straight-line depreciation on personal property owned by Landlord
which is consumed in the operation or maintenance of the Common Areas;
rental or lease payments paid by Landlord for rented or leased personal
property used in the operation or maintenance of the Common Areas; fees
for required licenses and permits; repairing, resurfacing, repaving,
maintaining, painting, lighting, cleaning, refuse removal, security and
similar items; reserves for roof replacement and exterior painting and
other appropriate reserves; and a reasonable allowance to
Landlord for Landlord's supervision of the Common Areas (not to exceed
three percent (3% ) of the gross rents of the Project for the calendar
year). Landlord may cause any or all of such services to be
provided by third parties and the cost of such services shall be included
in Common Area costs. Common Area costs shall not include
depreciation of real property which forms part of the Common
Areas.
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(e)
Tenant's Share and
Payment. Tenant shall pay Tenant's annual pro rata share
of all Common Area costs (prorated for any fractional month) upon written
notice from Landlord that such costs are due and payable, and in any event
prior to delinquency. Tenant's pro rata share shall be
calculated by dividing the square foot area of the Property(23,712 SF), as
set forth in Section 1.04 of the Lease, by the aggregate square foot area
of the Project (213,408 SF) which is leased or held for lease by tenants,
as of the date on which the computation is made. Tenant's
initial pro rata share is set out in Paragraph 1.12(b). Any
changes in the Common Area costs and/or the aggregate area of the Project
leased or held for lease during the Lease Term shall be effective on the
first day of the month after such change occurs. Landlord may,
at Landlord's election, estimate in advance and charge to Tenant as Common
Area costs, all real property taxes for which Tenant is liable under
Section 4.02 of the Lease, all insurance premiums for which Tenant is
liable under Section 4.04 of the Lease, all maintenance and repair costs
for which Tenant is liable under Section 6.04 of the Lease, and all other
Common Area costs payable by Tenant hereunder. At Landlord's
election, such statements of estimated Common Area costs shall be
delivered monthly, quarterly or at any other periodic intervals to be
designated by Landlord. Landlord may adjust such estimates at
any time based upon Landlord's experience and reasonable anticipation of
costs. Such adjustments shall be effective as of the next rent
payment date after notice to Tenant. Within sixty (60) days
after the end of each calendar year of the Lease Term, Landlord shall
deliver to Tenant a statement prepared in accordance with generally
accepted accounting principles setting forth, in reasonable detail, the
Common Area costs paid or incurred by Landlord during the preceding
calendar year and Tenant's pro rata share. Upon receipt of such statement,
there shall be an adjustment between Landlord and Tenant, with payment to
or credit given by Landlord (as the case may be) so that Landlord shall
receive the entire amount of Tenant's share of such costs and expenses for
such period.
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(a)
Except as provided in Article Seven (Damage or Destruction) and Article
Eight (Condemnation), Landlord shall keep the following in good order,
condition and repair: the foundations, exterior walls and roof of the
Property (including painting the exterior surface of the exterior walls of
the Property not more often than once every five (5) years, if necessary)
and all components of electrical, mechanical, plumbing, heating and air
conditioning systems and facilities located in the Property which are
concealed or used in common by tenants of the Project. However,
Landlord shall not be obligated to maintain or repair windows, doors,
plate glass or the interior surfaces of the exterior
walls. Landlord shall make repairs under this Section 6.03
within a reasonable time after receipt of a written notice from Tenant of
the need for such repairs.
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(b)
Tenant shall pay or reimburse Landlord for all costs Landlord incurs under
Paragraph 6.03(a) above as Common Area costs as provided for in Section
4.05 of the Lease. Tenant waives the benefit of any statute in
effect now or in the future which might give Tenant the right to make
repairs at Landlord’s expense or to terminate this Lease due to Landlord’s
failure to keep the Property in good order, condition and
repair.
