ACFN 10-Q
Acorn Energy, Inc. (ACFN)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
SECURITIES EXCHANGE ACT OF 1934
For
the quarterly period ended
or
SECURITIES EXCHANGE ACT OF 1934
For the transition period from _____ to _____
Commission
file number:
(Exact name of registrant as specified in its charter)
(State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) |
| (Address of principal executive offices) | (Zip Code) |
(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 | ||
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.
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).
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 ☐ | |
| 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 4, 2026 | |
| Common Stock, $ par value per share |
ACORN ENERGY, INC.
Quarterly Report on Form 10-Q
for the Quarterly Period Ended June 30, 2026
TABLE OF CONTENTS
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.
| 2 |
PART I
| ITEM 1. | UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS |
ACORN ENERGY, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
As of June 30, 2026 | As of December 31, 2025 | |||||||
| (Unaudited) | ||||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash | $ | $ | ||||||
| Accounts receivable, net | ||||||||
| Inventory | ||||||||
| Other current assets | ||||||||
| State income tax receivable | ||||||||
| Deferred cost of goods sold (COGS) | ||||||||
| Total current assets | ||||||||
| Property and equipment, net | ||||||||
| Intangibles, net | ||||||||
| Right-of-use assets, net | ||||||||
| Other assets | ||||||||
| Deferred tax assets | ||||||||
| Total assets | $ | $ | ||||||
| LIABILITIES AND EQUITY | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | $ | ||||||
| Accrued expenses | ||||||||
| Deferred revenue | ||||||||
| Current operating lease liabilities | ||||||||
| Other current liabilities | ||||||||
| State income tax payable | ||||||||
| Total current liabilities | ||||||||
| Long-term liabilities: | ||||||||
| Deferred revenue | ||||||||
| Noncurrent operating lease liabilities | ||||||||
| Other long-term liabilities | ||||||||
| Total liabilities | ||||||||
| Commitments and contingencies (Note 8) | ||||||||
| Equity: | ||||||||
| Acorn Energy, Inc. stockholders | ||||||||
| Common stock - $ par value per share: Authorized - shares; issued - at June 30, 2026 and at December 31, 2025; outstanding - at June 30, 2026 and at December 31, 2025 | ||||||||
| Additional paid-in capital | ||||||||
| Accumulated stockholders’ deficit | ( | ) | ( | ) | ||||
| Treasury stock, at cost – shares at June 30, 2026 and December 31, 2025 | ( | ) | ( | ) | ||||
| Total Acorn Energy, Inc. stockholders’ equity | ||||||||
| Non-controlling interests | ||||||||
| Total equity | ||||||||
| Total liabilities and equity | $ | $ | ||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
| 3 |
ACORN ENERGY, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED) (IN THOUSANDS, EXCEPT PER SHARE DATA)
Six months ended June 30, | Three months ended June 30, | |||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Revenue | $ | $ | $ | $ | ||||||||||||
| COGS | ||||||||||||||||
| Gross profit | ||||||||||||||||
| Operating expenses: | ||||||||||||||||
| Research and development (R&D) expenses | ||||||||||||||||
| Selling, general and administrative (SG&A) expenses | ||||||||||||||||
| Total operating expenses | ||||||||||||||||
| Operating income | ||||||||||||||||
| Interest income, net | ||||||||||||||||
| Income before income taxes | ||||||||||||||||
| Provision for income taxes | ||||||||||||||||
| Net income | ||||||||||||||||
| Non-controlling interest share of income | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Net income attributable to Acorn Energy, Inc. stockholders | $ | $ | $ | $ | ||||||||||||
| Net income per share attributable to Acorn Energy, Inc stockholders – basic and diluted | ||||||||||||||||
| Basic | $ | $ | $ | $ | ||||||||||||
| Diluted | $ | $ | $ | $ | ||||||||||||
| Weighted average number of shares outstanding attributable to Acorn Energy, Inc. stockholders – basic and diluted | ||||||||||||||||
| Basic | ||||||||||||||||
| Diluted | ||||||||||||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
| 4 |
ACORN ENERGY, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
(UNAUDITED) (IN THOUSANDS)
| Three and Six Months Ended June 30, 2026 | ||||||||||||||||||||||||||||||||||||
Number of Shares Outstanding | Common Stock | Additional Paid-In Capital | Accumulated Deficit | Number of Treasury Shares | Treasury Stock | Total Acorn Energy, Inc. Stockholders’ Equity | Non- controlling interests | Total Equity | ||||||||||||||||||||||||||||
| Balances as of December 31, 2025 | $ | $ | $ | ( | ) | $ | ( | ) | $ | $ | $ | |||||||||||||||||||||||||
| Net loss | — | ( | ) | — | ( | ) | ( | ) | ||||||||||||||||||||||||||||
| Stock option exercises | * | — | ||||||||||||||||||||||||||||||||||
| Accrued dividend in OmniMetrix preferred shares | — | — | ( | ) | ( | ) | ||||||||||||||||||||||||||||||
| Stock-based compensation | — | — | ||||||||||||||||||||||||||||||||||
| Balances as of March 31, 2026 | $ | $ | $ | ( | ) | $ | ( | ) | $ | $ | $ | |||||||||||||||||||||||||
| Net income | — | — | ||||||||||||||||||||||||||||||||||
| Stock option exercises | * | * | — | |||||||||||||||||||||||||||||||||
| Accrued dividend in OmniMetrix preferred shares | — | — | ( | ) | ( | ) | ||||||||||||||||||||||||||||||
| Stock-based compensation | — | — | ||||||||||||||||||||||||||||||||||
| Balances as of June 30, 2026 | $ | $ | $ | ( | ) | $ | ( | ) | $ | $ | $ | |||||||||||||||||||||||||
| Three and Six Months Ended June 30, 2025 | ||||||||||||||||||||||||||||||||||||
Number of Shares Outstanding | Common Stock | Additional Paid-In Capital | Accumulated Deficit | Number of Treasury Shares | Treasury Stock | Total Acorn Energy, Inc. Stockholders’ Equity | Non- controlling interests | Total Equity | ||||||||||||||||||||||||||||
| Balances as of December 31, 2024 | $ | $ | $ | ( | ) | $ | ( | ) | $ | $ | $ | |||||||||||||||||||||||||
| Net income | — | — | ||||||||||||||||||||||||||||||||||
| Accrued dividend in OmniMetrix preferred shares | — | — | ( | ) | ( | ) | ||||||||||||||||||||||||||||||
| Stock-based compensation | — | — | ||||||||||||||||||||||||||||||||||
| Balances as of March 31, 2025 | $ | $ | $ | ( | ) | $ | ( | ) | $ | $ | $ | |||||||||||||||||||||||||
| Net income | — | — | ||||||||||||||||||||||||||||||||||
| Stock option exercises | * | — | ||||||||||||||||||||||||||||||||||
| Accrued dividend in OmniMetrix preferred shares | — | — | ( | ) | ( | ) | ||||||||||||||||||||||||||||||
| Stock-based compensation | — | — | ||||||||||||||||||||||||||||||||||
| Balances as of June 30, 2025 | $ | $ | $ | ( | ) | $ | ( | ) | $ | $ | $ | |||||||||||||||||||||||||
| * |
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
| 5 |
ACORN ENERGY, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED) (IN THOUSANDS)
| Six months ended June 30, | ||||||||
| 2026 | 2025 | |||||||
| Cash flows provided by operating activities: | ||||||||
| Net income | $ | $ | ||||||
| Depreciation and amortization | ||||||||
| Deferred income tax expense | ||||||||
| Decrease in the provision for credit losses | ( | ) | ||||||
| Impairment of inventory | ||||||||
| Non-cash lease expense | ||||||||
| Stock-based compensation | ||||||||
| Change in operating assets and liabilities: | ||||||||
| Increase in accounts receivable | ( | ) | ( | ) | ||||
| Decrease (increase) in inventory | ( | ) | ||||||
| Decrease in deferred COGS | ||||||||
| (Increase) decrease in other current assets and other assets | ( | ) | ||||||
| Decrease in state income tax receivable | ||||||||
| Decrease in deferred revenue | ( | ) | ( | ) | ||||
| Decrease in operating lease liability | ( | ) | ( | ) | ||||
| (Decrease) increase in state income tax payable | ( | ) | ||||||
| (Decrease) increase in accounts payable, accrued expenses, other current liabilities and non-current liabilities | ( | ) | ||||||
| Net cash provided by operating activities | ||||||||
| Cash flows used in investing activities: | ||||||||
| Equipment, furniture and trade show booth purchases | ( | ) | ( | ) | ||||
| Payment for exclusive distribution and commercialization rights | ( | ) | ||||||
| Patents | ( | ) | ||||||
| Investments in technology | ( | ) | ( | ) | ||||
| Leasehold improvements | ( | ) | ||||||
| Net cash used in investing activities | ( | ) | ( | ) | ||||
| Cash flows provided by financing activities: | ||||||||
| Stock option exercise proceeds | ||||||||
| Net cash provided by financing activities | ||||||||
| Net increase in cash | ||||||||
| Cash at the beginning of the period | ||||||||
| Cash at the end of the period | $ | $ | ||||||
| Supplemental cash flow information: | ||||||||
| Cash paid during the year for: | ||||||||
| Income taxes | $ | $ | ||||||
| Non-cash investing and financing activities: | ||||||||
| Right-of-use assets | $ | $ | ||||||
| Operating lease liability | ||||||||
| Accrued preferred dividends to former CEO of OmniMetrix | $ | $ | ||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
| 6 |
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. (“Acorn”) and its subsidiaries, OmniMetrix, LLC (“OmniMetrix”) and OMX Holdings, Inc. (collectively, with Acorn and OmniMetrix, “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. The December 31, 2025 consolidated balance sheet data were derived from audited financial statements but do not include all disclosures required by accounting principles generally accepted in the United States of America. 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- and three-month periods ended June 30, 2026 and 2025 are not necessarily indicative of the results that may be expected for the year ending December 31, 2026.
