UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

☒ ~~QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE~~(Mark One)

~~SECURITIES EXCHANGE ACT OF 1934~~

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~June~~September 30, 2022

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number: 001-33886

ACORN ENERGY, INC.

(Exact name of registrant as specified in its charter)

Delaware

22-2786081

(State or other jurisdiction

of incorporation or organization)

(I.R.S. Employer

Identification No.)

1000 N West Street, Suite 1200, Wilmington,

Delaware

19801

(Address of principal executive offices)

(Zip Code)

410-654-3315

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class		Trading Symbol(s)		Name of each exchange on which registered
None

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

	Large accelerated filer ☐		Accelerated filer ☐

	Non-accelerated filer ☒		Smaller reporting company ☒

	Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

Class		Outstanding at ~~August~~November 9, 2022
Common Stock, $0.01 par value per share		~~39,687,589~~39,712,589

ACORN ENERGY, INC.

Quarterly Report on Form 10-Q

for the Quarterly Period Ended ~~June~~September 30, 2022

TABLE OF CONTENTS

	PAGE
PART I Financial Information

~~Item 1. Unaudited Condensed Consolidated Financial Statements:~~	3

Item 1. Unaudited Condensed Consolidated ~~Balance Sheets as of June 30, 2022 and December 31, 2021~~Financial Statements:	3

Condensed Consolidated Balance Sheets as of September 30, 2022 and December 31, 2021	3

Condensed Consolidated Statements of Operations for the three and ~~six~~nine months ended ~~June~~September 30, 2022 and 2021	4

Condensed Consolidated Statements of Changes in Deficit for the three and ~~six~~nine months ended ~~June~~September 30, 2022 and 2021	5

Condensed Consolidated Statements of Cash Flows for the ~~six~~nine months ended ~~June~~September 30, 2022 and 2021	6

Notes to Condensed Consolidated Financial Statements	7

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	16

Item 3. Quantitative and Qualitative Disclosures About Market Risk	23

~~Item 4. Controls and Procedures~~	24

~~PART II Other Information~~Item 4. Controls and Procedures	26

~~Item 6. Exhibits~~PART II Other Information	2527

~~Signatures~~Item 6. Exhibits	2627

Signatures	28

Certain statements contained in this report are forward-looking in nature. These statements are generally identified by the inclusion of phrases such as “we expect”, “we anticipate”, “we believe”, “we estimate” and other phrases of similar meaning. Whether such statements ultimately prove to be accurate depends upon a variety of factors that may affect our business and operations. Many of these factors are described in our most recent Annual Report on Form 10-K as filed with the Securities and Exchange Commission.

PART I

ITEM 1.

UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

ACORN ENERGY, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)

(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)

	As of June 30, 2022			As of December 31, 2021			As of September 30, 2022			As of December 31, 2021
ASSETS
Current assets:
Cash	$	1,259		$	1,722		$	1,124		$	1,722
Accounts receivable, net		584			876			917			876
Inventory, net		915			617			903			617
Deferred cost of goods sold		858			799			862			799
Other current assets		221			229			258			229
Total current assets		3,837			4,243			4,064			4,243
Property and equipment, net		687			517			675			517
Right-of-use assets, net		349			399			324			399
Deferred cost of goods sold		772			714			809			714
Other assets		178			169			202			169
Total assets	$	5,823		$	6,042		$	6,074		$	6,042
LIABILITIES AND DEFICIT
Current liabilities:
Accounts payable	$	340		$	457		$	373		$	457
Accrued expenses		156			164			157			164
Deferred revenue		3,642			3,541			3,903			3,541
Current operating lease liabilities		111			107			114			107
Other current liabilities		43			34			57			34
Total current liabilities		4,292			4,303			4,604			4,303
Long-term liabilities:
Deferred revenue		1,993			1,852			2,150			1,852
Long-term operating lease liabilities		279			336			250			336
Other long-term liabilities		14			12			15			12
Total long-term liabilities		2,286			2,200			2,415			2,200
Commitments and contingencies (Note 5)		-			-			-			-
Deficit:
Acorn Energy, Inc. shareholders
Common stock - $0.01 par value per share: Authorized – 42,000,000 shares; Issued – 39,687,589 shares at June 30, 2022 and December 31, 2021		397			397
Common stock - $0.01 par value per share: Authorized – 42,000,000 shares; Issued – 39,712,589 shares at September 30, 2022 and 39,687,589 shares at December 31, 2021								397			397
Additional paid-in capital		102,857			102,804			102,878			102,804
Accumulated deficit		(100,980	)		(100,634	)		(101,190	)		(100,634	)
Treasury stock, at cost – 801,920 shares at June 30, 2022 and December 31, 2021		(3,036	)		(3,036	)
Treasury stock, at cost – 801,920 shares at September 30, 2022 and December 31, 2021								(3,036	)		(3,036	)
Total Acorn Energy, Inc. shareholders’ deficit		(762	)		(469	)		(951	)		(469	)
Non-controlling interest		7			8
Non-controlling interests								6			8
Total deficit		(755	)		(461	)		(945	)		(461	)
Total liabilities and deficit	$	5,823		$	6,042		$	6,074		$	6,042

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

ACORN ENERGY, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

(IN THOUSANDS, EXCEPT PER SHARE DATA)

	2022			2021			2022			2021			2022			2021			2022			2021
	Six months ended June 30,						Three months ended June 30,						Nine months ended September 30,						Three months ended September 30,
	2022			2021			2022			2021			2022			2021			2022			2021

Revenue	$	3,372		$	3,316		$	1,621		$	1,611		$	5,155		$	5,022		$	1,783		$	1,706
Cost of sales		868			884			375			389			1,436			1,348			568			464
Gross profit		2,504			2,432			1,246			1,222			3,719			3,674			1,215			1,242
Operating expenses:
Research and development expense		410			353			212			175			637			532			227			179
Selling, general and administrative expense		2,387			2,048			1,205			1,042			3,585			3,086			1,198			1,038
Impairment of software		51			—			51			—			51			—			—			—
Total operating expenses		2,848			2,401			1,468			1,217			4,273			3,618			1,425			1,217
Operating (loss) income		(344	)		31			(222	)		5			(554	)		56			(210	)		25
Finance expense, net		(1	)		(5	)		(1	)		(1	)		(1	)		(5	)		—			—
(Loss) income before income taxes		(345	)		26			(223	)		4			(555	)		51			(210	)		25
Income tax expense		—			—			—			—			—			—			—			—
Net (loss) income		(345	)		26			(223	)		4			(555	)		51			(210	)		25
Non-controlling interest share of net income		(1	)		(4	)		-	*		(2	)		(1	)		(6	)		—			(2	)
Net (loss) income attributable to Acorn Energy, Inc. shareholders	$	(346	)	$	22		$	(223	)	$	2		$	(556	)	$	45		$	(210	)	$	23

Basic and diluted net (loss) income per share attributable to Acorn Energy, Inc. shareholders:	$	(0.01	)	$	0.00		$	(0.01	)	$	0.00		$	(0.01	)	$	0.00		$	(0.01	)	$	0.00
Weighted average number of shares outstanding attributable to Acorn Energy, Inc. shareholders – basic and diluted
Basic		39,688			39,688			39,688			39,688			39,692			39,687			39,700			39,687
Diluted		39,688			39,914			39,688			39,936			39,692			39,922			39,700			39,959

*	~~Less than $1~~

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

ACORN ENERGY, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN DEFICIT (UNAUDITED)

(IN THOUSANDS)

	Number of Shares		Common Stock		Additional Paid-In Capital		Accumulated Deficit			Number of Treasury Shares		Treasury Stock			Total Acorn Energy, Inc. Shareholders’ Deficit			Non- controlling interests			Total Deficit			Number of Shares		Common Stock			Additional Paid-In Capital		Accumulated Deficit			Number of Treasury Shares		Treasury Stock			Total Acorn Energy, Inc. Shareholders’ Deficit			Non- controlling interests			Total Deficit
	Three and Six Months Ended June 30, 2022																							Three and Nine Months Ended September 30, 2022
	Number of Shares		Common Stock		Additional Paid-In Capital		Accumulated Deficit			Number of Treasury Shares		Treasury Stock			Total Acorn Energy, Inc. Shareholders’ Deficit			Non- controlling interests			Total Deficit			Number of Shares		Common Stock			Additional Paid-In Capital		Accumulated Deficit			Number of Treasury Shares		Treasury Stock			Total Acorn Energy, Inc. Shareholders’ Deficit			Non- controlling interests			Total Deficit
Balances as of December 31, 2021		39,688	$	397	$	102,804	$	(100,634	)		802	$	(3,036	)	$	(469	)	$	8		$	(461	)		39,688	$	397		$	102,804	$	(100,634	)		802	$	(3,036	)	$	(469	)	$	8		$	(461	)
Net loss		—		—		—		(123	)		—		—			(123	)		1			(122	)		—		—			—		(123	)		—		—			(123	)		1			(122	)
Accrued dividend in OmniMetrix preferred shares		—		—		—		—			—		—			—			(1	)		(1	)		—		—			—		—			—		—			—			(1	)		(1	)
Stock option compensation		—		—		31		—			—		—			31			—			31			—		—			31		—			—		—			31			—			31
Balances as of March 31, 2022		39,688	$	397	$	102,835	$	(100,757	)		802	$	(3,036	)	$	(561	)	$	8		$	(553	)		39,688	$	397		$	102,835	$	(100,757	)		802	$	(3,036	)	$	(561	)	$	8		$	(553	)
Net loss		—		—		—		(223	)		—		—			(223	)		-	*		(223	)		—		—			—		(223	)		—		—			(223	)		-	*		(223	)
Accrued dividend in OmniMetrix preferred shares		—		—		—		—			—		—			—			(1	)		(1	)		—		—			—		—			—		—			—			(1	)		(1	)
Stock option compensation		—		—		22		—			—		—			22			—			22			—		—			22		—			—		—			22			—			22
Balances as of June 30, 2022		39,688	$	397	$	102,857	$	(100,980	)		802	$	(3,036	)	$	(762	)	$	7		$	(755	)		39,688	$	397		$	102,857	$	(100,980	)		802	$	(3,036	)	$	(762	)	$	7		$	(755	)
Net loss																									—		—			—		(210	)		—		—			(210	)		—			(210	)
Accrued dividend in OmniMetrix preferred shares																									—		—			—		—			—		—			—			(1	)		(1	)
Proceeds from stock option exercise																									25		-	*		5		—			—		—			5			—			5
Stock option compensation																									—		—			16		—			—		—			16			—			16
Balances as of September 30, 2022																									39,713	$	397		$	102,878	$	(101,190	)		802	$	(3,036	)	$	(951	)	$	6		$	(945	)

	Three and Six Months Ended June 30, 2021																							Three and Nine Months Ended September 30, 2021
	Number of Shares		Common Stock		Additional Paid-In Capital		Accumulated Deficit			Number of Treasury Shares		Treasury Stock			Total Acorn Energy, Inc. Shareholders’ Deficit			Non-controlling interests			Total Deficit			Number of Shares		Common Stock		Additional Paid-In Capital		Accumulated Deficit			Number of Treasury Shares		Treasury Stock			Total Acorn Energy, Inc. Shareholders’ Deficit			Non- controlling interests			Total Deficit
Balances as of December 31, 2020		39,688	$	397	$	102,729	$	(100,613	)		802	$	(3,036	)	$	(523	)	$	4		$	(519	)		39,687	$	397	$	102,729	$	(100,613	)		802	$	(3,036	)	$	(523	)	$	4		$	(519	)
Beginning balance		39,688	$	397	$	102,729	$	(100,613	)		802	$	(3,036	)	$	(523	)	$	4		$	(519	)
Net income		—		—		—		20			—		—			20			2			22
Net Income																									—		—		—		20			—		—			20			2			22
Accrued dividend in OmniMetrix preferred shares		—		—		—		—			—		—			—			(1	)		(1	)		—		—		—		—			—		—			—			(1	)		(1	)
Stock option compensation		—		—		15		—			—		—			15			—			15			—		—		15		—			—		—			15			—			15
Balances as of March 31, 2021		39,688	$	397	$	102,744	$	(100,593	)		802	$	(3,036	)	$	(488	)	$	5		$	(483	)		39,687	$	397	$	102,744	$	(100,593	)		802	$	(3,036	)	$	(488	)	$	5		$	(483	)
Net income		—		—		—		2			—		—			2			2			4
Net income (loss)		—		—		—		2			—		—			2			2			4
Net Income																									—		—		—		2			—		—			2			2			4
Accrued dividend in OmniMetrix preferred shares		—		—		—		—			—		—			—			(1	)		(1	)		—		—		—		—			—		—			—			(1	)		(1	)
Stock option compensation		—		—		21		—			—		—			21			—			21			—		—		21		—			—		—			21			—			21
Balances as of June 30, 2021		39,688	$	397	$	102,765	$	(100,591	)		802	$	(3,036	)	$	(465	)	$	6		$	(459	)		39,687	$	397	$	102,765	$	(100,591	)		802	$	(3,036	)	$	(465	)	$	6		$	(459	)
Beginning balance																									39,687	$	397	$	102,765	$	(100,591	)		802	$	(3,036	)	$	(465	)	$	6		$	(459	)
Net Income																									—		—		—		23			—		—			23			2			25
Net Income (Loss)																									—		—		—		23			—		—			23			2			25
Accrued dividend in OmniMetrix preferred shares																									—		—		—		—			—		—			—			(1	)		(1	)
Stock option compensation																									—		—		22		—			—		—			22			—			22
Balances as of September 30, 2021																									39,687	$	397	$	102,787	$	(100,568	)		802	$	(3,036	)	$	(420	)	$	7		$	(413	)
Ending balance		39,688	$	397	$	102,765	$	(100,591	)		802	$	(3,036	)	$	(465	)	$	6		$	(459	)		39,687	$	397	$	102,787	$	(100,568	)		802	$	(3,036	)	$	(420	)	$	7		$	(413	)

