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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

FORM 10-Q

 

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

SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended June 30, 2023

 

or

 

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

 

For the transition period from to

 

Commission file number: 001-33886

 

ACORN ENERGY, INC.

(Exact name of registrant as specified in its charter)

 

Delaware   22-2786081

(State or other jurisdiction

of incorporation or organization)

  

(I.R.S. Employer

Identification No.)

 

1000 N West Street, Suite 1200, Wilmington,

Delaware

   19801
(Address of principal executive offices)   (Zip Code)

 

410-654-3315

(Registrant’s telephone number, including area code)

 

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

 

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

 

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

 

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

 

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

 

  Large accelerated filer ☐ Accelerated filer ☐
  Non-accelerated filer ☒ Smaller reporting company ☒
  Emerging growth company ☐  

 

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

 

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

 

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

 

Class   Outstanding at August 8, 2023
Common Stock, $0.01 par value per share   39,757,589  

 

 

 

 

 

 

ACORN ENERGY, INC.

Quarterly Report on Form 10-Q

for the Quarterly Period Ended June 30, 2023

 

TABLE OF CONTENTS

 

  PAGE 
PART I Financial Information  
   
Item 1. Unaudited Condensed Consolidated Financial Statements: 3
   
Condensed Consolidated Balance Sheets as of June 30, 2023 and December 31, 2022 (Audited) 3
   
Condensed Consolidated Statements of Operations for the three and six months ended June 30, 2023 and 2022 4
   
Condensed Consolidated Statements of Changes in Stockholders’ Deficit for the three and six months ended June 30, 2023 and 2022 5
   
Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2023 and 2022 6
   
Notes to Condensed Consolidated Financial Statements 7
   
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations 16
   
Item 3. Quantitative and Qualitative Disclosures About Market Risk 22
   
Item 4. Controls and Procedures 22
   
PART II Other Information  
   
Item 6. Exhibits 23
   
Signatures 24

 

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, 2023		   As of
December 31, 2022		 
   (Unaudited)   (Audited) 
ASSETS          
Current assets:          
Cash  $1,573   $1,450 
Accounts receivable, net   701    597 
Inventory, net   803    789 
Deferred cost of goods sold (COGS)   917    887 
Other current assets   398    288 
Total current assets   4,392    4,011 
Property and equipment, net   614    653 
Operating right-of-use assets, net   246    298 
Deferred COGS   733    807 
Other assets   224    215 
Total assets  $6,209   $5,984 
LIABILITIES AND STOCKHOLDERS’ DEFICIT          
Current liabilities:          
Accounts payable  $321   $243 
Accrued expenses   157    171 
Deferred revenue   4,154    3,984 
Operating lease liabilities   119    116 
Other current liabilities   30    58 
Total current liabilities   4,781    4,572 
Long-term liabilities:          
Deferred revenue   2,213    2,187 
Operating lease liabilities   160    220 
Other long-term liabilities   18    16 
Total long-term liabilities   2,391    2,423 
Commitments and contingencies (Note 7)   -    - 
Stockholders’ deficit:          
Acorn Energy, Inc. stockholders          
Common stock - $0.01 par value per share: Authorized – 42,000,000 shares; issued and outstanding – 39,757,589 and 39,722,589 shares at June 30, 2023 and December 31, 2022, respectively   397    397 
Additional paid-in capital   102,924    102,889 
Accumulated stockholders’ deficit   (101,256)   (101,267)
Treasury stock, at cost – 801,920 shares at June 30, 2023 and December 31, 2022   (3,036)   (3,036)
Total Acorn Energy, Inc. stockholders’ deficit   (971)   (1,017)
Non-controlling interest   8    6 
Total stockholders’ deficit   (963)   (1,011)
Total liabilities and stockholders’ deficit  $6,209   $5,984 

 

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)

 

    2023     2022     2023     2022  
   

Six months ended

June 30,

    

Three months ended

June 30,

  
    2023     2022     2023     2022  
                         
Revenue   $ 3,722     $ 3,372     $ 1,973     $ 1,621  
COGS     916       868       483       375  
Gross profit     2,806       2,504       1,490       1,246  
Operating expenses:                                
Research and development (R&D) expense     402       410       188       212  
Selling, general and administrative (SG&A) expense     2,416       2,387       1,219       1,205  
Impairment of software     —       51       —       51  
Total operating expenses     2,818       2,848       1,407       1,468  
Operating (loss) income     (12 )     (344 )     83       (222 )
Interest income (expense), net     27       (1 )     16       (1 )
Income (loss) before income taxes     15       (345 )     99       (223 )
Income tax expense     —       —       —       —  
Net income (loss)     15       (345 )     99       (223 )
Non-controlling interest share of net income     (4 )     (1 )     (3 )     -*
Net income (loss) attributable to Acorn Energy, Inc. stockholders   $ 11     $ (346 )   $ 96     $ (223 )
                                 
Basic and diluted net income (loss) per share attributable to Acorn Energy, Inc. stockholders:   $ 0.00     $ (0.01 )   $ 0.00     $ (0.01 )
Weighted average number of shares outstanding attributable to Acorn Energy, Inc. stockholders – basic and diluted                                
Basic     39,746       39,688       39,758       39,688  
Diluted     39,780       39,688       39,784       39,688  

 

* Less than $1

 

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 DEFICIT (UNAUDITED)

(IN THOUSANDS)

 

   Number of Shares   Common Stock   Additional Paid-In Capital   Accumulated Deficit   Number of Treasury Shares   Treasury Stock  

Total Acorn

Energy, Inc.

Stockholders’

Deficit

   Non-
controlling interests		   Total Deficit 
   Three and Six Months Ended June 30, 2023 
   Number of Shares   Common Stock   Additional Paid-In Capital   Accumulated Deficit   Number of Treasury Shares   Treasury Stock  

Total Acorn

Energy, Inc.

Stockholders’

Deficit

   Non-
controlling interests		   Total Deficit 
Balances as of December 31, 2022   39,723   $397   $102,889   $(101,267)   802   $(3,036)  $(1,017)  $6   $(1,011)
Net loss   —    —    —    (85)   —    —    (85)   1    (84)
Proceeds from warrant exercise   35    —*    5    —    —    —    5    —    5 
Accrued dividend in OmniMetrix preferred shares   —    —    —    —    —    —    —    (1)   (1)
Stock-based compensation   —    —    17    —    —    —    17    —    17 
Balances as of March 31, 2023   39,758   $397   $102,911   $(101,352)   802   $(3,036)  $(1,080)  $6   $(1,074)
Net income   —    —    —    96    —    —    96    3    99 
Accrued dividend in OmniMetrix preferred shares   —    —    —    —    —    —    —    (1)   (1)
Stock-based compensation   —    —    13    —    —    —    13    —    13 
Balances as of June 30, 2023   39,758   $397   $102,924   $(101,256)   802   $(3,036)  $(971)  $8   $(963)

 

   Number of Shares   Common Stock   Additional Paid-In Capital   Accumulated Deficit   Number of Treasury Shares   Treasury Stock   Total Acorn
Energy, Inc.
Stockholders’
Deficit		  

Non-

controlling interests

  

Total

Stockholders’ Deficit

 
   Three and Six Months Ended June 30, 2022 
   Number of Shares   Common Stock   Additional Paid-In Capital   Accumulated Deficit   Number of Treasury Shares   Treasury Stock   Total Acorn
Energy, Inc.
Stockholders’
Deficit		  

Non-

controlling interests

  

Total

Stockholders’ Deficit

 
Balances as of December 31, 2021   39,688   $397   $102,804   $(100,634)   802   $(3,036)  $(469)  $8   $(461)
Net loss   —    —    —    (123)   —    —    (123)   1    (122)
Accrued dividend in OmniMetrix preferred shares   —    —    —    —    —    —    —    (1)   (1)
Stock-based compensation   —    —    31    —    —    —    31    —    31 
Balances as of March 31, 2022   39,688   $397   $102,835   $(100,757)   802   $(3,036)  $(561)  $8   $(553)
Net loss   —    —    —    (223)   —    —    (223)   —*    (223)
Accrued dividend in OmniMetrix preferred shares   —    —    —    —    —    —    —    (1)   (1)
Stock-based compensation   —    —    22    —    —    —    22    —    22 
Balances as of June 30, 2022   39,688   $397   $102,857   $(100,980)   802   $(3,036)  $(762)  $7   $(755)

 

* Less than $1

 

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)

 

   2023   2022 
   Six months ended June 30, 
   2023   2022 
Cash flows provided by (used in) operating activities:          
Net income (loss)  $15   $(345)
Depreciation and amortization   76    48 
Impairment of inventory   8    — 
Impairment of software   —    51 
Non-cash lease expense   63    59 
Stock-based compensation   30    53 
Change in operating assets and liabilities:          
(Increase) decrease in accounts receivable   (104)   292 
Increase in inventory   (22)   (298)
Decrease (increase) in deferred COGS   44    (117)
Increase in other current assets and other assets   (119)   (1)
Increase (decrease) in accounts payable and accrued expenses   64    (125)
Increase in deferred revenue   196    242 
Decrease in operating lease liability   (67)   (62)
(Decrease) increase in other current liabilities and non-current liabilities   (29)   9 
Net cash provided by (used in) operating activities   155    (194)
           
Cash flows used in investing activities:          
Investments in technology   (37)   (266)
Other capital investments   —    (3)
Net cash used in investing activities   (37)   (269)
           
Cash flows used in financing activities:          
Warrant exercise proceeds   5    — 
Net cash provided by financing activities   5    — 
           
Net increase (decrease) in cash   123    (463)
Cash at the beginning of the year   1,450    1,722 
Cash at the end of the period  $1,573   $1,259 
           
Supplemental cash flow information:          
Cash paid during the period for:          
Interest  $1   $1 
           
Non-cash investing and financing activities:          
Accrued preferred dividends to former CEO of OmniMetrix  $2   $2 

 

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. and its subsidiaries, OmniMetrix, LLC and OMX Holdings, Inc. (collectively, “Acorn” or “the Company”) have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and with the instructions to Article 8 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete consolidated financial statements. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation have been included. Operating results for the six- and three-month periods ended June 30, 2023 and 2022 are not necessarily indicative of the results that may be expected for the year ending December 31, 2023. All dollar amounts are rounded to the nearest thousand and, thus, are approximate.

 

These unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and footnotes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022, filed with the Securities and Exchange Commission on March 16, 2023.

 

NOTE 2—ACCOUNTING POLICIES

 

Use of Estimates in Preparation of Financial Statements

 

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

 

As applicable to these unaudited condensed consolidated financial statements, the most significant estimates and assumptions relate to uncertainties with respect to revenue recognition and management’s projections.

 

Concentrations of Credit Risk

 

Financial instruments, which potentially subject the Company to concentrations of credit risk, consist principally of cash and trade accounts receivable. The Company’s cash was deposited with a U.S. bank and amounted to $1,573,000 at June 30, 2023. The Company does not believe there is a significant risk of non-performance by its counterparties. For the three- and six-month periods ended June 30, 2023, there was one customer (the same customer in both periods) that represented 21% and 15% of the Company’s total invoiced sales, respectively. At June 30, 2023, the Company had two customers that represented greater than 10% of our accounts receivable with balances representing 25% and 14% of the Company’s total accounts receivable. As of August 8, 2023, we have collected 64% of the outstanding amount of $277,000, in the aggregate due from these two customers as of June 30, 2023. This represents 100% from one of the two customers which had $177,000 outstanding. Approximately 12% of the accounts receivable at December 31, 2022 was due from one customer which was subsequently collected in full. Credit risk with respect to the balance of trade receivables is generally diversified due to the number of entities comprising the Company’s customer base. Although we do not believe there is significant risk of non-performance by these counterparties, any failures or defaults on their part could negatively impact the value of our financial instruments and could have a material adverse effect on our business, operations or financial condition.

 

Inventory

 

Inventories are comprised of components (raw materials), work-in-process 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.

 

7

 

 

All inventories are periodically reviewed to identify slow-moving and obsolete inventory. Management conducted an assessment and wrote-off inventory carried at $8,000 for the six months ended June 30, 2023, of which $5,000 was written off in the three months ended June 30, 2023.

 

Basic and Diluted Net Income (Loss) Per Share

 

Basic net income (loss) per share is computed by dividing the net income (loss) attributable to Acorn Energy, Inc. by the weighted average number of shares outstanding during the period, excluding treasury stock. Diluted net income (loss) per share is computed by dividing the net income (loss) by the weighted average number of shares outstanding plus the dilutive potential of common shares which would result from the exercise of stock options. The dilutive effects of stock options are excluded from the computation of diluted net income (loss) per share if doing so would be antidilutive. For the six-month period ending June 30, 2023, the number of options that were excluded from the computation of diluted net loss, as they had an antidilutive effect, was 897,000 (which have a weighted average exercise price of $0.43). For the three-month period ending June 30, 2023, the number of options that were excluded from the computation of diluted net loss, as they had an antidilutive effect, was 1,003,039 (which have a weighted average exercise price of $0.42). For both the six- and three-month periods ending June 30, 2022, the number of options that were excluded from the computation of diluted net loss, as they had an antidilutive effect, was 979,000 (which have a weighted average exercise price of $0.41) and the number of warrants that were excluded from the computation of diluted net loss, as they had an antidilutive effect, was 35,000 (which had a weighted average exercise price of $0.13).