All dollar amounts, except per share data, are rounded to the nearest thousand; thus, they 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, 2025, filed with the Securities and Exchange Commission on March 5, 2026.
NOTE 2—ACCOUNTING POLICIES
Use of Estimates in Preparation of Financial Statements
The preparation of 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 consolidated financial statements, and the reported amounts of revenues and expenses during the reporting periods.
As applicable to these unaudited consolidated financial statements, the most significant estimates and assumptions relate to uncertainties with respect to valuation allowance.
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 $
| 7 |
Inventory
Inventories are comprised of components (raw materials) and finished goods, which are measured at the lower of cost or net realizable value.
Raw materials inventory is generally comprised of radios, cables, antennas, and electrical components. Finished goods inventory consists of fully assembled systems ready for final shipment to the customer. Costs are determined at cost of acquisition on a weighted average basis and include all outside production and applicable shipping costs.
All inventories are periodically reviewed to identify slow-moving and obsolete inventory. Management conducts an assessment at the end of each reporting period of the Company’s inventory reserve and writes off any inventory items that are deemed obsolete.
Management
conducted an assessment and wrote off inventory deemed obsolete valued at $
Intangibles
The Company’s intangible assets are subject to amortization and are amortized over the estimated useful life in proportion to the economic benefits received. The Company evaluates the recoverability of intangible assets periodically by considering events or circumstances that may warrant revised estimates of useful lives or that indicate the asset may be impaired.
Revenue Recognition
The Company’s revenue recognition policy is consistent with applicable revenue recognition guidance and interpretations. The core principle of ASC 606 is to recognize revenue when promised goods or services are transferred to customers in an amount that reflects the consideration that is expected to be received for those goods or services. ASC 606 defines a five-step process to achieve this core principle, which includes: (1) identifying contracts with customers, (2) identifying performance obligations within those contracts, (3) determining the transaction price, (4) allocating the transaction price to the performance obligation in the contract, which may include an estimate of variable consideration, and (5) recognizing revenue when or as each performance obligation is satisfied. The Company assesses whether payment terms are customary or extended in accordance with normal practice relative to the market in which the sale is occurring. The Company’s sales arrangements generally include standard payment terms. These terms effectively relate to all customers, products, and arrangements regardless of customer type, product mix or arrangement size. See Note 12 - Revenue, for further discussion.
Product revenues are recognized at the point in time when control of the product is transferred to the customer, which typically occurs upon shipment or delivery except to the one customer under the Material Contract for which this occurs upon acceptance. To determine when control has transferred, the Company considers if there is a present right to payment and if legal title, physical possession, and the significant risks and rewards of ownership of the asset has transferred to the customer. Revenue from the prepayment of monitoring fees (generally paid twelve months in advance) are recorded as deferred revenue upon receipt of payment from the customer and then amortized to revenue over the monitoring service period. This method provides a faithful depiction of the transfer of services as it aligns the recognition of revenue with the period in which the monitoring services are provided. By deferring the revenue and recognizing it over the service period, the financial statements accurately reflect the Company’s performance and obligations to its customers. See Notes 11 and 12 for the disaggregation of the Company’s revenue for the periods presented.
Any sales tax, value added tax, and other tax the Company collects concurrent with revenue producing activities are excluded from revenue.
| 8 |
Income Taxes
The Company accounts for income taxes under the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the consolidated financial statements. Under this method, the company determines deferred tax assets and liabilities on the basis of the differences between the financial statement and the tax bases of assets and liabilities by using enacted tax rates in effect for the year in which the differences are expected to reverse. The effect of a change in tax rates on deferred assets and liabilities is recognized in income in the period that includes the enactment date.
The
Company recognizes deferred tax assets to the extent that it believes that these assets are more likely than not to be realized. In making
such a determination, the Company considers all available positive and negative evidence, including future reversals of existing taxable
temporary differences, projected future taxable income, tax-planning strategies, and results of recent operations. If the Company determines
that it would be able to realize its deferred tax assets in the future in excess of their net recorded amount, the Company would make
an adjustment to the deferred tax asset valuation allowance, which would reduce the provision for incomes taxes. During the year ended
December 31, 2025, the Company recorded a reduction in the valuation allowance of $
The Company records uncertain tax positions in accordance with ASC 740 on the basis of a two-step process in which (1) the Company determines whether it is more likely than not that the tax positions will be sustained on the basis of the technical merits of the position and (2) for those tax positions that meet the more likely-than-not recognition threshold, the company recognizes the largest amount of tax benefit that more than 50 percent likely to be realized upon ultimate settlement with the related tax authority.
The Company recognizes interest and penalties related to unrecognized tax benefits on the income tax expense line in the accompanying unaudited condensed consolidated statements of operations. No accrued interest or penalties were required to be included in the related tax liability line in the unaudited condensed consolidated balance sheet as of June 30, 2026 and in the consolidated balance sheet as of December 31, 2025
Basic net income per share is computed by dividing the net income attributable to Acorn Energy, Inc. by the weighted average number of shares outstanding during the period, excluding treasury stock. Diluted net income per share is computed by dividing the net 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 are excluded from the computation of diluted net income per share if doing so would be antidilutive.
