8-K
ACORN ENERGY, INC. (ACFN)
UNITED STATES
SECURITIESAND EXCHANGE COMMISSION
Washington,D.C. 20549
FORM8-K
CURRENTREPORT
PURSUANTTO SECTION 13 OR 15(d) OF THE
SECURITIESEXCHANGE ACT OF 1934
Dateof Report (Date of earliest event reported) March 16, 2021
ACORNENERGY, INC.
(Exactname of Registrant as Specified in its Charter)
| Delaware | 001-33886 | 22-2786081 |
|---|---|---|
| (State<br> or Other Jurisdiction<br><br> <br>of<br> Incorporation) | (Commission<br><br> <br>file<br> Number) | (IRS<br> Employer<br><br> <br>Identification<br> No.) |
| 1000<br> N West St., Suite 1200, Wilmington, Delaware | 19801 | |
| --- | --- | |
| (Address<br> of Principal Executive Offices) | (Zip<br> Code) |
Registrant’s telephone number, including area code (410) 654-3315
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| [ ] | Written<br> communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
|---|---|
| [ ] | Soliciting<br> material pursuant to Rule 14a-2 under the Exchange Act (17 CFR 240.14a-2) |
| [ ] | Pre-commencement<br> communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| [ ] | Pre-commencement<br> communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Securities registered pursuant to Section 12(b) of the Act:
| Title<br> of each class | Trading<br> Symbol(s) | Name<br> of each exchange on which registered |
|---|---|---|
| None |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
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. [ ]
Item2.02 Results of Operations and Financial Condition.
On March 16, 2021, the Registrant issued a press release announcing its 2020 fourth quarter and full year results. The press release is attached as Exhibit 99.1 hereto.
Item9.01 Financial Statements and Exhibits.
(d)Exhibits
99.1 Press Release of Acorn Energy, Inc., dated March 16, 2021
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 the undersigned hereunto duly authorized on this 16th day of March, 2021.
| ACORN<br> ENERGY, INC. | |
|---|---|
| By: | /s/ Tracy S. Clifford |
| Name: | Tracy<br> S. Clifford |
| Title: | Chief<br> Financial Officer |
Exhibit99.1
Internetof Things (IoT) Solutions Provider Acorn Achieves Q4 Net Income
andPositive Operating Cash Flow for Q4 & FY 2020;
HostsInvestor Call Today 11am ET
Wilmington,DE – March 16, 2021 – Acorn Energy, Inc. (OTCQB: ACFN), a provider of Internet of Things (IoT) remote monitoring and control solutions for stand-by generators, gas pipelines, air compressors and other industrial equipment through its OmniMetrix subsidiary, today announced results for its fourth quarter (Q4’20) and full year ended December 31, 2020. Acorn will host an investor call today at 11:00 a.m. ET to discuss its results and outlook (details below).
Jan Loeb, Acorn’s CEO, commented, “Despite significant business challenges posed by COVID-19, Acorn was able to achieve operating profitability on a consolidated basis in the fourth quarter and positive cash flow for the quarter and full year. Going forward, we believe Acorn is on track to achieve our long-standing goal of profitability and positive cash flow on a consolidated basis in fiscal 2021 and beyond. Importantly, Acorn has nearly $70 million of net operating loss carryforward tax assets (NOLs) which will largely shield future income from taxes, thereby positively impacting our future cash flows.
“While business development efforts were severely constrained by the pandemic during 2020, the strength of our value proposition and business model enabled Acorn to achieve year-over-year revenue growth on a GAAP basis and maintain sales at 2019 levels on a cash basis. In addition we were also successful in further strengthening our gross margin to 69.8% in FY 2020 from 65.4% in FY 2019, based on margin improvements in both monitoring and hardware revenue.
“We believe we are well positioned to achieve further top-line and bottom-line growth in our business in fiscal 2021 as business conditions gradually return to a more normalized state. Late in 2020, we began reengaging in sales dialogues with larger companies that had halted in person meetings for much of the year. We also recently added two new sales engineers to support business development efforts in both our PG and CP segment, and we expect the momentum of business activity to build as the impact of the pandemic subsides.