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(a)
Except as provided in Section 6.03, Article Seven (Damage or Destruction)
and Article Eight (Condemnation), Tenant shall keep all portions of the
Property (including structural, nonstructural, interior, systems and
equipment) in good order, condition and repair (including interior
repainting and refinishing, as needed). If any portion of the
Property or any system or equipment in the Property which Tenant is
obligated to repair cannot be fully repaired or restored, Tenant shall
promptly replace such portion of the Property or system or equipment in
the Property, regardless of whether the benefit of such replacement
extends beyond the Lease Term; but if the benefit or useful life of such
replacement extends beyond the Lease Term (as such term may be extended by
exercise of any options), the useful life of such replacement shall be
prorated over the remaining portion of the Lease Term (as extended), and
Tenant shall be liable only for that portion of the cost which is
applicable to the Lease Term (as extended). Tenant shall
maintain a preventive maintenance contract providing for the regular
inspection and maintenance of the heating and air conditioning system by a
licensed heating and air conditioning contractor. Landlord
shall have the right, upon written notice to Tenant, to undertake the
responsibility for preventive maintenance of the heating and air
conditioning system at Tenant's expense. In addition, Tenant
shall, at Tenant's expense, repair any damage to the roof, foundation or
structural portions of walls caused by Tenant's act or
omissions. It is the intention of Landlord and Tenant that, at
all times during the Lease Term, Tenant shall maintain the Property in an
attractive, first-class and fully operative
condition.
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(b)
Tenant shall fulfill all of Tenant's obligations under this Section 6.04
at Tenant's sole expense. If Tenant fails to maintain, repair
or replace the Property as required by this Section 6.04, Landlord may,
upon ten (10) days' prior notice to Tenant (except that no notice shall be
required in the case of any emergency), enter the Property and perform
such maintenance or repair (including replacement, as needed) on behalf of
Tenant. In such case, Tenant shall reimburse Landlord for all
costs incurred in performing such maintenance or repair immediately upon
demand.
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(a)
Tenant shall not make any alterations, additions, or improvements to the
Property without Landlord's prior written consent, except for
non-structural alterations which do not exceed Ten Thousand Dollars
($10,000) in cost cumulatively over the Lease Term and which are not
visible from the outside of any building of which the Property is
part. Landlord may require Tenant to provide demolition and/or
lien and completion bonds in form and amount satisfactory to
Landlord. Tenant shall promptly remove any alterations,
additions, or improvements constructed in violation of this Paragraph
6.05(a) upon Landlord's written request. All alterations,
additions, and improvements shall be done in a good and workmanlike
manner, in conformity with all applicable laws and regulations, and by a
contractor approved by Landlord. Upon completion of any such
work, Tenant shall provide Landlord with "as built" plans, copies of all
construction contracts, and proof of payment for all labor and
materials.
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(b) Tenant
shall pay when due all claims for labor and material furnished to the
Property. Tenant shall give Landlord at least twenty (20) days'
prior written notice of the commencement of any work on the Property,
regardless of whether Landlord's consent to such work is
required. Landlord may elect to record and post notices of
non-responsibility on the Property.
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(a)
Tenant shall notify Landlord in writing immediately upon the occurrence of
any damage to the Property. If the Property is only partially
damaged (i.e., less than twenty-five (25%) of the Property is
untenantable as a result of such damage or less than twenty-five percent
(25%) of Tenant's operations are materially impaired) and if the proceeds
received by Landlord from the insurance policies described in Paragraph
4.04(b) are sufficient to pay for the necessary repairs, this Lease shall
remain in effect and Landlord shall repair the damage as soon as
reasonably possible, but not to exceed 3 months. Landlord may
elect (but is not required) to repair any damage to Tenant's fixtures,
equipment, or improvements.