*	Less than $1

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

ACORN ENERGY, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

(IN THOUSANDS)

	2022			2021			2022			2021
	Six months ended June 30,						Nine months ended September 30,
	2022			2021			2022			2021
Cash flows (used in) provided by operating activities:
Net (loss) income	$	(345	)	$	26		$	(555	)	$	51
Depreciation and amortization		48			37			83			56
Impairment of software		51			—			51			—
Impairment of inventory								31			—
Non-cash lease expense		59			59			93			71
Stock-based compensation		53			36			69			58
Change in operating assets and liabilities:
Decrease (increase) in accounts receivable		292			(98	)
Increase in accounts receivable								(41	)		(184	)
Increase in inventory		(298	)		(127	)		(317	)		(241	)
Increase in deferred cost of goods sold		(117	)		(33	)		(158	)		(137	)
Increase in other current assets and other assets		(1	)		(18	)		(62	)		(48	)
Decrease in accounts payable and accrued expenses		(125	)		(95	)
Increase (decrease) in accounts payable and accrued expenses								(91	)		212
Increase in deferred revenue		242			165			660			557
Decrease in operating lease liability		(62	)		(60	)		(97	)		(71	)
Increase in other current liabilities and non-current liabilities		9			1
Increase (decrease) in other current liabilities and non-current liabilities								23			(1	)
Net cash (used in) provided by operating activities		(194	)		83			(311	)		323

Cash flows used in investing activities:
Investments in technology		(266	)		(42	)		(286	)		(214	)
Other capital investments		(3	)		—			(6	)		(7	)
Net cash used in investing activities		(269	)		(42	)		(292	)		(221	)

Cash flows used in financing activities:
Cash flows provided by (used in) financing activities:
Short-term credit, net		—			(149	)		—			(149	)
Net cash used in financing activities		—			(149	)
Stock option exercise proceeds								5			—
Net cash provided by (used in) financing activities								5			(149	)

Net decrease in cash		(463	)		(108	)		(598	)		(47	)
Cash at the beginning of the year		1,722			2,063			1,722			2,063
Cash at the end of the period	$	1,259		$	1,955		$	1,124		$	2,016

Supplemental cash flow information:
Cash paid during the year for:
Interest	$	1		$	4		$	1		$	5

Non-cash investing and financing activities:
Accrued preferred dividends to former Acorn director and/or former OmniMetrix CEO	$	2		$	2		$	3		$	3

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

ACORN ENERGY, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED STATEMENTS

(UNAUDITED)

NOTE 1— BASIS OF PRESENTATION

The accompanying unaudited condensed consolidated financial statements of Acorn Energy, Inc. and its subsidiaries, OmniMetrix, LLC and OMX Holdings, Inc. (collectively, “Acorn” or “the Company”) have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and with the instructions to Article 8 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete consolidated financial statements. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation have been included. Operating results for the ~~six-~~nine- and three-month periods ended ~~June~~September 30, 2022 are not necessarily indicative of the results that may be expected for the year ending December 31, 2022. All dollar amounts are rounded to the nearest thousand and, thus, are approximate.

These unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and footnotes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021, filed with the Securities and Exchange Commission on March 31, 2022.

NOTE 2—ACCOUNTING POLICIES

Use of Estimates in Preparation of Financial Statements

The preparation of unaudited condensed consolidated financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities as of the date of the unaudited condensed unaudited consolidated financial statements, and the reported amounts of revenues and expenses during the reporting periods.

As applicable to these unaudited condensed consolidated financial statements, the most significant estimates and assumptions relate to uncertainties with respect to income taxes, inventories, account receivable allowances, contingencies, revenue recognition, management’s projections and analyses of the possible impairments.

Concentrations of Credit Risk

Financial instruments, which potentially subject the Company to concentrations of credit risk, consist principally of cash and trade accounts receivable. The Company’s cash was deposited with a U.S. bank and amounted to $~~1,259,000~~1,124,000 at ~~June~~September 30, 2022. The Company does not believe there is significant risk of non-performance by these counterparties. For the ~~three- and six-month periods~~three-month period ended ~~June~~September 30, 2022, there ~~were no~~was one customer that represented 22% of total invoice sales. For the nine-month period ended September 30, 2022, the Company did not have any customers that represented greater than 10%10% of the Company’s total invoiced ~~sales or~~sales. One customer represented 39% of ~~our~~the Company’s accounts receivable at ~~June~~September 30, 2022. This was due to a large volume of equipment purchases from one commercial/industrial customer during the month of September. Credit risk with respect to the balance of trade receivables is generally diversified due to the number of entities comprising the Company’s customer base.

Basic and Diluted Net (Loss) Income Per Share

Basic net (loss) income per share is computed by dividing the net (loss) income attributable to Acorn Energy, Inc. by the weighted average number of shares outstanding during the year, excluding treasury stock. Diluted net (loss) income per share is computed by dividing the net (loss) income by the weighted average number of shares outstanding plus the dilutive potential of common shares which would result from the exercise of stock options and warrants. The dilutive effects of stock options and warrants are excluded from the computation of diluted net (loss) income per share if doing so would be antidilutive. For both the ~~six-~~nine- and three-month periods ending ~~June~~September 30, 2022, the number of options that were excluded from the computation of diluted net loss, as they had an antidilutive effect, was ~~979,000~~954,000 (which have a weighted average exercise price of $~~0.41~~0.42) and the number of warrants that were excluded from the computation of diluted net loss, as they had an antidilutive effect, was 35,000 (which had a weighted average exercise price of $0.13). For the ~~six-~~nine- and three-month periods ending ~~June~~September 30, 2021, respectively, the number of options that were excluded from the computation of diluted net income per share, as they had an antidilutive effect, was ~~286,000~~291,000 (which had a weighted average exercise price of $~~0.79~~0.56) and ~~321,000~~181,000 (which had a weighted average exercise price of $~~0.76~~0.66); there were no antidilutive warrants.

The following data represents the amounts used in computing EPS and the effect on net income (loss) and the weighted average number of shares of dilutive potential common stock (in thousands):

SCHEDULE OF EFFECT ON NET INCOME LOSS AND WEIGHTED AVERAGE NUMBER OF SHARES

	2022			2021		2022			2021		2022			2021		2022			2021
	Six months ended June 30,					Three months ended June 30,					Nine months ended September 30,					Three months ended September 30,
	2022			2021		2022			2021		2022			2021		2022			2021
Net (loss) income available to common stockholders	$	(346	)	$	22	$	(223	)	$	2
Net income (loss) available to common stockholders											$	(556	)	$	45	$	(210	)	$	23

Weighted average share outstanding:
Basic		39,688			39,688		39,688			39,688		39,692			39,687		39,700			39,687
Add: Warrants		—			27		—			27		—			28		—			28
Add: Stock options		—			199		—			221		—			207		—			244
Diluted		39,688			39,914		39,688			39,936		39,692			39,922		39,700			39,959

Basic and diluted net (loss) income per share	$	(0.01	)	$	0.00	$	(0.01	)	$	0.00	$	(0.01	)	$	0.00	$	(0.01	)	$	0.00

Recently Issued Accounting ~~Principles~~Standards

~~Other than the pronouncement noted below, there~~There have been no recent accounting ~~pronouncements~~standards or changes in accounting ~~pronouncements~~standards during the ~~six-~~nine- and three-month periods ended ~~June~~September 30, 2022, that are of material significance, or have potential material significance, to the Company.

In June 2016, the FASB issued ASU 2016-13, Financial Instruments-Credit Losses (“ASC 326”), authoritative guidance amending how entities will measure credit losses for most financial assets and certain other instruments that are not measured at fair value through net income. The guidance requires the application of a current expected credit loss model, which is a new impairment model based on expected losses. The new guidance is effective for interim and annual reporting periods beginning after December 15, 2022. The Company is currently evaluating the impact of the new guidance on its condensed consolidated financial statements and related disclosures.

NOTE 3—LIQUIDITY

At ~~June~~September 30, 2022, the Company had negative working capital of $~~455,000~~540,000. The Company’s working capital includes $~~1,259,000~~1,124,000 of cash and deferred revenue of $~~3,642,000~~3,903,000. Such deferred revenue does not require significant cash outlay for the revenue to be recognized. Net cash decreased during the ~~six~~nine months ended ~~June~~September 30, 2022 by $~~463,000~~598,000, of which $~~194,000~~311,000 was used in operating activities, ~~and~~ $~~269,000~~292,000 was used in investing activities and $5,000 was provided by financing activities.

During the first ~~six~~nine months of 2022, the Company’s OmniMetrix, LLC subsidiary provided $~~371,000~~516,000 from operations while the Company’s corporate headquarters used $~~565,000~~827,000 during the same period.

OmniMetrix is considered an essential business because it provides infrastructure support to both government and commercial sectors and across key industries. The Company has experienced minimal negative impacts due to the COVID-19 pandemic to date. Throughout the pandemic, the Company continued to realize new equipment sales (although not at the anticipated growth rate due to travel and meeting restrictions which have negatively impacted the sales closing timeline), has continued to collect its monthly recurring monitoring revenues and has retained its customer base. While the impacts of COVID-19 in the future are uncertain, the Company believes that due to the need for backup power and the desirability of remote monitoring services, it should continue to be positioned for stable financial performance. Business travel has now started to resume and sales are returning to projected levels.

As of ~~August 9,~~November 8, 2022, the Company had cash of $~~1,143,000~~967,000 and accounts receivable of $1,334,000. The Company believes that such cash, plus the cash generated from accounts receivable collections and operations, will provide sufficient liquidity to finance the operating activities of Acorn and OmniMetrix at their current level of operations for the foreseeable future and for the twelve months from the issuance of these unaudited condensed consolidated financial statements in particular. The Company may, at some point, elect to obtain a new line of credit or other source of financing to fund additional investments in the business.