 

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

 

   2023   2022   2023   2022 
  

Six months ended

June 30,

  

Three months ended

June 30,

 
   2023   2022   2023   2022 
Net income (loss) available to common stockholders  $11   $(346)  $96   $(223)
                     
Weighted average share outstanding:                    
Basic   39,746    39,688    39,758    39,688 
Add: Stock options   34    —    26    — 
Diluted   39,780    39,688    39,784    39,688 
                     
Basic and diluted net income (loss) per share  $0.00   $(0.01)  $0.00   $(0.01)

 

Recently Adopted Accounting Standards

 

Other than the pronouncement noted below, there have been no recent accounting pronouncements or changes in accounting standards during the six-month period ended June 30, 2023 that would affect the Company’s financial statements.

 

On January 1, 2023, the Company adopted ASU 2016-13, “Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments.” This guidance was issued to provide financial statement users with more useful information about the expected credit losses on financial instruments and other commitments to extend credit held by a reporting entity at each reporting date. Specifically, this guidance requires entities to utilize a new “expected loss” model as it relates to trade and other receivables. The adoption of the standard impacts the way the Company estimates the allowance for doubtful accounts on its trade and other receivables. Refer to Note 4, “Allowance for Credit Losses,” for further information regarding the Company’s allowance for expected credit losses.

 

8

 

 

NOTE 3—LIQUIDITY

 

As of June 30, 2023, the Company had cash of $1,573,000.

 

At June 30, 2023, the Company had negative working capital of $389,000. The Company’s working capital includes $1,573,000 of cash and deferred revenue of $4,154,000. Such deferred revenue does not require a significant cash outlay for the revenue to be recognized. Net cash increased during the six months ended June 30, 2023 by $123,000, of which $155,000 was provided by operating activities, $37,000 was used in investing activities and $5,000 was provided by financing activities.

 

As of August 8, 2023, the Company had cash of $1,738,000. The Company believes that such cash, plus the cash generated from operations, will provide sufficient liquidity to finance the operating activities of the Company at their current level of operations for the twelve months from the issuance of these unaudited condensed consolidated financial statements in particular. The Company may, at some point, elect to obtain a new line of credit or other source of financing to fund additional investments in the business.

 

NOTE 4—ALLOWANCE FOR CREDIT LOSSES

 

For the Company, ASU 2016-13, “Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments,” applies to its contract assets (deferred COGS and deferred sales commissions), lease receivables (sublease, see Note 6) and trade receivables. There are no expected or estimated credit losses on the Company’s contract assets or its lease receivable based on the Company’s implementation of ASU 2016-13.

 

The Company’s trade receivables primarily arise from the sale of our products to independent residential dealers, industrial distributors and dealers, national and regional retailers, equipment distributors, solar installers, and certain end users with payment terms generally ranging from 30 to 60 days. The Company evaluates the credit risk of a customer when extending credit based on a combination of various financial and qualitative factors that may affect the customers’ ability to pay. These factors include the customers’ financial condition and past payment experience.

 

The Company maintains an allowance for credit losses, which represents an estimate of expected losses over the remaining contractual life of its receivables considering current market conditions and estimates for supportable forecasts when appropriate. The Company measures expected credit losses on its trade receivables on an entity-by-entity basis. The estimate of expected credit losses considers a historical loss experience rate that is adjusted for delinquency trends, collection experience, and/or economic risk where appropriate. Additionally, management develops a specific allowance for trade receivables known to have a high risk of expected future credit loss.

 

The Company has historically experienced immaterial write-offs given the nature of the customers that receive credit. As of June 30, 2023, the Company had gross receivables of $707,000 and an allowance for credit losses of $6,000.

 

The following is a tabular reconciliation of the Company’s allowance for credit losses:

  

  

June 30, 2023

  

December 31, 2022

 
   As of 
  

June 30, 2023

  

December 31, 2022

 
   (in thousands) 
Balance at beginning of period  $10   $6 
Provision for credit losses   2    3 
Net (charge-offs) credits   (6)   1 
Balance at end of period  $6   $10 

 

9

 

 

NOTE 5—INVENTORY

 

  

June 30, 2023

  

December 31, 2022

 
   As of 
  

June 30, 2023

  

December 31, 2022

 
   (in thousands) 
Raw materials  $729   $684 
Finished goods   74    105 
Inventory net  $803   $789 

 

At June 30, 2023 and December 31, 2022, the Company’s inventory reserve was $4,000.

 

All inventories are periodically reviewed to identify slow-moving and obsolete inventory. Management conducted an assessment and wrote-off inventory carried at $8,000 for the six months ended June 30, 2023, of which $5,000 was written off in the three months ended June 30, 2023.

 

NOTE 6—LEASES

 

OmniMetrix leases office space and office equipment under operating lease agreements. The office lease has an expiration date of September 30, 2025. The office equipment lease was entered into in April 2019 and has a sixty-month term. Operating lease payments for the six months ended June 30, 2023 and 2022 were $63,000 and $62,000, respectively. Operating lease payments for the three months ended June 30, 2023 and 2022 were $32,000 and $32,000, respectively. The future minimum lease payments on non-cancellable operating leases as of June 30, 2023 using a discount rate of 4.5% are $279,000. The 4.5% discount rate used is the incremental borrowing rate which, as defined in ASC 842, is the rate of interest that a lessee would have to pay to borrow, on a collateralized basis, over a similar term and in a similar economic environment, an amount equal to the lease payments.

 

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

 

  

For the Six Months

Ending June 30,

 
   2023   2022 
Cash paid for operating lease liabilities  $63   $62 

 

Supplemental balance sheet information related to leases consisted of the following:

  

    2023  
Weighted average remaining lease terms for operating leases     2.24 years  

 

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, 2023 (in thousands):

 

  

Year ended

June 30,

 
2024  $129 
2025   131 
2026   33 
Total undiscounted cash flows   293 
Less: Imputed interest   (14)
Present value of operating lease liabilities (a)  $279 

 

  (a) Includes current portion of $119,000 for operating leases.

 

10

 

 

On July 6, 2021, the Company entered into an agreement with King Industrial Realty, Inc., to sublease from the Company 1,900 square feet of office space of the Company’s 21,000 square feet of office and production space in the Hamilton Mill Business Park located in Buford, Georgia, for a monthly sublease payment of $2,375 (plus an annual escalator each year of 3%) which includes the base rent plus a pro-rata share of utilities, property taxes and insurance. Fifty percent of any excess rent received above the per square foot amount that the Company pays will be remitted to the Company’s landlord less the allocation of any shared expenses and leasehold improvements specific to the sublease. The estimated amount the Company expects to remit to the landlord each future year of the sublease is $6,100 per year. The sublease commenced on October 1, 2021 and will run through September 30, 2025 which is the end of the Company’s lease term with its landlord. Below are the future payments (in thousands) expected under the sublease net of the estimated annual service cost of $2,220 (gross of the estimated amount expected to be remitted to our landlord):

 

   Year ended June 30, 
2024  $28 
2025   29 
2026   7 
Total undiscounted cash flows  $64 

 

NOTE 7—COMMITMENTS AND CONTINGENCIES

 

The Company has $279,000 in operating lease obligations payable through 2026 and $41,000 in other contractual obligations. The Company also has $631,000 in open purchase order commitments payable through October 2023.

 

NOTE 8—EQUITY

 

(a) General

 

At June 30, 2023 the Company had issued and outstanding 39,757,589 shares of its common stock, par value $0.01 per share. Holders of outstanding common stock are entitled to receive dividends when and if declared by the Board and to share ratably in the assets of the Company legally available for distribution in the event of a liquidation, dissolution or winding up of the Company.

 

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

 

(b) Summary Employee Option Information

 

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

 

At June 30, 2023, 1,240,351 options were available for grant under the Amended and Restated 2006 Stock Incentive Plan and no options were available for grant under the 2006 Stock Option Plan for Non-Employee Directors. During the six months ended June 30, 2023, 215,000 options were issued of which 110,000 of these options were issued in the three months ended June 30, 2023. The options were issued as follows: an aggregate of 55,000 to directors (excluding the CEO), 35,000 to the CEO, 100,000 to the CFO and an aggregate of 25,000 to employees. In the six and three months ended June 30, 2023, there were no grants to non-employees (other than the directors, CEO and CFO).

 

11

 

 

No options were exercised in the six and three months ended June 30, 2023. The intrinsic value of options outstanding and of options exercisable at June 30, 2023 was $8,000. 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, 2022   943,790   $0.42    4.3 years   $16,000 
Granted   215,000    0.33           
Exercised   —    —           
Forfeited or expired   (20,501)   0.40           
Outstanding at June 30, 2023   1,138,289   $0.40    4.5 years   $8,000 
Exercisable at June 30, 2023   899,258   $0.41    4.0 years   $8,000 

 

The fair value of the options granted of $46,000 was estimated on the grant date using the Black-Scholes option-pricing model with the following weighted average assumptions:

 

Risk-free interest rate     3.9 %
Expected term of options     4.1 years  
Expected annual volatility     94.5 %
Expected dividend yield     — %

 

(c) Stock-based Compensation Expense

 

Stock-based compensation expense included in SG&A expenses in the Company’s unaudited condensed consolidated statements of operations was $30,000 and $53,000 for the six-month periods ended June 30, 2023 and 2022, respectively, and $13,000 and $22,000 for the three-month periods ended June 30, 2023 and 2022, respectively.

 

The total compensation cost related to non-vested awards not yet recognized was $43,000 and $59,000 as of June 30, 2023 and 2022, respectively.

 

(d) Warrants

 

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

 

  

Number

of Warrants

(in shares)

  

Weighted

Average

Exercise

Price Per

Share

  

Weighted

Average

Remaining

Contractual

Life

 
Outstanding at December 31, 2022   35,000   $0.13    2.5 months 
Granted   —    —      
Exercised   (35,000)   0.13      
Forfeited or expired   —    —      
Outstanding at June 30, 2023   —   $—    — 

 

12

 

 

NOTE 9— SEGMENT REPORTING

 

As of June 30, 2023, the Company operates in two reportable operating segments, both of which are performed through the Company’s OmniMetrix subsidiary:

 

  ● Power Generation (“PG”). OmniMetrix’s PG services provide wireless remote monitoring and control systems and IoT applications for residential and commercial/industrial power generation equipment. This includes OmniMetrix’s AIRGuard product, which remotely monitors and controls industrial air compressors and its Smart Annunciator product which is typically sold to commercial customers that require a visual representation of the generator’s status and has a touch-screen display that indicates the current state of that generator.
     
  ● Cathodic Protection (“CP”). OmniMetrix’s CP services provide remote monitoring and control products for cathodic protection systems on oil and 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. OmniMetrix also offers the industry’s first RADTM (Remote AC Mitigation Disconnect) that mounts onto existing Solid-state Decouplers in the field and can remotely disconnect/connect these AC mitigation tools which can drastically reduce a company’s expense while increasing employee safety.

 

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 following tables represent segmented data for the six-month and three-month periods ended June 30, 2023 and 2022 (in thousands):

 

   PG   CP   Total 
Six months ended June 30, 2023:               
Revenues from external customers  $3,196   $526   $3,722 
Segment gross profit   2,495    311    2,806 
Depreciation and amortization   65    11    76 
Segment income (loss) before income taxes  $530   $(40)  $490 
                
Six months ended June 30, 2022:               
Revenues from external customers  $2,825   $547   $3,372 
Segment gross profit   2,164    340    2,504 
Depreciation and amortization   41    8    49 
Segment income (loss) before income taxes*  $262   $(45)  $217 
                
Three months ended June 30, 2023:               
Revenues from external customers  $1,689   $284   $1,973 
Segment gross profit   1,316    174    1,490 
Depreciation and amortization   32    6    38 
Segment income before income taxes  $331   $8   $339 
                
Three months ended June 30, 2022:               
Revenues from external customers  $1,380   $241   $1,621 
Segment gross profit   1,091    155    1,246 
Depreciation and amortization   24    5    29 
Segment income (loss) before income taxes*  $73   $(24)  $49 

 

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

 

13

 

 

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

 

Reconciliation of Segment Income (Loss) to Consolidated Net Income (Loss) Before Income Taxes

 

   2023   2022   2023   2022 
  

Six months ended

June 30,

  

Three months ended

June 30,

 
   2023   2022   2023   2022 
Total net income before income taxes for reportable segments*  $490   $217   $339   $49 
Unallocated cost of corporate headquarters   (475)   (511)   (240)   (221)
Consolidated net income (loss) before income taxes  $15   $(294)  $99   $(172)

 

* Software impairment of $51,000 is not related to a specific segment and, thus, is not included in the “Total net income before income taxes for reportable segments” for the six and three months ended June 30, 2022.

