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| Utah                                                          |   | 87-0398877                             |
|---------------------------------------------------------------|--------|----------------------------------------|
| (State or other jurisdiction ofincorporation or organization) |   | (I.R.S. employeridentification number) |

| 5225 Wiley Post Way, Suite 500Salt Lake City, Utah |   |  84116 |
|----------------------------------------------------|--------|-------------|
| (Address of principal executive offices)           |   | (Zip Code)  |

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|                                       |                                                                                               | Page Number |
|--------------------------------------------|----------------------------------------------------------------------------------------------------|-------------|
|  PART I – FINANCIAL INFORMATION |
| Item 1                                     |  Condensed Consolidated Financial Statements:                                                 |        |
|                                       |  Consolidated Balance Sheets as of September 30, 2009 and June 30, 2009                       | 1           |
|                                       |  Consolidated Statements of Operations for the three months ended September 30, 2009 and 2008 | 2           |
|                                       |  Consolidated Statements of Cash Flows for the three months ended September 30, 2009 and 2008 | 3           |
|                                       |  Notes to Condensed Consolidated Financial Statements                                         | 5           |
| Item 2                                     |  Management’s Discussion and Analysis of Financial Condition and Results of Operations  | 11          |
| Item 3                                     |  Quantitative and Qualitative Disclosures About Market Risk                                   | 16          |
| Item 4T                                    |  Controls and Procedures                                                                      | 16          |
|  PART II – OTHER INFORMATION    |
| Item 1                                     |  Legal Proceedings                                                                            | 17          |
| Item 1A                                    |  Risk Factors                                                                                 | 17          |
| Item 2                                     |  Unregistered Sales of Equity Securities and Use of Proceeds                                  | 17          |
| Item 3                                     |  Defaults Upon Senior Securities                                                              | 17          |
| Item 4                                     |  Submission of Matters to a Vote of Security Holders                                          | 17          |
| Item 5                                     |  Other Information                                                                            | 17          |
| Item 6                                     |  Exhibits                                                                                     | 17          |
|  Signatures                           |                                                                                               | 18          |

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CONSOLIDATED BALANCE SHEETS

|                                                                                                                              |   | (Unaudited)   |    |   | (Audited) |   |
|-----------------------------------------------------------------------------------------------------------------------------------|--------|---------------|---------|--------|-----------|--------|
|                                                                                                                              |   | September 30, |    |   | June 30,  |   |
|                                                                                                                              |   | 2009          |    |   | 2009      |   |
| ASSETS                                                                                                                            |   |          |    |   |      |   |
| Current assets:                                                                                                                   |   |          |    |   |      |   |
| Cash and cash equivalents                                                                                                         |   | $             | 8,060   |   |      | $      | 9,801 |   |
| Marketable securities                                                                                                             |   |          | 2,129   |   |      |   | 2,103 |   |
| Receivables, net of allowance for doubtful accounts of $103 and $103, respectively                                                |   |          | 6,552   |   |      |   | 4,968 |   |
| Inventories, net                                                                                                                  |   |          | 9,713   |   |      |   | 7,075 |   |
| Deferred income taxes                                                                                                             |   |          | 3,135   |   |      |   | 2,970 |   |
| Prepaid expenses and other assets                                                                                                 |   |          | 1,318   |   |      |   | 1,398 |   |
| Total current assets                                                                                                              |   |          | 30,907  |   |      |   | 28,315 |   |
|                                                                                                                              |   |          |    |   |      |   |   |   |
| Long-term inventory                                                                                                               |   |          | 4,759   |   |      |   | 8,559 |   |
| Property and equipment, net                                                                                                       |   |          | 3,002   |   |      |   | 2,762 |   |
| Long-term deferred tax asset                                                                                                      |   |          | 1,294   |   |      |   | 1,159 |   |
| Other assets                                                                                                                      |   |          | 56      |   |      |   | 58 |   |
| Total assets                                                                                                                      |   | $             | 40,018  |   |      | $      | 40,853 |   |
|                                                                                                                              |   |          |    |   |      |   |   |   |
| LIABILITIES AND SHAREHOLDERS' EQUITY                                                                                              |   |          |    |   |      |   |   |   |
| Current liabilities:                                                                                                              |   |          |    |   |      |   |   |   |
| Accounts payable                                                                                                                  |   | $             | 2,479   |   |      | $      | 3,545 |   |
| Accrued liabilities                                                                                                               |   |          | 2,161   |   |      |   | 2,380 |   |
| Deferred product revenue                                                                                                          |   |          | 5,304   |   |      |   | 4,709 |   |
| Total current liabilities                                                                                                         |   |          | 9,944   |   |      |   | 10,634 |   |
|                                                                                                                              |   |          |    |   |      |   |   |   |
| Deferred rent                                                                                                                     |   |          | 506     |   |      |   | 544 |   |
| Other long-term liabilities                                                                                                       |   |          | 1,224   |   |      |   | 1,189 |   |
| Total liabilities                                                                                                                 |   |          | 11,674  |   |      |   | 12,367 |   |
|                                                                                                                              |   |          |    |   |      |   |   |   |
| Shareholders' equity:                                                                                                             |   |          |    |   |      |   |   |   |
| Common stock, par value $0.001, 50,000,000 shares authorized, 8,929,002 and 8,928,802 shares issued and outstanding, respectively |   |          | 9       |   |      |   | 9 |   |
| Additional paid-in capital                                                                                                        |   |          | 38,734  |   |      |   | 38,616 |   |
| Accumulated other comprehensive income                                                                                            |   |          | 21      |   |      |   | 6 |   |
| Accumulated deficit                                                                                                               |   |          | (10,420 | )      |      |   | (10,145 | ) |
| Total shareholders' equity                                                                                                        |   |          | 28,344  |   |      |   | 28,486 |   |
| Total liabilities and shareholders' equity                                                                                        |   | $             | 40,018  |   |      | $      | 40,853 |   |
|                                                                                                                              |   |          |    |   |      |   |   |   |