The combined weighted average number of options that were excluded from the computation of diluted income per share, as they had an antidilutive effect, was (which have a weighted average exercise price of $) for the six-month period ended June 30, 2026. The combined weighted average number of options that were excluded from the computation of diluted income per share, as they had an antidilutive effect, was (which have a weighted average exercise price of $) for the three-month period ended June 30, 2026. The combined weighted average number of options that were excluded from the computation of diluted net income per share, as they had an antidilutive effect, was (with a weighted average exercise price of $) for both the six- and three-month periods ended June 30, 2025.
| 9 |
Six months ended June 30, | Three months ended June 30, | |||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Net income attributable to common stockholders | $ | $ | $ | $ | ||||||||||||
| Weighted average shares outstanding: | ||||||||||||||||
| -Basic | ||||||||||||||||
| Add: Stock options | ||||||||||||||||
| -Diluted | ||||||||||||||||
| Basic net income per share | $ | $ | $ | $ | ||||||||||||
| Diluted net income per share | $ | $ | $ | $ | ||||||||||||
Recent Accounting Pronouncements
In November 2024, the FASB issued Accounting Standards Update No. 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses (“ASU 2024-03”), and in January 2025, the FASB issued Accounting Standards Update No. 2025-01, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Clarifying the Effective Date (“ASU 2025-01”). ASU 2024-03 requires additional disclosure of the nature of expenses included in the income statement as well as disclosures about specific types of expenses included in the expense captions presented in the income statement. ASU 2024-03, as clarified by ASU 2025-01, is effective for us for our annual reporting for fiscal 2027 and for interim period reporting beginning in fiscal 2028 on a prospective basis. Both early adoption and retrospective application are permitted. The Company is currently evaluating the impact that the adoption of these standards will have on its consolidated financial statements and disclosures.
Recently Adopted Accounting Standards
In July 2025, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2025-05, which introduces a practical expedient and an accounting policy election for estimating expected credit losses on current accounts receivable and contract assets arising from revenue transactions under ASC Topic 606. The practical expedient allows entities to assume that current conditions as of the reporting date remain unchanged over the remaining life of the asset, thereby eliminating the need to incorporate forecasts of future economic conditions. The accounting policy election, available to entities other than public business entities, permits consideration of post-balance sheet cash collections in estimating expected credit losses, provided the practical expedient is also elected. Although the Company qualifies as a public business entity and is therefore not eligible for the accounting policy election, the Company evaluated the practical expedient and determined that it did not have a material impact on its consolidated financial statements upon adoption effective January 1, 2026.
NOTE 3—LIQUIDITY
The
Company expects that its existing cash as of June 30, 2026 of $
| 10 |
At
June 30, 2026, the Company had working capital of $
NOTE 4—ACCOUNTS RECEIVABLE AND ALLOWANCE FOR CREDIT LOSSES
The
Company has historically experienced immaterial write-offs given the nature of the customers that receive credit. As of June 30, 2026,
the Company had gross receivables of $
For the six months ended June 30, 2026 | For the year ended December 31, 2025 | |||||||
| (in thousands) | ||||||||
| Accounts Receivable, net, beginning of period | $ | $ | ||||||
| Accounts Receivable, net, end of period | $ | $ | ||||||
The following is a tabular reconciliation of the Company’s allowance for credit losses:
For the six months ended June 30, 2026 | For the year ended December 31, 2025 | |||||||
| (in thousands) | ||||||||
| Balance at beginning of period | $ | $ | ||||||
| (Decrease) increase in provision for credit losses | ( | ) | ||||||
| Balance at end of period | $ | $ | ||||||
NOTE 5—INVENTORY
| As of | ||||||||
June 30, 2026 | December 31, 2025 | |||||||
| (in thousands) | ||||||||
| Raw materials | $ | $ | ||||||
| Finished goods | ||||||||
| $ | $ | |||||||
At
both June 30, 2026 and December 31, 2025, the Company’s inventory reserve for obsolescence was $
| 11 |
NOTE 6—INTANGIBLES, NET
On January 1, 2026, OmniMetrix entered into a Technology Partnership Agreement (the “AIO Agreement”) with AIO Systems Ltd., an Israeli technology company (“AIO”). Under the AIO Agreement, OmniMetrix obtained the exclusive right to market, distribute, integrate, and sell AIO’s centralized monitoring and management related products and services. The Company evaluated payment and concluded that the payment represents consideration for the acquisition of identifiable intangible rights and deliverables, principally consisting of (i) the exclusive distribution rights granted in the Territory, as defined in the AIO Agreement, and (ii) the contractually required market-readiness deliverables.
The
AIO Agreement has been classified as a finite-lived intangible asset and will be amortized on a straight-line basis over its estimated
useful life of five (
Patents
are amortized over the patent term, which on average is
| Estimated | As of | |||||||||
Useful Life (in years) | June 30, 2026 | December 31, 2025 | ||||||||
| (in thousands) | ||||||||||
| Cost: | ||||||||||
| Exclusive distribution and commercialization rights | $ | $ | ||||||||
| Patents | ||||||||||
| Accumulated depreciation and amortization | ||||||||||
| Exclusive distribution and commercialization rights | ||||||||||
| Patents | ||||||||||
| Intangibles, net | $ | $ | ||||||||
Estimated future amortization expense will be presented in the table below in subsequent periodic reports following the placed-in-service date:
| Year ended June 30, | ||||
| 2027 | ||||
| 2028 | ||||
| 2029 | ||||
| 2030 | ||||
| 2031 | ||||
| Thereafter | ||||
| Total | $ | |||
NOTE 7—LEASES
OmniMetrix
leases office space and office equipment under operating lease agreements. The office lease, originally set to expire on
| 12 |
The
present value of future minimum lease payments on non-cancelable operating leases as of June 30, 2026 using a discount rate of
Supplemental cash flow information related to leases consisted of the following (in thousands):
For the Six Months Ending June 30, | ||||||||
| 2026 | 2025 | |||||||
| Cash paid for operating lease liabilities | $ | $ | ||||||
Supplemental balance sheet information related to leases consisted of the following:
As of June 30, 2026 | ||||
| Weighted average remaining lease terms for operating leases | ||||
The table below reconciles the undiscounted future minimum lease payments under non-cancelable lease agreements having initial terms of more than one year to the total operating lease liabilities recognized on the unaudited condensed consolidated balance sheet as of June 30, 2026 (in thousands):
Year ended June 30, | ||||
| 2027 | $ | |||
| 2028 | ||||
| 2029 | ||||
| 2030 | ||||
| 2031 | ||||
| Total undiscounted cash flows | ||||
| Less: Imputed interest | ( | ) | ||
| Present value of operating lease liabilities (a) | $ | |||
| (a) |
On
July 6, 2021, the Company entered into an agreement with King Industrial Realty, Inc., to sublease from the Company
Below are the future gross payments expected to be received by the Company under the sublease (in thousands):
| Year ended June 30, | ||||
| 2027 | $ | |||
| 2028 | ||||
| 2029 | ||||
| Total undiscounted cash flows | $ | |||
| 13 |
NOTE 8—COMMITMENTS AND CONTINGENCIES
The
Company has $
As
it relates to the AIO Agreement described in Note 6, the Company has commitments to share a defined portion of monitoring and SaaS-related
revenue generated under the agreement with AIO. The Company is obligated to remit to AIO a share of (i) the Company’s revenue from
ongoing monitoring contracts utilizing AIO’s products, net of data, communication, cloud server, and billing costs, and (ii) the
Company’s revenue from SaaS arrangements involving AIO’s products, net of the cost of products sold, installation costs,
and other directly attributable costs.
NOTE 9— STOCKHOLDERS’ EQUITY
(a) General
At June 30, 2026, Acorn had shares issued and shares outstanding of its common stock, par value $ 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 t authorized to issue preferred stock. Accordingly, 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 option holder 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.