 

NOTE 10—REVENUE

 

The following table disaggregates the Company’s revenue for the six-month and three-month periods ended June 30, 2023 and 2022 (in thousands):

 

   Hardware   Monitoring   Total 
Six months ended June 30, 2023:               
PG Segment  $1,237   $1,959   $3,196 
CP Segment   396    130    526 
Total Revenue  $1,633   $2,089   $3,722 

 

   Hardware   Monitoring   Total 
Six months ended June 30, 2022:               
PG Segment  $1,002   $1,823   $2,825 
CP Segment   414    133    547 
Total Revenue  $1,416   $1,956   $3,372 

 

   Hardware   Monitoring   Total 
Three months ended June 30, 2023:               
PG Segment  $688   $1,001   $1,689 
CP Segment   220    64    284 
Total Revenue  $908   $1,065   $1,973 

 

   Hardware   Monitoring   Total 
Three months ended June 30, 2022:               
PG Segment  $479   $901   $1,380 
CP Segment   176    65    241 
Total Revenue  $655   $966   $1,621 

 

Deferred revenue activity for the six months ended June 30, 2023 can be seen in the table below (in thousands):

 

   Hardware   Monitoring   Total 
Balance at December 31, 2022  $3,751   $2,420   $6,171 
Additions during the period   1,278    2,200    3,478 
Recognized as revenue   (1,192)   (2,090)   (3,282)
Balance at June 30, 2023  $3,837   $2,530   $6,367 
                
Amounts to be recognized as revenue in the twelve-month-period ending:               
June 30, 2024  $2,099    2,055    4,154 
June 30, 2025   1,312    471    1,783 
June 30, 2026 and thereafter   426    4    430 
   $3,837    2,530    6,367 

 

14

 

 

Other revenue of $440,000 was related to customized units, accessories, repairs, and other miscellaneous charges that are recognized to revenue when sold and are not deferred.

 

The amount of hardware revenue recognized during the six months ended June 30, 2023 that was included in deferred revenue at the beginning of the fiscal year was $1,018,000. The amount of monitoring revenue during the six months ended June 30, 2023 that was included in deferred revenue at the beginning of the fiscal year was $1,472,000.

 

Deferred charges relate only to the sale of equipment. Deferred charges activity for the six months ended June 30, 2023 can be seen in the table below (in thousands):

 

      
Balance at December 31, 2022  $1,694 
Additions, net of adjustments, during the period   496 
Recognized as COGS   (540)
Balance at June 30, 2023  $1,650 
      
Amounts to be recognized as COGS in the twelve-month-period ending:     
June 30, 2024  $917 
June 30, 2025   563 
June 30, 2026 and thereafter   170 
   $1,650 

 

Data costs paid to AT&T and the COGS related to sales of upgrade kits, accessories and repairs of $376,000 in the aggregate are expensed as incurred and are not deferred.

 

The following table provides a reconciliation of the Company’s sales commissions contract assets for the six-month period ended June 30, 2023 (in thousands):

 

   Hardware   Monitoring   Total 
Balance at December 31, 2022  $319   $80   $399 
Additions during the period   115    30    145 
Amortization of sales commissions   (97)   (17)   (114)
Balance at June 30, 2023  $337    93    430 

 

The capitalized sales commissions are included in other current assets ($218,000) and other assets ($212,000) in the Company’s unaudited condensed consolidated balance sheets as of June 30, 2023. The capitalized sales commissions are included in other current assets ($196,000) and other assets ($203,000) in the Company’s condensed consolidated balance sheet at December 31, 2022.

 

Amounts to be recognized as sales commission expense in the twelve-month-period ending:

 

      
June 30, 2024  $218 
June 30, 2025   145 
June 30, 2026 and thereafter   67 
Total  $430 

 

The contract assets of deferred COGS and deferred sales commissions are subject to review under ASU 2016-13, see Notes 2 and 4; however, no credit losses on contract assets are expected based on the Company’s implementation of ASU 2016-13.

 

NOTE 11—RELATED PARTY BALANCES AND TRANSACTIONS

 

Officer and Director Fees

 

The Company recorded fees to officers of $261,000 and $261,000 for the six months ended June 30, 2023 and 2022, respectively, and $131,000 and $131,000 for the three months ended June 30, 2023 and 2022, respectively, which are included in SG&A expenses.

 

The Company recorded fees to directors of $34,000 and $30,000 for the six months ended June 30, 2023 and 2022, respectively, and $19,000 and $15,000 for the three months ended June 30, 2023 and 2022, respectively, which are included in SG&A expenses.

 

Intercompany

 

The intercompany balance due to Acorn from OmniMetrix for amounts loaned, accrued interest and expenses paid by Acorn on OmniMetrix’s behalf was $3,112,000 as of June 30, 2023 as compared to $3,677,000 as of December 31, 2022. This balance is eliminated in consolidation. During the six months ended June 30, 2023, the intercompany amount due to Acorn from OmniMetrix decreased by $565,000. This included repayments of $692,000 offset by interest of $89,000 and dividends of $38,000 due to Acorn. During the six months ended June 30, 2022, the intercompany amount due to Acorn from OmniMetrix decreased by $556,000. This included repayments of $780,000 offset by interest of $89,000, dividends of $38,000 due to Acorn and $97,000 in shared expenses paid by Acorn.

 

15

 

 

ACORN ENERGY, INC.

 

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

 

This Form 10-Q contains “forward-looking statements” relating to the Company which represent the Company’s current expectations or beliefs including, but not limited to, statements concerning the Company’s operations, performance, financial condition and growth. For this purpose, any statements contained in this Form 10-Q that are not statements of historical fact are forward-looking statements. Without limiting the generality of the foregoing, words such as “may”, “anticipate”, “intend”, “could”, “estimate” or “continue” or the negative or other comparable terminology are intended to identify forward-looking statements. These statements by their nature involve substantial risks and uncertainties, such as credit losses, dependence on management and key personnel, variability of quarterly results, and the ability of the Company to continue its growth strategy and the Company’s competition, certain of which are beyond the Company’s control. Should one or more of these risks or uncertainties materialize or should the underlying assumptions prove incorrect, or any of the other risks set out under the caption “Risk Factors” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022 occur, actual outcomes and results could differ materially from those indicated in the forward-looking statements.

 

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

 

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

 

FINANCIAL RESULTS BY COMPANY

 

The following table shows, for the periods indicated, the financial results (dollar amounts in thousands) attributable to each of our consolidated companies.

 

   Six months ended June 30, 2023 
   OmniMetrix   Acorn   Total 
Revenue  $3,722   $—   $3,722 
COGS   916    —    916 
Gross profit   2,806    —    2,806 
Gross profit margin   75%        75%
R&D expense   402    —    402 
SG&A expense   1,942    474    2,416 
Operating income (loss)  $462   $(474)  $(12)

 

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

 

16

 

 

   Three months ended June 30, 2023 
   OmniMetrix   Acorn   Total 
Revenue  $1,973   $—   $1,973 
COGS   483    —    483 
Gross profit   1,490    —    1,490 
Gross profit margin   76%        76%
R&D expense   188    —    188 
SG&A expense   979    240    1,219 
Operating income (loss)  $323   $(240)  $83 

 

   Three months ended June 30, 2022 
   OmniMetrix   Acorn   Total 
Revenue  $1,621   $—   $1,621 
COGS   375    —    375 
Gross profit   1,246    —    1,246 
Gross profit margin   77%        77%
R&D expense   212    —    212 
SG&A expense   985    220    1,205 
Impairment of software   51    —    51 
Operating loss  $(2)  $(220)  $(222)

 

BACKLOG

 

As of June 30, 2023, OmniMetrix had a backlog of $6,367,000, primarily comprised of deferred revenue, of which $4,154,000 is expected to be recognized as revenue in the next twelve months. This compares to a backlog of $5,635,000 at June 30, 2022.

 

RECENT DEVELOPMENTS

 

On March 2, 2023, 35,000 warrants that were set to expire on March 16, 2023 were exercised at an exercise price of $0.13 per share by our Chief Executive Officer.

 

OVERVIEW AND TREND INFORMATION

 

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

 

  ● Power Generation (“PG”). OmniMetrix’s PG services provide wireless remote monitoring and control systems and IoT applications for residential and commercial/industrial power generation equipment. This includes our AIRGuard product, which remotely monitors and controls industrial air compressors and our Smart Annunciator product which is typically sold to commercial customers that require a visual representation of the generator’s status and has a touch-screen display that indicates the current state of that generator.
     
  ● Cathodic Protection (“CP”). OmniMetrix’s CP services provide remote monitoring and control products for cathodic protection systems on oil and 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. OmniMetrix also offers the industry’s first RADTM (Remote AC Mitigation Disconnect) that mounts onto existing Solid-state Decouplers in the field and can remotely disconnect/connect these AC mitigation tools which can drastically reduce a company’s expense while increasing employee safety.

 

Each of our PG and CP activities represents a reportable segment. The following analysis should be read together with the segment and revenue information provided in Notes 9 and 10 to the unaudited condensed consolidated financial statements included in this quarterly report.

 

17

 

 

OmniMetrix

 

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

 

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

 

Sales of OmniMetrix monitoring systems include the sale of equipment and of monitoring services. Revenue (and related costs) associated with sale of equipment are recorded to deferred revenue (and deferred charges) upon shipment for PG and CP monitoring units. Revenue and related costs with respect to the sale of new equipment are recognized over the life of the units which is currently estimated to be three years. Revenues from the prepayment 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).

 

Results of Operations

 

The following table sets forth certain information with respect to the unaudited condensed consolidated results of operations of the Company for the six-month periods ended June 30, 2023 and 2022, including the percentage of total revenues during each period attributable to selected components of the Statements of Operations data and for the period-to-period percentage changes in such components. For segment data, see Notes 9 and 10 to the unaudited condensed consolidated financial statements included in this quarterly report.

 

   Six months ended June 30, 
   2023    2022    Change 
   ($,000)   % of revenues    ($,000)   % of revenues   

From

2022 to 2023(1)

 
Revenue  $3,722    100%   $3,372    100%    10%
COGS   916    25%    868    26%    (6)%
Gross profit   2,806    75%    2,504    74%    12%
R&D expense   402    11%    410    12%    2%
SG&A expense   2,416    65%    2,387    71%    (1)%
Impairment of software   —    —%    51    2%    100%
Operating loss   (12)   (*)%    (344)   (10)%    97%
Interest income (expense), net   27    1%    (1)   (*)%    2800%
(Loss) income before income taxes   15    *%    (345)   (10)%    104%
Income tax expense   —    —     —    —%    — 
Net (loss) income   15    *%    (345)   (10)%    104%
Less: Non-controlling interest share of net income   4    *%    1    *%    300%
Net (loss) income attributable to Acorn Energy, Inc.  $11    *%   $(346)   (10)%    103%

 

*result is less than 1%.

(1)parentheses indicate unfavorable change from prior period.

 

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The following table sets forth certain information with respect to the unaudited consolidated results of operations of the Company for the three-month periods ended June 30, 2023 and 2022, including the percentage of total revenues during each period attributable to selected components of the operations statement data and for the period-to-period percentage changes in such components. For segment data, see Notes 9 and 10 to the unaudited condensed consolidated financial statements included in this quarterly report.

 

   Three months ended June 30, 
   2023    2022    Change 
   ($,000)   % of revenues    ($,000)   % of revenues    from
2022 to 2023(1)		 
Revenue  $1,973    100%   $1,621    100%    22%
COGS   483    24%    375    23%    (29)%
Gross profit   1,490    76%    1,246    77%    20%
R&D expense   188    10%    212    13%    11%
SG&A expense   1,219    62%    1,205    74%    (1)%
Impairment of software   —    —%    51    3%    100%
Operating income (loss)   83    4%    (222)   (14)%    137%
Interest income (expense), net   16    1%    (1)   —%    1700%
Income (loss) before income taxes   99    5%    (223)   (14)%    144%
Income tax expense   —    —%    —    —%    —%
Net income (loss)   99    5%    (223)   (14)%    144%
Less: Non-controlling interest share of net income   3    *%    **    *%    300%
Net income (loss) attributable to Acorn Energy, Inc.  $96    5%   $(223)   (14)%    143%

 

*result is less than 1%.

**less than $1

(1)parentheses indicate unfavorable change from prior period.

 

Revenue for the six and three months ended June 30, 2023 and 2022

 

In the six months ended June 30, 2023, revenue increased by $350,000, or 10%, from $3,372,000 in the six months ended June 30, 2022 to $3,722,000 in the six months ended June 30, 2023. Hardware revenue increased by $217,000 from $1,416,000 in the six months ended June 30, 2022 to $1,633,000 in the six months ended June 30, 2023. During the six months ended June 30, 2023, we recorded $92,000 in revenue from the sale of custom TG Pro units that are designed to large customer specifications and monitored by the customer and thus the revenue was not deferred. We did not have any custom unit orders in the first six months ended June 30, 2022. The hardware revenue during the six months ended June 30, 2023, excluding the revenue from the sale of the custom units, was $1,541,000; thus, the increase in hardware revenue excluding the custom units was 9%. This increase was attributed to TG Pro and TG2 revenue increases as well as from installation income realized offset by a decrease in revenue from Hero products as sales of CP products were down period over period. Monitoring revenue increased by $133,000, or 7%, from $1,956,000 in the six months ended June 30, 2022 to $2,089,000 in the six months ended June 30, 2023. The increase in monitoring revenue was due to an increase in the number of connections being monitored.

 

As discussed above, OmniMetrix has two reportable segments, PG and CP. Of the $3,722,000 in revenue recognized in the six months ended June 30, 2023, $3,196,000 was generated by PG activities and $526,000 was generated by CP activities. This represents an increase in revenue from PG activities of $371,000, or 13%, from $2,825,000 in the six months ended June 30, 2022, and a decrease in revenue from CP activities of $21,000, or 4%, from $547,000 in the six months ended June 30, 2022. As noted above, the increase in PG revenue was due to the sale of custom units for which revenue is immediately recognized instead of deferred, an increase in the sale of other PG products and an increase in the number of PG units being monitored.

