**UNITED      STATES**

**SECURITIES      AND EXCHANGE COMMISSION**

**WASHINGTON,      D.C. 20549**

**FORM      10-Q**

**Quarterly      Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of      1934**

**OR**

**Transition      Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of      1934**

**000-17219**

**CLEARONE      COMMUNICATIONS, INC.**

| **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) |

**(801)      975-7200**

----

**CLEARONE      COMMUNICATIONS, INC.**

**INDEX      TO FORM 10-Q**

**FOR      THE QUARTER ENDED MARCH 31, 2007**

|                                                                 |                                                                                                                                                                                                               | **Page                Number** |
|----------------------------------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------------------|
|  Disclosure                Regarding Forward-Looking Statements | 3                                                                                                                                                                                                                  |
|  PART                I - FINANCIAL INFORMATION                  |
| Item                1                                                |  Condensed                Consolidated Financial Statements                                                                                                                                                   |                           |
|                                                                 |  Condensed                Consolidated Balance Sheets as of March 31, 2007 and June 30,                2006                                                                                                   | 4                              |
|                                                                 |  Condensed                Consolidated Statements of Income for the three months ended March                31,                2007 and 2006 and the nine months ended March 31, 2007 and                2006 | 5                              |
|                                                                 |  Condensed                Consolidated Statements of Cash Flows for the nine months ended March                31,                2007 and 2006                                                               | 7                              |
|                                                                 |  Notes                to Condensed Consolidated Financial Statements                                                                                                                                          | 9                              |
| Item                2                                                |  Management’s                Discussion and Analysis of Financial Condition and Results of                Operations                                                                                    | 13                             |
| Item                3                                                |  Quantitative                and Qualitative Disclosures About Market Risk                                                                                                                                    | 20                             |
| Item                4                                                |  Controls                and Procedures                                                                                                                                                                       | 21                             |
|  PART                II - OTHER INFORMATION                     |
| Item                1                                                |  Legal                Proceedings                                                                                                                                                                             | 22                             |
| Item                1A                                               |  Risk                Factors                                                                                                                                                                                  | 22                             |
| Item                2                                                |  Unregistered                Sales of Equity Securities and Use of Proceeds                                                                                                                                   | 28                             |
| Item                3                                                |  Defaults                Upon Senior Securities                                                                                                                                                               | 28                             |
| Item                4                                                |  Submission                of Matters to a Vote of Security Holders                                                                                                                                           | 28                             |
| Item                5                                                |  Other                Information                                                                                                                                                                             | 28                             |
| Item                6                                                |  Exhibits                                                                                                                                                                                                     | 29                             |
|  Signatures                                                     |                                                                                                                                                                                                               | 29                             |

----

**DISCLOSURE      REGARDING FORWARD-LOOKING STATEMENTS**

----

**PART      I - FINANCIAL INFORMATION**

**Item      1. Financial Statements**

**CLEARONE      COMMUNICATIONS, INC.**

**CONDENSED      CONSOLIDATED BALANCE SHEETS**

**(in      thousands of dollars, except per share amounts)**

|                                                                                                |   | **Unaudited**                |    |                        |   |
|-----------------------------------------------------------------------------------------------------|--------|------------------------------|---------|-----------------------------|--------|
|                                                                                                |   | **March                31,** |    | **June                30,** |   |
|                                                                                                |   | **2007**                     |    | **2006**                    |   |
|                                                                                                |   |                         |    |                        |   |
| **ASSETS**                                                                                          |   |                         |    |                        |   |
| Current                assets:                                                                      |   |                         |    |                        |   |
| Cash                and cash equivalents                                                            |   | $                            | 1,312   |                        | $      | 1,240 |   |
| Marketable                securities                                                                |   |                         | 20,650  |                        |   | 20,550 |   |
| Accounts                receivable                                                                  |   |                         | 6,847   |                        |   | 7,784 |   |
| Note                receivable                                                                      |   |                         | 160     |                        |   | - |   |
| Inventories,                net                                                                     |   |                         | 6,953   |                        |   | 6,614 |   |
| Income                tax receivable                                                                |   |                         | -       |                        |   | 3,240 |   |
| Deferred                income taxes, net                                                           |   |                         | 132     |                        |   | 128 |   |
| Prepaid                expenses                                                                     |   |                         | 299     |                        |   | 255 |   |
| Net                assets of discontinued operations                                                |   |                         | -       |                        |   | 565 |   |
| Total                current assets                                                                 |   |                         | 36,353  |                        |   | 40,376 |   |
|                                                                                                |   |                         |    |                        |   |   |   |
| Property                and equipment, net                                                          |   |                         | 2,689   |                        |   | 1,647 |   |
| Note                receivable - long-term                                                          |   |                         | 85      |                        |   | - |   |
| Other                assets                                                                         |   |                         | 13      |                        |   | 15 |   |
| Total                assets                                                                         |   | $                            | 39,140  |                        | $      | 42,038 |   |
|                                                                                                |   |                         |    |                        |   |   |   |
| **LIABILITIES                AND SHAREHOLDERS' EQUITY**                                             |   |                         |    |                        |   |   |   |
| Current                liabilities:                                                                 |   |                         |    |                        |   |   |   |
| Accounts                payable                                                                     |   | $                            | 1,946   |                        | $      | 2,597 |   |
| Accrued                taxes                                                                        |   |                         | 456     |                        |   | - |   |
| Accrued                liabilities                                                                  |   |                         | 1,814   |                        |   | 2,397 |   |
| Deferred                product revenue                                                             |   |                         | 5,111   |                        |   | 5,871 |   |
| Total                current liabilities                                                            |   |                         | 9,327   |                        |   | 10,865 |   |
|                                                                                                |   |                         |    |                        |   |   |   |
| Deferred                rent                                                                        |   |                         | 894     |                        |   | - |   |
| Deferred                income taxes, net                                                           |   |                         | 132     |                        |   | 128 |   |
| Other                long-term liabilities                                                          |   |                         | 578     |                        |   | 633 |   |
| Total                liabilities                                                                    |   |                         | 10,931  |                        |   | 11,626 |   |
|                                                                                                |   |                         |    |                        |   |   |   |
| Shareholders'                equity:                                                                |   |                         |    |                        |   |   |   |
| Common                stock, par value $0.001, 50,000,000 shares authorized,                        |   |                         |    |                        |   |   |   |
| 10,881,262                and 12,184,727 shares issued and outstanding, respectively                |   |                         | 11      |                        |   | 12 |   |
| Additional                paid-in capital                                                           |   |                         | 47,578  |                        |   | 52,764 |   |
| Accumulated                deficit                                                                  |   |                         | (19,380 | )                           |   | (22,364 | ) |
| Total                shareholders' equity                                                           |   |                         | 28,209  |                        |   | 30,412 |   |
| Total                liabilities and shareholders' equity                                           |   | $                            | 39,140  |                        | $      | 42,038 |   |
|                                                                                                |   |                         |    |                        |   |   |   |
| See                accompanying notes to condensed consolidated financial                statements |