NOTE 4—LEASES

OmniMetrix leases office space and office equipment under operating lease agreements. The office lease ~~has an expiration date of~~expires on September 30, 2025. The office equipment lease ~~was entered into~~commenced in April 2019 and has a sixty-month term. Operating lease payments for the ~~six~~nine months ended ~~June~~September 30, 2022 and 2021 were $~~62,000~~93,000 and $~~60,000~~90,000, respectively. Operating lease payments for the three months ended ~~June~~September 30, 2022 and 2021 were $~~32,000~~31,000 and $30,000, respectively. The future minimum lease payments on non-cancellable operating leases as of ~~June~~September 30, 2022 using a discount rate of ~~4.5~~4.5%% are $~~390,000~~364,000. ~~The~~ ~~4.5% discount rate used is~~Supplemental balance sheet information related to leases consisted of the incremental borrowing rate which, as defined in ASC 842, is the rate of interest that a lessee would have to pay to borrow, on a collateralized basis, over a similar term and in a similar economic environment, an amount equal to the lease payments.following:

Supplemental cash flow information related to leases consisted of the following (in thousands):

SCHEDULE OF SUPPLEMENTAL CASH FLOW INFORMATION RELATED TO LEASES

June 30,
2022 2021
Cash paid for operating lease liabilities $ 62 $ 60
September 30,
2022 2021
Cash paid for operating lease liabilities $ 93 $ 90

Supplemental balance sheet information related to leases consisted of the following:
SCHEDULE OF SUPPLEMENTAL BALANCE SHEET INFORMATION RELATED TO LEASES
2022
Weighted average remaining lease terms for operating leases 2.98 ~~3.23~~ ~~years~~

The table below reconciles the undiscounted future minimum lease payments under non-cancelable lease agreements having initial terms in excess of ~~more than~~ one year to the total operating lease liabilities recognized on the unaudited condensed consolidated balance sheet as of ~~June~~September 30, 2022 (in thousands):
SCHEDULE OF FUTURE MINIMUM LEASE PAYMENTS

Twelve-month
period ended
June 30,

Twelve-month
period ended
September 30,

2023 $ 126 $ 127
2024 129 129
2025 131 132
2026 33
Total undiscounted cash flows 419 388
Less: Imputed interest (29 ) (24 )
Present value of operating lease liabilities (a) $ 390 (a) $ 364

(a) Includes current portion of $~~111,000~~114,000 for operating leases.
9

On July 6, 2021, the Company entered into an agreement with King Industrial Realty, Inc., to sublease from the Company 1,900 square feet of office space of the Company’s 21,000 square feet of office and production space in the Hamilton Mill Business Park located in Buford, Georgia for a monthly sublease payment of $2,375 (plus an annual escalator each year of 3%) which includes the base rent plus a pro-rata share of utilities, property taxes and insurance. Fifty percent of any excess rent received above the per square foot amount that the Company pays will be remitted to the Company’s landlord less the allocation of any shared expenses and leasehold improvements specific to the sublease. The Company invested $7,000 on leasehold improvements related to the sublease. Due to the offset of the capital expenditures, the Company has not had any net rent due to its landlord to date related to the sublease. The estimated amount the Company expects to remit to the landlord subsequent to the first twelve months is $6,700 per year. The sublease commenced on October 1, 2021 and will run through September 30, 2025 which is the end of the Company’s lease term with its landlord.

9
~~SCHEDULE OF SUBLEASE~~
Twelve-month period ended June 30,
2023 $ 26
2024 26
2025 26
2026 7
Total undiscounted cash flows $ 85
NOTE 5—COMMITMENTS AND CONTINGENCIES

On August 19, 2019, OmniMetrix entered into an agreement with a software development partner to create and license to OmniMetrix a new software platform and application. Pursuant to this agreement, OmniMetrix paid this partner equal monthly payments over the first seven months of the term of the agreement equal to $200,000 in the aggregate. OmniMetrix will also pay the partner (i) a per-sensor monitoring fee for each sensor connected to the developed technology, or (ii) a percentage of any revenue received above a specified amount per sensor monitored per month in gas applications only. Commencing on January 1, 2021, OmniMetrix paid the partner a quarterly licensing fee of $12,500 which was renegotiated to $4,450 effective October 1, 2021. The ~~annual licensing fee moving forward will be $17,800, which will be paid in quarterly increments of $4,450. The~~ per-sensor monitoring fees have not yet commenced. The initial term of this agreement ~~ends~~ended on August 19, 2022 and would have automatically renewed for ~~one-year periods~~an additional year, but OmniMetrix delivered a written notice of termination to the other party sixty days prior to the end of the ~~respective~~initial term. OmniMetrix is currently on a month-to-month arrangement through December 31, 2022, paying a monthly licensing fee of $1,500, and is working with the software development partner to negotiate more favorable ~~terms.~~terms for future periods.

In addition to the above, the Company has $~~419,000~~388,000 in operating lease obligations payable through 2026 and $~~28,000~~20,000 in other contractual obligations. The Company also has $~~920,000~~786,000 in open purchase order commitments payable through ~~2022.~~April 2023.

NOTE 6—EQUITY

(a) General

At ~~June~~September 30, 2022 the Company had issued and outstanding ~~39,687,589~~39,712,589 shares of its common stock, par value $0.01 per share. Holders of outstanding common stock are entitled to receive dividends when and if declared by the Board and to share ratably in the assets of the Company legally available for distribution in the event of a liquidation, dissolution or winding up of the Company.

The Company is not authorized to issue preferred stock. Accordingly, no preferred stock is issued or outstanding.

(b) Summary Employee Option Information

The Company’s stock option plans provide for the grant to officers, directors and employees of options to purchase shares of common stock. The purchase price may be paid in cash or, if the option is “in-the-money” at the end of the option term, it is automatically exercised “net”. In a net exercise of an option, the Company does not require a payment of the exercise price of the option from the optionee but reduces the number of shares of common stock issued upon the exercise of the option by the smallest number of whole shares that has an aggregate fair market value equal to or in excess of the aggregate exercise price for the option shares covered by the option exercised. Each option is exercisable for one share of the Company’s common stock. Most options expire within five to ten years from the date of the grant, and generally vest over a three-year period from the date of the grant.
10

At ~~June~~September 30, 2022, 1,434,850 options were available for grant under the Amended and Restated 2006 Stock Incentive Plan and no options were available for grant under the 2006 Stock Option Plan for Non-Employee Directors. During the three months ended ~~June~~September 30, 2022, ~~50,000~~no options were issued to employees of the ~~Company’s CFO.~~Company. During the ~~six~~nine months ended ~~June~~September 30, 2022, 30,000 options were issued to directors, 35,000 options were issued to the Company’s CEO, 50,000 options were issued to the Company’s CFO and 30,770 options were issued to other employees. In the ~~six~~nine and three months ended ~~June~~September 30, 2022, there were 0no grants to ~~non-employees (other than~~non-employees. The fair value of the ~~directors, CEO and CFO)~~options issued was $54,000.

10
In the nine and three months ended September 30, 2022, ~~NaN~~25,000 options were exercised inat an exercise price of $0.20 per share. The fair value of the ~~six and three months ended June 30, 2022.~~options exercised was $3,000. The intrinsic value of options outstanding and of options exercisable at ~~June~~September 30, 2022 was $~~126,000~~68,000 and $~~114,000~~66,000, respectively.
The Company utilized the Black-Scholes option-pricing model to estimate fair value, utilizing the following assumptions for the respective years (all in weighted averages):
SUMMARY OF BLACK-SCHOLES OPTION PRICING TO ESTIMATE FAIR VALUE

Number
of Options
(in shares)

Weighted
Average
Exercise
Price Per
Share

Weighted
Average
Remaining
Contractual Life

Aggregate
Intrinsic
Value

Number
of Options
(in shares)

Weighted
Average
Exercise
Price Per
Share

Weighted
Average
Remaining
Contractual Life

Aggregate
Intrinsic
Value

Outstanding at December 31, 2021 833,020 $ 0.39 4.7 years $ 291,000 833,020 $ 0.39 4.7 years $ 291,000
Granted 145,770 0.55 145,770 0.55
Exercised — — 25,000 0.20
6,250

Forfeited or expired — — — —
Outstanding at June 30, 2022 978,790 $ 0.41 4.6 years $ 126,000
Exercisable at June 30, 2022 737,579 $ 0.38 4.1 years $ 114,000
Outstanding at September 30, 2022 953,790 $ 0.42 4.5 years $ 68,000
Exercisable at September 30, 2022 800,251 $ 0.40 4.2 years $ 66,000

The fair value of the options granted of $54,000 was estimated on the grant date using the Black-Scholes option-pricing model with the following weighted average assumptions:
SCHEDULE OF STOCK OPTIONS FAIR VALUE ASSUMPTIONS ESTIMATED USING BLACK-SCHOLES PRICING MODEL

Risk-free interest rate 1.8 %
Expected term of options 3.9 years
Expected annual volatility 93.6 %
Expected dividend yield — %

(c) Stock-based Compensation Expense

Stock-based compensation expense included in selling, general and administrative expenses in the Company’s unaudited condensed consolidated statements of operations was $~~53,000~~69,000 and $~~36,000~~58,000 for the ~~six-month~~nine-month periods ended ~~June~~September 30, 2022 and 2021, respectively and $~~22,000~~16,000 and $~~21,000~~22,000 for the three-month periods ended ~~June~~September 30, 2022 and 2021, respectively.

The total compensation cost related to non-vested awards not yet recognized was $~~59,000~~43,000 as of ~~June~~September 30, 2022.
11

(d) Warrants

The Company previously issued warrants at exercise prices equal to or greater than market value of the Company’s common stock at the date of issuance. A summary of warrant activity follows:
SUMMARY OF WARRANT ACTIVITY

Number
of Warrants
(in shares)

Weighted
Average
Exercise
Price Per
Share

Weighted
Average
Remaining
Contractual
Life

Number
of Warrants
(in shares)

Weighted
Average
Exercise
Price Per
Share

Weighted
Average
Remaining
Contractual
Life

Outstanding at December 31, 2021 35,000 $ 0.13 14.5 months 35,000 $ 0.13 14.5 months
Granted — — — —
Exercised — — — —
Forfeited or expired — — — —
Outstanding at June 30, 2022 35,000 $ 0.13 8.5 months
Outstanding at September 30, 2022 35,000 $ 0.13 5.5 months
11
NOTE 7— SEGMENT REPORTING

As of ~~June~~September 30, 2022, the Company operates in 2two reportable operating segments, both of which are performed through the Company’s OmniMetrix subsidiary:

● The ~~PG (Power Generation)~~Power Generation (“PG”) segment provides wireless remote monitoring and control systems and services for critical assets as well as Internet of Things applications. The PG segment includes OmniMetrix’s monitoring device for industrial air compressors and dryers, and a line of annunciators.

● The ~~CP (Cathodic Protection)~~Cathodic Protection (“CP”) segment provides remote monitoring of cathodic protection systems on gas pipelines for gas utilities and pipeline companies.

The Company’s reportable segments are strategic business units, offering different products and services, and are managed separately as each business requires different technology and marketing strategies.

12
The following tables represent segmented data for the ~~six-month~~nine-month and three-month periods ended ~~June~~September 30, 2022 and 2021 (in thousands):
SUMMARY OF SEGMENTED DATA
PG CP Total PG CP Total
Six months ended June 30, 2022:
Revenues from external customers $ 2,825 $ 547 $ 3,372
Segment gross profit 2,164 340 2,504
Depreciation and amortization 41 8 49
Segment income (loss) before income taxes* * $ 262 $ (45 ) $ 217

Six months ended June 30, 2021:
Nine months ended September 30, 2022:
Revenues from external customers $ 2,837 $ 479 $ 3,316 $ 4,335 $ 820 $ 5,155
Segment gross profit 2,150 282 2,432 3,256 463 3,719
Depreciation and amortization 32 5 37 72 13 85
Segment income (loss) before income taxes $ 510 $ (17 ) $ 493 $ 340 $ (103 ) $ 237

Three months ended June 30, 2022:
Revenues from external customers $ 1,380 $ 241 $ 1,621
Segment gross profit 1,091 155 1,246
Depreciation and amortization 24 5 29
Segment income (loss) before income taxes* * $ 73 $ (24 ) $ 49

Three months ended June 30, 2021:
Nine months ended September 30, 2021:
Revenues from external customers $ 1,379 $ 232 $ 1,611 $ 4,283 $ 739 $ 5,022
Segment gross profit 1,082 140 1,222 3,241 433 3,674
Depreciation and amortization 19 3 22 48 8 21
Segment income (loss) before income taxes $ 234 $ (4 ) $ 230 $ 774 $ (15 ) $ 759

Three months ended September 30, 2022:
Revenues from external customers $ 1,510 $ 273 $ 1,783
Segment gross profit 1,092 123 1,215
Depreciation and amortization 31 5 36
Segment income (loss) before income taxes $ 78 $ (58 ) $ 20

Three months ended September 30, 2021:
Revenues from external customers $ 1,446 $ 260 $ 1,706
Segment gross profit 1,091 151 1,242
Depreciation and amortization 16 3 19
Segment income before income taxes $ 264 $ 2 $ 266

* The software impairment of $51,000 recorded in the three months ended June 30, 2022 is not related to a specific segment and, thus, is not included in the “Segment income (loss) before income taxes” for the ~~six and three~~nine months ended ~~June~~September 30, 2022.