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CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

|                                                         |   | Three Months Ended September 30, |      |
|--------------------------------------------------------------|--------|----------------------------------|-----------|
|                                                         |   | 2009                             |      |   | 2008 |   |
|                                                         |   |                             |      |   |   |   |
| Revenue                                                      |   | $                                | 7,646     |   |   | $ | 11,082 |   |
|                                                         |   |                             |      |   |   |   |   |   |
| Cost of goods sold                                           |   |                             | 3,692     |   |   |   | 3,942 |   |
| Gross profit                                                 |   |                             | 3,954     |   |   |   | 7,140 |   |
|                                                         |   |                             |      |   |   |   |   |   |
| Operating expenses:                                          |   |                             |      |   |   |   |   |   |
| Sales and marketing                                          |   |                             | 1,603     |   |   |   | 1,977 |   |
| Research and product development                             |   |                             | 1,668     |   |   |   | 1,776 |   |
| General and administrative                                   |   |                             | 1,329     |   |   |   | 1,072 |   |
| Total operating expenses                                     |   |                             | 4,600     |   |   |   | 4,825 |   |
|                                                         |   |                             |      |   |   |   |   |   |
| Operating (loss) income                                      |   |                             | (646      | ) |   |   | 2,315 |   |
|                                                         |   |                             |      |   |   |   |   |   |
| Total other income, net                                      |   |                             | 67        |   |   |   | 65 |   |
|                                                         |   |                             |      |   |   |   |   |   |
| (Loss) income from continuing operations before income taxes |   |                             | (579      | ) |   |   | 2,380 |   |
| Benefit from (provision for) income taxes                    |   |                             | 304       |   |   |   | (853 | ) |
| Net (loss) income                                            |   | $                                | (275      | ) |   | $ | 1,527 |   |
|                                                         |   |                             |      |   |   |   |   |   |
| Basic (loss) earnings per common share                       |   | $                                | (0.03     | ) |   | $ | 0.15 |   |
| Diluted (loss) earnings per common share                     |   | $                                | (0.03     | ) |   | $ | 0.15 |   |
|                                                         |   |                             |      |   |   |   |   |   |
| Basic weighted average shares outstanding                    |   |                             | 8,928,897 |   |   |   | 10,112,787 |   |
| Diluted weighted average shares outstanding                  |   |                             | 9,052,070 |   |   |   | 10,206,652 |   |