----

**CLEARONE      COMMUNICATIONS, INC.**

**CONDENSED      CONSOLIDATED STATEMENTS OF INCOME**

**(Unaudited)**

**(in      thousands of dollars, except per share amounts)**

|                                                                                                |   | **Three                Months Ended** |   | **Nine                Months Ended** |   |
|-----------------------------------------------------------------------------------------------------|--------|---------------------------------------|--------|--------------------------------------|--------|
|                                                                                                |   | **March                31,**          |   | **March                31,**         |   | **March                31,** |   | **March                31,** |   |
|                                                                                                |   | **2007**                              |   | **2006**                             |   | **2007** |   | **2006** |   |
|                                                                                                |   |                                  |   |                                 |   |   |   |   |   |
| Product                Revenue:                                                                     |   | $                                     | 9,355  |                                 | $      | 8,278 |   | $ | 28,873 |   | $ | 26,158 |   |
|                                                                                                |   |                                  |   |                                 |   |   |   |   |   |   |   |   |   |
| Cost                of goods sold:                                                                  |   |                                  | 4,190  |                                 |   | 4,253 |   |   | 13,366 |   |   | 12,737 |   |
| Gross                profit                                                                         |   |                                  | 5,165  |                                 |   | 4,025 |   |   | 15,507 |   |   | 13,421 |   |
|                                                                                                |   |                                  |   |                                 |   |   |   |   |   |   |   |   |   |
| Operating                expenses:                                                                  |   |                                  |   |                                 |   |   |   |   |   |   |   |   |   |
| Marketing                and selling                                                                |   |                                  | 2,004  |                                 |   | 1,920 |   |   | 5,711 |   |   | 5,542 |   |
| General                and administrative                                                           |   |                                  | 763    |                                 |   | 1,060 |   |   | 2,260 |   |   | 4,288 |   |
| Settlement                in shareholders' class action                                             |   |                                  | -      |                                 |   | - |   |   | - |   |   | (1,205 | ) |
| Research                and product development                                                     |   |                                  | 1,848  |                                 |   | 2,201 |   |   | 5,782 |   |   | 5,778 |   |
| Total                operating expenses                                                             |   |                                  | 4,615  |                                 |   | 5,181 |   |   | 13,753 |   |   | 14,403 |   |
|                                                                                                |   |                                  |   |                                 |   |   |   |   |   |   |   |   |   |
| Operating                income (loss)                                                              |   |                                  | 550    |                                 |   | (1,156 | ) |   | 1,754 |   |   | (982 | ) |
|                                                                                                |   |                                  |   |                                 |   |   |   |   |   |   |   |   |   |
| Other                income (expense), net:                                                         |   |                                  |   |                                 |   |   |   |   |   |   |   |   |   |
| Interest                income                                                                      |   |                                  | 572    |                                 |   | 218 |   |   | 1,163 |   |   | 563 |   |
| Other,                net                                                                           |   |                                  | 5      |                                 |   | 19 |   |   | 66 |   |   | 31 |   |
| Other                income (expense), net:                                                         |   |                                  | 577    |                                 |   | 237 |   |   | 1,229 |   |   | 594 |   |
|                                                                                                |   |                                  |   |                                 |   |   |   |   |   |   |   |   |   |
| Income                (loss) from continuing operations before income taxes                         |   |                                  | 1,127  |                                 |   | (919 | ) |   | 2,983 |   |   | (388 | ) |
| (Provision)                benefit from income taxes                                                |   |                                  | (167   | )                                    |   | 782 |   |   | (303 | ) |   | 1,150 |   |
| Income                (loss) from continuing operations                                             |   |                                  | 960    |                                 |   | (137 | ) |   | 2,680 |   |   | 762 |   |
|                                                                                                |   |                                  |   |                                 |   |   |   |   |   |   |   |   |   |
| Discontinued                operations:                                                             |   |                                  |   |                                 |   |   |   |   |   |   |   |   |   |
| Income                from discontinued operations                                                  |   |                                  | -      |                                 |   | 50 |   |   | 75 |   |   | 268 |   |
| Gain                (loss) on disposal of discontinued operations                                   |   |                                  | 420    |                                 |   | 1,030 |   |   | 410 |   |   | 2,676 |   |
| Income                tax provision                                                                 |   |                                  | (157   | )                                    |   | (403 | ) |   | (181 | ) |   | (1,098 | ) |
| Income                from discontinued operations:                                                 |   |                                  | 263    |                                 |   | 677 |   |   | 304 |   |   | 1,846 |   |
|                                                                                                |   |                                  |   |                                 |   |   |   |   |   |   |   |   |   |
| Net                income                                                                           |   | $                                     | 1,223  |                                 | $      | 540 |   | $ | 2,984 |   | $ | 2,608 |   |
|                                                                                                |   |                                  |   |                                 |   |   |   |   |   |   |   |   |   |
| See                accompanying notes to condensed consolidated financial                statements |