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(b)
If the insurance proceeds received by Landlord are not sufficient to pay
the entire cost of repair, or if the cause of the damage is not covered by
the insurance policies which Landlord maintains under Paragraph 4.04(b),
Landlord may elect either to (i) repair the damage as soon as reasonably
possible, but not to exceed 3 months, in which case this Lease shall
remain in full force and effect, or (ii) terminate this Lease as of
the date the damage occurred. Landlord shall notify Tenant
within thirty (30) days after receipt of notice of the occurrence of the
damage whether Landlord elects to repair the damage or terminate the
Lease. If Landlord elects to repair the damage, Tenant shall
pay Landlord the "deductible amount" (if any) under Landlord's insurance
policies and, if the damage was due to an act or omission of Tenant, or
Tenant's employees, agents, contractors or invitees, the difference
between the actual cost of repair and any insurance proceeds received by
Landlord. If Landlord elects to terminate the Lease, Tenant may
elect to continue this Lease in full force and effect, in which case
Tenant shall repair any damage to the Property and any building in which
the Property is located. Tenant shall pay the cost of such
repairs, except that upon satisfactory completion of such repairs,
Landlord shall deliver to Tenant any such insurance proceeds received by
Landlord for the damage repaired by Tenant. Tenant shall give
Landlord written notice of such election within ten (10) days after
receiving Landlord's termination
notice.
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(c)
If the damage to the property occurs during the last six (6) months of the
Lease Term and such damage will require more than thirty (30) days to
repair, either Landlord or Tenant may elect to terminate this Lease as of
the date the damage occurred, regardless of the sufficiency of any
insurance proceeds. The party electing to terminate this Lease
shall give written notification to the other party of such election within
thirty (30) days after Tenant's notice to Landlord of the occurrence of
the damage.
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(a) Tenant's
request for consent to any transfer described in Section 9.01 shall set
forth in writing the details of the proposed transfer, including the name,
business and financial condition of the prospective transferee, financial
details of the proposed transfer (e.g., the term of and the rent and
security deposit payable under any proposed assignment or sublease), and
any other information Landlord deems relevant. Landlord shall
have the right to withhold consent, if reasonable, or to grant consent,
based on the following factors: (i) the business of the
proposed assignee or subtenant and the proposed use of the Property; (ii)
the net worth and financial reputation of the proposed assignee or
subtenant; (iii) Tenant's compliance with all of its obligations under the
Lease; and (iv) such other factors as Landlord may reasonably deem
relevant. If Landlord objects to a proposed assignment solely
because of the net worth and/or financial reputation of the proposed
assignee, Tenant may nonetheless sublease (but not assign), all or a
portion of the Property to the proposed transferee, but only on the other
terms of the proposed transfer.
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(b) If
Tenant assigns or subleases, the following shall
apply:
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(i) Tenant
shall pay to Landlord as Additional Rent under the Lease the Landlord's
Share (stated in Section 1.14) of the Profit (defined below) on such
transaction as and when received by Tenant, unless Landlord gives written
notice to Tenant and the assignee or subtenant that Landlord's Share shall
be paid by the assignee or subtenant to Landlord directly. The
"Profit" means (A) all amounts paid to Tenant for such assignment or
sublease, including "key" money, monthly rent in excess of the monthly
rent payable under the Lease, and all fees and other consideration paid
for the assignment or sublease, including fees under any collateral
agreements, less (B) costs and expenses directly incurred by Tenant in
connection with the execution and performance of such assignment or
sublease for real estate broker's commissions and costs of renovation or
construction of tenant improvements required under such assignment or
sublease. Tenant is entitled to recover such costs and expenses
before Tenant is obligated to pay the Landlord's Share to
Landlord. The Profit in the case of a sublease of less than all
the Property is the rent allocable to the subleased space as a percentage
on a square footage basis.
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(ii) Tenant
shall provide Landlord a written statement certifying all amounts to be
paid from any assignment or sublease of the Property within thirty (30)
days after the transaction documentation is signed, and Landlord may
inspect Tenant's book and records to verify the accuracy of such
statement. On written request, Tenant shall promptly furnish to
Landlord copies of all the transaction documentation, all of which shall
be certified by Tenant to be complete, true and
correct. Landlord's receipt of Landlord's Share shall not be a
consent to any further assignment or subletting. The breach of
Tenant's obligation under this Paragraph 9.05(b) shall be a material
default of the Lease.
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(a) If
Tenant abandons the Property or if Tenant's vacation of the Property
results in the cancellation of any insurance described in Section
4.04. If Tenant elects to vacate and sublease the space and is
current with the rent and CAM, the lease shall not be in
default.