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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

|                                                                  |   | Three Months EndedSeptember 30, |    |
|-----------------------------------------------------------------------|--------|---------------------------------|---------|
|                                                                  |   | 2009                            |    |   | 2008 |   |
| Cash flows from operating activities:                                 |   |                            |    |   |   |   |
| Net (loss) income from continuing operations                          |   | $                               | (275    | ) |   | $ | 1,527 |   |
| Adjustments to reconcile net (loss) income from continuing operations |   |                            |    |   |   |   |   |   |
|   to net cash (used in) provided by operating activities:   |   |                            |    |   |   |   |   |   |
| Depreciation and amortization expense                                 |   |                            | 193     |   |   |   | 181 |   |
| Stock-based compensation                                              |   |                            | 118     |   |   |   | 160 |   |
| Write-off of inventory                                                |   |                            | 7       |   |   |   | 27 |   |
| Gain on disposal of assets and fixed assets write-offs                |   |                            | (5      | ) |   |   | (5 | ) |
| Provision for doubtful accounts                                       |   |                            | — |   |   |   | 23 |   |
| Changes in operating assets and liabilities:                          |   |                            |    |   |   |   |   |   |
| Accounts receivable                                                   |   |                            | (1,658  | ) |   |   | 409 |   |
| Deferred taxes                                                        |   |                            | (276    | ) |   |   | 541 |   |
| Note receivable                                                       |   |                            | — |   |   |   | 29 |   |
| Inventories                                                           |   |                            | 1,155   |   |   |   | (2,669 | ) |
| Prepaid expenses and other assets                                     |   |                            | 80      |   |   |   | 337 |   |
| Accounts payable                                                      |   |                            | (992    | ) |   |   | 394 |   |
| Accrued liabilities                                                   |   |                            | (219    | ) |   |   | 52 |   |
| Income taxes                                                          |   |                            | — |   |   |   | 198 |   |
| Deferred product revenue                                              |   |                            | 595     |   |   |   | (938 | ) |
| Net change in other assets or liabilities                             |   |                            | — |   |   |   | (3 | ) |
| Net cash (used in) provided by operating activities                   |   |                            | (1,277  | ) |   |   | 263 |   |
|                                                                  |   |                            |    |   |   |   |   |   |
| Cash flows from investing activities:                                 |   |                            |    |   |   |   |   |   |
| Purchase of property and equipment                                    |   |                            | (476    | ) |   |   | (304 | ) |
| Proceeds from sale of property and equipment                          |   |                            | 12      |   |   |   | — |   |
| Sale of marketable securities                                         |   |                            | — |   |   |   | 5,201 |   |
|  Net cash (used in) provided by investing activities             |   |                            | (464    | ) |   |   | 4,897 |   |
|                                                                  |   |                            |    |   |   |   |   |   |
| Cash flows from financing activities:                                 |   |                            |    |   |   |   |   |   |
| Proceeds from common stock                                            |   |                            | — |   |   |   | 6 |   |
| Common stock purchased and retired                                    |   |                            | — |   |   |   | (6,762 | ) |
| Net cash used in financing activities                                 |   |                            | — |   |   |   | (6,756 | ) |
|                                                                  |   |                            |    |   |   |   |   |   |
| Net decrease in cash and cash equivalents                             |   |                            | (1,741  | ) |   |   | (1,596 | ) |
| Cash and cash equivalents at the beginning of the period              |   |                            | 9,801   |   |   |   | 3,327 |   |
| Cash and cash equivalents at the end of the period                    |   | $                               | 8,060   |   |   | $ | 1,731 |   |
|                                                                  |   |                            |    |   |   |   |   |   |

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|                                                                                 |   | Three Months EndedSeptember 30, |   |
|--------------------------------------------------------------------------------------|--------|---------------------------------|--------|
|                                                                                 |   | 2009                            |   |   | 2008 |   |
|                                                                                 |   |                            |   |   |   |   |
| Supplemental disclosure of cash flow information:                                    |   |                            |   |   |   |   |
| Cash (received) paid for income taxes                                                |   | $                               | (48    | ) |   | $ | 101 |   |
|                                                                                 |   |                            |   |   |   |   |   |   |
| Supplemental disclosure of non-cash financing activities:                            |   |                            |   |   |   |   |   |   |
| Exchanged accounts receivable from a vendor with accounts payable to the same vendor |   | $                               | 74     |   |   | $ | 20 |   |
| Unrealized gain on marketable securities, net of tax of $11 and $415, respectively   |   | $                               | 15     |   |   | $ | 700 |   |

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

|            |   | September 30, |   |   | June 30, |   |
|-----------------|--------|---------------|--------|--------|----------|--------|
|            |   | 2009          |   |   | 2009     |   |
| Current:        |   |          |   |   |     |   |
| Raw materials   |   | $             | 1,129  |   |     | $      | 352 |   |
| Finished goods  |   |          | 8,584  |   |     |   | 6,723 |   |
| Total inventory |   | $             | 9,713  |   |     | $      | 7,075 |   |
|            |   |          |   |   |     |   |   |   |
| Long-term:      |   |          |   |   |     |   |   |   |
| Raw materials   |   | $             | 1,400  |   |     | $      | 2,376 |   |
| Finished goods  |   |          | 3,359  |   |     |   | 6,183 |   |
| Total inventory |   | $             | 4,759  |   |     | $      | 8,559 |   |