----

**CLEARONE      COMMUNICATIONS, INC.**

**CONDENSED      CONSOLIDATED STATEMENTS OF INCOME (CONTINUED)**

**(Unaudited)**

**(in      thousands of dollars, except per share amounts)**

|                                                                                                |   | **Three                Months Ended** |       | **Nine                Months Ended** |   |
|-----------------------------------------------------------------------------------------------------|--------|---------------------------------------|------------|--------------------------------------|--------|
|                                                                                                |   | **March                31,**          |       | **March                31,**         |   | **March                31,** |   | **March                31,** |   |
|                                                                                                |   | **2007**                              |       | **2006**                             |   | **2007** |   | **2006** |   |
|                                                                                                |   |                                  |       |                                 |   |   |   |   |   |
| Basic                earnings per common share from continuing operations                           |   | $                                     | 0.09       |                                 | $      | (0.01 | ) | $ | 0.23 |   | $ | 0.06 |   |
| Diluted                earnings per common share from continuing operations                         |   | $                                     | 0.09       |                                 | $      | (0.01 | ) | $ | 0.23 |   | $ | 0.06 |   |
|                                                                                                |   |                                  |       |                                 |   |   |   |   |   |   |   |   |   |
| Basic                earnings per common share from discontinued operations                         |   | $                                     | 0.02       |                                 | $      | 0.06 |   | $ | 0.03 |   | $ | 0.16 |   |
| Diluted                earnings per common share from discontinued operations                       |   | $                                     | 0.02       |                                 | $      | 0.06 |   | $ | 0.03 |   | $ | 0.15 |   |
|                                                                                                |   |                                  |       |                                 |   |   |   |   |   |   |   |   |   |
| Basic                earnings per common share                                                      |   | $                                     | 0.11       |                                 | $      | 0.04 |   | $ | 0.25 |   | $ | 0.22 |   |
| Diluted                earnings per common share                                                    |   | $                                     | 0.11       |                                 | $      | 0.04 |   | $ | 0.25 |   | $ | 0.21 |   |
|                                                                                                |   |                                  |       |                                 |   |   |   |   |   |   |   |   |   |
| Basic                weighted average shares                                                        |   |                                  | 10,994,607 |                                 |   | 12,184,727 |   |   | 11,705,853 |   |   | 11,882,375 |   |
| Diluted                weighted average shares                                                      |   |                                  | 11,101,791 |                                 |   | 12,187,446 |   |   | 11,770,145 |   |   | 12,214,401 |   |
|                                                                                                |   |                                  |       |                                 |   |   |   |   |   |   |   |   |   |
| See                accompanying notes to condensed consolidated financial                statements |

