On August 20, 2009, ClearOne Communications, Inc. (the "Company") determined that the Company incorrectly deferred revenue and associated costs during the fiscal years beginning 2004.

The Company provides a right of return on product sales to distributors. The revenue from product sales to distributors is not recognized until the return privilege has expired, which approximates when product is sold through to customers of the Company's distributors, rather than when the product is initially shipped to a distributor. The Company estimated at each quarter-end the amount of revenue and costs to be deferred based on the channel inventory information provided by certain distributors. Although only certain distributors provided channel inventory amounts, the Company made estimates with regard to the amount of inventory in the entire channel for all distributors and for all channel inventory items based on information provided by certain distributors.

The Company corrected the deferral method to defer revenue and associated costs based on the actual channel inventory items reported by the distributors and other channel partners. Further, with respect to distributors and other channel partners not reporting the channel inventory, the deferred revenue and associated costs were deferred until the Company received payment for the product sales made to such distributors or channel partners.

The Company plans to amend its Form 10-K in the near-term for the fiscal year ended June 30, 2008 ("Amended 10-K") and restate the financial statements included in that filing. The financial statements for the fiscal years ended June 30, 2008 and 2006 included in the Amended 10-K will be restated for the adjustments to deferred revenue and associated costs. The adjustments to the deferred revenue and associated costs for the fiscal year ended June 30, 2007 were insignificant. Item 6 of the Amended 10-K will also disclose the changes to fiscal years ended 2004 and 2005 to reflect the changes in deferred revenue and associated costs. The effect of these changes is described in more detail in the following schedule.

The Company has discussed the above matter with Jones Simkins, P.C., the Company's independent registered accountants.

ClearOne Communications, Inc. Statement of correction of error in computing the deferred revenue and costs

All amounts are in thousands of dollars, except for per share details

                                                        Fiscal years ended June 30,
                                    2008          2007             2006             2005          2004
Revenue
Previously reported               $  39,752     $  39,861     $        35,362     $  29,087     $  25,736
After correction of error         $  38,758     $  39,783     $        34,528     $  28,754     $  26,727
Difference - Increase
(Decrease)                        $    (994 )   $     (78 )   $          (834 )   $    (333 )   $     991
Difference as % of previously
reported Revenue                       2.5%          0.2%                2.4%          1.1%          3.9%
Gross Profit
Previously reported               $  23,291     $  22,138     $        17,987     $  16,367     $  10,976
After correction of error         $  22,554     $  22,146     $        17,676     $  16,146     $  11,318
Difference - Increase
(Decrease)                        $    (737 )   $       8     $          (311 )   $    (221 )   $     342
Difference as % of previously
reported Gross Profit                  3.2%            --                1.7%          1.4%          3.1%
Income (Loss) from Continuing
Operations
Previously reported               $   5,640     $   4,787     $           (60 )   $   1,947     $ (11,902 )
After correction of error         $   5,243     $   4,795     $          (371 )   $   1,726     $ (11,560 )
Difference                        $    (397 )   $       8     $          (311 )   $    (221 )   $     342
Difference as % of previously
reported Income (Loss)                 7.0%          0.2%              518.3%         11.4%          2.9%
Income (Loss) from Continuing
Operations per share (Diluted)
Previously reported               $    0.52     $    0.41     $            --     $    0.16     $   (1.08 )
After correction of error         $    0.49     $    0.41     $         (0.03 )   $    0.14     $   (1.05 )
Difference                        $   (0.03 )   $      --     $         (0.03 )   $   (0.02 )   $    0.03
Difference as % of previously
reported Income (Loss) per
share                                  5.8%            --     Not Meaningful          12.5%          2.8%