“Our growth and technology leadership is also supported by new product launches, which during 2020 included our Smart Annunciator solution that provides status updates on critical electrical systems and our upgraded OmniPro data management software used for pipeline corrosion protection. We continue to invest in new product development and expect to have additional new product enhancements and launches during 2021.
“We substantially strengthened our financial position during 2020, increasing cash by $816,000 to over $2 million at year end, reflecting $464,000 in operating cash flow and net Paycheck Protection Program (“PPP”) loan proceeds of $421,000, partially offset by some investments into the business. Our strengthened balance sheet provides a solid foundation to advance the company and to consider value-enhancing growth opportunities.
“Fortunately, our business has proven to be very resilient over the past year. We believe this strength is due to the value and ROI that remote monitoring solutions deliver versus labor-intensive alternatives. Our clear value proposition, combined with continued low levels of penetration for industrial monitoring and the overall Internet of Things (“IoT”) network, give us confidence in the long term growth opportunities for our business. We continue to target average annual revenue growth of 20% and expect to return to a trajectory more in line with that goal in 2021.”
OmniMetrixSummary Financial Results
| ($ in thousands) | 2020 | 2019 | Change | ||||||
|---|---|---|---|---|---|---|---|---|---|
| Monitoring revenue | $ | 3,819 | $ | 3,327 | 14.8 | % | |||
| Hardware revenue | $ | 2,103 | $ | 2,163 | -2.8 | % | |||
| Total revenue | $ | 5,922 | $ | 5,490 | 7.9 | % | |||
| Gross profit | $ | 4,131 | $ | 3,590 | 15.1 | % | |||
| Gross margin | 69.8 | % | 65.4 | % |
All of Acorn’s revenue currently derives from its 99%-owned operating subsidiary, OmniMetrix.
OmniMetrix revenue grew 8% to $5.9M in 2020 from $5.5M in 2019, attributed primarily to a 15% increase in monitoring revenue, offset by a 3% decrease in hardware revenue. Monitoring revenue growth reflects an increase in the number of units being monitored; whereas the decline in hardware sales principally reflects business development disruptions caused by COVID-19 with the most significant negative impact occurring in the corrosion protection (CP) segment where the customer base is large corporations. Revenue in Q4’20 was 14% higher than Q4’19 revenue as a result of increases in both monitoring and hardware revenue. In accordance with GAAP, hardware sales are deferred and recognized to revenue over the estimated life of the unit (three years); thus, 2020 revenue includes amortization of hardware sales made in the prior twenty-four months as well.
Gross profit grew 15% in 2020, driven by a greater percentage of total revenue from monitoring, which has a higher gross margin, and due to a change in the product mix. Gross margin on hardware increased to 44% in 2020 from 38% in 2019, due to reduced costs on new power generation (PG) products and a more cost efficient CP product mix. Gross margin on monitoring revenue remained strong at 84% in both 2020 and 2019. In Q4’20, gross profit grew 17% to $1,110,000 vs. $946,000 in Q4’19 and gross margin had a nominal increase to 69% from 68% in Q4’19.
OmniMetrix’s total operating expense increased 4% to $3,551,000 from $3,413,000 in 2019, principally due to a $60,000 or 11% increase in research and development (“R&D”) expense and a $79,000 or 3% increase in selling, general and administrative (“SG&A”) expenses. The increase in R&D expense was for the continued development of next generation products and the exploration of possible new product lines. OmniMetrix’s Q4’20 total operating expenses increased 4% to $888,000 from $857,000 in Q4’19.
Management expects a moderate increase in R&D expense in 2021 as OmniMetrix continues to work on certain initiatives to redesign products and expand product lines to build on its technology leadership and support market share gains. Management anticipates that SG&A costs will increase approximately 15% in 2021 due to having a fully staffed and expanded sales team and continued investments in technology and operations.