----

**CLEARONE      COMMUNICATIONS, INC.**

**CONDENSED      CONSOLIDATED STATEMENTS OF CASH FLOWS**

**(Unaudited)**

**(in      thousands of dollars, except per share amounts)**

|                                                                                                |   | **Nine                Months Ended** |    |
|-----------------------------------------------------------------------------------------------------|--------|--------------------------------------|---------|
|                                                                                                |   | **March                31,**         |    | **March                31,** |   |
|                                                                                                |   | **2007**                             |    | **2006** |   |
| Cash                flows from operating activities:                                                |   |                                 |    |   |   |
| Net                income from continuing operations                                                |   | $                                    | 2,680   |   | $ | 762 |   |
| Adjustments                to reconcile net income from continuing operations                       |   |                                 |    |   |   |   |   |
| to                net cash provided by (used in) operations:                                        |   |                                 |    |   |   |   |   |
| Depreciation                and amortization expense                                                |   |                                 | 678     |   |   | 998 |   |
| Stock-based                compensation                                                             |   |                                 | 658     |   |   | 875 |   |
| Write-off                of inventory                                                               |   |                                 | 499     |   |   | 425 |   |
| (Gain)                loss on disposal of assets and fixed assets write-offs                        |   |                                 | 1       |   |   | (59 | ) |
| Provision                for doubtful accounts                                                      |   |                                 | 1       |   |   | 3 |   |
| Accounts                receivable                                                                  |   |                                 | 936     |   |   | (125 | ) |
| Note                receivable - Ken-A-Vision                                                       |   |                                 | (245    | ) |   | - |   |
| Inventories                                                                                         |   |                                 | (838    | ) |   | (250 | ) |
| Other                assets                                                                         |   |                                 | (43     | ) |   | (215 | ) |
| Accounts                payable                                                                     |   |                                 | (651    | ) |   | (366 | ) |
| Accrued                liabilities                                                                  |   |                                 | (737    | ) |   | (1,647 | ) |
| Income                taxes receivable                                                              |   |                                 | 3,696   |   |   | 276 |   |
| Other                liabilities                                                                    |   |                                 | (55     | ) |   | 18 |   |
| Deferred                product revenue                                                             |   |                                 | (760    | ) |   | 300 |   |
| Net                cash provided by continuing operating activities                                 |   |                                 | 5,820   |   |   | 995 |   |
| Net                cash provided by discontinued operating activities                               |   |                                 | 47      |   |   | 267 |   |
| Net                cash provided by operating activities                                            |   |                                 | 5,867   |   |   | 1,262 |   |
|                                                                                                |   |                                 |    |   |   |   |   |
| Cash                flows from investing activities:                                                |   |                                 |    |   |   |   |   |
| Purchase                of property and equipment                                                   |   |                                 | (732    | ) |   | (233 | ) |
| Proceeds                from the sale of property and equipment                                     |   |                                 | 60      |   |   | 82 |   |
| Purchase                of marketable securities                                                    |   |                                 | (22,650 | ) |   | (5,450 | ) |
| Sale                of marketable securities                                                        |   |                                 | 22,550  |   |   | 2,400 |   |
| Net                cash provided by (used in) continuing investing activities                       |   |                                 | (772    | ) |   | (3,201 | ) |
| Net                cash provided by discontinued investing activities                               |   |                                 | 822     |   |   | 1,678 |   |
| Net                cash provided by (used in) investing activities                                  |   |                                 | 50      |   |   | (1,523 | ) |
|                                                                                                |   |                                 |    |   |   |   |   |
| Cash                flows from financing activities:                                                |   |                                 |    |   |   |   |   |
| Proceeds                from common stock                                                           |   |                                 | 36      |   |   | - |   |
| Purchase                and retirement of stock                                                     |   |                                 | (5,881  | ) |   | - |   |
| Net                cash used in financing activities                                                |   |                                 | (5,845  | ) |   | - |   |
|                                                                                                |   |                                 |    |   |   |   |   |
| Net                increase in cash and cash equivalents                                            |   |                                 | 72      |   |   | (261 | ) |
| Cash                and cash equivalents at the beginning of the period                             |   |                                 | 1,240   |   |   | 1,892 |   |
| Cash                and cash equivalents at the end of the period                                   |   | $                                    | 1,312   |   | $ | 1,631 |   |
|                                                                                                |   |                                 |    |   |   |   |   |
| See                accompanying notes to condensed consolidated financial                statements |

----

**CLEARONE      COMMUNICATIONS, INC.**

**CONDENSED      CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)**

**(Unaudited)**

**(in      thousands of dollars, except per share amounts)**

|                                                                                                |   | **Nine                Months Ended** |   |
|-----------------------------------------------------------------------------------------------------|--------|--------------------------------------|--------|
|                                                                                                |   | **March                31,**         |   | **March                31,** |   |
|                                                                                                |   | **2007**                             |   | **2006** |   |
| Supplemental                disclosure of cash flow information:                                    |   |                                 |   |   |   |
| Cash                paid for interest                                                               |   | $                                    | 1      |   | $ | - |   |
| Cash                paid (received) for income taxes                                                |   |                                 | (3,176 | ) |   | (346 | ) |
|                                                                                                |   |                                 |   |   |   |   |   |
| Supplemental                disclosure of non-cash financing activities:                            |   |                                 |   |   |   |   |   |
| Value                of common shares issued in shareholder settlement                              |   | $                                    | -      |   | $ | 2,264 |   |
| Lease                incentive for Edgewater leasehold improvements                                 |   |                                 | 1,049  |   |   | - |   |
|                                                                                                |   |                                 |   |   |   |   |   |
| See                accompanying notes to condensed consolidated financial                statements |

----

**CLEARONE      COMMUNICATIONS, INC.**

**NOTES      TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

**(Unaudited)**

**(in      thousands of dollars, except per share amounts)**

**1.      Basis of Presentation**

**2.        Inventory**

|                                 |   | **March                  31,** |   | **June                  30,** |   |
|--------------------------------------|--------|--------------------------------|--------|-------------------------------|--------|
|                                 |   | **2007**                       |   | **2006**                      |   |
|                                 |   |                           |   |                          |   |
| Raw                  materials       |   | $                              | 168    |                          | $      | 513 |   |
| Finished                  goods      |   |                           | 4,520  |                          |   | 3,284 |   |
| Consigned                  inventory |   |                           | 2,265  |                          |   | 2,817 |   |
| Total                  inventory     |   | $                              | 6,953  |                          | $      | 6,614 |   |