 

19

 

 

Revenue increased by $352,000, or 22%, from $1,621,000 in the three months ended June 30, 2022 to $1,973,000 in the three months ended June 30, 2023. The increase is due to the same drivers in the six-month period as previously discussed.

 

Of the $1,973,000 in revenue recognized in the three months ended June 30, 2023, $1,689,000 was generated by PG activities and $284,000 was generated by CP activities. As compared to the three months ended June 30, 2022, revenue from PG activities increased $309,000, or 22%, and revenue from CP activities increased $43,000, or 18%.

 

Gross profit for the six and three months ended June 30, 2023 and 2022

 

Gross profit for the six months ended June 30, 2023 was $2,806,000, reflecting a gross margin of 75%, compared with a gross profit of $2,504,000, reflecting a gross margin of 74%, for the six months ended June 30, 2022.

 

Gross margin on hardware revenue for the six months ended June 30, 2023 was 53% compared to 50% for the six months ended June 30, 2022. Gross margin on monitoring revenue for the six months ended June 30, 2023 was 93% compared to 92% for the six months ended June 30, 2022.

 

Gross profit for the three months ended June 30, 2023 was $1,490,000, reflecting a gross margin of 76%, compared with a gross profit for the three months ended June 30, 2022 of $1,246,000, reflecting a gross margin of 77%. Gross margin on hardware revenue for the three months ended June 30, 2023 and 2022 was 55%. Gross margin on monitoring revenue for the three months ended June 30, 2023 was 93% compared to 92% for the three months ended June 30, 2022.

 

Operating expenses for the six and three months ended June 30, 2023 and 2022

 

OmniMetrix R&D expense. During the six months ended June 30, 2023 and 2022, R&D expense was $402,000 and $410,000, respectively. During the three months ended June 30, 2023, OmniMetrix recorded $188,000 of R&D expense as compared to $212,000 in the three months ended June 30, 2022. The decrease in R&D expense in the three months ended June 30, 2023 of $24,000 is due to a reduction of R&D hours related to the phased retirement of one of our engineers.

 

OmniMetrix SG&A expense. During the six months ended June 30, 2023, OmniMetrix recorded SG&A expense of $1,942,000, compared to SG&A expense of $1,877,000 in the six months ended June 30, 2022, an increase of $65,000, or 3%. During the three months ended June 30, 2022, OmniMetrix recorded SG&A expense of $979,000, compared to SG&A expense of $985,000 in the three months ended June 30, 2022, a decrease of $6,000, or less than 1%. The increase in the six-month period was primarily due to an increase of (i) $30,000 in sales commission amortization, (ii) $27,000 in amortization primarily related to IT assets, (iii) $11,000 in personnel costs, (iv) $9,000 in travel and trade show expenses, offset by a decrease of (v) $9,000 in technology consulting and software license fees and (vi) $3,000 in net aggregate decreases in other expense categories.

 

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

 

Corporate SG&A expense. Corporate SG&A expense was $474,000 in the six months ended June 30, 2023, a decrease of $36,000, or 7%, from the $510,000 of corporate SG&A expense reported in the six months ended June 30, 2022. This decrease was due to a decrease of (i) $18,000 in audit fees due to the timing of when the services were performed as some were performed in the fourth quarter of 2022, (ii) $19,000 in stock compensation expense, (iii) $9,000 in insurance expenses offset by a net increase of (iv) $10,000 in other public company expenses.

 

Corporate SG&A expense for the three months ended June 30, 2023 increased $20,000, or 9%, to $240,000 from $220,000 in the three months ended June 30, 2022 primarily due to the timing of tax professional fees along with increases in other public company costs. Second quarter 2023 corporate SG&A expense of $240,000 was higher by $6,000 than first quarter 2023 corporate SG&A expense of $234,000. We expect the quarterly corporate overhead to increase due to increased audit fees and board fees in addition to costs that may be required to support the growth of our OmniMetrix subsidiary.

 

20

 

 

Net income (loss) attributable to Acorn Energy. We recognized net income attributable to Acorn stockholders of $11,000 in the six months ended June 30, 2023, compared to net loss attributable to Acorn stockholders of $346,000 in the six months ended June 30, 2022. Our net income during the six months ended June 30, 2023 is comprised of net income at OmniMetrix of $490,000 offset by corporate expenses, net of interest income of $1,000, of $475,000 and the non-controlling interest share of our income from OmniMetrix of $4,000. Our net income during the six months ended June 30, 2022 is comprised of net income at OmniMetrix of $167,000 offset by corporate expenses, including net interest expense, of $512,000 and the non-controlling interest share of our income from OmniMetrix of $1,000.

 

For the three months ended June 30, 2023, we recognized net income attributable to Acorn stockholders of $96,000, compared to a net loss attributable to Acorn stockholders of $223,000 for the three months ended June 30, 2022. Our net income during the three months ended June 30, 2023 is comprised of net income at OmniMetrix of $339,000 offset by corporate expenses of $240,000 and the non-controlling interest share of our income from OmniMetrix of $3,000. Our net loss in the three months ended June 30, 2022 is comprised of net loss at OmniMetrix of $1,000 plus corporate expenses of $222,000. The non-controlling interest share of OmniMetrix during this period rounded to zero.

 

Liquidity and Capital Resources

 

At June 30, 2023, we had negative working capital of $389,000. Our working capital includes $1,573,000 of cash and deferred revenue of $4,154,000. The deferred revenue does not require a significant cash outlay for the revenue to be recognized.

 

During the six months ended June 30, 2023, our OmniMetrix subsidiary provided $708,000 from operations while our corporate headquarters used $553,000 during the same period.

 

During the six months ended June 30, 2023, we invested $37,000 in technology and received proceeds of $5,000 from financing activities related to the exercise of warrants.

 

Other Liquidity Matters

 

OmniMetrix owes Acorn $3,112,000 for loans, accrued interest and expenses advanced to it by Acorn. OmniMetrix made repayments to Acorn of $692,000 in the first half of 2023 offset by interest, dividends and other advances of $127,000 in the aggregate.

 

As of August 8, 2023, we had cash of $1,738,000. We believe that such cash, plus the cash generated from operations, will provide sufficient liquidity to finance the operating activities of Acorn and OmniMetrix at their current level of operations for the twelve months from the issuance of these unaudited condensed consolidated financial statements. We may, at some point, elect to obtain a new line of credit or other source of financing to fund additional investments in the business.

 

Contractual Obligations and Commitments

 

The table below provides information concerning obligations under certain categories of our contractual obligations as of June 30, 2023.

 

CASH PAYMENTS DUE TO CONTRACTUAL OBLIGATIONS

 

   Twelve Month Periods Ending June 30, (in thousands) 
   Total   2024   2025-2026   2027-2028   2029 and thereafter 
Software agreements  $14   $14   $—   $—   $— 
Operating leases*   293    129    164    —    — 
Contractual services   26    26    —    —    — 
Purchase commitments**   631    631    —    —    — 
Total contractual cash obligations  $964   $800   $164   $—   $— 

 

*Reflects the gross amount of 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.

 

21

 

 

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

 

Concentrations of Credit Risk

 

Financial instruments, which potentially subject the Company to concentrations of credit risk, consist principally of cash and trade accounts receivable. The Company’s cash was deposited with a U.S. bank and amounted to $1,573,000 at June 30, 2023. The Company does not believe there is a significant risk of non-performance by its counterparties. For the three- and six-month periods ended June 30, 2023, there was one customer (the same customer in both periods) that represented 21% and 15% of the Company’s total invoiced sales, respectively. At June 30, 2023, the Company had two customers that represented greater than 10% of our accounts receivable with balances representing 25% and 14% of the Company’s total accounts receivable. As of August 8, 2023, we have collected 64% of the outstanding amount of $277,000, in the aggregate due from these two customers as of June 30, 2023. This represents 100% from one of the two customers which had $177,000 outstanding. Approximately 12% of the accounts receivable at December 31, 2022 was due from one customer which was subsequently collected in full. Credit risk with respect to the balance of trade receivables is generally diversified due to the number of entities comprising the Company’s customer base.

 

Fair Value of Financial Instruments

 

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

 

ITEM 4. CONTROLS AND PROCEDURES

 

As of the end of the period covered by this report, we carried out an evaluation, under the supervision and with the participation of our management, including the Chief Executive Officer and the Chief Financial Officer, of the design and operation of our disclosure controls and procedures (as such term is defined in Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)). Based on this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were not effective due to material weaknesses noted in our Annual Report on Form 10-K for the year ended December 31, 2022, to ensure that the information required to be disclosed by us in the reports we file or submit under the Exchange Act is (i) accumulated and communicated to our management (including our Chief Executive Officer and Chief Financial Officer) in a timely manner, and (ii) recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms.

 

As noted in our Annual Report on Form 10-K for the year ended December 31, 2022, we employ a decentralized internal control methodology, coupled with management’s oversight, whereby our OmniMetrix subsidiary is responsible for mitigating its risks to financial reporting by implementing and maintaining effective control policies and procedures and subsequently translating that respective risk mitigation up and through to the parent level and to our external financial statements. In addition, as our operating subsidiary is not large enough to effectively mitigate certain risks by segregating incompatible duties, management must employ compensating mechanisms throughout our company in a manner that is feasible within the constraints in which it operates.

 

The material weaknesses management identified were caused by an insufficient complement of resources at our OmniMetrix subsidiary and limited ERP system capabilities, such that individual control policies and procedures at the subsidiary could not be implemented, maintained, or remediated when and where necessary. As a result, a majority of the significant process areas management identified for our OmniMetrix subsidiary had one or more material weaknesses present. This condition was further exacerbated as the Company could not demonstrate that each of the principles described within the Committee of Sponsoring Organizations of the Treadway Commission’s document entitled “Internal Control - Integrated Framework (2013)” were present and functioning.

 

Changes in Internal Control Over Financial Reporting

 

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

 

22

 

 

PART II

 

ITEM 6. EXHIBITS.

 

10.1* Amended and Restated Consulting Agreement, dated June 1, 2023, by and between Acorn Energy, Inc. and Tracy Clifford Consulting, LLC (incorporated herein by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed June 2, 2023).
   
#31.1 Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
   
#31.2 Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
   
#32.1 Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
   
#32.2 Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
   
#101.1 The following financial statements from Acorn Energy’s Form 10-Q for the quarter ended June 30, 2023, filed on August 10, 2023, formatted in XBRL (eXtensible Business Reporting Language): (i) Condensed Consolidated Balance Sheets, (ii) Condensed Consolidated Statements of Operations, (iii) Condensed Consolidated Statements of Changes in Deficit, (iv) Condensed Consolidated Statements of Cash Flows and (v) Notes to Condensed Consolidated Financial Statements, tagged as blocks of text.
   
#104.1 Cover Page Interactive Data File (embedded within the Inline XBRL document)
   
* This exhibit includes a management contract, compensatory plan or arrangement in which one or more directors or executive officers of the Registrant participate.
   
# This exhibit is filed or furnished herewith.

 

23

 

 

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 10, 2023    
     
  By: /s/ TRACY S. CLIFFORD
    Tracy S. Clifford
    Chief Financial Officer

 

24

 

 

Exhibit 31.1

 

I, Jan H. Loeb, the Chief Executive Officer of Acorn Energy, Inc., certify that:

 

  1. I have reviewed this report on Form 10-Q of Acorn Energy, Inc.;
     
  2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
     
  3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
     
  4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

 

  (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
     
  (b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
     
  (c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
     
  (d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

 

  5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

 

  (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
     
  (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

 

Dated: August 10, 2023

 

By: /s/ JAN H. LOEB  
  Jan H. Loeb  
  Chief Executive Officer  

 

 

 

 

Exhibit 31.2

 

I, Tracy S. Clifford, the Chief Financial Officer of Acorn Energy, Inc., certify that:

 

  1. I have reviewed this report on Form 10-Q of Acorn Energy, Inc.;
     
  2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
     
  3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
     
  4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

 

  (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
     
  (b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
     
  (c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
     
  (d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

 

  5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

 

  (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
     
  (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

 

Dated: August 10, 2023

 

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

 

 

 

 

Exhibit 32.1

 

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

 

In connection with the Quarterly Report on Form 10-Q of Acorn Energy, Inc. (the “Company”) for the quarterly period ended June 30, 2023, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Jan H. Loeb, Chief Executive Officer of the Company, hereby certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

 

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
   
(2) The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.

 

/s/ Jan H. Loeb  
Jan H. Loeb  
Chief Executive Officer  
August 10, 2023  

 

 

 

 

Exhibit 32.2

 

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

 

In connection with the Quarterly Report on Form 10-Q of Acorn Energy, Inc. (the “Company”) for the quarterly period ended June 30, 2023, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Tracy S. Clifford, Chief Financial Officer of the Company, hereby certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

 

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
   
(2) The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.