OmniMetrix generated operating income of $580,000 in 2020 versus operating income of $177,000 in 2019, principally due to increased revenue combined with gross margin expansion, partially offset by modestly higher operating expenses. OmniMetrix’s Q4’20 operating income increased to $222,000, compared to $89,000 in Q4’19.
AcornConsolidated Financial Results
For the year, Acorn’s corporate SG&A costs increased by $14,000 (2%) to $890,000 in 2020, principally due to higher professional fees. In Q4’20, corporate SG&A was $213,000 vs. $197,000 in Q4’19, also relating to higher professional fees.
Acorn recognized a gain of $421,000 in Q4’20 and the full year 2020 on the extinguishment of OmniMetrix’s PPP loan, pursuant to the loan’s terms. Including the PPP gain, net income attributable to Acorn shareholders improved to $69,000, or $0.00 per share, in 2020, as compared to a net loss of $618,000, or ($0.02) per share, in 2019. The non-controlling interest share of net income was $7,000 for 2020 compared to a share of net loss of $29,000 for 2019. Q4’20 net income attributable to Acorn shareholders improved to $417,000, or $0.01 per share, from a net loss of $61,000, or $0.00 per share in Q4’19. The non-controlling interest share of net income for Q4’20 was $6,000 compared to zero for Q4’19. Excluding the gain from the PPP extinguishment, Acorn would have recorded consolidated Q4’20 net income before non-controlling interest of $2,000.
Liquidityand Capital Resources
Cash generated from operating activities improved to $464,000 in 2020, including $164,000 generated in Q4, which compares to a use of cash of $1.2M in 2019, including a use of $288,000 in Q4’19.
At December 31, 2020, consolidated cash and cash equivalents increased to $2,063,000 from $1,247,000 at December 31, 2019. The increase of $816,000, is mainly due to cash generated from operating activities plus net proceeds from PPP loans, partially offset by investments in the business.
OmniMetrix’s outstanding balance on its receivables-based line of credit as of December 31, 2020 was $149,000, as compared to $136,000 at December 31, 2019. This line was paid off and management elected not to renew the credit line but rather allowed it to expire in accordance with its terms on February 28, 2021. Acorn believes the Company’s current cash and expected cash flow from operations provides sufficient liquidity to finance the company’s existing operations for the foreseeable future.
The continuing global impact of COVID-19 remains an uncertainty. The Company’s operations could be materially affected by a lingering pandemic, including a material adverse impact on the Company’s financial position, operations and cash flows. Possible effects may include, but are not limited to, disruption to the Company’s customers and revenue, absenteeism in the Company’s labor workforce, and supply chain disruption.
ConferenceCall Details
| Date/Time: | Tuesday,<br> March 16th at 11:00 am ET |
|---|---|
| Dial-in Number: | 1-844-834-0644 or 1-412-317-5190 (Int’l) |
| Online Replay/Transcript: | Audio<br> file and call transcript will be posted to the |
| Investor<br> section of Acorn’s website when available. | |
| Submit Questions via Email: | acfn@catalyst-ir.com<br> – before or after the call. |
AboutAcorn (www.acornenergy.com) and OmniMetrix^TM^ (www.omnimetrix.net)
Acorn Energy, Inc. owns a 99% equity stake in OmniMetrix, a pioneer and leader in machine-to-machine (M2M) and Internet of Things (IoT) wireless remote monitoring and control solutions for stand-by power generators, gas pipelines, air compressors and other industrial equipment. OmniMetrix’s proven, cost-effective solutions make critical systems more reliable. The company monitors tens of thousands of assets for customers, which include 25 Fortune/Global 500 companies. In addition to residential generators, OmniMetrix solutions monitor critical equipment used by cell towers, manufacturing plants, medical facilities, data centers, retail stores, public transportation systems, energy distribution and federal, state and municipal government facilities.