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(b)
If Tenant fails to pay rent or any other charge when
due;
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(c) If
Tenant fails to perform any of Tenant's non-monetary obligations under
this Lease for a period of thirty (30) days after written notice from
Landlord; provided that if more than thirty (30) days are required to
complete such performance, Tenant shall not be in default if Tenant
commences such performance within the thirty (30) -day period and
thereafter diligently pursues its completion. However, Landlord
shall not be required to give such notice if Tenant's failure to perform
constitutes a non-curable breach of this Lease. The notice
required by this Paragraph is intended to satisfy any and all notice
requirements imposed by law on Landlord and is not in addition to any such
requirement.
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(d) (i) If
Tenant makes a general assignment or general arrangement for the benefit
of creditors; (ii) if a petition for adjudication of bankruptcy or for
reorganization or rearrangement is filed by or against Tenant and is not
dismissed within thirty (30) days; (iii) if a trustee or receiver is
appointed to take possession of substantially all of Tenant's assets
located at the Property or of Tenant's interest in this Lease and
possession is not restored to Tenant within thirty (30) days; or (iv) if
substantially all of Tenant's assets located at the Property or of
Tenant's interest in this Lease is subjected to attachment, execution or
other judicial seizure which is not discharged within thirty (30)
days. If a court of competent jurisdiction determines that any
of the acts described in this subparagraph (d) is not a default under this
Lease, and a trustee is appointed to take possession (or if Tenant remains
a debtor in possession) and such trustee or Tenant transfers Tenant's
interest hereunder, then Landlord shall receive, as Additional Rent, the
excess, if any, of the rent (or any other consideration) paid in
connection with such assignment or sublease over the rent payable by
Tenant under this Lease.
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(e) If
any guarantor of the Lease revokes or otherwise terminates, or purports to
revoke or otherwise terminate, any guaranty of all or any portion of
Tenant's obligations under the Lease. Unless otherwise
expressly provided, no guaranty of the Lease is
revocable.
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(a)
Terminate Tenant's right to possession of the Property by any lawful
means, in which case this Lease shall terminate and Tenant shall
immediately surrender possession of the Property to
Landlord. In such event, Landlord shall be entitled to recover
from Tenant all damages incurred by Landlord by reason of Tenant's
default, including (i) the worth at the time of the award of the unpaid
Base Rent, Additional Rent and other charges which Landlord had earned at
the time of the termination; (ii) the worth at the time of the award of
the amount by which the unpaid Base Rent, additional Rent and other
charges which Landlord would have earned after termination until the time
of the award exceeds the amount of such rental loss that Tenant proves
Landlord could have reasonably avoided; (iii) the worth at the
time of the award of the amount by which the unpaid Base Rent, Additional
Rent and other charges which Tenant would have paid for the
balance of the Lease Term after the time of award exceeds the amount of
such rental loss that Tenant proves Landlord could have reasonably
avoided; and (iv) any other amount necessary to compensate Landlord for
all the detriment proximately caused by Tenant's failure to perform its
obligations under the Lease or which in the ordinary course of things
would be likely to result therefrom, including, but not limited to, any
costs or expenses Landlord incurs in maintaining or preserving the
Property after such default, the cost of recovering possession of the
Property, expenses of reletting, including necessary renovation or
alteration of the Property, Landlord's reasonable attorneys' fees incurred
in connection therewith, and any real estate commission paid or
payable. As used in subparts (i) and (ii) above, the "worth at
the time of the award" is computed by allowing interest on unpaid amounts
at the rate of fifteen percent (15%) per annum, or such lesser amount as
may then be the maximum lawful rate. As used in subpart (iii)
above, the "worth at the time of the award" is computed by discounting
such amount at the discount rate of the Federal Reserve Bank of San
Francisco at the time of the award, plus one percent (1%). If
Tenant has abandoned the Property, Landlord shall have the option of (i)
retaking possession of the Property and recovering from Tenant the amount
specified in this Paragraph 10.03(a), or (ii) proceeding under Paragraph
10.03(b);
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(b) Maintain
Tenant's right to possession, in which case this Lease shall continue in
effect whether or not Tenant has abandoned the Property. In
such event, Landlord shall be entitled to enforce all of Landlord's rights
and remedies under this Lease, including the right to recover the rent as
it becomes due;
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(c) Pursue
any other remedy now or hereafter available to Landlord under the laws or
judicial decisions of the state in which the Property is
located.