The Company does not currently break out total assets by reportable segment as there is a high level of shared utilization between the segments. Further, the Chief Decision Maker does not review the assets by segment.

12
Reconciliation of Segment (Loss) Income to Consolidated Net Income (Loss) ~~Income~~ Before Income Taxes
SCHEDULE OF RECONCILIATION OF SEGMENT DATA TO CONSOLIDATED NET INCOME LOSS BEFORE INCOME TAXES
2022 2021 2022 2021

Six months ended
June 30,

Three months ended
June 30,
Nine months ended
September 30, Three months ended
September 30,
2022 2021 2022 2021 2022 2021 2022 2021
Total net income before income taxes for reportable segments* * $ 217 $ 493 $ 49 $ 230
Total net income before income taxes for reportable segments $ 237 $ 759 $ 20 $ 266
Unallocated cost of corporate headquarters (510 ) (467 ) (220 ) (226 ) (741 ) (708 ) (230 ) (241 )
Consolidated net (loss) income before income taxes $ (293 ) $ 26 $ (171 ) $ 4 $ (504 ) $ 51 $ (210 ) $ 25
* The software impairment of $51,000 recorded in the three months ended June 30, 2022 is not related to a specific segment and, thus, is not included in the ~~“Total net~~“Segment income (loss) before income ~~taxes for reportable segments”~~taxes” for the ~~six and three~~nine months ended ~~June~~September 30, 2022.
13

NOTE 8—REVENUE

The following table disaggregates the Company’s revenue for the ~~six-month and three-month~~three-and-nine-month periods ended ~~June~~September 30, 2022 and 2021 (in thousands):
SCHEDULE OF DISAGGREGATES OF REVENUE
Hardware Monitoring Total Hardware Monitoring Total
Six months ended June 30, 2022:
Nine months ended September 30, 2022:
PG Segment $ 1,002 $ 1,823 $ 2,825 $ 1,610 $ 2,725 $ 4,335
CP Segment 414 133 547 631 189 820
Total Revenue $ 1,416 $ 1,956 $ 3,372 $ 2,241 $ 2,914 $ 5,155

Hardware Monitoring Total Hardware Monitoring Total
Six months ended June 30, 2021:
Nine months ended September 30, 2021:
PG Segment $ 942 $ 1,895 $ 2,837 $ 1,449 $ 2,834 $ 4,283
CP Segment 349 130 479 543 196 739
Total Revenue $ 1,291 $ 2,025 $ 3,316 $ 1,992 $ 3,030 $ 5,022

Hardware Monitoring Total Hardware Monitoring Total
Three months ended June 30, 2022:
Three months ended September 30, 2022:
PG Segment $ 479 $ 901 $ 1,380 $                608 $ 902 $ 1,510
CP Segment 176 65 241 217 56 273
Total Revenue $ 655 $ 966 $ 1,621 $ 825 $ 958 $ 1,783

Hardware Monitoring Total
Three months ended June 30, 2021:
PG Segment $ 425 $ 954 $ 1,379
CP Segment 169 63 232
Total Revenue $ 594 $ 1,017 $ 1,611
13
Hardware Monitoring Total
Three months ended September 30, 2021:
PG Segment $       507 $ 939 $ 1,446
CP Segment 194 66 260
Total Revenue $ 701 $ 1,005 $ 1,706

Deferred revenue activity for the ~~six~~nine months ended ~~June~~September 30, 2022 can be seen in the table below (in thousands):
SCHEDULE OF DEFERRED REVENUE ACTIVITY
Hardware Monitoring Total Hardware Monitoring Total
Balance at December 31, 2021 $ 3,268 $ 2,125 $ 5,393 $ 3,268 $ 2,125 $ 5,393
Additions during the period 1,282 1,943 3,225 2,088 3,144 5,232
Recognized as revenue (1,027 ) (1,956 ) (2,983 ) (1,658 ) (2,914 ) (4,572 )
Balance at June 30, 2022 $ 3,523 $ 2,112 $ 5,635
Balance at September 30, 2022 $ 3,698 $ 2,355 $ 6,053

Amounts to be recognized as revenue in the twelve-month-period ending:
June 30, 2023 $ 1,839 $ 1,803 $ 3,642
June 30, 2024 1,270 304 1,574
June 30, 2025 and thereafter 414 5 419
September 30, 2023 $ 1,904 $ 1,999 $ 3,903
September 30, 2024 1,350 353 1,703
September 30, 2025 and thereafter 444 3 447
Total $ 3,523 $ 2,112 $ 5,635 $ 3,698 $ 2,355 $ 6,053

Other revenue of $~~389,000~~583,000, is related to accessories, repairs, and other miscellaneous charges that are recognized to revenue when sold and are not deferred.

14
Deferred ~~charges~~cost of goods sold relate only to the sale of equipment. Deferred ~~charges~~cost of goods sold activity for the ~~six~~nine months ended ~~June~~September 30, 2022 can be seen in the table below (in thousands):
SCHEDULE OF DEFERRED CHARGES ACTIVITY
Balance at December 31, 2021 $ 1,513 $ 1,513
Additions, net of adjustments, during the period 601 951
Recognized as cost of sales (484 ) (793 )
Balance at June 30, 2022 $ 1,630
Balance at September 30, 2022 $ 1,671

Amounts to be recognized as cost of sales in the twelve-month-period ending:
June 30, 2023 $ 858
June 30, 2024 581 *
June 30, 2025 and thereafter 191 *
September 30, 2023 $ 862
September 30, 2024 611
September 30, 2025 and thereafter 198
$ 1,630 $ 1,671

Other cost of goods sold (COGS) recognized of $~~227,000~~393,000 is related to accessories, repairs, and other miscellaneous charges that are recognized to revenue when sold and are not deferred, in addition to $~~157,000~~250,000 in monitoring COGS which is not deferred.

The following table provides a reconciliation of the Company’s sales commissions contract assets for the ~~six-month~~nine-month period ended ~~June~~September 30, 2022 (in thousands):
SCHEDULE OF SALES COMMISSIONS CONTRACT ASSETS
Hardware Monitoring Total Hardware Monitoring Total
Balance at December 31, 2021 $ 242 $ 53 $ 295 $ 242 $ 53 $ 295
Additions during the period 94 20 114 167 38 205
Amortization of sales commissions (71 ) (13 ) (84 ) (111 ) (20 ) (131 )
Balance at June 30, 2022 $ 265 $ 60 $ 325
Balance at September 30, 2022 $ 298 $ 71 $ 369

The capitalized sales commissions are included in other current assets ($~~159,000~~179,000) and other assets ($~~166,000~~190,000) in the Company’s unaudited condensed consolidated balance sheets ~~as of June~~at September 30, 2022. The capitalized sales commissions are included in other current assets ($138,000) and other assets ($157,000) in the Company’s consolidated balance sheets ~~as of~~at December 31, 2021.

14
NOTE 9—RELATED PARTY BALANCES AND TRANSACTIONS

Officer and Director Fees

The Company recorded fees to officers of $~~261,000~~391,000 and $~~256,000~~386,000 for the ~~six~~nine months ended ~~June~~September 30, 2022 and 2021, respectively, and $~~131,000~~130,000 ~~and $129,000~~ for each of the ~~three months~~three-month periods ended ~~June~~September 30, 2022 and 2021, ~~respectively,~~ which is included in selling, general and administrative expenses.

The Company recorded fees to directors of $~~30,000~~44,000 for each of the ~~six months~~nine-month periods ended ~~June~~September 30, 2022 and 2021, and $15,000 for each of the ~~three months~~three-month periods ended ~~June~~September 30, 2022 and 2021, which is included in selling, general and administrative expenses.

Intercompany

The related party balance due to Acorn from OmniMetrix for amounts loaned, accrued interest and expenses paid by Acorn on OmniMetrix’s behalf was $~~3,661,000~~3,770,000 as of ~~June~~September 30, 2022 as compared to $4,217,000as of December 31, 2021. This balance is eliminated in consolidation. During the ~~six~~nine months ended ~~June~~September 30, 2022, the intercompany amount due to Acorn from OmniMetrix decreased by $~~556,000~~447,000. This included repayments of $780,000offset by interest of $~~89,000~~134,000, dividends of $~~38,000~~57,000 due to Acorn and $~~97,000~~142,000 in shared expenses paid by Acorn. During the ~~six~~nine months ended ~~June~~September 30, 2021, the intercompany amount due to Acorn from OmniMetrix decreased by $~~157,000~~272,000. This included repayments of $~~345,000~~523,000 offset by interest of $~~104,000~~149,000, dividends of $~~38,000~~57,000 due to Acorn and $~~46,000~~45,000 in shared expenses paid by Acorn.
NOTE 10—SUBSEQUENT EVENTS
The Company evaluated subsequent events after September 30, 2022, in accordance with FASB ASC 855 Subsequent Events, through the date of the issuance of these financial statements and has determined there have been no subsequent events for which disclosure is required.

15

ACORN ENERGY, INC.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

This Form 10-Q contains “forward-looking statements” relating to the Company which represent the Company’s current expectations or beliefs including, but not limited to, statements concerning the Company’s operations, performance, financial condition and growth. For this purpose, any statements contained in this Form 10-Q that are not statements of historical fact are forward-looking statements. Without limiting the generality of the foregoing, words such as “may”, “anticipate”, “intend”, “could”, “estimate” or “continue” or the negative or other comparable terminology are intended to identify forward-looking statements. These statements by their nature involve substantial risks and uncertainties, such as credit losses, dependence on management and key personnel, variability of quarterly results, and the ability of the Company to continue its growth strategy and the Company’s competition, certain of which are beyond the Company’s control. Should one or more of these risks or uncertainties materialize or should the underlying assumptions prove incorrect, or any of the other risks set out under the caption “Risk Factors” in the Company’s 10-K report for the year ended December 31, 2021 occur, actual outcomes and results could differ materially from those indicated in the forward-looking statements.

Any forward-looking statement speaks only as of the date on which such statement is made, and the Company undertakes no obligation to update any forward-looking statement or statements to reflect events or circumstances after the date on which such statement is made or to reflect the occurrence of unanticipated events. New factors emerge from time to time and it is not possible for management to predict all such factors, nor can it assess the impact of each such factor on the business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements.

All dollar amounts in the discussion below are rounded to the nearest thousand and, thus, are approximate.

FINANCIAL RESULTS BY COMPANY

The following table shows, for the periods indicated, the financial results (dollar amounts in thousands) attributable to each of our consolidated companies. In the tables and discussion below, research and development expense is referred to as “R&D expense,” and selling, general and administrative expense is referred to as “SG&A expense.”

Six months ended June 30, 2022
OmniMetrix Acorn Total
Revenue $ 3,372 $ — $ 3,372
Cost of sales 868 — 868
Gross profit 2,504 — 2,504
Gross profit margin 74 % 74 %
R&D expense 410 — 410
SG&A expense 1,877 510 2,387
Impairment of software 51 — 51
Operating income (loss) $ 166 $ (510 ) $ (344 )
Six months ended June 30, 2021 Nine months ended September 30, 2022
OmniMetrix Acorn Total OmniMetrix Acorn Total Continuing Operations
Revenue $ 3,316 $ — $ 3,316 $ 5,155 $ — $ 5,155
Cost of sales 884 — 884 1,436 — 1,436
Gross profit 2,432 — 2,432 3,719 — 3,719
Gross profit margin 73 % 73 % 72 % 72 %
R&D expense 353 — 353 637 — 637
SG&A expense 1,581 467 2,048 2,845 740 3,585
Impairment of software 51 — 51
Operating income (loss) $ 498 $ (467 ) $ 31 $ 186 $ (740 ) $ (554 )

16

Three months ended June 30, 2022 Nine months ended September 30, 2021
OmniMetrix Acorn Total OmniMetrix Acorn Total Continuing Operations
Revenue $ 1,621 $ — $ 1,621 $ 5,022 $ — $ 5,022
Cost of Sales 375 — 375
Cost of sales 1,348 — 1,348
Gross profit 1,246 — 1,246 3,674 — 3,674
Gross profit margin 77 % 77 % 73 % 73 %
R&D expense 212 — 212 532 — 532
SG&A expense 985 220 1,205 2,379 707 3,086
Impairment of software 51 — 51
Operating loss $ (2 ) $ (220 ) $ (222 )
Operating income (loss) $ 763 $ (707 ) $ 56

Three months ended June 30, 2021 Three months ended September 30, 2022
OmniMetrix Acorn Total OmniMetrix Acorn Total Continuing Operations
Revenue $ 1,611 $ — $ 1,611 $ 1,783 $ — $ 1,783
Cost of Sales 389 — 389
Cost of sales 568 — 568
Gross profit 1,222 — 1,222 1,215 — 1,215
Gross profit margin 76 % 76 % 68 % 68 %
R&D expense 175 — 175 227 — 227
SG&A expense 816 226 1,042 968 230 1,198
Operating income (loss) $ 231 $ (226 ) $ 5 $ 20 $ (230 ) $ (210 )
Three months ended September 30, 2021
OmniMetrix Acorn Total Continuing Operations
Revenue $ 1,706 $ — $ 1,706
Cost of Sales 464 — 464
Gross profit 1,242 — 1,242
Gross profit margin 73 % 73 %
R&D expense 179 — 179
SG&A expense 798 240 1,038
Operating income (loss) $ 265 $ (240 ) $ 25

BACKLOG

As of ~~June~~September 30, 2022, our backlog of work to be completed (primarily deferred revenue) at our OmniMetrix subsidiary totaled ~~$5,635,000.~~$6,053,000.