 

/s/ Tracy S. Clifford  
Tracy S. Clifford  
Chief Financial Officer  
August 10, 2023  

 

 

 

v3.23.2
Cover - shares
 6 Months Ended
Jun. 30, 2023
Aug. 08, 2023
Cover [Abstract]    
Document Type 10-Q  
Amendment Flag false  
Document Quarterly Report true  
Document Transition Report false  
Document Period End Date Jun. 30, 2023  
Document Fiscal Period Focus Q2  
Document Fiscal Year Focus 2023  
Current Fiscal Year End Date --12-31  
Entity File Number 001-33886  
Entity Registrant Name ACORN ENERGY, INC.  
Entity Central Index Key 0000880984  
Entity Tax Identification Number 22-2786081  
Entity Incorporation, State or Country Code DE  
Entity Address, Address Line One 1000 N West Street  
Entity Address, Address Line Two Suite 1200  
Entity Address, City or Town Wilmington  
Entity Address, State or Province DE  
Entity Address, Postal Zip Code 19801  
City Area Code 410  
Local Phone Number 654-3315  
Entity Current Reporting Status Yes  
Entity Interactive Data Current Yes  
Entity Filer Category Non-accelerated Filer  
Entity Small Business true  
Entity Emerging Growth Company false  
Entity Shell Company false  
Entity Common Stock, Shares Outstanding   39,757,589
v3.23.2
Condensed Consolidated Balance Sheets - USD ($)
Jun. 30, 2023
Dec. 31, 2022
Current assets:    
Cash $ 1,573,000 $ 1,450,000
Accounts receivable, net 701,000 597,000
Inventory, net 803,000 789,000
Deferred cost of goods sold (COGS) 917,000 887,000
Other current assets 398,000 288,000
Total current assets 4,392,000 4,011,000
Property and equipment, net 614,000 653,000
Operating right-of-use assets, net 246,000 298,000
Deferred COGS 733,000 807,000
Other assets 224,000 215,000
Total assets 6,209,000 5,984,000
Current liabilities:    
Accounts payable 321,000 243,000
Accrued expenses 157,000 171,000
Deferred revenue 4,154,000 3,984,000
Operating lease liabilities 119,000 116,000
Other current liabilities 30,000 58,000
Total current liabilities 4,781,000 4,572,000
Long-term liabilities:    
Deferred revenue 2,213,000 2,187,000
Operating lease liabilities 160,000 220,000
Other long-term liabilities 18,000 16,000
Total long-term liabilities 2,391,000 2,423,000
Commitments and contingencies (Note 7)
Acorn Energy, Inc. stockholders    
Common stock - $0.01 par value per share: Authorized – 42,000,000 shares; issued and outstanding – 39,757,589 and 39,722,589 shares at June 30, 2023 and December 31, 2022, respectively 397,000 397,000
Additional paid-in capital 102,924,000 102,889,000
Accumulated stockholders’ deficit (101,256,000) (101,267,000)
Treasury stock, at cost – 801,920 shares at June 30, 2023 and December 31, 2022 (3,036,000) (3,036,000)
Total Acorn Energy, Inc. stockholders’ deficit (971,000) (1,017,000)
Non-controlling interest 8,000 6,000
Total stockholders’ deficit (963,000) (1,011,000)
Total liabilities and stockholders’ deficit $ 6,209,000 $ 5,984,000
v3.23.2
Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares
Jun. 30, 2023
Dec. 31, 2022
Statement of Financial Position [Abstract]    
Common stock, par value $ 0.01 $ 0.01
Common stock, shares authorized 42,000,000 42,000,000
Common stock, shares issued 39,757,589 39,722,589
Common stock, shares outstanding 39,757,589 39,722,589
Treasury stock, shares 801,920 801,920
v3.23.2
Condensed Consolidated Statements of Operations (Unaudited) - USD ($)
$ in Thousands
 3 Months Ended 6 Months Ended
Jun. 30, 2023
Jun. 30, 2022
Jun. 30, 2023
Jun. 30, 2022
Income Statement [Abstract]        
Revenue $ 1,973 $ 1,621 $ 3,722 $ 3,372
COGS 483 375 916 868
Gross profit 1,490 1,246 2,806 2,504
Operating expenses:        
Research and development (R&D) expense 188 212 402 410
Selling, general and administrative (SG&A) expense 1,219 1,205 2,416 2,387
Impairment of software 51 51
Total operating expenses 1,407 1,468 2,818 2,848
Operating (loss) income 83 (222) (12) (344)
Interest income (expense), net 16 (1) 27 (1)
Income (loss) before income taxes 99 (223) 15 (345)
Income tax expense
Net income (loss) 99 (223) 15 (345)
Non-controlling interest share of net income (3) [1] (4) (1)
Net income (loss) attributable to Acorn Energy, Inc. stockholders $ 96 $ (223) $ 11 $ (346)
Basic net income (loss) per share $ 0.00 $ (0.01) $ 0.00 $ (0.01)
Diluted net income (loss) per share $ 0.00 $ (0.01) $ 0.00 $ (0.01)
Weighted average number of shares outstanding attributable to Acorn Energy, Inc. stockholders – basic and diluted        
Basic 39,758 39,688 39,746 39,688
Diluted 39,784 39,688 39,780 39,688
[1] Less than $1
v3.23.2
Condensed Consolidated Statements of Changes in Deficit (Unaudited) - USD ($)
$ in Thousands
Total
Common Stock [Member]
Additional Paid-in Capital [Member]
Retained Earnings [Member]
Treasury Stock, Common [Member]
Parent [Member]
Noncontrolling Interest [Member]
Balance at Dec. 31, 2021 $ (461) $ 397 $ 102,804 $ (100,634) $ (3,036) $ (469) $ 8
Balance, shares at Dec. 31, 2021   39,688     802    
Net (income) loss (122) (123) (123) 1
Accrued dividend in OmniMetrix preferred shares (1) (1)
Stock-based compensation 31 31 31
Balance at Mar. 31, 2022 (553) $ 397 102,835 (100,757) $ (3,036) (561) 8
Balance, shares at Mar. 31, 2022   39,688     802    
Balance at Dec. 31, 2021 (461) $ 397 102,804 (100,634) $ (3,036) (469) 8
Balance, shares at Dec. 31, 2021   39,688     802    
Net (income) loss (345)            
Balance at Jun. 30, 2022 (755) $ 397 102,857 (100,980) $ (3,036) (762) 7
Balance, shares at Jun. 30, 2022   39,688     802    
Balance at Mar. 31, 2022 (553) $ 397 102,835 (100,757) $ (3,036) (561) 8
Balance, shares at Mar. 31, 2022   39,688     802    
Net (income) loss (223) (223) (223) [1]
Accrued dividend in OmniMetrix preferred shares (1) (1)
Stock-based compensation 22 22 22
Balance at Jun. 30, 2022 (755) $ 397 102,857 (100,980) $ (3,036) (762) 7
Balance, shares at Jun. 30, 2022   39,688     802    
Balance at Dec. 31, 2022 (1,011) $ 397 102,889 (101,267) $ (3,036) (1,017) 6
Balance, shares at Dec. 31, 2022   39,723     802    
Net (income) loss (84) (85) (85) 1
Proceeds from warrant exercise 5 [1] 5 5
Proceeds from warrant exercise, shares   35          
Accrued dividend in OmniMetrix preferred shares (1) (1)
Stock-based compensation 17 17 17
Balance at Mar. 31, 2023 (1,074) $ 397 102,911 (101,352) $ (3,036) (1,080) 6
Balance, shares at Mar. 31, 2023   39,758     802    
Balance at Dec. 31, 2022 (1,011) $ 397 102,889 (101,267) $ (3,036) (1,017) 6
Balance, shares at Dec. 31, 2022   39,723     802    
Net (income) loss 15            
Balance at Jun. 30, 2023 (963) $ 397 102,924 (101,256) $ (3,036) (971) 8
Balance, shares at Jun. 30, 2023   39,758     802    
Balance at Mar. 31, 2023 (1,074) $ 397 102,911 (101,352) $ (3,036) (1,080) 6
Balance, shares at Mar. 31, 2023   39,758     802    
Net (income) loss 99 96 96 3
Accrued dividend in OmniMetrix preferred shares (1) (1)
Stock-based compensation 13 13 13
Balance at Jun. 30, 2023 $ (963) $ 397 $ 102,924 $ (101,256) $ (3,036) $ (971) $ 8
Balance, shares at Jun. 30, 2023   39,758     802    
[1] Less than $1
v3.23.2
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($)
$ in Thousands
 6 Months Ended
Jun. 30, 2023
Jun. 30, 2022
Cash flows provided by (used in) operating activities:    
Net income (loss) $ 15 $ (345)
Depreciation and amortization 76 48
Impairment of inventory 8
Impairment of software 51
Non-cash lease expense 63 59
Stock-based compensation 30 53
Change in operating assets and liabilities:    
(Increase) decrease in accounts receivable (104) 292
Increase in inventory (22) (298)
Decrease (increase) in deferred COGS 44 (117)
Increase in other current assets and other assets (119) (1)
Increase (decrease) in accounts payable and accrued expenses 64 (125)
Increase in deferred revenue 196 242
Decrease in operating lease liability (67) (62)
(Decrease) increase in other current liabilities and non-current liabilities (29) 9
Net cash provided by (used in) operating activities 155 (194)
Cash flows used in investing activities:    
Investments in technology (37) (266)
Other capital investments (3)
Net cash used in investing activities (37) (269)
Cash flows used in financing activities:    
Warrant exercise proceeds 5
Net cash provided by financing activities 5
Net increase (decrease) in cash 123 (463)
Cash at the beginning of the year 1,450 1,722
Cash at the end of the period 1,573 1,259
Cash paid during the period for:    
Interest 1 1
Non-cash investing and financing activities:    
Accrued preferred dividends to former CEO of OmniMetrix $ 2 $ 2
v3.23.2
BASIS OF PRESENTATION
 6 Months Ended
Jun. 30, 2023
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
BASIS OF PRESENTATION

NOTE 1— BASIS OF PRESENTATION

 

The accompanying unaudited condensed consolidated financial statements of Acorn Energy, Inc. and its subsidiaries, OmniMetrix, LLC and OMX Holdings, Inc. (collectively, “Acorn” or “the Company”) have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and with the instructions to Article 8 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete consolidated financial statements. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation have been included. Operating results for the six- and three-month periods ended June 30, 2023 and 2022 are not necessarily indicative of the results that may be expected for the year ending December 31, 2023. All dollar amounts are rounded to the nearest thousand and, thus, are approximate.

 

These unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and footnotes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022, filed with the Securities and Exchange Commission on March 16, 2023.

 
v3.23.2
ACCOUNTING POLICIES
 6 Months Ended
Jun. 30, 2023
Accounting Policies [Abstract]  
ACCOUNTING POLICIES

NOTE 2—ACCOUNTING POLICIES

 

Use of Estimates in Preparation of Financial Statements

 

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

 

As applicable to these unaudited condensed consolidated financial statements, the most significant estimates and assumptions relate to uncertainties with respect to revenue recognition and management’s projections.

 

Concentrations of Credit Risk

 

Financial instruments, which potentially subject the Company to concentrations of credit risk, consist principally of cash and trade accounts receivable. The Company’s cash was deposited with a U.S. bank and amounted to $1,573,000 at June 30, 2023. The Company does not believe there is a significant risk of non-performance by its counterparties. For the three- and six-month periods ended June 30, 2023, there was one customer (the same customer in both periods) that represented 21% and 15% of the Company’s total invoiced sales, respectively. At June 30, 2023, the Company had two customers that represented greater than 10% of our accounts receivable with balances representing 25% and 14% of the Company’s total accounts receivable. As of August 8, 2023, we have collected 64% of the outstanding amount of $277,000, in the aggregate due from these two customers as of June 30, 2023. This represents 100% from one of the two customers which had $177,000 outstanding. Approximately 12% of the accounts receivable at December 31, 2022 was due from one customer which was subsequently collected in full. Credit risk with respect to the balance of trade receivables is generally diversified due to the number of entities comprising the Company’s customer base. Although we do not believe there is significant risk of non-performance by these counterparties, any failures or defaults on their part could negatively impact the value of our financial instruments and could have a material adverse effect on our business, operations or financial condition.

 

Inventory

 

Inventories are comprised of components (raw materials), work-in-process 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 conducted an assessment and wrote-off inventory carried at $8,000 for the six months ended June 30, 2023, of which $5,000 was written off in the three months ended June 30, 2023.

 

Basic and Diluted Net Income (Loss) Per Share

 

Basic net income (loss) per share is computed by dividing the net income (loss) attributable to Acorn Energy, Inc. by the weighted average number of shares outstanding during the period, excluding treasury stock. Diluted net income (loss) per share is computed by dividing the net income (loss) by the weighted average number of shares outstanding plus the dilutive potential of common shares which would result from the exercise of stock options. The dilutive effects of stock options are excluded from the computation of diluted net income (loss) per share if doing so would be antidilutive. For the six-month period ending June 30, 2023, the number of options that were excluded from the computation of diluted net loss, as they had an antidilutive effect, was 897,000 (which have a weighted average exercise price of $0.43). For the three-month period ending June 30, 2023, the number of options that were excluded from the computation of diluted net loss, as they had an antidilutive effect, was 1,003,039 (which have a weighted average exercise price of $0.42). For both the six- and three-month periods ending June 30, 2022, the number of options that were excluded from the computation of diluted net loss, as they had an antidilutive effect, was 979,000 (which have a weighted average exercise price of $0.41) and the number of warrants that were excluded from the computation of diluted net loss, as they had an antidilutive effect, was 35,000 (which had a weighted average exercise price of $0.13).