**3.        Share-Based Payment **

----

----

**4.        Discontinued Operations**

|                                                                                                     |   | **Three                  Months Ended** |   | **Nine                  Months Ended** |   |
|----------------------------------------------------------------------------------------------------------|--------|-----------------------------------------|--------|----------------------------------------|--------|
|                                                                                                     |   | **March                  31,**          |   | **March                  31,**         |   | **March                  31,** |   | **March                  31,** |   |
|                                                                                                     |   | **2007**                                |   | **2006**                               |   | **2007** |   | **2006** |   |
|                                                                                                     |   |                                    |   |                                   |   |   |   |   |   |
| Income                  from discontinued operations:                                                    |   |                                    |   |                                   |   |   |   |   |   |
| Ken-A-Vision                                                                                             |   | $                                       | -      |                                   | $      | 50 |   | $ | 75 |   | $ | 268 |   |
|                                                                                                     |   |                                    |   |                                   |   |   |   |   |   |   |   |   |   |
| Gain                  (loss) on disposal of discontinued operations:                                     |   |                                    |   |                                   |   |   |   |   |   |   |   |   |   |
| Ken-A-Vision                                                                                             |   | $                                       | -      |                                   | $      | - |   | $ | (10 | ) | $ | - |   |
| Conferencing                  Services                                                                   |   |                                    | -      |                                   |   | 1,030 |   |   | - |   |   | 1,030 |   |
| OM                  Video                                                                                |   |                                    | 420    |                                   |   | - |   |   | 420 |   |   | 300 |   |
| Burk                                                                                                     |   |                                    | -      |                                   |   | - |   |   | - |   |   | 1,346 |   |
| Total                  gain (loss) on disposal of discontinued operations                                |   |                                    | 420    |                                   |   | 1,030 |   |   | 410 |   |   | 2,676 |   |
|                                                                                                     |   |                                    |   |                                   |   |   |   |   |   |   |   |   |   |
| Income                  tax benefit (provision):                                                         |   |                                    |   |                                   |   |   |   |   |   |   |   |   |   |
| Ken-A-Vision                                                                                             |   | $                                       | -      |                                   | $      | - |   | $ | (24 | ) | $ | (81 | ) |
| Conferencing                  Services                                                                   |   |                                    | -      |                                   |   | (384 | ) |   | - |   |   | (384 | ) |
| OM                  Video                                                                                |   |                                    | (157   | )                                      |   | (19 | ) |   | (157 | ) |   | (131 | ) |
| Burk                                                                                                     |   |                                    | -      |                                   |   | - |   |   | - |   |   | (502 | ) |
| Total                  income tax benefit (provision)                                                    |   |                                    | (157   | )                                      |   | (403 | ) |   | (181 | ) |   | (1,098 | ) |
|                                                                                                     |   |                                    |   |                                   |   |   |   |   |   |   |   |   |   |
| Total                  income (loss) from discontinued operations, net of income                  taxes: |
| Ken-A-Vision                                                                                             |   | $                                       | -      |                                   | $      | 50 |   | $ | 41 |   | $ | 187 |   |
| Conferencing                  Services                                                                   |   |                                    | -      |                                   |   | 646 |   |   | - |   |   | 646 |   |
| OM                  Video                                                                                |   |                                    | 263    |                                   |   | (19 | ) |   | 263 |   |   | 169 |   |
| Burk                                                                                                     |   |                                    | -      |                                   |   | - |   |   | - |   |   | 844 |   |
| Total                  income (loss) from discontinued operations,                                       |   |                                    |   |                                   |   |   |   |   |   |   |   |   |   |
| net                  of income taxes                                                                     |   | $                                       | 263    |                                   | $      | 677 |   | $ | 304 |   | $ | 1,846 |   |

*OM        Video*

----

**5.        Shareholders’ Equity**

**6.        Reclassifications**

| **7.  ** | **Recent                Accounting Pronouncements** |
|--------------------|-----------------------------------------------------|

*Accounting        for Uncertainty in Income Taxes*
*Accounting        for Income Taxes*

----

| **Item                  2.** | **MANAGEMENT'S                  DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF                  OPERATIONS** |
|------------------------------|-----------------------------------------------------------------------------------------------------------------------------|

*The        following discussion should be read in conjunction with our unaudited condensed        consolidated financial statements and related notes to condensed consolidated        financial statements included in this Form 10-Q and our audited consolidated        financial statements included in our Annual Report on Form 10-K for the year        ended June 30, 2006 filed with the SEC and management’s discussion and analysis        contained therein. This discussion contains forward-looking statements based        on        current expectations that involve risks and uncertainties, such as our plans,        objectives, expectations, and intentions, as set forth under “Disclosure        Regarding Forward-Looking Statements.” Our actual results and the timing of        events could differ materially from those anticipated in these forward-looking        statements as a result of various factors, including those set forth in the        following discussion and under the caption “Risk Factors” in Part II, Item 1A,        as well as other information found in the documents we file from time to        time        with the SEC. Unless otherwise indicated, all references to a year reflect        our        fiscal year that ends on June 30.*