RECENT DEVELOPMENTS
On January 1, 2022, 30,000 options in the aggregate were issued to directors with an exercise price of $0.63 and that ~~vest~~vested in equal increments on January 1, 2022, April 1, 2022, July 1, 2022 and October 1, 2022, valued at ~~$12,100~~$12,000 in the aggregate.

On January 1, 2022, 35,000 options were issued to the CEO with an exercise price of $0.63 and that ~~vest~~vested in equal increments on January 1, 2022, April 1, 2022, July 1, 2022 and October 1, 2022, valued at ~~$14,100.~~$14,000.
17

On March 4, 2022, 30,770 options were issued to the Vice President of Sales with an exercise price of $0.55 and that vest in equal increments over three years on the anniversary date of the grant. These options are valued at ~~$11,400.~~$11,000.

On June 1, 2022, 50,000 options were issued to the CFO with an exercise price of $0.44 and ~~that vest~~vesting in equal increments on June 1, 2022, September 1, 2022, December 1, 2022 and March 1, 2023, valued at $16,000.
On August 12, 2022, 25,000 vested options were exercised by the CEO with an exercise price of $0.20 per share or $5,000 in the aggregate. These options had an expiration date of August 13, 2022.

During June 2022, we conducted an evaluation of the status of an ERP software customization project that had been initiated in July 2019 and was ongoing. As a result of this evaluation, we elected to terminate this project effective June 30, 2022 and recorded an impairment against the capitalized investment in this project of $51,000.

In July 2022, we announced a partnership between OmniMetrix, CPower Energy Management (“CPower”), and Power Solutions Specialists TX (“PSS”) designed to help homeowners that install next-generation standby generators to earn compensation for offering grid relief, known as “demand response,” to the Electric Reliability Council of Texas (“ERCOT”). CPower’s demand response solutions, combined with OmniMetrix’s remote control capabilities, allow the shifting of electricity production to PSS’s best-in-class residential standby generators for a few hours each year when the grid is stressed or ERCOT energy pricing is high, without the homeowner needing to take any action. Homeowners are compensated for signing up and possibly supplying grid offload by running their generators for up to 12 hours per year. We do not expect this partnership to begin generating revenue until 2023.

17
On August 19, 2019, we entered into an agreement with a software development partner to create and license to us a new software platform and application. Pursuant to this agreement, we paid this partner equal monthly payments over the first seven months of the term of the agreement equal to $200,000 in the aggregate. We will also pay the partner (i) a per-sensor monitoring fee for each sensor connected to the developed technology, or (ii) a percentage of any revenue received above a specified amount per sensor monitored per month, in gas applications only. Commencing on January 1, 2021, we paid the partner a quarterly licensing fee of $12,500 which was renegotiated to $4,450 effective October 1, 2021. The ~~annual licensing fee moving forward will be $17,800, which will be paid in quarterly increments of $4,450. The~~ per-sensor monitoring fees have not yet commenced. The initial term of this agreement ~~ends~~ended on August 19, 2022 and would have automatically renewed for ~~one-year periods~~an additional year, but we delivered a written notice of termination to the other party sixty days prior to the end of the ~~respective~~initial term. We are currently on a month-to-month arrangement through December 31, 2022, paying a monthly licensing fee of $1,500, and are working with the software development partner to negotiate more favorable ~~terms.~~terms for future periods.

We entered into a new agreement effective May 1, 2020 for data hosting services, replacing an expiring agreement with the same vendor. The agreement had a twelve-month term. In January 2021, we elected to renew this agreement for an additional twelve months under the same terms, extending the agreement to April 30, 2022. We did not extend this agreement for an additional one-year term beyond the expiration of the previous term on April 30, 2022 and ~~are currently~~were under a month-to-month arrangement which we ~~intend to terminate by the end of the third quarter of~~terminated effective September 30, 2022. Under the applicable data hosting services agreements, we paid ~~$38,000~~$28,000 and ~~$42,000~~$38,000 for the three-month periods ended ~~June~~September 30, 2022 and 2021, respectively, and ~~$80,000~~$108,000 and ~~$79,000~~$117,000 for the ~~six-month~~nine-month periods ended ~~June~~September 30, 2022 and 2021, respectively.

On March 17, 2021, we entered into a master services agreement for the development of a new user interface for our customer data portal. The cost of this project is ~~$119,000~~$126,000 in design and development services ($14,000 was paid at the commencement of this project and three equal installments of $23,000 were paid monthly starting in July 2021 with the fourth and final installment to be paid upon completion and launch of the new interface). This project is substantially completed and the launch of the new customer portal is expected to occur by the end of 2022. The cost of this project is capitalized, and amortization will begin once the new interface is completed and ready to deploy.

18
The master services agreement also covers the design, set-up and deployment of a new Microsoft Azure cloud infrastructure to host our OmniView data servers, which ~~replaces~~replaced our ~~existing~~previous Peak 10 datacenter hosting environment. The new infrastructure provides a more modern, agile and cost-effective environment in which to grow our IoT connections and services. We invested $166,000 in this initiative during the year ended December 31, 2021 and ~~$260,000~~$268,000 in the ~~six~~nine months ended ~~June~~September 30, 2022, of which ~~$116,000~~$8,000 was invested in the three months ended ~~June~~September 30, 2022. The new Microsoft Azure cloud infrastructure environment was completed and launched on May 1, 2022. The cost of this project iswas capitalized, and amortization over an estimated useful life of seven years began on May 1, 2022.

OVERVIEW AND TREND INFORMATION

Acorn Energy, Inc. (“Acorn” or “the Company”) is a holding company focused on technology-driven solutions for energy infrastructure asset management. We provide the following services and products through our OmniMetrix^TM, LLC (“OmniMetrix”) subsidiary:

● Power Generation (“PG”) monitoring. OmniMetrix’s PG activities provide wireless remote monitoring and control systems and services for critical assets as well as Internet of Things applications. The PG segment includes our monitoring device for industrial air compressors and dryers, and a line of annunciators.

● Cathodic Protection (“CP”) monitoring. OmniMetrix’s CP segment provides remote monitoring of cathodic protection systems on gas pipelines for gas utilities and pipeline companies.

Each of our PG and CP activities represents a reportable segment. The following analysis should be read together with the segment and revenue information provided in Notes 7 and 8 to the interim unaudited condensed consolidated financial statements included in this quarterly report.

OmniMetrix

OmniMetrix is a Georgia limited liability company based in Buford, Georgia that develops and markets wireless remote monitoring and control systems and services for multiple markets in the Internet of Things (“IoT”) ecosystem: critical assets (including stand-by power generators, pumps, pumpjacks, light towers, turbines, compressors, and other industrial equipment) as well as cathodic protection for the pipeline industry (gas utilities and pipeline companies). Acorn owns 99% of OmniMetrix with 1% owned by the former CEO of OmniMetrix.

Following the emergence of machine-to-machine (M2M) and IoT applications, whereby companies aggregate multiple sensors and monitors into a simplified dashboard for customers, OmniMetrix believes it plays a key role in this new economic ecosystem. In addition, OmniMetrix sees a rapidly growing need for backup power infrastructure to secure critical military, government, and private sector assets against emergency events including terrorist attacks, natural disasters, cybersecurity threats, and other issues related to the reliability of the electric power grid. As residential and industrial standby generators, turbines, compressors, pumps, pumpjacks, light towers and other industrial equipment are part of the critical infrastructure increasingly becoming monitored in IoT applications and given that OmniMetrix monitors all major brands of critical equipment, OmniMetrix believes it is well-positioned as a competitive participant in this market.

18
Sales of OmniMetrix monitoring systems include the sale of equipment and of monitoring services. Revenue (and related costs) associated with sale of equipment are recorded to deferred revenue (and deferred charges) upon shipment for PG and CP monitoring units. Revenue and related costs with respect to the sale of equipment are recognized over the estimated life of the units which are currently estimated to be three years. Revenues from the prepayment of monitoring fees (generally paid twelve months in advance) are initially recorded as deferred revenue upon receipt of payment from the customer and then amortized to revenue over the monitoring service period.

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Results of Operations

The following table sets forth certain information with respect to the unaudited condensed consolidated results of operations of the Company for the ~~six-month~~nine-month periods ended ~~June~~September 30, 2022 and 2021, including the percentage of total revenues during each period attributable to selected components of the operations statement data and for the period-to-period percentage changes in such components. For segment data, see Notes 7 and 8 to the unaudited condensed consolidated financial statements included in this quarterly report. The fluctuation discussion that follows the tables ~~contain~~contains dollar amounts that are rounded to the nearest thousand, thus, they are approximate.

Six months ended June 30, Nine months ended September 30,
2022 2021 Change 2022 2021 Change
($,000) % of revenues ($,000) % of revenues
from
2021 to 2022
($,000) % of revenues ($,000) % of revenues from 2021 to 2022
Revenue $ 3,372 100 % $ 3,316 100 % 2 % $ 5,155 100 % $ 5,022 100 % 3 %
Cost of sales 868 26 % 884 27 % (2 )% 1,436 28 %
1,348
27 % 6 %
Gross profit 2,504 74 % 2,432 73 % 3 % 3,719 72 % 3,674 73 % 1 %
R&D expense 410 12 % 353 11 % 16 % 637 12 % 532 11 % 20 %
SG&A expense 2,387 71 % 2,048 62 % 17 % 3,585 70 % 3,086 61 % 16 %
Impairment of software 51 2 % — — % 100 % 51 1 % — — % 100 %
Operating (loss) income (344 ) (10 )% 31 1 % (1210 )% (554 ) (11 )% 56 1 % (1,089 )%
Finance expense, net (1 ) * % (5 ) * % (80 )% (1 ) * % (5 ) * % (80 )%
(Loss) income before income taxes (345 ) (10 )% 26 1 % (1,427 )% (555 ) (11 )% 51 1 % (1,188 )%
Income tax expense — — — — % — — — — — % —
Net (loss) income (345 ) (10 )% 26 1 % (1,427 )% (555 ) (11 )% 51 1 % (1,188 )%
Non-controlling interest share of net income (1 ) * % (4 ) * % (125 )%
Non-controlling interests share of net income (1 ) * % (6 ) * % (83 )%
Net (loss) income attributable to Acorn Energy, Inc. $ (346 ) (10 )% $ 22 1 % (1,673 )% $ (556 ) (11 )% $ 45 1 % (1,336 )%

*result is less than 1%.
20

The following table sets forth certain information with respect to the unaudited consolidated results of operations of the Company for the three-month periods ended ~~June~~September 30, 2022 and 2021, including the percentage of total revenues during each period attributable to selected components of the operations statement data and for the period-to-period percentage changes in such components. For segment data, see Notes 7 and 8 to the unaudited condensed consolidated financial statements included in this quarterly report.