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(a) Upon
Landlord's written request, Tenant shall execute, acknowledge and deliver
to Landlord a written statement certifying, if in fact of the
case: (i) that none of the terms or provisions of this Lease
have been changed (or if they have been changed, stating how they have
been changed); (ii) that this Lease has not been canceled or terminated;
(iii) the last date of payment of the Base Rent and other charges and the
time period covered by such payment; (iv) that Landlord is not in default
under this Lease (or, if Landlord is claimed to be in default, stating
why); and (v) such other representations or information with respect to
Tenant or the Lease as Landlord may reasonable request or which any
prospective purchaser or encumbrancer of the Property may
require. Tenant shall deliver such statement to Landlord within
ten (10) days after Landlord's request. Landlord may give any
such statement by Tenant to any prospective purchaser or encumbrancer of
the Property. Such purchaser or encumbrancer may rely
conclusively upon such statement as true and
correct.
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(b) If
Tenant does not deliver such statement to Landlord within such ten (10)
-day period, Landlord, and any prospective purchaser or encumbrancer, may
conclusively presume and rely upon the following facts: (i) that the terms
and provisions of this Lease have not been changed except as otherwise
represented by Landlord; (ii) that this Lease has not been canceled or
terminated except as otherwise represented by Landlord; (iii) that not
more than one month's Base Rent or other charges have been paid in
advance; and (iv) that Landlord is not in default under the Lease. In such
event, Tenant shall be estopped from denying the truth of such
facts.
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(a)
As used in this Lease, the term "Landlord" means only the current owner or
owners of the fee title to the Property or Project or the leasehold estate
under a ground lease of the Property or Project at the time in
question. Each Landlord is obligated to perform the obligations
of Landlord under this Lease only during the time such Landlord owns such
interest or title. Any Landlord who transfers its title or
interest is relieved of all liability with respect to the obligations of
Landlord under this Lease to be performed on or after the date of
transfer. However, each Landlord shall deliver to its
transferee all funds that Tenant previously paid if such funds have not
yet been applied under the terms of this
Lease.
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(b)
Tenant shall give written notice of any failure by Landlord to perform any
of its obligations under this Lease to Landlord and to any ground lessor,
mortgagee or beneficiary under any deed of trust encumbering the Property
whose name and address have been furnished to Tenant in
writing. Landlord shall not be in default under this Lease
unless Landlord (or such ground lessor, mortgagee or beneficiary) fails to
cure such non-performance within thirty (30) days after receipt of
Tenant's notice. However, if such non-performance reasonably
requires more than thirty (30) days to cure, Landlord shall not be in
default if such cure is commenced within such thirty (30) -day period and
thereafter diligently pursued to
completion.
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(c) Notwithstanding
any term or provision herein to the contrary, the liability of Landlord
for the performance of its duties and obligations under this Lease is
limited to Landlord's interest in the Property and the Project, and
neither the Landlord nor its partners, shareholders, officers or other
principals shall have any personal liability under this
Lease as long as the Landlord maintains at least a 25% equity
ownership in the Project.
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“LANDLORD”
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Signed
on 13 October 2008
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CB
Center, LLC
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At
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By: /s/
James Gaddis
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Its: Managing
Member
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By:
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Its:
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“TENANT”
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Signed
on 10 October 2008
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ClearOne
Communications, Inc.
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At
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By: /s/
Greg LeClaire
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Its: Chief
Financial Officer
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By:
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Its:
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1.
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I
have reviewed this quarterly report on Form 10-Q of ClearOne
Communications, Inc.;
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2.
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Based
on my knowledge, this report does not contain any untrue statement of a
material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this
report;
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3.
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Based
on my knowledge, the financial statements, and other financial information
included in this report, fairly present in all material respects the
financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this
report;
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4.