At June 30, 2026, options were available for grant under the Amended and Restated 2006 Stock Incentive Plan (the “Plan”), and no options were available for grant under the 2006 Stock Option Plan for Non-Employee Directors. During the six-month period ended June 30, 2026, options were issued. No options were issued during the three-month period ended June 30, 2026. The options were issued as follows: an aggregate of to directors (excluding the CEO), to the CEO and to the CFO. In the six-month period ended June 30, 2026, there were no grants to non-employees (other than the directors, CEO and CFO).
| 14 |
During the six- and three-month periods ended June 30, 2026, and options were exercised, 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):
| Number of Options (in shares) | Weighted Average Exercise Price Per Share | Weighted Average Remaining Contractual Life | Aggregate Intrinsic Value | |||||||||||||
| Outstanding at December 31, 2025 | $ | years | $ | |||||||||||||
| Granted | ||||||||||||||||
| Cancelled/expired | ( | ) | ||||||||||||||
| Exercised | ( | ) | ||||||||||||||
| Outstanding at June 30, 2026 | $ | years | $ | |||||||||||||
| Exercisable at June 30, 2026 | $ | years | $ | |||||||||||||
| Risk-free interest rate | % | |||
| Expected term of options | years | |||
| Expected annual volatility | % | |||
| Expected dividend yield | % |
(c) Stock Option Compensation Expense
Stock option compensation expense included in selling, general and administrative expenses in the Company’s unaudited condensed consolidated statements of operations was $ and $ for the six-month periods ended June 30, 2026 and 2025, respectively, and $ and $ for the three-month periods ended June 30, 2026 and 2025, respectively.
The total compensation cost related to non-vested awards not yet recognized was $ as of June 30, 2026 which will be recognized over the next ten quarters.
NOTE 10— INCOME TAXES
The Company’s quarterly provision for income taxes is measured using an annual effective tax rate, adjusted for discrete items within the period presented. To determine the annual effective tax rate, the Company estimates both the total income (loss) before income taxes for the full year and the jurisdictions in which that income (loss) is subject to tax. The actual effective tax rate for the full year may differ from these estimates if income (loss) before income taxes is greater than or less than what was estimated or if the allocation of income (loss) to jurisdictions in which it is taxed is different from the estimated allocations.
For
the six months ended June 30, 2026 and 2025, the Company recognized net income tax expense of $
The Company files a consolidated U.S. income tax return and tax returns in certain state and local jurisdictions. As of June 30, 2026, the Company is no longer subject to federal examination for years before 2022, or for years before 2021 for state income taxes. However, our tax attribute carryforwards from closed tax years may be subject to examination to the extent utilized in an open tax year. The Company does not expect that our unrecognized tax benefits will change within the next twelve months due to statute of limitation lapses.
| 15 |
NOTE 11— SEGMENT REPORTING
As
of June 30, 2026, the Company operates in
| ● | Power Generation (“PG”). OmniMetrix’s PG services provide wireless remote monitoring and control systems and Internet of Things (“IoT”) applications for commercial/industrial and residential power generation equipment. In 2025, the Company launched the Omni family of products—the OmniPro commercial monitor and the Omni residential monitor—built on a new proprietary common communications core called the OCOM, a platform designed to enhance connectivity, reliability and performance in remote monitoring systems. These products are replacing the Company’s legacy TrueGuard and AIRGuard product lines, offering enhanced flexibility, expandability, and improved connectivity with easier installation. OmniMetrix also offers the Smart Annunciator product for commercial customers who require a visual representation of generator status via a touchscreen display. | |
| ● | Cathodic Protection (“CP”). OmniMetrix’s CP services provide remote monitoring and control products for cathodic protection systems on gas pipelines serving the gas utilities market and pipeline operators. The CP product lineup includes solutions to remotely monitor and control rectifiers, test stations and bonds. In 2025, the Company launched the RADex, an OCOM-based expansion of the Company’s RAD™ (Remote AC Mitigation Disconnect) that adds cathodic protection measurements while retaining the ability to remotely disconnect/connect AC mitigation tools on solid-state decouplers, reducing expense and increasing employee safety. |
| ● | Infrastructure Solutions (“IS”). OmniMetrix’s IS services provide smart infrastructure monitoring hardware, software and solutions for telecommunications, energy and data center infrastructure asset management in the North American market. Under a Technology Partnership Agreement effective January 1, 2026 with AIO Systems Ltd. (“AIO”), an Israel-based technology company, OmniMetrix has the exclusive right to market, distribute, integrate and sell, on a white-label basis, AIO’s IoT monitoring controllers, sensors, power management devices, security products, environmental monitoring equipment, and a cloud-based Management-of-Management (MOM) platform that provides centralized monitoring, alerting, ticketing and workflow orchestration for telecommunications towers, energy sites and data centers. Revenue in the IS segment is expected to be derived from hardware product sales, recurring monitoring service contracts and other bundled arrangements. The IS segment had no revenue for the six months ended June 30, 2026 as operations were in the pre-revenue stage. |
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.
The Company’s chief operating decision maker (“CODM”) is the Company’s Chief Executive Officer (CEO).
(b) Information about profit or loss and assets
The accounting policies of all the segments are those described in the summary of significant accounting policies. The Company evaluates performance by segment based on revenue (driven by the number of connections), gross profit and net income or loss before taxes.
The Company does not systematically allocate assets to the divisions of the subsidiaries constituting its consolidated group, unless the division constitutes a significant operation. Accordingly, where a division of a subsidiary constitutes a segment that does not meet the quantitative thresholds of applicable accounting principles, depreciation expense is recorded against the operations of such segment, without allocating the related depreciable assets to that segment. However, where a division of a subsidiary constitutes a segment that does meet the quantitative thresholds, related depreciable assets, along with other identifiable assets, are allocated to such division.
| 16 |
Segment expenses that are routinely provided to the CODM are COGS and R&D expense. R&D expense may be allocated to each segment based on the percentage of segment revenue to total revenue or based on estimated time on dedicated projects within the segment. SG&A expense and interest income is allocated to each segment based on the percentage of segment revenue to total revenue instead of being specifically identified to each segment since the Company’s resources have a high level of shared utilization between the segments. Further, the CODM does not review the assets by segment.
The following tables represent segmented data for the six- and three-month periods ended June 30, 2026 and 2025 (in thousands):
| PG | CP | IS | Total | |||||||||||||
| Six months ended June 30, 2026: | ||||||||||||||||
| Revenues from external customers | $ | $ | $ | $ | ||||||||||||
| COGS | ||||||||||||||||
| Segment gross profit | ||||||||||||||||
| R&D expense | ||||||||||||||||
| SG&A expense | ||||||||||||||||
| Segment operating income (loss) | ( | ) | ( | ) | ||||||||||||
| Interest income, net | ||||||||||||||||
| Segment income (loss) before income taxes | $ | $ | ( | ) | $ | ( | ) | $ | ||||||||
| Six months ended June 30, 2025: | ||||||||||||||||
| Revenues from external customers | $ | $ | $ | |||||||||||||
| COGS | ||||||||||||||||
| Segment gross profit | ||||||||||||||||
| R&D expense | ||||||||||||||||
| SG&A expense | ||||||||||||||||
| Segment operating income | ||||||||||||||||
| Interest income, net | ||||||||||||||||
| Segment income before income taxes | $ | $ | $ | |||||||||||||
| PG | CP | IS | Total | |||||||||||||
| Three months ended June 30, 2026: | ||||||||||||||||
| Revenues from external customers | $ | $ | $ | $ | ||||||||||||
| COGS | ||||||||||||||||
| Segment gross profit | ||||||||||||||||
| R&D expense | ||||||||||||||||
| SG&A expense | ||||||||||||||||
| Segment operating income (loss) | ( | ) | ( | ) | ||||||||||||
| Interest income, net | ||||||||||||||||
| Segment income (loss) before income taxes | $ | $ | ( | ) | $ | ( | ) | $ | ||||||||
| Three months ended June 30, 2025: | ||||||||||||||||
| Revenues from external customers | $ | $ | $ | |||||||||||||
| COGS | ||||||||||||||||
| Segment gross profit | ||||||||||||||||
| R&D expense | ||||||||||||||||
| SG&A expense | ||||||||||||||||
| Segment operating income | ||||||||||||||||
| Interest income, net | ||||||||||||||||
| Segment income before income taxes | $ | $ | $ | |||||||||||||
| 17 |
Reconciliation of Segment Income to Consolidated Net Income Before Income Taxes
Six months ended June 30, | Three months ended June 30, | |||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| (in thousands) | ||||||||||||||||
| Total net income before income taxes for reportable segments | $ | $ | $ | $ | ||||||||||||
| Unallocated cost of corporate headquarters | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Consolidated net income before income taxes | $ | $ | $ | $ | ||||||||||||
NOTE 12—REVENUE
Revenue from the prepayment of monitoring fees (generally paid twelve months in advance) are recorded as deferred revenue upon receipt of payment from the customer and then amortized to revenue over the monitoring service period. This method provides a faithful depiction of the transfer of services as it aligns the recognition of revenue with the period in which the monitoring services are provided. By deferring the revenue and recognizing it over the service period, the financial statements accurately reflect the company’s performance and obligations to its customers.