 

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

 

   2023   2022   2023   2022 
  

Six months ended

June 30,

  

Three months ended

June 30,

 
   2023   2022   2023   2022 
Net income (loss) available to common stockholders  $11   $(346)  $96   $(223)
                     
Weighted average share outstanding:                    
Basic   39,746    39,688    39,758    39,688 
Add: Stock options   34    —    26    — 
Diluted   39,780    39,688    39,784    39,688 
                     
Basic and diluted net income (loss) per share  $0.00   $(0.01)  $0.00   $(0.01)

 

Recently Adopted Accounting Standards

 

Other than the pronouncement noted below, there have been no recent accounting pronouncements or changes in accounting standards during the six-month period ended June 30, 2023 that would affect the Company’s financial statements.

 

On January 1, 2023, the Company adopted ASU 2016-13, “Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments.” This guidance was issued to provide financial statement users with more useful information about the expected credit losses on financial instruments and other commitments to extend credit held by a reporting entity at each reporting date. Specifically, this guidance requires entities to utilize a new “expected loss” model as it relates to trade and other receivables. The adoption of the standard impacts the way the Company estimates the allowance for doubtful accounts on its trade and other receivables. Refer to Note 4, “Allowance for Credit Losses,” for further information regarding the Company’s allowance for expected credit losses.

 

 
v3.23.2
LIQUIDITY
 6 Months Ended
Jun. 30, 2023
Liquidity  
LIQUIDITY

NOTE 3—LIQUIDITY

 

As of June 30, 2023, the Company had cash of $1,573,000.

 

At June 30, 2023, the Company had negative working capital of $389,000. The Company’s working capital includes $1,573,000 of cash and deferred revenue of $4,154,000. Such deferred revenue does not require a significant cash outlay for the revenue to be recognized. Net cash increased during the six months ended June 30, 2023 by $123,000, of which $155,000 was provided by operating activities, $37,000 was used in investing activities and $5,000 was provided by financing activities.

 

As of August 8, 2023, the Company had cash of $1,738,000. The Company believes that such cash, plus the cash generated from operations, will provide sufficient liquidity to finance the operating activities of the Company at their current level of operations for the twelve months from the issuance of these unaudited condensed consolidated financial statements in particular. The Company may, at some point, elect to obtain a new line of credit or other source of financing to fund additional investments in the business.

 
v3.23.2
ALLOWANCE FOR CREDIT LOSSES
 6 Months Ended
Jun. 30, 2023
Receivables [Abstract]  
ALLOWANCE FOR CREDIT LOSSES

NOTE 4—ALLOWANCE FOR CREDIT LOSSES

 

For the Company, ASU 2016-13, “Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments,” applies to its contract assets (deferred COGS and deferred sales commissions), lease receivables (sublease, see Note 6) and trade receivables. There are no expected or estimated credit losses on the Company’s contract assets or its lease receivable based on the Company’s implementation of ASU 2016-13.

 

The Company’s trade receivables primarily arise from the sale of our products to independent residential dealers, industrial distributors and dealers, national and regional retailers, equipment distributors, solar installers, and certain end users with payment terms generally ranging from 30 to 60 days. The Company evaluates the credit risk of a customer when extending credit based on a combination of various financial and qualitative factors that may affect the customers’ ability to pay. These factors include the customers’ financial condition and past payment experience.

 

The Company maintains an allowance for credit losses, which represents an estimate of expected losses over the remaining contractual life of its receivables considering current market conditions and estimates for supportable forecasts when appropriate. The Company measures expected credit losses on its trade receivables on an entity-by-entity basis. The estimate of expected credit losses considers a historical loss experience rate that is adjusted for delinquency trends, collection experience, and/or economic risk where appropriate. Additionally, management develops a specific allowance for trade receivables known to have a high risk of expected future credit loss.

 

The Company has historically experienced immaterial write-offs given the nature of the customers that receive credit. As of June 30, 2023, the Company had gross receivables of $707,000 and an allowance for credit losses of $6,000.

 

The following is a tabular reconciliation of the Company’s allowance for credit losses:

  

  

June 30, 2023

  

December 31, 2022

 
   As of 
  

June 30, 2023

  

December 31, 2022

 
   (in thousands) 
Balance at beginning of period  $10   $6 
Provision for credit losses   2    3 
Net (charge-offs) credits   (6)   1 
Balance at end of period  $6   $10 

 

 
v3.23.2
INVENTORY
 6 Months Ended
Jun. 30, 2023
Inventory Disclosure [Abstract]  
INVENTORY

NOTE 5—INVENTORY

 

  

June 30, 2023

  

December 31, 2022

 
   As of 
  

June 30, 2023

  

December 31, 2022

 
   (in thousands) 
Raw materials  $729   $684 
Finished goods   74    105 
Inventory net  $803   $789 

 

At June 30, 2023 and December 31, 2022, the Company’s inventory reserve was $4,000.

 

All inventories are periodically reviewed to identify slow-moving and obsolete inventory. Management conducted an assessment and wrote-off inventory carried at $8,000 for the six months ended June 30, 2023, of which $5,000 was written off in the three months ended June 30, 2023.

 
v3.23.2
LEASES
 6 Months Ended
Jun. 30, 2023
Leases  
LEASES

NOTE 6—LEASES

 

OmniMetrix leases office space and office equipment under operating lease agreements. The office lease has an expiration date of September 30, 2025. The office equipment lease was entered into in April 2019 and has a sixty-month term. Operating lease payments for the six months ended June 30, 2023 and 2022 were $63,000 and $62,000, respectively. Operating lease payments for the three months ended June 30, 2023 and 2022 were $32,000 and $32,000, respectively. The future minimum lease payments on non-cancellable operating leases as of June 30, 2023 using a discount rate of 4.5% are $279,000. The 4.5% discount rate used is the incremental borrowing rate which, as defined in ASC 842, is the rate of interest that a lessee would have to pay to borrow, on a collateralized basis, over a similar term and in a similar economic environment, an amount equal to the lease payments.

 

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

 

  

For the Six Months

Ending June 30,

 
   2023   2022 
Cash paid for operating lease liabilities  $63   $62 

 

Supplemental balance sheet information related to leases consisted of the following:

  

    2023  
Weighted average remaining lease terms for operating leases     2.24 years  

 

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, 2023 (in thousands):

 

  

Year ended

June 30,

 
2024  $129 
2025   131 
2026   33 
Total undiscounted cash flows   293 
Less: Imputed interest   (14)
Present value of operating lease liabilities (a)  $279 

 

  (a) Includes current portion of $119,000 for operating leases.

 

 

On July 6, 2021, the Company entered into an agreement with King Industrial Realty, Inc., to sublease from the Company 1,900 square feet of office space of the Company’s 21,000 square feet of office and production space in the Hamilton Mill Business Park located in Buford, Georgia, for a monthly sublease payment of $2,375 (plus an annual escalator each year of 3%) which includes the base rent plus a pro-rata share of utilities, property taxes and insurance. Fifty percent of any excess rent received above the per square foot amount that the Company pays will be remitted to the Company’s landlord less the allocation of any shared expenses and leasehold improvements specific to the sublease. The estimated amount the Company expects to remit to the landlord each future year of the sublease is $6,100 per year. The sublease commenced on October 1, 2021 and will run through September 30, 2025 which is the end of the Company’s lease term with its landlord. Below are the future payments (in thousands) expected under the sublease net of the estimated annual service cost of $2,220 (gross of the estimated amount expected to be remitted to our landlord):

 

   Year ended June 30, 
2024  $28 
2025   29 
2026   7 
Total undiscounted cash flows  $64 

 
v3.23.2
COMMITMENTS AND CONTINGENCIES
 6 Months Ended
Jun. 30, 2023
Commitments and Contingencies Disclosure [Abstract]  
COMMITMENTS AND CONTINGENCIES

NOTE 7—COMMITMENTS AND CONTINGENCIES

 

The Company has $279,000 in operating lease obligations payable through 2026 and $41,000 in other contractual obligations. The Company also has $631,000 in open purchase order commitments payable through October 2023.

 
v3.23.2
EQUITY
 6 Months Ended
Jun. 30, 2023
Equity [Abstract]  
EQUITY

NOTE 8—EQUITY

 

(a) General

 

At June 30, 2023 the Company had issued and outstanding 39,757,589 shares of its common stock, par value $0.01 per share. Holders of outstanding common stock are entitled to receive dividends when and if declared by the Board and to share ratably in the assets of the Company legally available for distribution in the event of a liquidation, dissolution or winding up of the Company.

 

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

 

(b) Summary Employee Option Information

 

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

 

At June 30, 2023, 1,240,351 options were available for grant under the Amended and Restated 2006 Stock Incentive Plan and no options were available for grant under the 2006 Stock Option Plan for Non-Employee Directors. During the six months ended June 30, 2023, 215,000 options were issued of which 110,000 of these options were issued in the three months ended June 30, 2023. The options were issued as follows: an aggregate of 55,000 to directors (excluding the CEO), 35,000 to the CEO, 100,000 to the CFO and an aggregate of 25,000 to employees. In the six and three months ended June 30, 2023, there were no grants to non-employees (other than the directors, CEO and CFO).

 

 

No options were exercised in the six and three months ended June 30, 2023. The intrinsic value of options outstanding and of options exercisable at June 30, 2023 was $8,000. 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, 2022   943,790   $0.42    4.3 years   $16,000 
Granted   215,000    0.33           
Exercised   —    —           
Forfeited or expired   (20,501)   0.40           
Outstanding at June 30, 2023   1,138,289   $0.40    4.5 years   $8,000 
Exercisable at June 30, 2023   899,258   $0.41    4.0 years   $8,000 

 

The fair value of the options granted of $46,000 was estimated on the grant date using the Black-Scholes option-pricing model with the following weighted average assumptions:

 

Risk-free interest rate     3.9 %
Expected term of options     4.1 years  
Expected annual volatility     94.5 %
Expected dividend yield     — %

 

(c) Stock-based Compensation Expense

 

Stock-based compensation expense included in SG&A expenses in the Company’s unaudited condensed consolidated statements of operations was $30,000 and $53,000 for the six-month periods ended June 30, 2023 and 2022, respectively, and $13,000 and $22,000 for the three-month periods ended June 30, 2023 and 2022, respectively.

 

The total compensation cost related to non-vested awards not yet recognized was $43,000 and $59,000 as of June 30, 2023 and 2022, respectively.

 

(d) Warrants

 

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

 

  

Number

of Warrants

(in shares)

  

Weighted

Average

Exercise

Price Per

Share

  

Weighted

Average

Remaining

Contractual

Life

 
Outstanding at December 31, 2022   35,000   $0.13    2.5 months 
Granted   —    —      
Exercised   (35,000)   0.13      
Forfeited or expired   —    —      
Outstanding at June 30, 2023   —   $—    — 

 

 
v3.23.2
SEGMENT REPORTING
 6 Months Ended
Jun. 30, 2023
Segment Reporting [Abstract]  
SEGMENT REPORTING

NOTE 9— SEGMENT REPORTING

 

As of June 30, 2023, the Company operates in two reportable operating segments, both of which are performed through the Company’s OmniMetrix subsidiary:

 

  ● Power Generation (“PG”). OmniMetrix’s PG services provide wireless remote monitoring and control systems and IoT applications for residential and commercial/industrial power generation equipment. This includes OmniMetrix’s AIRGuard product, which remotely monitors and controls industrial air compressors and its Smart Annunciator product which is typically sold to commercial customers that require a visual representation of the generator’s status and has a touch-screen display that indicates the current state of that generator.
     
  ● Cathodic Protection (“CP”). OmniMetrix’s CP services provide remote monitoring and control products for cathodic protection systems on oil and 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. OmniMetrix also offers the industry’s first RADTM (Remote AC Mitigation Disconnect) that mounts onto existing Solid-state Decouplers in the field and can remotely disconnect/connect these AC mitigation tools which can drastically reduce a company’s expense while increasing employee safety.