19
Three months ended June 30, Three months ended September 30,
2022 2021 Change 2022 2021 Change
($,000) % of revenues ($,000) % of revenues from
2021 to 2022 ($,000) % of revenues ($,000) % of revenues from
2021 to 2022
Revenue $ 1,621 100 % $ 1,611 100 % 1 % $ 1,783 100 % $ 1,706 100 % 5 %
Cost of sales 375 23 % 389 24 % (4 )% 568 32 % 464 27 % 22 %
Gross profit 1,246 77 % 1,222 76 % 2 % 1,215 68 % 1,242 73 % (2 )%
R&D expense 212 13 % 175 11 % 21 % 227 13 % 179 10 % 27 %
SG&A expense 1,205 74 % 1,042 65 % 16 % 1,198 67 % 1,038 61 % 15 %
Impairment of software 51 3 % — — % 100 %
Operating (loss) income (222 ) (14 )% 5 * % (4,540 )%
Operating income (loss) (210 ) (12 )% 25 1 % (940 )%
Finance expense, net (1 ) — % (1 ) * % — % — — % %— — % — %
(Loss) Income before income taxes (223 ) (14 )% 4 * % (5,675 )%
Income (loss) before income taxes (210 ) (12 )% 25 1 % (940 )%
Income tax expense — — % — — % — % — — % — — % — %
Net (loss) income (223 ) (14 )% 4 * % (5,675 )%
Non-controlling interest share of net (loss) income ** * % (2 ) * % (100 )%
Net (loss) income attributable to Acorn Energy, Inc. $ (223 ) (14 )% $ 2 * % (11,450 )%
Net income (loss) (210 ) (12 )% 25 1 % (940 )%
Non-controlling interests share of net income ** — % (2 ) * % (100 )%
Net income (loss) attributable to Acorn Energy, Inc. $ (210 ) (12 )% $ 23 1 % (1,013 )%

*result is less than 1%.
**less than $1$

Revenue for the ~~six~~nine and three months ended ~~June~~September 30, 2022 and 2021

In the ~~six~~nine months ended ~~June~~September 30, 2022, revenue increased by ~~$56,000,~~$133,000 or 2%3%, from ~~$3,316,000~~$5,022,000 in the ~~six~~nine months ended ~~June~~September 30, 2021 to ~~$3,372,000~~$5,155,000 in the ~~six~~nine months ended ~~June~~September 30, 2022. Hardware revenue increased by ~~$125,000~~$249,000 from ~~$1,291,000~~$1,992,000 in the ~~six~~nine months ended ~~June~~September 30, 2021 to ~~$1,416,000~~$2,241,000 in the ~~six~~nine months ended ~~June~~September 30, 2022. During the ~~six~~nine months ended ~~June~~September 30, 2021, we recorded $112,000 in revenue from the sale of custom TG Pro units that are designed to large customer specifications and monitored by the ~~customer and~~customer; thus, the revenue was not deferred. We did not have any custom unit orders in the ~~first six~~nine months ended ~~June~~September 30, 2022. The hardware revenue during the ~~six~~nine months ended ~~June~~September 30, 2021, excluding the revenue from the sale of the custom units, was ~~$1,179,000;~~$1,880,000; thus, the increase in hardware revenue excluding the custom units was ~~20%~~19%. This increase was attributed to Hero-2 and TG Pro revenue ~~increases as well as from~~and to a lesser extent TG-2 and RAD revenue in addition to engineering service income realized, offset by a decrease in revenue from the ~~TG-2 product.~~Hero-1, Patriot and TG-1 products. Monitoring revenue decreased by ~~$69,000,~~$116,000, or 3%4%, from ~~$2,025,000~~$3,030,000 in the ~~six~~nine months ended ~~June~~September 30, 2021 to ~~$1,956,000~~$2,914,000 in the ~~six~~nine months ended ~~June~~September 30, 2022. The decrease in monitoring revenue was due to the impact of the connections for which monitoring was discontinued as a result of ~~the~~ sunsetting 3G ~~technology.~~technology in addition to certain monitoring rebates applied for two of our larger customers, one in CP and one in PG.
21

As discussed above, OmniMetrix has two reportable segments, PG and CP. Of the ~~$3,372,000~~$5,155,000 in revenue recognized in the ~~six~~nine months ended ~~June~~September 30, 2022, ~~$2,825,000~~$4,335,000 was generated by PG activities and ~~$547,000~~$820,000 was generated by CP activities. This represents ~~a decrease~~an increase in revenue from PG activities of ~~$12,000,~~$52,000, or ~~0.4%~~1%, from ~~$2,837,000~~$4,283,000 in the ~~six~~nine months ended ~~June~~September 30, 2021, and an increase in revenue from CP activities of ~~$68,000,~~$81,000, or ~~14%~~11%, from ~~$479,000~~$739,000 in the ~~six~~nine months ended ~~June~~September 30, 2021. As noted above, ~~the decrease in~~ PG revenue growth was ~~due to~~negatively impacted by the ~~impact~~loss of monitoring revenue from the PG connections for which monitoring was discontinued ~~in the six months ended June 30, 2022~~ as a result of sunsetting 3G technology.

Revenue increased by ~~$10,000,~~$77,000, or 1%5%, from ~~$1,611,000~~$1,706,000 in the three months ended ~~June~~September 30, 2021 to ~~$1,621,000~~$1,783,000 in the three months ended ~~June~~September 30, 2022. ~~Revenue~~OmniMetrix’s increased revenue during the three months ended September 30, 2022 was ~~essentially flat period over period~~primarily attributable to increased hardware and accessories sales, which ~~we attribute to sales timing with significantly higher sales in first quarter 2022 that contributed to a slow down in purchasing~~increased $124,000 or 18%, from $701,000 in the ~~second quarter 2022~~three months ended September 30, 2021 to $825,000 in ~~addition to concerns related to inflation and related to rising interest rates and gas prices.~~the three months ended September 30, 2022.
20

Monitoring revenue decreased by ~~$51,000,~~$47,000, or 5%, from ~~$1,017,000~~$1,005,000 in the three months ended ~~June~~September 30, 2021 to ~~$966,000~~$958,000 in the three months ended ~~June~~September 30, 2022. The decrease is due to the same drivers as in the ~~six-month~~nine-month period as previously discussed.

Of the ~~$1,621,000~~$1,783,000 in revenue recognized in the three months ended ~~June~~September 30, 2022, ~~$1,380,000~~$1,510,000 was generated by PG activities and ~~$241,000~~$273,000 was generated by CP activities. ~~Revenue~~This represents an increase in revenue from PG activities ~~was relatively flat period-over-period, only increasing $1,000~~of $64,000, or 4%, from ~~$1,379,000~~$1,446,000 in the three months ended ~~June~~September 30, ~~2021. Revenue~~2021, and an increase in revenue from CP activities ~~increased $9,000,~~of $13,000, or 9%5%, from ~~$232,000~~$260,000 in the three months ended ~~June~~September 30, 2021.

Gross profit for the ~~six~~nine and three months ended ~~June~~September 30, 2022 and 2021
Gross profit for the ~~six~~nine months ended ~~June~~September 30, 2022 was ~~$2,504,000,~~$3,719,000, reflecting a gross margin of ~~74%~~72%, compared with a gross profit of ~~$2,432,000,~~$3,674,000, reflecting a 73% gross margin, for the ~~six~~nine months ended ~~June~~September 30, 2021. Gross margin on hardware revenue for the ~~six~~nine months ended ~~June~~September 30, 2022 was ~~50%~~47% compared to 46% for the ~~six~~nine months ended ~~June~~September 30, 2021. Gross margin on monitoring revenue was 91% for each of the ~~six months~~nine-month periods ended ~~June~~September 30, 2022 ~~was 92% compared to 91% for the six months ended June 30,~~and 2021.

Gross profit for the three months ended ~~June~~September 30, 2022 was ~~$1,246,000,~~$1,215,000, reflecting a gross margin of ~~77%~~68% on revenue, compared with a gross profit for the three months ended ~~June~~September 30, 2021 of ~~$1,222,000,~~$1,242,000, reflecting a gross margin of ~~76%~~73% on revenue. Gross margin on hardware revenue for the three months ended ~~June~~September 30, 2022 was ~~55%~~43% compared to ~~43%~~46% for the three months ended ~~June~~September 30, 2021. ~~This~~Cost of sales in the three and nine months ended September 30, 2022 included a write-off of $31,000 in obsolete CP parts inventory which was ~~attributed to revenue from custom engineering fees, accessory sales, product mix and certain price increases~~the primary reason for the decrease in gross margin during ~~the period.~~these periods.. Gross margin on monitoring revenue for the three months ended ~~June~~September 30, 2022 was ~~92%~~90% compared to ~~95%~~92% for the three months ended ~~June~~September 30, 2021. The decrease was due to monitoring rebates that were given to two large customers during the three months ended September 30, 2022.

Operating expenses for the ~~six~~nine and three months ended ~~June~~September 30, 2022 and 2021

OmniMetrix R&D expense. During the ~~six~~nine months ended ~~June~~September 30, 2022 and 2021, R&D expense was ~~$410,000~~$637,000 and ~~$353,000,~~$532,000, respectively. During the three months ended ~~June~~September 30, 2022, OmniMetrix recorded ~~$212,000~~$227,000 of R&D expense as compared to ~~$175,000~~$179,000 in the three months ended ~~June~~September 30, 2021. The increase in R&D expense in the ~~six~~nine months ended ~~June~~September 30, 2022 of ~~$57,000~~$105,000 and the increase of ~~$37,000 for~~$48,000 in the three months ended ~~June~~September 30, 2022 are both related to salary increases of our engineering team effective September 1, 2021, bonuses paid to our engineering team in the nine months ended September 30, 2022, the continued development of next generation PG and CP products, and exploration into new possible product lines. We expect a moderate increase in R&D expense for the remainder of 2022 ~~as we continue~~due to engineering salary increases granted effective October 1, 2022 and for continued investment in work on certain initiatives to redesign products and expand product lines to increase ~~the~~our level of ~~innovation.~~innovation ahead of our competitors.
22

OmniMetrix SG&A expense. During the ~~six~~nine months ended ~~June~~September 30, 2022, OmniMetrix recorded SG&A expense of ~~$1,877,000~~$2,845,000, compared to SG&A ~~costs~~expense of ~~$1,581,000~~$2,379,000 in the ~~six~~nine months ended ~~June~~September 30, 2021, an increase of ~~$296,000,~~$466,000, or ~~19%~~20%. During the three months ended ~~June~~September 30, 2022, OmniMetrix recorded SG&A expense of ~~$985,000~~$968,000, compared to SG&A ~~costs~~expense of ~~$816,000~~$798,000 in the three months ended ~~June~~September 30, 2021, an increase of ~~$169,000,~~$170,000, or 21%. The increase in the ~~six-month~~nine-month period was primarily due to an increase of (i) ~~$109,000~~$187,000 in personnel expenses which included partial year bonuses of $16,000 which were not paid in 2021, (ii) ~~$23,000~~$51,000 in travel and trade show expenses, (iii) ~~$94,000~~$154,000 in technology consulting fees and software license fees, (iv) ~~$24,000~~$28,000 in ~~contractor expenses,~~depreciation expense, (v) ~~$26,000~~$39,000 in amortization of sales commissions and (vi) ~~$20,000~~$7,000 in aggregate increases across other expense categories. The increase in the three-month period was primarily due to an increase of (i) ~~$50,000~~$56,000 in personnel expenses which included the partial year bonuses noted above of $16,000 that were not paid in the ~~second~~third quarter of 2021, (ii) ~~$78,000~~$60,000 in technology consulting fees and software license fees, (iii) $28,000 in travel and ~~(iii) $41,000~~trade show expenses and (iv) $26,000 in aggregate increases across other expense categories.

During June 2022, we conducted an evaluation of the status of an ERP software customization project that had been initiated in July 2019 and was ongoing. As a result of this evaluation, we elected to terminate this project effective June 30, 2022 and recorded an impairment against the capitalized investment in this project of $51,000.
Corporate SG&A expense. Corporate SG&A expense was ~~$510,000~~$740,000 in the ~~six~~nine months ended ~~June~~September 30, 2022, an increase of ~~$43,000,~~$33,000, or 9%5%, from the ~~$467,000~~$707,000 of corporate SG&A expense reported in the ~~six~~nine months ended ~~June~~September 30, 2021. This increase is primarily due to increased stock compensation expense and audit fees, ~~and insurance costs.~~offset by a decrease in tax professional fees. Corporate SG&A expense for the three months ended ~~June~~September 30, 2022 decreased ~~$6,000,~~$10,000, or 3%4%, to ~~$220,000~~$230,000 from ~~$226,000 in~~$240,000 for the three months ended ~~June~~September 30, 2021. ~~Second~~Third quarter 2022 corporate SG&A expense of $230,000 was higher than second quarter 2022 corporate SG&A expense of $220,000 ~~was lower~~ by ~~$70,000 than first quarter 2022 corporate SG&A expense of $290,000,~~$10,000 primarily due to tax professional fees paid in the third quarter of 2022 and expenses related to our annual ~~audit which were incurred~~shareholder meeting held in the ~~first~~third quarter ~~2022.~~offset by a decrease in stock compensation expense and insurance expense quarter over quarter. We do not expect the quarterly corporate overhead to change materially except as may be required to support the growth of our OmniMetrix subsidiary and typical annual increases in professional fees and insurance premiums.