The following table disaggregates the Company’s revenue for the six- and three-month periods ended June 30, 2026 and 2025 (in thousands):
| Hardware | Monitoring | Total | ||||||||||
| Six months ended June 30, 2026: | ||||||||||||
| PG Segment | $ | $ | $ | |||||||||
| CP Segment | ||||||||||||
| Total Revenue | $ | $ | $ | |||||||||
| Hardware | Monitoring | Total | ||||||||||
| Six months ended June 30, 2025: | ||||||||||||
| PG Segment | $ | $ | $ | |||||||||
| CP Segment | ||||||||||||
| Total Revenue | $ | $ | $ | |||||||||
The IS segment had no revenue for the six months ended June 30, 2026 as operations were in the pre-revenue stage.
| Hardware | Monitoring | Total | ||||||||||
| Three months ended June 30, 2026: | ||||||||||||
| PG Segment | $ | $ | $ | |||||||||
| CP Segment | ||||||||||||
| Total Revenue | $ | $ | $ | |||||||||
| Hardware | Monitoring | Total | ||||||||||
| Three months ended June 30, 2025: | ||||||||||||
| PG Segment | $ | $ | $ | |||||||||
| CP Segment | ||||||||||||
| Total Revenue | $ | $ | $ | |||||||||
The IS segment had no revenue for the three months ended June 30, 2026 as operations were in the pre-revenue stage.
| 18 |
Deferred revenue activity for the six months ended June 30, 2026 can be seen in the table below (in thousands):
| Hardware | Monitoring | Total | ||||||||||
| Balance at December 31, 2025 | $ | $ | $ | |||||||||
| Additions during the period | ||||||||||||
| Recognized as revenue | ( | ) | ( | ) | ( | ) | ||||||
| Balance at June 30, 2026 | $ | $ | $ | |||||||||
| Amounts to be recognized as revenue in the twelve-month period ending: | ||||||||||||
| June 30, 2027 | $ | |||||||||||
| June 30, 2028 | ||||||||||||
| June 30, 2029 and thereafter | ||||||||||||
| $ | ||||||||||||
The
amount of hardware revenue recognized during the six months ended June 30, 2026 that was included in deferred revenue at the beginning
of the fiscal year was $
The following table provides a reconciliation of the Company’s hardware revenue for the six- and three-month periods ended June 30, 2026 and 2025 (in thousands):
Six months ended June 30, | Three months ended June 30, | |||||||||||||||
| Reconciliation of Hardware Revenue | 2026 | 2025 | 2026 | 2025 | ||||||||||||
| Amortization of deferred revenue | $ | $ | $ | $ | ||||||||||||
| Sales of custom designed units and related accessories | ||||||||||||||||
| Hardware sales | ||||||||||||||||
| Other accessories, services, shipping and miscellaneous charges | ||||||||||||||||
| Total hardware revenue | $ | $ | $ | $ | ||||||||||||
Deferred COGS relate only to the sale of equipment. Deferred COGS activity for the six-month period ended June 30, 2026 can be seen in the table below (in thousands):
| Balance at December 31, 2025 | $ | |||
| Additions, net of adjustments, during the period | ||||
| Recognized as COGS | ( | ) | ||
| Balance at June 30, 2026 | $ | |||
| Amounts to be recognized as COGS in the twelve-month-period ending: | ||||
| June 30, 2027 | $ |
| 19 |
The following table provides a reconciliation of the Company’s COGS expense for the six- and three-month periods ended June 30, 2026 and 2025 (in thousands):
Six months ended June 30, | Three months ended June 30, | |||||||||||||||
| Reconciliation of COGS Expense | 2026 | 2025 | 2026 | 2025 | ||||||||||||
| Amortization of deferred COGS | $ | $ | $ | $ | ||||||||||||
| COGS of custom designed units and related accessories | ||||||||||||||||
| COGS of hardware sales | ||||||||||||||||
| Data costs for monitoring | ||||||||||||||||
| Other COGS of accessories, services, shipping and miscellaneous charges | ||||||||||||||||
| Total COGS expense | $ | $ | $ | $ | ||||||||||||
The following table provides a reconciliation of the Company’s sales commissions contract assets for the six-month period ended June 30, 2026 (in thousands):
| Hardware | Monitoring | Total | ||||||||||
| Balance at December 31, 2025 | $ | $ | $ | |||||||||
| Additions during the period | ||||||||||||
| Amortization of sales commissions | ( | ) | ( | ) | ( | ) | ||||||
| Balance at June 30, 2026 | $ | |||||||||||
The
capitalized sales commissions are included in other current assets ($
Amounts to be recognized as sales commission expense in the twelve-month period ending (in thousands):
| June 30, 2027 | $ | |||
| June 30, 2028 | ||||
| June 30, 2029 and thereafter | ||||
| $ |
NOTE 13—RELATED PARTY BALANCES AND TRANSACTIONS
Officer and Director Fees
The
Company recorded consulting service fees to officers of $
The
Company recorded fees to directors of $
NOTE 14—SUBSEQUENT EVENTS
On July 31, 2026, OmniMetrix entered into an agreement with Champion Power Equipment, LLC under which Champion will act as a non-exclusive
reseller of OmniMetrix’s residential monitoring products and related monitoring services in North America.
| 20 |
| 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 Annual Report on Form 10-K for the year ended December 31, 2025 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 tables and discussion below are rounded to the nearest thousand, except per share data; thus, they 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.
| Six months ended June 30, 2026 | ||||||||||||
| OmniMetrix | Acorn | Total | ||||||||||
| Revenue | $ | 4,716 | $ | — | $ | 4,716 | ||||||
| COGS | 881 | — | 881 | |||||||||
| Gross profit | 3,835 | — | 3,835 | |||||||||
| Gross profit margin | 81 | % | 81 | % | ||||||||
| R&D expenses | 494 | — | 494 | |||||||||
| SG&A expenses | 2,224 | 871 | 3,095 | |||||||||
| Operating income (loss) | $ | 1,117 | $ | (871 | ) | $ | 246 | |||||
| Six months ended June 30, 2025 | ||||||||||||
| OmniMetrix | Acorn | Total | ||||||||||
| Revenue | $ | 6,623 | $ | — | $ | 6,623 | ||||||
| COGS | 1,658 | — | 1,658 | |||||||||
| Gross profit | 4,965 | — | 4,965 | |||||||||
| Gross profit margin | 75 | % | 75 | % | ||||||||
| R&D expenses | 556 | — | 556 | |||||||||
| SG&A expenses | 2,173 | 685 | 2,858 | |||||||||
| Operating income (loss) | $ | 2,236 | $ | (685 | ) | $ | 1,551 | |||||
| Three months ended June 30, 2026 | ||||||||||||
| OmniMetrix | Acorn | Total | ||||||||||
| Revenue | $ | 2,489 | $ | — | $ | 2,489 | ||||||
| COGS | 439 | — | 439 | |||||||||
| Gross profit | 2,050 | — | 2,050 | |||||||||
| Gross profit margin | 82 | % | 82 | % | ||||||||
| R&D expenses | 239 | — | 239 | |||||||||
| SG&A expenses | 1,089 | 347 | 1,436 | |||||||||
| Operating income (loss) | $ | 722 | $ | (347 | ) | $ | 375 | |||||
| Three months ended June 30, 2025 | ||||||||||||
| OmniMetrix | Acorn | Total | ||||||||||
| Revenue | $ | 3,525 | $ | — | $ | 3,525 | ||||||
| COGS | 886 | — | 886 | |||||||||
| Gross profit | 2,639 | — | 2,639 | |||||||||
| Gross profit margin | 75 | % | 75 | % | ||||||||
| R&D expenses | 265 | — | 265 | |||||||||
| SG&A expenses | 1,149 | 278 | 1,427 | |||||||||
| Operating income (loss) | $ | 1,225 | $ | (278 | ) | $ | 947 | |||||
| 21 |
BACKLOG
As of June 30, 2026, OmniMetrix had a backlog of $3,236,000, primarily comprised of deferred revenue, of which $2,806,000 is expected to be recognized as revenue in the next twelve months. This compares to a backlog of $3,669,000 at June 30, 2025.