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|                           |   | Three Months EndedSeptember 30, |    |
|--------------------------------|--------|---------------------------------|---------|
|                           |   | 2009                            |    |   | 2008 |   |
| Cost of goods sold             |   | $                               | — |   |   | $ | 24 |   |
| Sales and marketing            |   |                            | 22      |   |   |   | 14 |   |
| Research and development       |   |                            | 2       |   |   |   | 8 |   |
| General and administrative     |   |                            | 94      |   |   |   | 114 |   |
| Total share-based compensation |   | $                               | 118     |   |   | $ | 160 |   |

|                     |   | Cost Basis |   |   | Unrealized Gains |   |   | Recorded Basis |   |   | Current Marketable Securities |   |   | Long-term Marketable Securities |   |
|--------------------------|--------|------------|--------|--------|------------------|--------|--------|----------------|--------|--------|-------------------------------|--------|--------|---------------------------------|--------|
| As of September 30, 2009 |   |       |   |   |             |   |   |           |   |   |                          |   |   |                            |   |
| Corporate bonds          |   | $          | 2,098  |   |             | $      | 31     |           |   | $      | 2,129                         |   |   | $                               | 2,129  |   |   | $ | - |   |
|                     |   |       |   |   |             |   |   |           |   |   |                          |   |   |                            |   |   |   |   |   |   |
| As of June 30, 2009      |   |       |   |   |             |   |   |           |   |   |                          |   |   |                            |   |   |   |   |   |   |
| Corporate bonds          |   | $          | 2,098  |   |             | $      | 5      |           |   | $      | 2,103                         |   |   | $                               | 2,103  |   |   | $ | - |   |

| Unrealized holding gains as of June 30, 2009                                                    |   | $      | 6   |   |
|-------------------------------------------------------------------------------------------------|--------|--------|-----|--------|
| Unrealized gains, in available-for-sale investments during the quarter ended September 30, 2009 |   |   | 26  |   |
| Income tax                                                                                      |   |   | (11 | )      |
| Unrealized holding gains as of September 30, 2009                                               |   | $      | 21  |   |

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|                                                                       |   | Three Months EndedSeptember 30, |   |
|----------------------------------------------------------------------------|--------|---------------------------------|--------|
|                                                                       |   | 2009                            |   |   | 2008 |   |
| Net (loss) income                                                          |   | $                               | (275   | ) |   | $ | 1,527 |   |
| Other comprehensive income (loss):                                         |   |                            |   |   |   |   |   |   |
| Unrealized gains (losses), in available-for-sale investments, net of taxes |   |                            | 15     |   |   |   | (201 | ) |
| Comprehensive (loss) income                                                |   | $                               | (260   | ) |   | $ | 1,326 |   |

|                                     |   | Total Fair Value at September 30, 2009 |   |   | Quoted Prices in Active Markets for Identical Assets |   |   | Significant other observable inputs |   |   | Significant unobservable inputs |   |   | Total  |    |
|------------------------------------------|--------|----------------------------------------|--------|--------|------------------------------------------------------|--------|--------|-------------------------------------|--------|--------|---------------------------------|--------|--------|--------|---------|
|                                     |   |                                   |   |   | Level 1                                              |   |   | Level 2                             |   |   | Level 3                         |   |   |   |    |
| Short-term available-for-sale securities |   | $                                      | 2,129  |   |                                                 | $      | 2,129  |                                |   | $      | —                         |   |   | $      | — |   |   | $ | 2,129 |   |

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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