**BUSINESS        OVERVIEW**

**CRITICAL        ACCOUNTING POLICIES**

**Revenue        and Associated Allowances for Revenue Adjustments and Doubtful        Accounts**

----

|                                |   | **Deferred                  Revenue** |   | **Deferred                  Cost of Goods Sold** |   | **Deferred                  Gross Profit** |   |
|-------------------------------------|--------|---------------------------------------|--------|--------------------------------------------------|--------|--------------------------------------------|--------|
|                                |   |                                  |   |                                             |   |                                       |   |
| March                  31, 2007     |   | $                                     | 5,111  |                                             | $      | 2,265                                      |   | $ | 2,846 |   |
| December                  31, 2006  |   |                                  | 4,711  |                                             |   | 2,166                                      |   |   | 2,545 |   |
| September                  30, 2006 |   |                                  | 5,249  |                                             |   | 2,541                                      |   |   | 2,708 |   |
| June                  30, 2006      |   |                                  | 5,871  |                                             |   | 2,817                                      |   |   | 3,054 |   |
| March                  31, 2006     |   |                                  | 5,355  |                                             |   | 2,443                                      |   |   | 2,912 |   |
| December                  31, 2005  |   |                                  | 4,936  |                                             |   | 2,199                                      |   |   | 2,737 |   |
| September                  30, 2005 |   |                                  | 4,848  |                                             |   | 2,373                                      |   |   | 2,475 |   |
| June                  30, 2005      |   |                                  | 5,055  |                                             |   | 2,297                                      |   |   | 2,758 |   |
| March                  31, 2005     |   |                                  | 5,456  |                                             |   | 2,321                                      |   |   | 3,135 |   |
| December                  31, 2004  |   |                                  | 4,742  |                                             |   | 1,765                                      |   |   | 2,977 |   |
| September                  30, 2004 |   |                                  | 5,617  |                                             |   | 1,920                                      |   |   | 3,697 |   |
| June                  30, 2004      |   |                                  | 6,107  |                                             |   | 2,381                                      |   |   | 3,726 |   |

**Goodwill        and Purchased Intangibles**

| ·   | Significant                underperformance relative to projected future operating                results; |
|--------------------|------------------------------------------------------------------------------------------------------------|
| ·   | Significant                changes in the manner of our use of the acquired assets or the strategy                for our overall business; and |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------|
| ·   | Significant                negative industry or economic trends. |
|--------------------|------------------------------------------------------------------|

----

**Impairment        of Long-Lived Asset**

**Accounting        for Income Taxes **

**Lower-of-Cost        or Market Adjustments and Reserves for Excess and Obsolete        Inventory**

**Share-Based        Payment**

----

**SEASONALITY**

**ANALYSIS        OF RESULTS OF OPERATIONS**

**Results        of Operations for the three months or the third fiscal quarter (“3Q”) and nine        months of the fiscal year (“9M”) ended March 31, 2007 and        2006**

----

| **CLEARONE                  COMMUNICATIONS, INC.**                       |   |
|--------------------------------------------------------------------------|--------|
| **CONDENSED                  CONSOLIDATED STATEMENTS OF OPERATIONS**     |   |
| **(Unaudited)**                                                          |   |
| **(in                  thousands of dollars, except per share amounts)** |   |
|                                                                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                     |   | **Three                  Months Ended** |   | **Nine                  Months Ended** |   |
|                                                                     |   | **March                  31,** |   |   |   | **March                  31,** |   |   |   | **March                  31,** |   |   |   | **March                  31,** |   |   |   |
|                                                                     |   | **2007** |   |   |   | **2006** |   |   |   | **2007** |   |   |   | **2006** |   |   |   |
|                                                                     |   |   |   | **%                  of Revenue** |   |   |   | **%                  of Revenue** |   |   |   | **%                  of Revenue** |   |   |   | **%                  of Revenue** |   |
| Product                  Revenue:                                        |   | $ | 9,355 |   |   | 100% |   | $ | 8,278 |   |   | 100% |   | $ | 28,873 |   |   | 100% |   | $ | 26,158 |   |   | 100% |   |
|                                                                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Cost                  of goods sold:                                     |   |   | 4,190 |   |   | 45% |   |   | 4,253 |   |   | 51% |   |   | 13,366 |   |   | 46% |   |   | 12,737 |   |   | 49% |   |
| Gross                  profit                                            |   |   | 5,165 |   |   | 55% |   |   | 4,025 |   |   | 49% |   |   | 15,507 |   |   | 54% |   |   | 13,421 |   |   | 51% |   |
|                                                                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Operating                  expenses:                                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Marketing                  and selling                                   |   |   | 2,004 |   |   | 21% |   |   | 1,920 |   |   | 23% |   |   | 5,711 |   |   | 20% |   |   | 5,542 |   |   | 21% |   |
| General                  and administrative                              |   |   | 763 |   |   | 8% |   |   | 1,060 |   |   | 13% |   |   | 2,260 |   |   | 8% |   |   | 4,288 |   |   | 16% |   |
| Settlement                  in shareholders' class action                |   |   | - |   |   | 0% |   |   | - |   |   | 0% |   |   | - |   |   | 0% |   |   | (1,205 | ) |   | -5% |   |
| Research                  and product development                        |   |   | 1,848 |   |   | 20% |   |   | 2,201 |   |   | 27% |   |   | 5,782 |   |   | 20% |   |   | 5,778 |   |   | 22% |   |
| Total                  operating expenses                                |   |   | 4,615 |   |   | 49% |   |   | 5,181 |   |   | 63% |   |   | 13,753 |   |   | 48% |   |   | 14,403 |   |   | 55% |   |