RECENT DEVELOPMENTS
On January 1, 2026, Acorn Energy entered into an agreement with AIO Systems, Ltd. to expand Acorn’s infrastructure asset management technology offerings for cell towers, data centers, and utility assets in North America. Under the agreement, Acorn has exclusive rights to market, distribute, integrate, and sell AIO’s cloud-based monitoring and analytics solutions under the OmniMetrix brand in the United States, Canada, and Mexico, significantly expanding Acorn’s product portfolio and addressable market. The partnership leverages AIO’s globally-deployed technology and provides for shared equipment and monitoring revenues, with Acorn expecting a phased rollout and limited near-term revenue contribution as integration and market expansion efforts progress.
On July 31, 2026, OmniMetrix entered into an agreement with Champion Power Equipment, LLC under which Champion will act as a non-exclusive reseller of OmniMetrix’s residential monitoring products and related monitoring services in North America. Pricing under the agreement is based on an assumed purchase volume of 3,000 units per calendar year, but the agreement does not obligate Champion to purchase any minimum quantity. We expect the arrangement to broaden distribution of our residential power generation products.
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 OmniMetrixTM, LLC (“OmniMetrix”) subsidiary:
| ● | Power Generation (“PG”). OmniMetrix’s PG services provide wireless remote monitoring and control systems and Internet of Things (“IoT”) applications for commercial/industrial and residential power generation equipment. In 2025, we launched the Omni family of products—the OmniPro commercial monitor and the Omni residential monitor—built on a new proprietary common communications core called the OCOM, a platform designed to enhance connectivity, reliability and performance in remote monitoring systems. These products are replacing our legacy TrueGuard and AIRGuard product lines, offering enhanced flexibility, expandability, and improved connectivity with easier installation. OmniMetrix also offers the Smart Annunciator product for commercial customers who require a visual representation of generator status via a touchscreen display. | |
| ● | Cathodic Protection (“CP”). OmniMetrix’s CP services provide remote monitoring and control products for cathodic protection systems on gas pipelines serving the gas utilities market and pipeline operators. The CP product lineup includes solutions to remotely monitor and control rectifiers, test stations and bonds. In 2025, we launched the RADex, an OCOM-based expansion of our RAD™ (Remote AC Mitigation Disconnect) that adds cathodic protection measurements while retaining the ability to remotely disconnect/connect AC mitigation tools on solid-state decouplers, reducing expense and increasing employee safety. |
| ● | Infrastructure Solutions (“IS”). OmniMetrix’s IS services provide smart infrastructure monitoring hardware, software and solutions for telecommunications, energy and data center infrastructure asset management in the North American market. Under a Technology Partnership Agreement effective January 1, 2026 with AIO Systems Ltd. (“AIO”), an Israel-based technology company, OmniMetrix has the exclusive right to market, distribute, integrate and sell, on a white-label basis, AIO’s IoT monitoring controllers, sensors, power management devices, security products, environmental monitoring equipment, and a cloud-based Management-of-Management (MOM) platform that provides centralized monitoring, alerting, ticketing and workflow orchestration for telecommunications towers, energy sites and data centers. Revenue in the IS segment is expected to be derived from hardware product sales, recurring monitoring service contracts and other bundled arrangements. The IS segment had no revenue for the six months ended June 30, 2026 as operations were in the pre-revenue stage. |
| 22 |
Each of our PG, CP and IS activities represents a reportable segment. The following analysis should be read together with the segment and revenue information provided in Notes 11 and 12 to the 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 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). OmniMetrix now also markets an infrastructure solutions product line that provides smart infrastructure monitoring hardware, software and solutions for telecommunications, energy and data center infrastructure asset management in the North American market as described above.
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 economic ecosystem. In addition, OmniMetrix continues to see 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 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.
OmniMetrix sells monitoring hardware devices and data monitoring services. Revenue from hardware sales is recognized upon shipment or upon acceptance (specific to the Material Contract). Revenues from the payment of monitoring fees (generally paid 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 (typically twelve-month, renewable periods).
Critical Accounting Estimates
In preparing the financial statements, management is required to make estimates and assumptions that have an impact on the asset, liability, revenue and expense amounts reported. These estimates can also affect our supplemental information disclosures, including information about contingencies, risk and financial condition. We believe, given current facts and circumstances, that our estimates and assumptions are reasonable, adhere to U.S. GAAP, and are consistently applied. Inherent in the nature of an estimate or assumption is the fact that actual results may differ from estimates and estimates may vary as new facts and circumstances arise. We make routine estimates and judgments in determining net realizable value of accounts receivable, inventories, property and equipment, prepaid expenses, product warranties and other reserves as well as the amortization period for deferred commissions payable. Management believes our most critical accounting estimates and assumptions are in the area of the valuation allowance.
Valuation Allowance
We regularly review our deferred tax assets for recoverability considering historically profitability, projected future taxable income, the expected timing of the reversals of existing temporary differences and tax planning strategies. In assessing the need for a valuation allowance, we consider both positive and negative evidence related to the likelihood of realization of the deferred tax assets. The weight given to the positive and negative evidence is commensurate with the extent to which the evidence may be objectively verified.
| 23 |
We record a valuation allowance to reduce our deferred tax assets to the net amount that we believe is more likely than not to be realized. The net carrying amount of the Company’s deferred tax assets is based on the Company’s belief that it is more likely than not that the Company will generate sufficient future taxable income in certain jurisdictions to realize these deferred tax assets. The ultimate realization of the deferred tax assets depends upon our ability to generate sufficient taxable income in the future. In forecasting future taxable income, management’s projections and beliefs are based upon a variety of estimates and numerous assumptions made by our management with respect to, among other things, interest rates, forecasted revenue of the hardware sales and monitoring revenue or revenue streams that could generate sufficient income. In evaluating our ability to recover our deferred tax assets, we consider and weigh all available positive and negative evidence, including our past operating results, the existence of cumulative losses in the most recent years and our forecast of future taxable income. When the likelihood of the realization of existing deferred tax assets changes, adjustments to the valuation allowance are charged in the period in which the determination is made. If our estimates and assumptions change in the future, the Company may be required to record additional valuation allowances against its deferred tax assets, resulting in additional income tax expense in the Company’s Consolidated Statements of Operations, or conversely to reduce the existing valuation allowance resulting in less income tax expense.
The Company currently has a three-year cumulative income position which is positive evidence that it is more likely than not the deferred tax assets will be realized. As of June 30, 2026, we believe, based on our projections, that a partial valuation allowance of $10,326,000, continues to be necessary against our deferred tax assets. Uncertainty exists related to the generation of future hardware and monitoring revenue, nonetheless the Company believes sufficient positive evidence exists which supports the partial reversal of the valuation allowance. At this time, however, we cannot assure you that we will be successful in doing so. Accordingly, our management will continue to assess the need for this valuation allowance and will make adjustments when appropriate.