21
Net (loss) income attributable to Acorn Energy. We recognized net loss attributable to Acorn shareholders of ~~$346,000~~$556,000 in the ~~six~~nine months ended ~~June~~September 30, 2022 compared to a net income attributable to Acorn shareholders of ~~$22,000~~$45,000 in the ~~six~~nine months ended ~~June~~September 30, 2021. Our net ~~income~~loss during the ~~six~~nine months ended ~~June~~September 30, 2022 is comprised of ~~net~~operating income at OmniMetrix of ~~$167,000~~$52,000, offset by corporate expenses, including net interest expense, of ~~$512,000~~$607,000 and the non-controlling interest share of our income from OmniMetrix of $1,000. Our net income induring the ~~six~~nine months ended ~~June~~September 30, 2021 ~~was~~is comprised of ~~net~~operating income at OmniMetrix of ~~$493,000~~$759,000, offset by corporate expenses, including net interest expense, of ~~$467,000~~$708,000 and the non-controlling interest share of our income from OmniMetrix of ~~$4,000.~~$6,000.

For the three months ended ~~June~~September 30, 2022, we recognized net loss attributable to Acorn shareholders of ~~$223,000~~$210,000 compared to a net income attributable to Acorn shareholders of ~~$2,000~~$23,000 for the three months ended ~~June~~September 30, 2021. Our net loss in the three months ended ~~June~~September 30, 2022 is comprised of ~~net loss~~operating income at OmniMetrix of ~~$1,000 plus~~$19,000, offset by corporate expenses of ~~$222,000.~~$229,000. The non-controlling interest share of our income from OmniMetrix ~~during this period rounded to zero.~~was less than $1,000. Our net income in the three months ended ~~June~~September 30, 2021 was comprised of ~~net~~operating income at OmniMetrix of ~~$230,000~~$266,000, offset by corporate expenses of ~~$226,000~~$241,000 and ~~less the~~ $2,000 attributed to the non-controlling interest share of our income in OmniMetrix.

Liquidity and Capital Resources

At ~~June~~September 30, 2022, we had negative working capital of ~~$455,000.~~$540,000. Our working capital includes ~~$1,259,000~~$1,124,000 of cash and deferred revenue of ~~$3,642,000.~~$3,903,000. The deferred revenue does not require significant cash outlay for the revenue to be recognized. Net cash decreased during the nine months ended September 30, 2022 by $598,000, of which $311,000 was used in operating activities, $292,000 was used in investing activities and $5,000 was provided by financing activities.
23

During the ~~six~~first nine months ~~ended June 30,~~of 2022, ~~our~~the Company’s OmniMetrix, LLC subsidiary provided ~~$371,000~~$516,000 from operations while ~~our~~the Company’s corporate headquarters used ~~$565,000~~$827,000 during the same period.

During the ~~six~~nine months ended ~~June~~September 30, 2022, we invested ~~$266,000~~$286,000 in technology, primarily in the design of our new cloud server environment as well as investments in new hardware and software upgrades. In addition, we had other capital expenditures of ~~$3,000~~$6,000 related to patent filings and minor leasehold improvements.

Other Liquidity Matters

OmniMetrix owes Acorn ~~$3,660,000~~$3,770,000 for loans, accrued interest and expenses advanced to it by Acorn. OmniMetrix made repayments to Acorn of $780,000 in the first ~~half~~nine months of 2022 offset by interest, dividends and other advances of ~~$224,000~~$333,000 in the aggregate.

As of ~~August 9,~~November 8, 2022, we had cash of ~~$1,143,000.~~$967,000 and accounts receivable of $1,334,000. We believe that such cash, plus the cash generated from accounts receivable collections and operations, will provide sufficient liquidity to finance the operating activities of Acorn and OmniMetrix at their current level of operations for the foreseeable future and for the twelve months from the issuance of these unaudited condensed consolidated financial statements in particular. We may, at some point, elect to obtain a new line of credit or other source of financing to fund additional investments in the business.
22
Contractual Obligations and Commitments

The table below provides information concerning obligations under certain categories of our contractual obligations as of ~~June~~September 30, 2022.

CASH PAYMENTS DUE TO CONTRACTUAL OBLIGATIONS

Twelve Month Periods Ending June 30, (in thousands) Twelve Month Periods Ending September 30, (in thousands)
Total 2023 2024-2025 2026-2027 2028 and thereafter Total 2023 2024-2025 2026-2027 2028 and thereafter
Software agreements $ 17 $ 17 $ — $ — $      — $ 13 $ 13 $     — $      — $      —
Operating leases 419 126 260 33 — 388 127 261 — —
Contractual services 13 8 5 — — 11 8 3 — —
Total contractual cash obligations $ 449 $ 151 $ 265 $ 33 $ — $ 412 $ 148 $ 264 $ — $ —

The Company also has ~~$920,000~~$786,000 in open purchase order commitments payable through ~~2022.~~April 2023.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

COVID-19 Risk
~~The~~As discussed under the caption “Risk Factors” in our 10-K report for the year ended December 31, 2021, the COVID-19 pandemic could negatively affect various aspects of our business, including our workforce and supply chain, and make it more difficult and expensive to meet our obligations to our customers, and could result in reduced demand from our customers.
The outbreak of the COVID-19 pandemic caused governments around the world to implement quarantines of certain geographic areas and implement significant restrictions on travel. Several governments also implemented work restrictions that prohibit many employees from going to work, both around the world as well as in certain jurisdictions in the United States. At this time, it is unclear if foreign governments or U.S. federal, state or local governments will further extend any of the current restrictions or if further restrictions will be put into place. In addition, many countries, including the United States, have placed significant bans on international travel. It is possible that restrictions or bans on domestic travel may be implemented by U.S. federal, state or local governments. As a result of the pandemic, businesses can be shut down, supply chains can be interrupted, slowed, or rendered inoperable, and individuals can become ill, quarantined, or otherwise unable to work and/or travel due to health reasons or governmental restrictions. OmniMetrix is considered an essential business due to the fact that it provides infrastructure support to both government and commercial sectors and across key industries, so it has not been forced to shut down to date.
Governmental mandates may require forced shutdowns of our facilities for extended or indefinite periods. In addition, the pandemic could adversely affect our workforce resulting in serious health issues and absenteeism. The pandemic could also substantially interfere with general commercial activity related to our supply chain and customer base, which could have a material adverse effect on our financial condition, results of operations, business, or prospects. Some of the electronic devices and hardware we purchase, like antennas, radios, and GPS modules are very specific to our ~~application;~~application, and there are not likely to be practical alternatives. In some cases, our circuit boards were designed around specific electronic hardware that met our specifications. We ~~are working~~continue to work closely with our contract manufacturers and suppliers in order to mitigate, as much as possible, the risks to our supply chain for these critical devices and hardware, including identifying any lead-time issues and any potential alternate sources. We ~~are~~ also ~~examining~~continue to examine all currently open purchase orders in an effort to identify whether we need to issue additional orders to secure product that is critical, already has questionable lead times and/or is unique to our requirements. Alternate sources may not be available or may result in delays in shipments to us from our supply chain and subsequently to our customers, each of which would affect our results of operations. Further, if our customers’ businesses are similarly affected as a result of the pandemic, they might delay or reduce purchases from us, which could adversely affect our results of operations.

24
Concentrations of Credit Risk

Financial instruments, which potentially subject usthe Company to concentrations of credit risk, consist principally of cash and trade accounts receivable. Our cash was deposited with a U.S. bank and amounted to ~~$1,259,000~~$1,124,000 at ~~June~~September 30, 2022. We do not believe there is significant risk of non-performance by these counterparties. For the ~~six- and~~ three-month ~~periods~~period ended ~~June~~September 30, 2022, there ~~were no~~was one customer that represented 22% of total invoice sales. For the nine-month period ended September 30, 2022, we did not have any customers that represented greater than 10% of our total invoiced ~~sales or~~sales. One customer represented 39% of our accounts receivable at ~~June~~September 30, 2022. This was due to a large volume of equipment purchases from one commercial/industrial customer during the month of September 2022. Credit risk with respect to the balance of trade receivables is generally diversified due to the number of entities comprising ~~our~~the Company’s customer base.
23

Fair Value of Financial Instruments

Fair values of financial instruments included in current assets and current liabilities are estimated to approximate their book values due to the short maturity of such investments.

Interest Rate Risk
OmniMetrix’s Loan and Security Agreement expired in accordance with its terms on February 28, 2021 and we elected not to renew this line of credit. Subsequent to this date, we were not subject to any interest rate risk as of the date of this filing.
25
ITEM 4. CONTROLS AND PROCEDURES

As of the end of the period covered by this report, we carried out an evaluation, under the supervision and with the participation of our management, including the Chief Executive Officer and the Chief Financial Officer, of the design and operation of our disclosure controls and procedures (as such term is defined in Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)). Based on this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were not effective due to material weaknesses noted in our Annual Report on Form 10-K for the year ended December 31, 2021, to ensure that the information required to be disclosed by us in the reports we file or submit under the Exchange Act is (i) accumulated and communicated to our management (including our Chief Executive Officer and Chief Financial Officer) in a timely manner, and (ii) recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms.

As noted in our Annual Report on Form 10-K for the year ended December 31, 2021, we employ a decentralized internal control methodology, coupled with management’s oversight, whereby our OmniMetrix subsidiary is responsible for mitigating its risks to financial reporting by implementing and maintaining effective control policies and procedures and subsequently translating that respective risk mitigation up and through to the parent level and to our external financial statements. In addition, as our operating subsidiary is not large enough to effectively mitigate certain risks by segregating incompatible duties, management must employ compensating mechanisms throughout our company in a manner that is feasible within the constraints in which it operates.

The material weaknesses management identified were caused by an insufficient complement of resources at our OmniMetrix subsidiary and limited IT system capabilities, such that individual control policies and procedures at the subsidiary could not be implemented, maintained, or remediated when and where necessary. As a result, a majority of the significant process areas management identified for our OmniMetrix subsidiary had one or more material weaknesses present.

Changes in Internal Control Over Financial Reporting

There was no change in our internal control over financial reporting (as such term is defined in Rule 13a-15(f) under the Exchange Act) during the quarterly period covered by this report that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

2426

PART II

ITEM 6. EXHIBITS.

10.1* Amended and Restated Consulting Agreement, dated June 1, 2022, by and between the Registrant and Tracy Clifford Consulting, LLC (incorporated by reference to Exhibit 10.1 of the Registrant’s Current Report on Form 10-Q, filed June 1, 2022).
#31.1
~~#31.1~~ Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

#31.2 Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

#32.1 Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

#32.2 Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

#101.1 The following financial statements from Acorn Energy’s Form 10-Q for the quarter ended ~~June~~September 30, 2022, filed on ~~August 12,~~November 10, 2022, formatted in XBRL (eXtensible Business Reporting Language): (i) Condensed Consolidated Balance Sheets, (ii) Condensed Consolidated Statements of Operations, (iii) Condensed Consolidated Statements of Changes in Equity, (iv) Condensed Consolidated Statements of Cash Flows and (v) Notes to Condensed Consolidated Financial Statements, tagged as blocks of text.

*
~~This exhibit includes a management contract, compensatory plan or arrangement in which one or more directors or executive officers of the Registrant participate.~~
# This exhibit is filed or furnished herewith.

2527

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by ~~its principal financial officer~~the undersigned thereunto duly authorized.

ACORN ENERGY, INC.