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The
registrant’s other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal
control over financial reporting (as defined in Exchange Act Rules
13a-15(f) and 15d-15(f)) for the registrant and
have:
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a)
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Designed
such disclosure controls and procedures, or caused such disclosure
controls and procedures to be designed under our supervision, to ensure
that material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this report is being
prepared;
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b)
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Designed
such internal control over financial reporting, or caused such internal
control over financial reporting to be designed under our supervision, to
provide reasonable assurance regarding the reliability of financial
reporting and the preparation of financial statements for external
purposes in accordance with generally accepted accounting
principles;
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c)
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Evaluated
the effectiveness of the registrant’s disclosure controls and procedures
and presented in this report our conclusions about the effectiveness of
the disclosure controls and procedures, as of the end of the period
covered by this report based on such evaluation;
and
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d)
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Disclosed
in this report any change in the registrant’s internal control over
financial reporting that occurred during the registrant’s most recent
fiscal quarter that has materially affected, or is reasonably likely to
materially affect, the registrant’s internal control over financial
reporting; and
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5.
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The
registrant’s other certifying officer and I have disclosed, based on our
most recent evaluation of internal control over financial reporting, to
the registrant’s auditors and the audit committee of the registrant’s
board of directors (or persons performing the equivalent
functions):
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a)
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All
significant deficiencies and material weaknesses in the design or
operation of internal control over financial reporting which are
reasonably likely to adversely affect the registrant’s ability to record,
process, summarize and report financial information;
and
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b)
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Any
fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant’s internal control
over financial reporting.
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Date: November
11, 2008
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By:
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/s/ Zeynep Hakimoglu
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Zeynep
Hakimoglu
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||
Chairman,
President and Chief Executive
Officer
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1.
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I
have reviewed this quarterly report on Form 10-Q of ClearOne
Communications, Inc.;
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2.
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Based
on my knowledge, this report does not contain any untrue statement of a
material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this
report;
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3.
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Based
on my knowledge, the financial statements, and other financial information
included in this report, fairly present in all material respects the
financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this
report;
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4.
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The
registrant’s other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal
control over financial reporting (as defined in Exchange Act Rules
13a-15(f) and 15d-15(f)) for the registrant and
have:
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a)
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Designed
such disclosure controls and procedures, or caused such disclosure
controls and procedures to be designed under our supervision, to ensure
that material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this report is being
prepared;
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b)
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Designed
such internal control over financial reporting, or caused such internal
control over financial reporting to be designed under our supervision, to
provide reasonable assurance regarding the reliability of financial
reporting and the preparation of financial statements for external
purposes in accordance with generally accepted accounting
principles;
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c)
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Evaluated
the effectiveness of the registrant’s disclosure controls and procedures
and presented in this report our conclusions about the effectiveness of
the disclosure controls and procedures, as of the end of the period
covered by this report based on such evaluation;
and
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d)
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Disclosed
in this report any change in the registrant’s internal control over
financial reporting that occurred during the registrant’s most recent
fiscal quarter that has materially affected, or is reasonably likely to
materially affect, the registrant’s internal control over financial
reporting; and
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5.
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The
registrant’s other certifying officer and I have disclosed, based on our
most recent evaluation of internal control over financial reporting, to
the registrant’s auditors and the audit committee of the registrant’s
board of directors (or persons performing the equivalent
functions):
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a)
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All
significant deficiencies and material weaknesses in the design or
operation of internal control over financial reporting which are
reasonably likely to adversely affect the registrant’s ability to record,
process, summarize and report financial information;
and
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b)
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Any
fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant’s internal control
over financial reporting.
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Date:
November 11, 2008
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By:
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/s/ Greg A. LeClaire
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Greg
A LeClaire
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Chief
Financial Officer
(Principal
Financial and Accounting Officer)
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Date: November
11, 2008
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By:
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/s/ Zeynep Hakimoglu
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Zeynep
Hakimoglu
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Chairman,
President and Chief Executive Officer
(Principal
Executive Officer)
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Date:
November 11, 2008
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By:
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/s/ Greg A. LeClaire
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Greg
A. LeClaire
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Chief
Financial Officer
(Principal
Financial and Accounting Officer)
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