Future changes in the Company’s stock ownership, which may be outside of the Company’s control or future equity offerings or acquisitions that have equity as a component of the purchase price consideration may trigger an “ownership change” and the utilization of the Company’s federal and state net operating losses may be subject to a limitation under the Internal Revenue Code, as well as similar state provisions. Such limitations may result in the expiration of net operating loss (NOL) carryforwards before their utilization.
Results of Operations
The following tables set forth certain information with respect to the unaudited condensed consolidated results of operations of the Company for the six- and three-month periods ended June 30, 2026 and 2025, including the percentage of total revenues during each period attributable to selected components of the operations statements data and for the period-to-period percentage changes in such components. For segment data, see Notes 11 and 12 to the unaudited condensed consolidated financial statements included in this quarterly report.
| Six months ended June 30, | ||||||||||||||||||||
| 2026 | 2025 | Change | ||||||||||||||||||
| ($,000) | % of revenues | ($,000) | % of revenues | From 2025 to 2026 | ||||||||||||||||
| Revenue | $ | 4,716 | 100 | % | $ | 6,623 | 100 | % | (29 | )% | ||||||||||
| COGS | 881 | 19 | % | 1,658 | 25 | % | (47 | )% | ||||||||||||
| Gross profit | 3,835 | 81 | % | 4,965 | 75 | % | (23 | )% | ||||||||||||
| R&D expenses | 494 | 10 | % | 556 | 8 | % | (11 | )% | ||||||||||||
| SG&A expenses | 3,095 | 66 | % | 2,858 | 43 | % | 8 | % | ||||||||||||
| Operating income | 246 | 5 | % | 1,551 | 23 | % | (84 | )% | ||||||||||||
| Interest income, net | 63 | 1 | % | 51 | 1 | % | 24 | % | ||||||||||||
| Income before income taxes | 309 | 7 | % | 1,602 | 24 | % | (81 | )% | ||||||||||||
| Income tax expense | 80 | 2 | % | 396 | 6 | % | (80 | )% | ||||||||||||
| Net income | 229 | 5 | % | 1,206 | 18 | % | (81 | )% | ||||||||||||
| Non-controlling interest share of net income | (12 | ) | * | % | (22 | ) | * | % | (45 | )% | ||||||||||
| Net income attributable to Acorn Energy, Inc. | $ | 217 | 5 | % | $ | 1,184 | 18 | % | (82 | )% | ||||||||||
*Result is less than 1% or not meaningful.
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| Three months ended June 30, | ||||||||||||||||||||
| 2026 | 2025 | Change | ||||||||||||||||||
| ($,000) | % of revenues | ($,000) | % of revenues | from 2025 to 2026 | ||||||||||||||||
| Revenue | $ | 2,489 | 100 | % | $ | 3,525 | 100 | % | (29 | )% | ||||||||||
| COGS | 439 | 18 | % | 886 | 25 | % | (50 | )% | ||||||||||||
| Gross profit | 2,050 | 82 | % | 2,639 | 75 | % | (22 | )% | ||||||||||||
| R&D expenses | 239 | 10 | % | 265 | 8 | % | (10 | )% | ||||||||||||
| SG&A expense | 1,436 | 58 | % | 1,427 | 40 | % | 1 | % | ||||||||||||
| Operating income | 375 | 15 | % | 947 | 27 | % | (60 | )% | ||||||||||||
| Interest income, net | 32 | 1 | % | 27 | 1 | % | 19 | % | ||||||||||||
| Income before income taxes | 407 | 16 | % | 974 | 28 | % | (58 | )% | ||||||||||||
| Income tax expense | 105 | 4 | % | 242 | 7 | % | (57 | )% | ||||||||||||
| Net income | 302 | 12 | % | 732 | 21 | % | (59 | )% | ||||||||||||
| Non-controlling interest share of net income | (8 | ) | * | % | (12 | ) | * | % | (33 | )% | ||||||||||
| Net income attributable to Acorn Energy, Inc. | $ | 294 | 12 | % | $ | 720 | 20 | % | (59 | )% | ||||||||||
*Result is less than 1%.
Revenue for the six- and three-month periods ended June 30, 2026 and 2025
Revenue decreased by $1,907,000, or 28.8%, from $6,623,000 in the six-month period ended June 30, 2025 to $4,716,000 in the six-month period ended June 30, 2026. Hardware revenue decreased by $2,160,000, or 53.5%, from $4,034,000 in the six-month period ended June 30, 2025 to $1,874,000 in the six-month period ended June 30, 2026. See the reconciliation of hardware revenue below for more details. Monitoring revenue increased by $253,000, or 9.8%, from $2,589,000 in the six-month period ended June 30, 2025 to $2,842,000 in the six-month period ended June 30, 2026. The increase in monitoring revenue was due to an increase in the number of connections being monitored and growth in our customer base.
As discussed above, OmniMetrix has three reportable segments, PG, CP and IS. Of the $4,716,000 in revenue recognized in the six-month period ended June 30, 2026, $4,450,000 was generated by PG activities and $266,000 was generated by CP activities. This represents a decrease in revenue from PG activities of $1,797,000, or 28.8%, from $6,247,000 in the six-month period ended June 30, 2025, and a decrease in revenue from CP activities of $110,000, or 29.3%, from $376,000 in the six-month period ended June 30, 2025. The IS segment remained in a pre-revenue stage and generated no revenue in either period. The decrease in PG revenue was primarily due to the sales under our Material Contract in the prior year period and the decrease in revenue recognized from amortization of deferred hardware, as we near the final recognition of the remaining balance of revenue that was previously deferred. The decrease in CP revenue was due to fewer CP hardware sales in the current-year period as compared to the prior-year period.
Revenue decreased by $1,036,000, or 29.4%, from $3,525,000 in the three-month period ended June 30, 2025 to $2,489,000 in the three-month period ended June 30, 2026. As compared to the three-month period ended June 30, 2025, hardware revenue decreased $1,141,000, or 51.7%, while monitoring revenue increased $105,000, or 8.0%. Of the $2,489,000 in revenue recognized in the three-month period ended June 30, 2026, $2,367,000 was generated by PG activities and $122,000 was generated by CP activities. In the three-month period ended June 30, 2026, as compared to the three-month period ended June 30, 2025, revenue from PG activities decreased $993,000, or 29.6%, from $3,360,000, and revenue from CP activities decreased $43,000, or 26.1%, from $165,000. The fluctuation drivers were the same for the three-month period as described for the six-month period.
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Hardware revenue during the six- and three-month periods ended June 30, 2026 and 2025 is further detailed in the table below (in thousands):
Six months ended June 30, | Three months ended June 30, | |||||||||||||||
| Reconciliation of Hardware Revenue | 2026 | 2025 | 2026 | 2025 | ||||||||||||
| Amortization of deferred revenue | $ | 163 | $ | 585 | $ | 53 | $ | 270 | ||||||||
| Sales of custom designed units and related accessories | 77 | 58 | 58 | — | ||||||||||||
| Hardware sales | 1,362 | 3,160 | 806 | 1,808 | ||||||||||||
| Other accessories, services, shipping and miscellaneous charges | 272 | 231 | 147 | 127 | ||||||||||||
| Total hardware revenue | $ | 1,874 | $ | 4,034 | $ | 1,064 | $ | 2,205 | ||||||||
Gross profit for the six- and three-month periods ended June 30, 2026 and 2025
Gross profit for the six-month period ended June 30, 2026 was $3,835,000, reflecting a gross margin of 81.3%, compared with a gross profit of $4,965,000, reflecting a gross margin of 75.0%, for the six-month period ended June 30, 2025.
Gross margin on hardware revenue for the six-month period ended June 30, 2026 was 60.8% compared to 62.5% for the six-month period ended June 30, 2025. Gross margin on monitoring revenue for the six-month periods ended June 30, 2026 and 2025 was 94.8% and 94.4%, respectively.