 

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 following tables represent segmented data for the six-month and three-month periods ended June 30, 2023 and 2022 (in thousands):

 

   PG   CP   Total 
Six months ended June 30, 2023:               
Revenues from external customers  $3,196   $526   $3,722 
Segment gross profit   2,495    311    2,806 
Depreciation and amortization   65    11    76 
Segment income (loss) before income taxes  $530   $(40)  $490 
                
Six months ended June 30, 2022:               
Revenues from external customers  $2,825   $547   $3,372 
Segment gross profit   2,164    340    2,504 
Depreciation and amortization   41    8    49 
Segment income (loss) before income taxes*  $262   $(45)  $217 
                
Three months ended June 30, 2023:               
Revenues from external customers  $1,689   $284   $1,973 
Segment gross profit   1,316    174    1,490 
Depreciation and amortization   32    6    38 
Segment income before income taxes  $331   $8   $339 
                
Three months ended June 30, 2022:               
Revenues from external customers  $1,380   $241   $1,621 
Segment gross profit   1,091    155    1,246 
Depreciation and amortization   24    5    29 
Segment income (loss) before income taxes*  $73   $(24)  $49 

 

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

 

 

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

 

Reconciliation of Segment Income (Loss) to Consolidated Net Income (Loss) Before Income Taxes

 

   2023   2022   2023   2022 
  

Six months ended

June 30,

  

Three months ended

June 30,

 
   2023   2022   2023   2022 
Total net income before income taxes for reportable segments*  $490   $217   $339   $49 
Unallocated cost of corporate headquarters   (475)   (511)   (240)   (221)
Consolidated net income (loss) before income taxes  $15   $(294)  $99   $(172)

 

* Software impairment of $51,000 is not related to a specific segment and, thus, is not included in the “Total net income before income taxes for reportable segments” for the six and three months ended June 30, 2022.

 
v3.23.2
REVENUE
 6 Months Ended
Jun. 30, 2023
Revenue from Contract with Customer [Abstract]  
REVENUE

NOTE 10—REVENUE

 

The following table disaggregates the Company’s revenue for the six-month and three-month periods ended June 30, 2023 and 2022 (in thousands):

 

   Hardware   Monitoring   Total 
Six months ended June 30, 2023:               
PG Segment  $1,237   $1,959   $3,196 
CP Segment   396    130    526 
Total Revenue  $1,633   $2,089   $3,722 

 

   Hardware   Monitoring   Total 
Six months ended June 30, 2022:               
PG Segment  $1,002   $1,823   $2,825 
CP Segment   414    133    547 
Total Revenue  $1,416   $1,956   $3,372 

 

   Hardware   Monitoring   Total 
Three months ended June 30, 2023:               
PG Segment  $688   $1,001   $1,689 
CP Segment   220    64    284 
Total Revenue  $908   $1,065   $1,973 

 

   Hardware   Monitoring   Total 
Three months ended June 30, 2022:               
PG Segment  $479   $901   $1,380 
CP Segment   176    65    241 
Total Revenue  $655   $966   $1,621 

 

Deferred revenue activity for the six months ended June 30, 2023 can be seen in the table below (in thousands):

 

   Hardware   Monitoring   Total 
Balance at December 31, 2022  $3,751   $2,420   $6,171 
Additions during the period   1,278    2,200    3,478 
Recognized as revenue   (1,192)   (2,090)   (3,282)
Balance at June 30, 2023  $3,837   $2,530   $6,367 
                
Amounts to be recognized as revenue in the twelve-month-period ending:               
June 30, 2024  $2,099    2,055    4,154 
June 30, 2025   1,312    471    1,783 
June 30, 2026 and thereafter   426    4    430 
   $3,837    2,530    6,367 

 

 

Other revenue of $440,000 was related to customized units, accessories, repairs, and other miscellaneous charges that are recognized to revenue when sold and are not deferred.

 

The amount of hardware revenue recognized during the six months ended June 30, 2023 that was included in deferred revenue at the beginning of the fiscal year was $1,018,000. The amount of monitoring revenue during the six months ended June 30, 2023 that was included in deferred revenue at the beginning of the fiscal year was $1,472,000.

 

Deferred charges relate only to the sale of equipment. Deferred charges activity for the six months ended June 30, 2023 can be seen in the table below (in thousands):

 

      
Balance at December 31, 2022  $1,694 
Additions, net of adjustments, during the period   496 
Recognized as COGS   (540)
Balance at June 30, 2023  $1,650 
      
Amounts to be recognized as COGS in the twelve-month-period ending:     
June 30, 2024  $917 
June 30, 2025   563 
June 30, 2026 and thereafter   170 
   $1,650 

 

Data costs paid to AT&T and the COGS related to sales of upgrade kits, accessories and repairs of $376,000 in the aggregate are expensed as incurred and are not deferred.

 

The following table provides a reconciliation of the Company’s sales commissions contract assets for the six-month period ended June 30, 2023 (in thousands):

 

   Hardware   Monitoring   Total 
Balance at December 31, 2022  $319   $80   $399 
Additions during the period   115    30    145 
Amortization of sales commissions   (97)   (17)   (114)
Balance at June 30, 2023  $337    93    430 

 

The capitalized sales commissions are included in other current assets ($218,000) and other assets ($212,000) in the Company’s unaudited condensed consolidated balance sheets as of June 30, 2023. The capitalized sales commissions are included in other current assets ($196,000) and other assets ($203,000) in the Company’s condensed consolidated balance sheet at December 31, 2022.

 

Amounts to be recognized as sales commission expense in the twelve-month-period ending:

 

      
June 30, 2024  $218 
June 30, 2025   145 
June 30, 2026 and thereafter   67 
Total  $430 

 

The contract assets of deferred COGS and deferred sales commissions are subject to review under ASU 2016-13, see Notes 2 and 4; however, no credit losses on contract assets are expected based on the Company’s implementation of ASU 2016-13.

 
v3.23.2
RELATED PARTY BALANCES AND TRANSACTIONS
 6 Months Ended
Jun. 30, 2023
Related Party Transactions [Abstract]  
RELATED PARTY BALANCES AND TRANSACTIONS

NOTE 11—RELATED PARTY BALANCES AND TRANSACTIONS

 

Officer and Director Fees

 

The Company recorded fees to officers of $261,000 and $261,000 for the six months ended June 30, 2023 and 2022, respectively, and $131,000 and $131,000 for the three months ended June 30, 2023 and 2022, respectively, which are included in SG&A expenses.

 

The Company recorded fees to directors of $34,000 and $30,000 for the six months ended June 30, 2023 and 2022, respectively, and $19,000 and $15,000 for the three months ended June 30, 2023 and 2022, respectively, which are included in SG&A expenses.

 

Intercompany

 

The intercompany balance due to Acorn from OmniMetrix for amounts loaned, accrued interest and expenses paid by Acorn on OmniMetrix’s behalf was $3,112,000 as of June 30, 2023 as compared to $3,677,000 as of December 31, 2022. This balance is eliminated in consolidation. During the six months ended June 30, 2023, the intercompany amount due to Acorn from OmniMetrix decreased by $565,000. This included repayments of $692,000 offset by interest of $89,000 and dividends of $38,000 due to Acorn. During the six months ended June 30, 2022, the intercompany amount due to Acorn from OmniMetrix decreased by $556,000. This included repayments of $780,000 offset by interest of $89,000, dividends of $38,000 due to Acorn and $97,000 in shared expenses paid by Acorn.
v3.23.2
ACCOUNTING POLICIES (Policies)
 6 Months Ended
Jun. 30, 2023
Accounting Policies [Abstract]  
Use of Estimates in Preparation of Financial Statements

Use of Estimates in Preparation of Financial Statements

 

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

 

As applicable to these unaudited condensed consolidated financial statements, the most significant estimates and assumptions relate to uncertainties with respect to revenue recognition and management’s projections.

 
Concentrations of Credit Risk

Concentrations of Credit Risk

 

Financial instruments, which potentially subject the Company to concentrations of credit risk, consist principally of cash and trade accounts receivable. The Company’s cash was deposited with a U.S. bank and amounted to $1,573,000 at June 30, 2023. The Company does not believe there is a significant risk of non-performance by its counterparties. For the three- and six-month periods ended June 30, 2023, there was one customer (the same customer in both periods) that represented 21% and 15% of the Company’s total invoiced sales, respectively. At June 30, 2023, the Company had two customers that represented greater than 10% of our accounts receivable with balances representing 25% and 14% of the Company’s total accounts receivable. As of August 8, 2023, we have collected 64% of the outstanding amount of $277,000, in the aggregate due from these two customers as of June 30, 2023. This represents 100% from one of the two customers which had $177,000 outstanding. Approximately 12% of the accounts receivable at December 31, 2022 was due from one customer which was subsequently collected in full. Credit risk with respect to the balance of trade receivables is generally diversified due to the number of entities comprising the Company’s customer base. Although we do not believe there is significant risk of non-performance by these counterparties, any failures or defaults on their part could negatively impact the value of our financial instruments and could have a material adverse effect on our business, operations or financial condition.

 
Inventory

Inventory

 

Inventories are comprised of components (raw materials), work-in-process 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 conducted an assessment and wrote-off inventory carried at $8,000 for the six months ended June 30, 2023, of which $5,000 was written off in the three months ended June 30, 2023.

 
Basic and Diluted Net Income (Loss) Per Share

Basic and Diluted Net Income (Loss) Per Share

 

Basic net income (loss) per share is computed by dividing the net income (loss) attributable to Acorn Energy, Inc. by the weighted average number of shares outstanding during the period, excluding treasury stock. Diluted net income (loss) per share is computed by dividing the net income (loss) by the weighted average number of shares outstanding plus the dilutive potential of common shares which would result from the exercise of stock options. The dilutive effects of stock options are excluded from the computation of diluted net income (loss) per share if doing so would be antidilutive. For the six-month period ending June 30, 2023, the number of options that were excluded from the computation of diluted net loss, as they had an antidilutive effect, was 897,000 (which have a weighted average exercise price of $0.43). For the three-month period ending June 30, 2023, the number of options that were excluded from the computation of diluted net loss, as they had an antidilutive effect, was 1,003,039 (which have a weighted average exercise price of $0.42). For both the six- and three-month periods ending June 30, 2022, the number of options that were excluded from the computation of diluted net loss, as they had an antidilutive effect, was 979,000 (which have a weighted average exercise price of $0.41) and the number of warrants that were excluded from the computation of diluted net loss, as they had an antidilutive effect, was 35,000 (which had a weighted average exercise price of $0.13).

 

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

 

   2023   2022   2023   2022 
  

Six months ended

June 30,

  

Three months ended

June 30,

 
   2023   2022   2023   2022 
Net income (loss) available to common stockholders  $11   $(346)  $96   $(223)
                     
Weighted average share outstanding:                    
Basic   39,746    39,688    39,758    39,688 
Add: Stock options   34    —    26    — 
Diluted   39,780    39,688    39,784    39,688 
                     
Basic and diluted net income (loss) per share  $0.00   $(0.01)  $0.00   $(0.01)

 
Recently Adopted Accounting Standards

Recently Adopted Accounting Standards

 

Other than the pronouncement noted below, there have been no recent accounting pronouncements or changes in accounting standards during the six-month period ended June 30, 2023 that would affect the Company’s financial statements.

 

On January 1, 2023, the Company adopted ASU 2016-13, “Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments.” This guidance was issued to provide financial statement users with more useful information about the expected credit losses on financial instruments and other commitments to extend credit held by a reporting entity at each reporting date. Specifically, this guidance requires entities to utilize a new “expected loss” model as it relates to trade and other receivables. The adoption of the standard impacts the way the Company estimates the allowance for doubtful accounts on its trade and other receivables. Refer to Note 4, “Allowance for Credit Losses,” for further information regarding the Company’s allowance for expected credit losses.
v3.23.2
ACCOUNTING POLICIES (Tables)
 6 Months Ended
Jun. 30, 2023
Accounting Policies [Abstract]  
SCHEDULE OF EFFECT ON NET INCOME LOSS AND WEIGHTED AVERAGE NUMBER OF SHARES

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

 

   2023   2022   2023   2022 
  

Six months ended

June 30,

  

Three months ended

June 30,

 
   2023   2022   2023   2022 
Net income (loss) available to common stockholders  $11   $(346)  $96   $(223)
                     
Weighted average share outstanding:                    
Basic   39,746    39,688    39,758    39,688 
Add: Stock options   34    —    26    — 
Diluted   39,780    39,688    39,784    39,688 
                     
Basic and diluted net income (loss) per share  $0.00   $(0.01)  $0.00   $(0.01)
v3.23.2
ALLOWANCE FOR CREDIT LOSSES (Tables)
 6 Months Ended
Jun. 30, 2023
Receivables [Abstract]  
SCHEDULE OF ALLOWANCES FOR CREDIT LOSSES

The following is a tabular reconciliation of the Company’s allowance for credit losses:

  

  

June 30, 2023

  

December 31, 2022

 
   As of 
  

June 30, 2023

  

December 31, 2022

 
   (in thousands) 
Balance at beginning of period  $10   $6 
Provision for credit losses   2    3 
Net (charge-offs) credits   (6)   1 
Balance at end of period  $6   $10 
v3.23.2
INVENTORY (Tables)
 6 Months Ended
Jun. 30, 2023
Inventory Disclosure [Abstract]  
SCHEDULE OF INVENTORY

 

  

June 30, 2023

  

December 31, 2022

 
   As of 
  

June 30, 2023

  

December 31, 2022

 
   (in thousands) 
Raw materials  $729   $684 
Finished goods   74    105 
Inventory net  $803   $789 
v3.23.2
LEASES (Tables)
 6 Months Ended
Jun. 30, 2023
Leases  
SCHEDULE OF SUPPLEMENTAL CASH FLOW INFORMATION RELATED TO LEASES

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

 

  

For the Six Months

Ending June 30,

 
   2023   2022 
Cash paid for operating lease liabilities  $63   $62 
SCHEDULE OF SUPPLEMENTAL BALANCE SHEET INFORMATION RELATED TO LEASES

Supplemental balance sheet information related to leases consisted of the following:

  

    2023  
Weighted average remaining lease terms for operating leases     2.24 years  
SCHEDULE OF FUTURE MINIMUM LEASE PAYMENTS

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, 2023 (in thousands):

 

  

Year ended

June 30,

 
2024  $129 
2025   131 
2026   33 
Total undiscounted cash flows   293 
Less: Imputed interest   (14)
Present value of operating lease liabilities (a)  $279 

 

  (a) Includes current portion of $119,000 for operating leases.
SCHEDULE OF SUBLEASES

 

   Year ended June 30, 
2024  $28 
2025   29 
2026   7 
Total undiscounted cash flows  $64 
v3.23.2
EQUITY (Tables)
 6 Months Ended
Jun. 30, 2023
Equity [Abstract]  
SCHEDULE OF BLACK-SCHOLES OPTION PRICING ESTIMATE FAIR VALUE

 

  

Number

of Options

(in shares)

  

Weighted

Average

Exercise

Price Per

Share

  

Weighted

Average

Remaining

Contractual Life

  