**Revenue**

**Costs        of Goods Sold and Gross Profit**

----

|                                |   | **Three                  Months Ended March 31,** |   | **Nine                  Months Ended March 31,** |   |
|-------------------------------------|--------|---------------------------------------------------|--------|--------------------------------------------------|--------|
|                                |   | **(in                  thousands)**               |   | **(in                  thousands)**              |   |
|                                |   | **2007**                                          |   | **2006**                                         |   | **2007** |   | **2006** |   |
|                                |   |                                              |   | **%                  of Revenue**                |   |   |   | **%                  of Revenue** |   |   |   | **%                  of Revenue** |   |   |   | **%                  of Revenue** |   |
|                                |   |                                              |   |                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Cost                  of goods sold |   | $                                                 | 4,190  |                                             |   | 44.8% |   | $ | 4,253 |   |   | 51.4% |   | $ | 13,366 |   |   | 46.3% |   | $ | 12,737 |   |   | 48.7% |   |
|                                |   |                                              |   |                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Gross                  profit       |   | $                                                 | 5,165  |                                             |   | 55.2% |   | $ | 4,025 |   |   | 48.6% |   | $ | 15,507 |   |   | 53.7% |   | $ | 13,421 |   |   | 51.3% |   |

**Operating        Expenses**

**Marketing        and selling expenses**
***.***

**General        and administrative expenses**
***.***

**Research        and product development expenses**
***.***

----

**Operating        income.**

**Other        income (expense), net.**

**Income        (loss) from continuing operations before income taxes**
***.***

**Income        (loss) from discontinued operations, net of tax. **

----

**LIQUIDITY        AND CAPITAL RESOURCES**

*Issues        Relating to Accounting for Leases*

**Item        3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET        RISK**

----

**Item        4.**
**CONTROLS        AND PROCEDURES**

----

**PART        II - OTHER INFORMATION**

**Item        1. LEGAL PROCEEDINGS**

*Legal        Proceedings.*

*Theft        of Trade Secrets Complaint.*

**Item        1A. RISK FACTORS **

*Investors        should carefully consider the risks described below. The risks described        below        are not the only ones we face, and there are risks that we are not presently        aware of or that we currently believe are immaterial that may also impair        our        business operations. Any of these risks could harm our business. The trading        price of our common stock could decline significantly due to any of these        risks        and investors may lose all or part of their investment. In assessing these        risks, investors should also refer to the other information contained or        incorporated by reference in this Quarterly Report on Form 10-Q, including        our        March 31, 2007 unaudited condensed consolidated financial statements and        related        notes.*

***Risks        Relating to Our Business***

*We        face intense competition in all of the markets for our products and services;        our operating results will be adversely affected if we cannot compete        effectively against other companies.*

*Difficulties        in estimating customer demand in our products segment could harm our profit        margins.*

----

*Our        sales depend to a certain extent on government funding and        regulation.*

*Environmental        laws and regulations subject us to a number of risks and could result in        significant costs and impact on revenue*

*Product        development delays or defects could harm our competitive position and reduce        our        revenues.*

----

| · | meeting                  required specifications and regulatory standards;                                                 |
|--------|----------------------------------------------------------------------------------------------------------------------------|
| · | meeting                  market expectations for performance and price;                                                    |
| · | hiring                  and keeping a sufficient number of skilled developers;                                             |
| · | obtaining                  prototype products at anticipated cost levels;                                                  |
| · | having                  the ability to identify problems or product defects in the development                  cycle; and |
| · | achieving                  necessary manufacturing                  efficiencies.                                          |

*Our        profitability may be adversely affected by our continuing dependence on our        distribution channels.*

*Reporting        of channel inventory by certain distributors.*

*We        depend on an outsourced manufacturing strategy.*

----

*We        depend on a single source for certain components.*

*Product        obsolescence could harm demand for our products and could adversely affect        our        revenues and our results of operations.*

*If        we        are unable to protect our intellectual property rights or have insufficient        proprietary rights, our business would be materially impaired.*

*International        sales account for a significant portion of our net revenue and risks inherent        in        international sales could harm our business.*

| · | unexpected                  changes in, or the imposition of, additional legislative or regulatory                  requirements;                                                                                                              |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| · | unique                  environmental regulations;                                                                                                                                                                                             |
| · | fluctuating                  exchange rates;                                                                                                                                                                                                   |
| · | tariffs                  and other barriers;                                                                                                                                                                                                   |
| · | difficulties                  in staffing and managing foreign sales operations;                                                                                                                                                               |
| · | import                  and export restrictions;                                                                                                                                                                                               |
| · | greater                  difficulties in accounts receivable collection and longer payment                  cycles;                                                                                                                            |
| · | potentially                  adverse tax consequences;                                                                                                                                                                                         |
| · | potential                  hostilities and changes in diplomatic and trade                  relationships;                                                                                                                                     |
| · | disruption                  in services due to natural disaster, economic or political difficulties,                  quarantines, transportation,or                  other restrictions associated with infectious                  diseases. |