Gross profit for the three-month period ended June 30, 2026 was $2,050,000, reflecting a gross margin of 82.4%, compared with a gross profit for the three-month period ended June 30, 2025 of $2,639,000, reflecting a gross margin of 74.9%. Gross margin on hardware revenue for the three-month period ended June 30, 2026 was 64.6% compared to 63.1% for the three-month period ended June 30, 2025. Gross margin on monitoring revenue for the three-month period ended June 30, 2026 was 95.6% compared to 94.6% for the three-month period ended June 30, 2025.
Operating expenses for the six- and three-month periods ended June 30, 2026 and 2025
R&D expense. During the six-month periods ended June 30, 2026 and 2025, R&D expense was $494,000 and $556,000, respectively. During the three-month period ended June 30, 2026, OmniMetrix recorded $239,000 of R&D expense as compared to $265,000 in the three-month period ended June 30, 2025. The decrease in R&D expense in the six-month period ended June 30, 2026 of approximately $62,000 is related to a decrease in expenses and materials paid to third-party consultants offset by salary increases granted to our engineering personnel effective January 1, 2026.
Selling, general and administrative expense. SG&A expense of the consolidated entities in the six-month period ended June 30, 2026 reflected an increase of $237,000, or 8.3%, as compared to the six-month period ended June 30, 2025. OmniMetrix’s SG&A expense increased $51,000, or 2.3%, from $2,173,000 in the six-month period ended June 30, 2025 to $2,224,000 in the six-month period ended June 30, 2026. This increase was primarily due to an increase of (i) $126,000 increase in personnel expenses due to compensation increases and staff additions, (ii) $47,000 in facility expenses due to the rate increase in our office space lease which was amended June 20, 2025, (iii) $25,000 in technology expenses, primarily consulting fees for special projects, (iv) $24,000 in travel and trade show expenses, (v) $13,000 in other expenses in the aggregate offset by a decrease of (vi) $184,000 in commission expenses as the prior year period was significantly higher due to the commissions earned related to the Material Contract. Corporate SG&A expense increased $186,000, or 27.2%, from $685,000 in the six-month period ended June 30, 2025 to $871,000 in the six-month period ended June 30, 2026. This increase was due to an increase of $202,000 in stock compensation expense due to a higher number of options being issued to our officers and directors in January 2026 than in historical periods and the higher stock price and related volatility offset by a net decrease of $16,000 in other public company expenses.
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SG&A expense of the consolidated entities in the three-month period ended June 30, 2026 reflected an increase of $9,000, or 0.6%, as compared to the three-month period ended June 30, 2025. OmniMetrix’s SG&A expense decreased $60,000, or 5.2%, from $1,149,000 in the three-month period ended June 30, 2025 to $1,089,000 in the three-month period ended June 30, 2026. This decrease was primarily due to a decrease of (i) $128,000 in commission expenses and (ii) $18,000 in technology expenses, offset by increases of (iii) $61,000 in personnel expenses, (iv) $22,000 in facility expenses and (v) $3,000 in other expenses. Corporate SG&A expense increased $69,000, or 24.8%, from $278,000 in the three-month period ended June 30, 2025 to $347,000 in the three-month period ended June 30, 2026. This increase was due to an increase of $66,000 in stock compensation and an increase of $3,000 in other corporate overhead expenses.
Net income attributable to Acorn Energy. We recognized net income attributable to Acorn stockholders of $217,000 in the six-month period ended June 30, 2026, compared to net income attributable to Acorn stockholders of $1,184,000 in the six-month period ended June 30, 2025. Our net income during the six-month period ended June 30, 2026 is comprised of pre-tax net income at OmniMetrix of $1,179,000 less federal income taxes of $64,000 and state income taxes of $16,000 offset by corporate expenses, net of interest income, of $870,000, and the non-controlling interest share of our income from OmniMetrix of $12,000. Our net income during the six-month period ended June 30, 2025 is comprised of pre-tax net income at OmniMetrix of $2,285,000 less federal income taxes of $337,000 and state income taxes of $59,000 offset by corporate expenses, net of interest income, of $681,000, and the non-controlling interest share of our income from OmniMetrix of $22,000.
For the three-month period ended June 30, 2026, we recognized net income attributable to Acorn stockholders of $294,000, compared to a net income attributable to Acorn stockholders of $720,000 for the three-month period ended June 30, 2025. Our net income during the three-month period ended June 30, 2026 is comprised of pre-tax net income at OmniMetrix of $754,000 less federal income taxes of $37,000 and state income taxes of $68,000 offset by corporate expenses, net of interest income, of $347,000, and the non-controlling interest share of our income from OmniMetrix of $8,000. Our net income during the three-month period ended June 30, 2025 is comprised of pre-tax net income at OmniMetrix of $1,251,000 less federal income taxes of $206,000 and state income taxes of $36,000 offset by corporate expenses, net of interest income, of $277,000, and the non-controlling interest share of income from OmniMetrix of $12,000.
Liquidity and Capital Resources
At June 30, 2026, we had working capital of $3,688,000. Our working capital includes $4,478,000 of cash and deferred revenue of $2,722,000. Such deferred revenue does not require a significant cash outlay for the revenue to be recognized.
Liquidity
The Company expects that its existing cash as of June 30, 2026 of $4,478,000 will be sufficient to fund our planned operating expenses and capital expenditure requirements for at least the next 12 months from the issuance date of these financial statements.
Contractual Obligations and Commitments
The table below provides information concerning obligations under certain categories of our contractual obligations as of June 30, 2026.
CASH PAYMENTS DUE TO CONTRACTUAL OBLIGATIONS
| Twelve-Month Periods Ending June 30, (in thousands) | ||||||||||||||||||||
| Total | 2027 | 2028-2029 | 2030-2031 | 2032 and thereafter | ||||||||||||||||
| Software agreements | $ | 11 | $ | 11 | $ | — | $ | — | $ | — | ||||||||||
| Operating leases* | 1,094 | 220 | 498 | 376 | — | |||||||||||||||
| Contractual services | 204 | 199 | 5 | — | — | |||||||||||||||
| Purchase commitments** | 434 | 434 | — | — | — | |||||||||||||||
| Total contractual cash obligations | $ | 1,743 | $ | 864 | $ | 503 | $ | 376 | $ | — | ||||||||||
*Reflects the gross amount of the payments to be made under the operating lease liabilities. Does not include rent amounts to be received under the sublease.
**Reflects open purchase orders for components/parts to be delivered over the next twelve months as sales forecast requires.
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| ITEM 3. | QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK |
Not applicable.
| ITEM 4. | CONTROLS AND PROCEDURES |
Evaluation of Disclosure Controls and Procedures
Our management, with the participation of our CEO and CFO, has evaluated the effectiveness of the design and operation of our disclosure controls and procedures as of the end of the period covered by this quarterly report on Form 10-Q. Based on this evaluation, our CEO and CFO concluded that our disclosure controls and procedures were effective as of June 30, 2026.
As noted in our Annual Report on Form 10-K for the year ended December 31, 2025, we employ a decentralized internal control methodology, coupled with management’s oversight, whereby our 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 the Company’s external consolidated financial statements.
Changes in Internal Control Over Financial Reporting
There were no changes in our internal control over financial reporting (as such term is defined in Rule 13a-15(f) under the Exchange Act) during the quarter ended June 30, 2026 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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PART II
| ITEM 5. | OTHER INFORMATION |
During
the second quarter of fiscal year 2026, none of our directors or officers
| ITEM 6. | EXHIBITS |
| # | This exhibit is filed or furnished herewith. |
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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 thereunto duly authorized.
| ACORN ENERGY, INC. | ||
| Dated: August 6, 2026 | ||
| By: | /s/ TRACY S. CLIFFORD | |
| Tracy S. Clifford | ||
| Chief Financial Officer | ||
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