Dated: ~~August 12,~~November 10, 2022

By: /s/ TRACY S. CLIFFORD
Tracy S. Clifford
Chief Financial Officer

2628

	June 30,
	2022		2021
Cash paid for operating lease liabilities	$	62	$	60

	September 30,
	2022		2021
Cash paid for operating lease liabilities	$	93	$	90

		2022
Weighted average remaining lease terms for operating leases			2.98			~~3.23~~ ~~years~~

	Twelve-month period ended June 30,				Twelve-month period ended September 30,
2023	$	126			$	127
2024		129				129
2025		131				132
2026		33
Total undiscounted cash flows		419				388
Less: Imputed interest		(29	)			(24	)
Present value of operating lease liabilities (a)	$	390		(a)	$	364

	Twelve-month period ended June 30,
2023	$	26
2024		26
2025		26
2026		7
Total undiscounted cash flows	$	85

	Number of Options (in shares)		Weighted Average Exercise Price Per Share		Weighted Average Remaining Contractual Life	Aggregate Intrinsic Value		Number of Options (in shares)		Weighted Average Exercise Price Per Share		Weighted Average Remaining Contractual Life		Aggregate Intrinsic Value
Outstanding at December 31, 2021		833,020	$	0.39	4.7 years	$	291,000		833,020	$	0.39		4.7 years	$	291,000
Granted		145,770		0.55					145,770		0.55
Exercised		—		—					25,000		0.20				6,250
Forfeited or expired		—		—					—		—
Outstanding at June 30, 2022		978,790	$	0.41	4.6 years	$	126,000
Exercisable at June 30, 2022		737,579	$	0.38	4.1 years	$	114,000
Outstanding at September 30, 2022									953,790	$	0.42		4.5 years	$	68,000
Exercisable at September 30, 2022									800,251	$	0.40		4.2 years	$	66,000


Risk-free interest rate	1.8	%
Expected term of options	3.9 years
Expected annual volatility	93.6	%
Expected dividend yield	—	%

	Number of Warrants (in shares)		Weighted Average Exercise Price Per Share		Weighted Average Remaining Contractual Life	Number of Warrants (in shares)		Weighted Average Exercise Price Per Share		Weighted Average Remaining Contractual Life
Outstanding at December 31, 2021		35,000	$	0.13	14.5 months		35,000	$	0.13		14.5 months
Granted		—		—			—		—
Exercised		—		—			—		—
Forfeited or expired		—		—			—		—
Outstanding at June 30, 2022		35,000	$	0.13	8.5 months
Outstanding at September 30, 2022							35,000	$	0.13		5.5 months

	●	The ~~PG (Power Generation)~~Power Generation (“PG”) segment provides wireless remote monitoring and control systems and services for critical assets as well as Internet of Things applications. The PG segment includes OmniMetrix’s monitoring device for industrial air compressors and dryers, and a line of annunciators.

	●	The ~~CP (Cathodic Protection)~~Cathodic Protection (“CP”) segment provides remote monitoring of cathodic protection systems on gas pipelines for gas utilities and pipeline companies.

		PG		CP			Total		PG		CP			Total
Six months ended June 30, 2022:
Revenues from external customers		$	2,825	$	547		$	3,372
Segment gross profit			2,164		340			2,504
Depreciation and amortization			41		8			49
Segment income (loss) before income taxes*	*	$	262	$	(45	)	$	217

Six months ended June 30, 2021:
Nine months ended September 30, 2022:
Revenues from external customers		$	2,837	$	479		$	3,316	$	4,335	$	820		$	5,155
Segment gross profit			2,150		282			2,432		3,256		463			3,719
Depreciation and amortization			32		5			37		72		13			85
Segment income (loss) before income taxes		$	510	$	(17	)	$	493	$	340	$	(103	)	$	237

Three months ended June 30, 2022:
Revenues from external customers		$	1,380	$	241		$	1,621
Segment gross profit			1,091		155			1,246
Depreciation and amortization			24		5			29
Segment income (loss) before income taxes*	*	$	73	$	(24	)	$	49

Three months ended June 30, 2021:
Nine months ended September 30, 2021:
Revenues from external customers		$	1,379	$	232		$	1,611	$	4,283	$	739		$	5,022
Segment gross profit			1,082		140			1,222		3,241		433			3,674
Depreciation and amortization			19		3			22		48		8			21
Segment income (loss) before income taxes		$	234	$	(4	)	$	230	$	774	$	(15	)	$	759

Three months ended September 30, 2022:
Revenues from external customers									$	1,510	$	273		$	1,783
Segment gross profit										1,092		123			1,215
Depreciation and amortization										31		5			36
Segment income (loss) before income taxes									$	78	$	(58	)	$	20

Three months ended September 30, 2021:
Revenues from external customers									$	1,446	$	260		$	1,706
Segment gross profit										1,091		151			1,242
Depreciation and amortization										16		3			19
Segment income before income taxes									$	264	$	2		$	266

	Hardware		Monitoring		Total		Hardware		Monitoring		Total
Six months ended June 30, 2022:
Nine months ended September 30, 2022:
PG Segment	$	1,002	$	1,823	$	2,825	$	1,610	$	2,725	$	4,335
CP Segment		414		133		547		631		189		820
Total Revenue	$	1,416	$	1,956	$	3,372	$	2,241	$	2,914	$	5,155

Balance at December 31, 2021	$	1,513		$	1,513
Additions, net of adjustments, during the period		601			951
Recognized as cost of sales		(484	)		(793	)
Balance at June 30, 2022	$	1,630
Balance at September 30, 2022				$	1,671

Amounts to be recognized as cost of sales in the twelve-month-period ending:
June 30, 2023	$	858
June 30, 2024		581	*
June 30, 2025 and thereafter		191	*
September 30, 2023				$	862
September 30, 2024					611
September 30, 2025 and thereafter					198
	$	1,630		$	1,671

	Six months ended June 30, 2022
	OmniMetrix			Acorn			Total
Revenue	$	3,372		$	—		$	3,372
Cost of sales		868			—			868
Gross profit		2,504			—			2,504
Gross profit margin		74	%					74	%
R&D expense		410			—			410
SG&A expense		1,877			510			2,387
Impairment of software		51			—			51
Operating income (loss)	$	166		$	(510	)	$	(344	)

	Six months ended June 30, 2021									Nine months ended September 30, 2022
	OmniMetrix			Acorn			Total			OmniMetrix			Acorn			Total Continuing Operations
Revenue	$	3,316		$	—		$	3,316		$	5,155		$	—		$	5,155
Cost of sales		884			—			884			1,436			—			1,436
Gross profit		2,432			—			2,432			3,719			—			3,719
Gross profit margin		73	%					73	%		72	%					72	%
R&D expense		353			—			353			637			—			637
SG&A expense		1,581			467			2,048			2,845			740			3,585
Impairment of software											51			—			51
Operating income (loss)	$	498		$	(467	)	$	31		$	186		$	(740	)	$	(554	)

	Three months ended June 30, 2022									Nine months ended September 30, 2021
	OmniMetrix			Acorn			Total			OmniMetrix			Acorn			Total Continuing Operations
Revenue	$	1,621		$	—		$	1,621		$	5,022		$	—		$	5,022
Cost of Sales		375			—			375
Cost of sales											1,348			—			1,348
Gross profit		1,246			—			1,246			3,674			—			3,674
Gross profit margin		77	%					77	%		73	%					73	%
R&D expense		212			—			212			532			—			532
SG&A expense		985			220			1,205			2,379			707			3,086
Impairment of software		51			—			51
Operating loss	$	(2	)	$	(220	)	$	(222	)
Operating income (loss)										$	763		$	(707	)	$	56

	Three months ended June 30, 2021									Three months ended September 30, 2022
	OmniMetrix			Acorn			Total			OmniMetrix			Acorn			Total Continuing Operations
Revenue	$	1,611		$	—		$	1,611		$	1,783		$	—		$	1,783
Cost of Sales		389			—			389
Cost of sales											568			—			568
Gross profit		1,222			—			1,222			1,215			—			1,215
Gross profit margin		76	%					76	%		68	%					68	%
R&D expense		175			—			175			227			—			227
SG&A expense		816			226			1,042			968			230			1,198
Operating income (loss)	$	231		$	(226	)	$	5		$	20		$	(230	)	$	(210	)

	Three months ended September 30, 2021
	OmniMetrix			Acorn			Total Continuing Operations
Revenue	$	1,706		$	—		$	1,706
Cost of Sales		464			—			464
Gross profit		1,242			—			1,242
Gross profit margin		73	%					73	%
R&D expense		179			—			179
SG&A expense		798			240			1,038
Operating income (loss)	$	265		$	(240	)	$	25

	●	Power Generation (“PG”) monitoring. OmniMetrix’s PG activities provide wireless remote monitoring and control systems and services for critical assets as well as Internet of Things applications. The PG segment includes our monitoring device for industrial air compressors and dryers, and a line of annunciators.

	●	Cathodic Protection (“CP”) monitoring. OmniMetrix’s CP segment provides remote monitoring of cathodic protection systems on gas pipelines for gas utilities and pipeline companies.

	Three months ended June 30,															Three months ended September 30,
	2022						2021						Change			2022						2021						Change
	($,000)			% of revenues			($,000)			% of revenues			from 2021 to 2022			($,000)			% of revenues			($,000)			% of revenues			from 2021 to 2022
Revenue	$	1,621			100	%	$	1,611			100	%		1	%	$	1,783			100	%	$	1,706			100	%		5	%
Cost of sales		375			23	%		389			24	%		(4	)%		568			32	%		464			27	%		22	%
Gross profit		1,246			77	%		1,222			76	%		2	%		1,215			68	%		1,242			73	%		(2	)%
R&D expense		212			13	%		175			11	%		21	%		227			13	%		179			10	%		27	%
SG&A expense		1,205			74	%		1,042			65	%		16	%		1,198			67	%		1,038			61	%		15	%
Impairment of software		51			3	%		—			—	%		100	%
Operating (loss) income		(222	)		(14	)%		5			*	%		(4,540	)%
Operating income (loss)																	(210	)		(12	)%		25			1	%		(940	)%
Finance expense, net		(1	)		—	%		(1	)		*	%		—	%		—			—	%		%—			—	%		—	%
(Loss) Income before income taxes		(223	)		(14	)%		4			*	%		(5,675	)%
Income (loss) before income taxes																	(210	)		(12	)%		25			1	%		(940	)%
Income tax expense		—			—	%		—			—	%		—	%		—			—	%		—			—	%		—	%
Net (loss) income		(223	)		(14	)%		4			*	%		(5,675	)%
Non-controlling interest share of net (loss) income		**			*	%		(2	)		*	%		(100	)%
Net (loss) income attributable to Acorn Energy, Inc.	$	(223	)		(14	)%	$	2			*	%		(11,450	)%
Net income (loss)																	(210	)		(12	)%		25			1	%		(940	)%
Non-controlling interests share of net income																	**			—	%		(2	)		*	%		(100	)%
Net income (loss) attributable to Acorn Energy, Inc.																$	(210	)		(12	)%	$	23			1	%		(1,013	)%

	Twelve Month Periods Ending June 30, (in thousands)										Twelve Month Periods Ending September 30, (in thousands)
	Total		2023		2024-2025		2026-2027		2028 and thereafter		Total		2023		2024-2025		2026-2027		2028 and thereafter
Software agreements	$	17	$	17	$	—	$	—	$	—	$	13	$	13	$	—	$	—	$	—
Operating leases		419		126		260		33		—		388		127		261		—		—
Contractual services		13		8		5		—		—		11		8		3		—		—
Total contractual cash obligations	$	449	$	151	$	265	$	33	$	—	$	412	$	148	$	264	$	—	$	—

10.1*	Amended and Restated Consulting Agreement, dated June 1, 2022, by and between the Registrant and Tracy Clifford Consulting, LLC (incorporated by reference to Exhibit 10.1 of the Registrant’s Current Report on Form 10-Q, filed June 1, 2022).
#31.1
~~#31.1~~	Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

#31.2	Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

#32.1	Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

#32.2	Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

#101.1	The following financial statements from Acorn Energy’s Form 10-Q for the quarter ended ~~June~~September 30, 2022, filed on ~~August 12,~~November 10, 2022, formatted in XBRL (eXtensible Business Reporting Language): (i) Condensed Consolidated Balance Sheets, (ii) Condensed Consolidated Statements of Operations, (iii) Condensed Consolidated Statements of Changes in Equity, (iv) Condensed Consolidated Statements of Cash Flows and (v) Notes to Condensed Consolidated Financial Statements, tagged as blocks of text.

*	~~This exhibit includes a management contract, compensatory plan or arrangement in which one or more directors or executive officers of the Registrant participate.~~
#	This exhibit is filed or furnished herewith.

	ACORN ENERGY, INC.

Dated: ~~August 12,~~November 10, 2022

	By:	/s/ TRACY S. CLIFFORD
		Tracy S. Clifford
		Chief Financial Officer