SafeHarbor Statement
This press release includes forward-looking statements, which are subject to risks and uncertainties. There is no assurance that Acorn will be successful in growing its business, reaching profitability, or maximizing the value of its operating company and other assets. A complete discussion of the risks and uncertainties that may affect Acorn Energy’s business, including the business of its subsidiary, is included in “Risk Factors” in the Company’s most recent Annual Report on Form 10-K as filed by the Company with the Securities and Exchange Commission.
Followus
Twitter: @Acorn_IR and @OmniMetrix
InvestorRelations Contacts
Catalyst IR
William Jones, 267-987-2082
David Collins, 212-924-9800
acfn@catalyst-ir.com
ACORNENERGY, INC. AND SUBSIDIARIES
CONDENSEDCONSOLIDATED STATEMENTS OF OPERATIONS
(INTHOUSANDS, EXCEPT PER SHARE DATA)
| Year ended<br> <br>December 31, | Three months ended<br> <br>December 31, | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2020 | 2019 | 2020 | 2019 | |||||||||
| Revenue | $ | 5,922 | $ | 5,490 | $ | 1,599 | $ | 1,400 | ||||
| Cost of sales | 1,791 | 1,900 | 489 | 454 | ||||||||
| Gross profit | 4,131 | 3,590 | 1,110 | 946 | ||||||||
| Operating expenses: | ||||||||||||
| Research and development expenses | 619 | 559 | 166 | 139 | ||||||||
| Selling, general and administrative expenses | 3,822 | 3,730 | 935 | 915 | ||||||||
| Total operating expenses | 4,441 | 4,289 | 1,101 | 1,054 | ||||||||
| Operating income (loss) | (310 | ) | (699 | ) | 9 | (108 | ) | |||||
| Finance expense, net | (35 | ) | 2 | (7 | ) | (3 | ) | |||||
| Gain on SBA PPP loan extinguishment | 421 | — | 421 | |||||||||
| Income (loss) before income taxes | 76 | (697 | ) | 423 | (111 | ) | ||||||
| Income tax expense | — | — | — | — | ||||||||
| Net income (loss) after income taxes | 76 | (697 | ) | 423 | (111 | ) | ||||||
| Gain on sale of interest in DSIT, net of transaction costs | — | 50 | — | 50 | ||||||||
| Net income (loss) | 76 | (647 | ) | 423 | (61 | ) | ||||||
| Non-controlling interest share of (income) loss | (7 | ) | 29 | (6 | ) | — | ||||||
| Net income (loss) attributable to Acorn Energy, Inc. shareholders | $ | 69 | $ | (618 | ) | $ | 417 | $ | (61 | ) | ||
| Basic and diluted net income (loss) per share attributable to Acorn Energy, Inc. shareholders: | ||||||||||||
| Net income (loss) per share attributable to Acorn Energy, Inc. shareholders – basic and diluted | $ | 0.00 | $ | (0.02 | ) | $ | 0.01 | $ | (0.00 | ) | ||
| Weighted average number of shares outstanding attributable to Acorn Energy, Inc. shareholders – basic | 39,674 | 35,495 | 39,688 | 39,591 | ||||||||
| Weighted average number of shares outstanding attributable to Acorn Energy, Inc. shareholders – diluted | 39,713 | 35,495 | 39,766 | 39,591 |
ACORNENERGY, INC. AND SUBSIDIARIES
CONSOLIDATEDBALANCE SHEETS
(INTHOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
| 2019 | |||||
| ASSETS | |||||
| Current assets: | |||||
| Cash | 2,063 | $ | 1,247 | ||
| Accounts receivable, net | 608 | 962 | |||
| Inventory, net | 236 | 291 | |||
| Other current assets | 126 | 189 | |||
| Deferred charges | 764 | 741 | |||
| Total current assets | 3,797 | 3,430 | |||
| Property and equipment, net | 268 | 189 | |||
| Right-of-use assets, net | 494 | 587 | |||
| Other assets | 642 | 778 | |||
| Total assets | 5,201 | $ | 4,984 | ||
| LIABILITIES AND DEFICIT | |||||
| Current liabilities: | |||||