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|                       |   | (in thousands of dollars) |   |
|----------------------------|--------|---------------------------|--------|
|                       |   |                      |   |   |   |   |   |  Q1 2010 vs. Q1 2009 |   |
|                       |   |  Q1 2010             |   |   |  Q1 2009 |   |   | Favorable (Unfavorable) |   |
|                       |   | Amount                    |   |   | % of Revenue |   |   | Amount |   |   | % of Revenue |   |   | Amount |   |   | % |   |
| Revenue                    |   | $                    | 7,646  |   |   |   | 100% |   |   | $  |  11,082 |   |   |   |  100% |   |   | $  |  (3,436 | )  |   |   |  -31.0% |   |
| Cost of goods sold         |   |                      | 3,692  |   |   |   | 48% |   |   |   | 3,942 |   |   |   | 36% |   |   |   | 250 |   |   |   | 6.3% |   |
| Gross profit               |   |                      | 3,954  |   |   |   | 52% |   |   |   | 7,140 |   |   |   | 64% |   |   |   | (3,186 | ) |   |   | -44.6% |   |
|                       |   |                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Operating expenses:        |   |                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Sales and marketing        |   |                      | 1,603  |   |   |   | 21% |   |   |   | 1,977 |   |   |   | 18% |   |   |   | 374 |   |   |   | 18.9% |   |
| Research and development   |   |                      | 1,668  |   |   |   | 22% |   |   |   | 1,776 |   |   |   | 16% |   |   |   | 108 |   |   |   | 6.1% |   |
| General and administrative |   |                      | 1,329  |   |   |   | 17% |   |   |   | 1,072 |   |   |   | 10% |   |   |   | (257 | ) |   |   | -24.0% |   |
| Total operating expenses   |   |                      | 4,600  |   |   |   | 60% |   |   |   | 4,825 |   |   |   | 44% |   |   |   | 225 |   |   |   | 4.7% |   |

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|                             |   | Deferred Revenue |   |   | Deferred Cost of Goods Sold |   |   | Deferred Gross Profit |   |
|----------------------------------|--------|------------------|--------|--------|-----------------------------|--------|--------|-----------------------|--------|
| Quarter ended September 30, 2009 |   | $                | 5,304  |   |                        | $      | 1,948  |                  |   | $ | 3,356 |   |
| Year ended June 30, 2009         |   |             |   |   |                        |   |   |                  |   |   |   |   |
| Fourth Quarter                   |   |             | 4,709  |   |                        |   | 1,843  |                  |   |   | 2,866 |   |
| Third Quarter                    |   |             | 4,611  |   |                        |   | 1,692  |                  |   |   | 2,919 |   |
| Second Quarter                   |   |             | 5,320  |   |                        |   | 1,914  |                  |   |   | 3,406 |   |
| First Quarter                    |   |             | 4,856  |   |                        |   | 1,938  |                  |   |   | 2,918 |   |

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QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

CONTROLS AND PROCEDURES

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LEGAL PROCEEDINGS

RISK FACTORS

UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

DEFAULTS UPON SENIOR SECURITIES

SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

OTHER INFORMATION

EXHIBITS

|  Exhibit No. |  Title of Document                                                                                                                                                                                              |
|-------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 2.2               | Agreement and Plan of Merger, dated as of November 3, 2009, by and among ClearOne Communications, Inc., Alta-Wasatch Acquisition Corporation, NetStreams, Inc., Austin Ventures VIII, L.P., and Kevin A. Reinis. (1) |
| 10.23             | Joinder to Loan and Security Agreement, dated as of November 3, 2009, by and between ClearOne Communications, Inc. and Square 1 Bank1. (1)                                                                           |
| 10.24             | Seventh Amendment to Loan and Security Agreement, dated as of November 3, 2009, by and between Square 1 Bank, ClearOne Communications, Inc., NetStreams, Inc., and NetStreams, LLC1. (1)                        |
| 31.1              | Section 302 Certification of Chief Executive Officer                                                                                                                                                                 |
| 31.2              | Section 302 Certification of Principal Financial Officer                                                                                                                                                             |
| 32.1              | Section 906 Certification of Chief Executive Officer                                                                                                                                                                 |
| 32.2              | Section 906 Certification of Principal Financial Officer                                                                                                                                                             |

| (1) | Incorporated by reference to the Registrant’s Current Report on Form 8-K filed with the SEC on November 9, 2009. |
|-----|------------------------------------------------------------------------------------------------------------------------|

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SIGNATURES

| ClearOne Communications, Inc., a Utah corporation |
|---------------------------------------------------|
|                                              |   |   |
|                                              |   |   |
|                                              |   |   |
| November 16 2009                                  | By: | /s/ Zeynep Hakimoglu |
|                                              |   | Zeynep Hakimoglu |
|                                              |   | Chief Executive Officer |
|                                              |   | (Principal Executive Officer) |
|                                              |   |   |
|                                              |   |   |
|                                              |   |   |
| November 16, 2009                                 | By: | /s/ Narsi Narayanan |
|                                              |   | Narsi Narayanan |
|                                              |   | Vice President of Finance |
|                                              |   | (Principal Financial and Accounting Officer) |