----

*We        may not be able to hire and retain qualified key and highly-skilled technical        employees, which could affect our ability to compete effectively and may        cause        our revenue and profitability to decline.*

*Our        reliance on third-party technology or license agreements.*

*We        may have difficulty in collecting outstanding receivables.*

*Interruptions        to our business could adversely affect our operations.*

----

***Risks        Relating to Our Company***

*Our        stock price fluctuates as a result of the conduct of our business and stock        market fluctuations.*

| · | statements                  or changes in opinions, ratings, or earnings estimates made by                  brokerage                  firms or industry analysts relating to the market in which we do                  business                  or relating to us specifically;                                                               |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| · | disparity                  between our reported results and the projections of                  analysts;                                                                                                                                                                                                                                        |
| · | the                  shift in sales mix of products that we currently sell to a sales                  mix of                  lower-gross profit product offerings;                                                                                                                                                                             |
| · | the                  level and mix of inventory levels held by our                  distributors;                                                                                                                                                                                                                                                |
| · | the                  announcement of new products or product enhancements by us or our                  competitors;                                                                                                                                                                                                                             |
| · | technological                  innovations by us or our competitors;                                                                                                                                                                                                                                                                             |
| · | success                  in meeting targeted availability dates for new or redesigned                  products;                                                                                                                                                                                                                                 |
| · | the                  ability to profitably and efficiently manage our supplies of products                  and                  key components;                                                                                                                                                                                                 |
| · | the                  ability to maintain profitable relationships with our                  customers;                                                                                                                                                                                                                                           |
| · | the                  ability to maintain an appropriate cost structure;                                                                                                                                                                                                                                                                          |
| · | quarterly                  variations in our results of operations;                                                                                                                                                                                                                                                                              |
| · | general                  consumer confidence or general market conditions or market conditions                  specific to technology industries;                                                                                                                                                                                               |
| · | domestic                  and international economic conditions;                                                                                                                                                                                                                                                                                 |
| · | the                  adoption of the new accounting standard, SFAS No. 123R, “Share-Based                  Payments,” which requires us to record compensation expense for certain                  options issued before July 1, 2005 and for all options issued or                  modified                  after June 30, 2005; |
| · | our                  ability to report financial information in a timely manner;                  and                                                                                                                                                                                                                                            |
| · | the                  markets in which our stock is                  traded.                                                                                                                                                                                                                                                                      |

*We        have previously identified material weaknesses in our internal        controls.*

*Our        directors and officers own a significant percentage of the Company, and may        exert significant influence over us.*

----

**Item        2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF        PROCEEDS**

**ISSUER        PURCHASES OF EQUITY SECURITIES**

| **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 (1)** |
|-------------------------------------------------------|-------------------------------------------------------|---------------------------------------------------|-----------------------------------------------------------------------------------------------------------------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| January                  1, 2007 - January 31, 2007   | 3,700                                                 | $4.42                                             | 3,700                                                                                                                                   | $1,841,000                                                                                                                                                          |
| February                  1, 2007 - February 28, 2007 | 144,301                                               | $5.56                                             | 148,001                                                                                                                                 | $1,039,000                                                                                                                                                          |
| March                  1, 2007 - March 31, 2007       | 50,000                                                | $6.35                                             | 198,001                                                                                                                                 | $721,000                                                                                                                                                            |
| Total                                                 | 198,001                                               |                                              | 198,001                                                                                                                                 |                                                                                                                                                                |

| (1)   | On                August 31, 2006, the Company announced that its Board of Directors                had                approved a stock buy-back program to purchase up to $2,000,000 of                the                Company’s common stock over the next 12 months on the open market. All                repurchased shares will be immediately retired. The stock buy-back                program                will expire in August 2007. |
|-----------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**Item        3. DEFAULTS UPON SENIOR SECURITIES**

**Item        4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS**

**Item        5. OTHER INFORMATION**

----

**Item        6. EXHIBITS**

| Exhibit | SEC                  Ref. |                                                                  |                         |
|---------|---------------------------|-----------------------------------------------------------------------|------------------------------|
| No.     |  No.                 | Title                  of Document                                    | Location                     |
| 31.1    | 31                        | Section                  302 Certification of Chief Executive Officer | This                  filing |
| 31.2    | 31                        | Section                  302 Certification of Chief Financial Officer | This                  filing |
| 32.1    | 32                        | Section                  906 Certification of Chief Executive Officer | This                  filing |
| 32.2    | 32                        | Section                  906 Certification of Chief Financial Officer | This                  filing |

**SIGNATURES**

|                          | CLEARONE                  COMMUNICATIONS, INC. |
|-------------------------------|------------------------------------------------|
|                          |                                           |   |
|                          |                                           |   |
|                          |                                           |   |
| May                  11, 2007 | By:                                            | /s/                  Zeynep Hakimoglu |
|                          |                                           | Zeynep                  Hakimoglu |
|                          |                                           | President                  and Chief Executive Officer |
|                          |                                           | *(Principal                  Executive Officer)* |
|                          |                                           |   |
|                          |                                           |   |
|                          |                                           |   |
| May                  11, 2007 | By:                                            | /s/                  Greg A. LeClaire |
|                          |                                           | Greg                  A. LeClaire |
|                          |                                           | VP                  Finance |
|                          |                                           | *(Principal                  Financial and Accounting                  Officer)* |