| Short-term bank credit | 149 | $ | 136 | ||
| Accounts payable | 229 | 197 | |||
| Accrued expenses | 168 | 136 | |||
| Deferred revenue | 3,214 | 3,004 | |||
| Current operating lease liabilities | 99 | 53 | |||
| Other current liabilities | 33 | 68 | |||
| Total current liabilities | 3,892 | 3,594 | |||
| Long-term liabilities: | |||||
| Deferred revenue | 1,340 | 1,491 | |||
| Noncurrent operating lease liabilities | 443 | 542 | |||
| Other long-term liabilities | 45 | 2 | |||
| Total long-term liabilities | 1,828 | 2,035 | |||
| Commitments and contingencies | |||||
| Deficit: | |||||
| Acorn Energy, Inc. shareholders | |||||
| Common stock - 0.01 par value per share: | |||||
| Authorized – 42,000,000 shares; Issued – 39,687,589 and 39,591,339 shares at December 31, 2020 and 2019, respectively | 397 | 396 | |||
| Additional paid-in capital | 102,726 | 101,655 | |||
| Warrants | 3 | 1,021 | |||
| Accumulated deficit | (100,613 | ) | (100,682 | ) | |
| Treasury stock, at cost – 801,920 shares at December 31, 2020 and 2019 | (3,036 | ) | (3,036 | ) | |
| Total Acorn Energy, Inc. shareholders’ deficit | (523 | ) | (646 | ) | |
| Non-controlling interests | 4 | 1 | |||
| Total deficit | (519 | ) | (645 | ) | |
| Total liabilities and deficit | 5,201 | $ | 4,984 |
All values are in US Dollars.
ACORNENERGY, INC. AND SUBSIDIARIES
CONSOLIDATEDSTATEMENTS OF CASH FLOWS
(INTHOUSANDS)
| 2019 | |||||
| Cash flows provided by (used in) operating activities: | |||||
| Net income (loss) | 76 | $ | (647 | ) | |
| Depreciation and amortization | 22 | 56 | |||
| Non-cash lease expense | 118 | 28 | |||
| Gain on sale of investment in DSIT, net of income taxes and transaction costs | — | (50 | ) | ||
| Forgiveness of SBA PPP loan | (421 | ) | — | ||
| Stock-based compensation | 35 | 22 | |||
| Professional fees paid in common stock | — | 18 | |||
| Change in operating assets and liabilities: | |||||
| Decrease (increase) in accounts receivable | 354 | (297 | ) | ||
| Decrease (increase) in inventory | 55 | (30 | ) | ||
| Increase in deferred charges, other current assets and other assets | 176 | 24 | |||
| Increase in deferred revenue | 59 | 434 | |||
| Decrease in amounts due to former directors | — | (323 | ) | ||
| Increase in operating lease liability | (78 | ) | (47 | ) | |
| Increase (decrease) in accounts payable, accrued expenses, other current liabilities and non-current liabilities | 68 | (409 | ) | ||
| Net cash provided by (used in) operating activities | 464 | (1,221 | ) | ||
| Cash flows used in investing activities: | |||||
| Purchases of software | (93 | ) | (162 | ) | |
| Payments made for patent filings | (8 | ) | (3 | ) | |
| Purchase of non-controlling interest in OmniMetrix | — | (950 | ) | ||
| Net cash provided by (used in) investing activities | (101 | ) | (1,115 | ) | |
| Cash flows provided by financing activities: | |||||
| Short-term credit, net | 13 | 136 | |||
| Proceeds from rights offering, net of expenses of 208 | — | 2,184 | |||
| Proceeds from SBA PPP loans, net of repayments | 421 | — | |||
| Stock option exercise proceeds | 19 | — | |||
| Net cash provided by financing activities | 453 | 2,320 | |||
| Net increase (decrease) in cash, cash equivalents and restricted cash | 816 | (16 | ) | ||
| Cash, cash equivalents and restricted cash at the beginning of the year | 1,247 | 1,263 | |||
| Cash, cash equivalents and restricted cash at the end of the year | 2,063 | $ | 1,247 |
All values are in US Dollars.