Aggregate

Intrinsic

Value

 
Outstanding at December 31, 2022   943,790   $0.42    4.3 years   $16,000 
Granted   215,000    0.33           
Exercised   —    —           
Forfeited or expired   (20,501)   0.40           
Outstanding at June 30, 2023   1,138,289   $0.40    4.5 years   $8,000 
Exercisable at June 30, 2023   899,258   $0.41    4.0 years   $8,000 
SCHEDULE OF STOCK OPTIONS FAIR VALUE ASSUMPTIONS ESTIMATED USING BLACK-SCHOLES PRICING MODEL

The fair value of the options granted of $46,000 was estimated on the grant date using the Black-Scholes option-pricing model with the following weighted average assumptions:

 

Risk-free interest rate     3.9 %
Expected term of options     4.1 years  
Expected annual volatility     94.5 %
Expected dividend yield     — %
SUMMARY OF WARRANT ACTIVITY

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

 

  

Number

of Warrants

(in shares)

  

Weighted

Average

Exercise

Price Per

Share

  

Weighted

Average

Remaining

Contractual

Life

 
Outstanding at December 31, 2022   35,000   $0.13    2.5 months 
Granted   —    —      
Exercised   (35,000)   0.13      
Forfeited or expired   —    —      
Outstanding at June 30, 2023   —   $—    — 
v3.23.2
SEGMENT REPORTING (Tables)
 6 Months Ended
Jun. 30, 2023
Segment Reporting [Abstract]  
SUMMARY OF SEGMENTED DATA

The following tables represent segmented data for the six-month and three-month periods ended June 30, 2023 and 2022 (in thousands):

 

   PG   CP   Total 
Six months ended June 30, 2023:               
Revenues from external customers  $3,196   $526   $3,722 
Segment gross profit   2,495    311    2,806 
Depreciation and amortization   65    11    76 
Segment income (loss) before income taxes  $530   $(40)  $490 
                
Six months ended June 30, 2022:               
Revenues from external customers  $2,825   $547   $3,372 
Segment gross profit   2,164    340    2,504 
Depreciation and amortization   41    8    49 
Segment income (loss) before income taxes*  $262   $(45)  $217 
                
Three months ended June 30, 2023:               
Revenues from external customers  $1,689   $284   $1,973 
Segment gross profit   1,316    174    1,490 
Depreciation and amortization   32    6    38 
Segment income before income taxes  $331   $8   $339 
                
Three months ended June 30, 2022:               
Revenues from external customers  $1,380   $241   $1,621 
Segment gross profit   1,091    155    1,246 
Depreciation and amortization   24    5    29 
Segment income (loss) before income taxes*  $73   $(24)  $49 

 

* Software impairment of $51,000 is not related to a specific segment and, thus, is not included in the “Segment income (loss) before income taxes” for the six and three months ended June 30, 2022.
SCHEDULE OF RECONCILIATION OF SEGMENT DATA TO CONSOLIDATED STATEMENT OF OPERATIONS

Reconciliation of Segment Income (Loss) to Consolidated Net Income (Loss) Before Income Taxes

 

   2023   2022   2023   2022 
  

Six months ended

June 30,

  

Three months ended

June 30,

 
   2023   2022   2023   2022 
Total net income before income taxes for reportable segments*  $490   $217   $339   $49 
Unallocated cost of corporate headquarters   (475)   (511)   (240)   (221)
Consolidated net income (loss) before income taxes  $15   $(294)  $99   $(172)

 

* Software impairment of $51,000 is not related to a specific segment and, thus, is not included in the “Total net income before income taxes for reportable segments” for the six and three months ended June 30, 2022.
v3.23.2
REVENUE (Tables)
 6 Months Ended
Jun. 30, 2023
Revenue from Contract with Customer [Abstract]  
SCHEDULE OF DISAGGREGATES OF REVENUE

The following table disaggregates the Company’s revenue for the six-month and three-month periods ended June 30, 2023 and 2022 (in thousands):

 

   Hardware   Monitoring   Total 
Six months ended June 30, 2023:               
PG Segment  $1,237   $1,959   $3,196 
CP Segment   396    130    526 
Total Revenue  $1,633   $2,089   $3,722 

 

   Hardware   Monitoring   Total 
Six months ended June 30, 2022:               
PG Segment  $1,002   $1,823   $2,825 
CP Segment   414    133    547 
Total Revenue  $1,416   $1,956   $3,372 

 

   Hardware   Monitoring   Total 
Three months ended June 30, 2023:               
PG Segment  $688   $1,001   $1,689 
CP Segment   220    64    284 
Total Revenue  $908   $1,065   $1,973 

 

   Hardware   Monitoring   Total 
Three months ended June 30, 2022:               
PG Segment  $479   $901   $1,380 
CP Segment   176    65    241 
Total Revenue  $655   $966   $1,621 
SCHEDULE OF DEFERRED REVENUE ACTIVITY

Deferred revenue activity for the six months ended June 30, 2023 can be seen in the table below (in thousands):

 

   Hardware   Monitoring   Total 
Balance at December 31, 2022  $3,751   $2,420   $6,171 
Additions during the period   1,278    2,200    3,478 
Recognized as revenue   (1,192)   (2,090)   (3,282)
Balance at June 30, 2023  $3,837   $2,530   $6,367 
                
Amounts to be recognized as revenue in the twelve-month-period ending:               
June 30, 2024  $2,099    2,055    4,154 
June 30, 2025   1,312    471    1,783 
June 30, 2026 and thereafter   426    4    430 
   $3,837    2,530    6,367 
SCHEDULE OF DEFERRED CHARGES ACTIVITY

Deferred charges relate only to the sale of equipment. Deferred charges activity for the six months ended June 30, 2023 can be seen in the table below (in thousands):

 

      
Balance at December 31, 2022  $1,694 
Additions, net of adjustments, during the period   496 
Recognized as COGS   (540)
Balance at June 30, 2023  $1,650 
      
Amounts to be recognized as COGS in the twelve-month-period ending:     
June 30, 2024  $917 
June 30, 2025   563 
June 30, 2026 and thereafter   170 
   $1,650 
SCHEDULE OF SALES COMMISSIONS CONTRACT ASSETS

The following table provides a reconciliation of the Company’s sales commissions contract assets for the six-month period ended June 30, 2023 (in thousands):

 

   Hardware   Monitoring   Total 
Balance at December 31, 2022  $319   $80   $399 
Additions during the period   115    30    145 
Amortization of sales commissions   (97)   (17)   (114)
Balance at June 30, 2023  $337    93    430 
SCHEDULE OF SALES COMMISSIONS EXPENSE

Amounts to be recognized as sales commission expense in the twelve-month-period ending:

 

      
June 30, 2024  $218 
June 30, 2025   145 
June 30, 2026 and thereafter   67 
Total  $430 
v3.23.2
SCHEDULE OF EFFECT ON NET INCOME LOSS AND WEIGHTED AVERAGE NUMBER OF SHARES (Details) - USD ($)
$ / shares in Units, $ in Thousands
 3 Months Ended 6 Months Ended
Jun. 30, 2023
Jun. 30, 2022
Jun. 30, 2023
Jun. 30, 2022
Accounting Policies [Abstract]        
Net income (loss) available to common stockholders $ 96 $ (223) $ 11 $ (346)
Weighted average share outstanding:        
Basic 39,758 39,688 39,746 39,688
Add: Stock options 26 34
Diluted 39,784 39,688 39,780 39,688
Basic net income (loss) per share $ 0.00 $ (0.01) $ 0.00 $ (0.01)
Diluted net income (loss) per share $ 0.00 $ (0.01) $ 0.00 $ (0.01)
v3.23.2
ACCOUNTING POLICIES (Details Narrative) - USD ($)
 3 Months Ended 6 Months Ended 12 Months Ended
Aug. 08, 2023
Jun. 30, 2023
Jun. 30, 2023
Jun. 30, 2022
Jun. 30, 2023
Jun. 30, 2022
Dec. 31, 2022
Product Information [Line Items]              
Deposit Assets   $ 1,573,000 $ 1,573,000   $ 1,573,000    
Inventory write off     $ 5,000   $ 8,000    
Stock Options [Member]              
Product Information [Line Items]              
Antidilutive securities excluded from computation of earnings per share, amount     1,003,039 979,000 897,000 979,000  
Weighted average exercise price     0.42 0.41 0.43 0.41  
Warrant [Member]              
Product Information [Line Items]              
Antidilutive securities excluded from computation of earnings per share, amount       35,000   35,000  
Weighted average exercise price       0.13   0.13  
Revenue Benchmark [Member] | Customer Concentration Risk [Member] | One Customer [Member]              
Product Information [Line Items]              
Concentration Risk, Percentage     21.00%   15.00%    
Revenue Benchmark [Member] | Customer Concentration Risk [Member] | Two Customer [Member]              
Product Information [Line Items]              
Concentration Risk, Percentage         10.00%    
Accounts Receivable [Member] | Customer Concentration Risk [Member] | One Customer [Member]              
Product Information [Line Items]              
Concentration Risk, Percentage         25.00%   12.00%
Accounts Receivable [Member] | Customer Concentration Risk [Member] | Two Customer [Member]              
Product Information [Line Items]              
Concentration Risk, Percentage 64.00% 100.00%     14.00%    
Outstanding amount $ 277,000 $ 177,000          
v3.23.2
LIQUIDITY (Details Narrative) - USD ($)
 6 Months Ended
Jun. 30, 2023
Jun. 30, 2022
Aug. 08, 2023
Dec. 31, 2022
Liquidity        
Cash $ 1,573,000      
Working capital 389,000      
Deferred revenue 4,154,000     $ 3,984,000
Net increase (decrease) in cash 123,000 $ (463,000)    
Operating activities 155,000 (194,000)    
Investing activities 37,000 269,000    
Financing activities 5,000    
Cash $ 1,573,000   $ 1,738,000 $ 1,450,000
v3.23.2
SCHEDULE OF ALLOWANCES FOR CREDIT LOSSES (Details) - USD ($)
$ in Thousands
 6 Months Ended 12 Months Ended
Jun. 30, 2023
Dec. 31, 2022
Receivables [Abstract]    
Balance at beginning of period $ 10 $ 6
Provision for credit losses 2 3
Net (charge-offs) credits (6) 1
Balance at end of period $ 6 $ 10
v3.23.2
ALLOWANCE FOR CREDIT LOSSES (Details Narrative)
Jun. 30, 2023
USD ($)
Receivables [Abstract]  
Gross receivables $ 707,000
Allowances for credit losses $ 6,000
v3.23.2
SCHEDULE OF INVENTORY (Details) - USD ($)
$ in Thousands
Jun. 30, 2023
Dec. 31, 2022
Inventory Disclosure [Abstract]    
Raw materials $ 729 $ 684
Finished goods 74 105
Inventory net $ 803 $ 789
v3.23.2
INVENTORY (Details Narrative) - USD ($)
 3 Months Ended 6 Months Ended
Jun. 30, 2023
Jun. 30, 2023
Dec. 31, 2022
Inventory Disclosure [Abstract]      
Inventory valuation reserves $ 4,000 $ 4,000 $ 4,000
Inventory write off $ 5,000 $ 8,000  
v3.23.2
SCHEDULE OF SUPPLEMENTAL CASH FLOW INFORMATION RELATED TO LEASES (Details) - USD ($)
$ in Thousands
 6 Months Ended
Jun. 30, 2023
Jun. 30, 2022
Leases    
Cash paid for operating lease liabilities $ 63 $ 62
v3.23.2
SCHEDULE OF SUPPLEMENTAL BALANCE SHEET INFORMATION RELATED TO LEASES (Details)
Jun. 30, 2023
Leases  
Weighted average remaining lease terms for operating leases 2 years 2 months 26 days
v3.23.2
SCHEDULE OF FUTURE MINIMUM LEASE PAYMENTS (Details)
$ in Thousands
Jun. 30, 2023
USD ($)
Leases  
2024 $ 129
2025 131
2026 33
Total undiscounted cash flows 293
Less: Imputed interest (14)
Present value of operating lease liabilities $ 279 [1]
[1] Includes current portion of $119,000 for operating leases.
v3.23.2
SCHEDULE OF FUTURE MINIMUM LEASE PAYMENTS (Details) (Parenthetical) - USD ($)
$ in Thousands
Jun. 30, 2023
Dec. 31, 2022
Leases    
Operating leases current portion $ 119 $ 116
v3.23.2
SCHEDULE OF SUBLEASES (Details)
$ in Thousands
Jun. 30, 2023
USD ($)
Leases  
2024 $ 28
2025 29
2026 7
Total undiscounted cash flows $ 64
v3.23.2
LEASES (Details Narrative)
 1 Months Ended 3 Months Ended 6 Months Ended
Jul. 06, 2021
USD ($)
ft²
Apr. 30, 2019
Jun. 30, 2023
USD ($)
Jun. 30, 2022
USD ($)
Jun. 30, 2023
USD ($)
Jun. 30, 2022
USD ($)
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]            
Operating lease discount rate     4.50%   4.50%  
Operating lease payments [1]     $ 279,000   $ 279,000  
Sublease payment $ 2,375          
Estimated sublease payments 6,100          
Annual service cost $ 2,220          
King Industrial Reality Inc [Member]            
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]            
Office and production space | ft² 1,900          
King Industrial Realty Inc [Member]            
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]            
Office and production space | ft² 21,000          
Operating Lease Agreements [Member] | Omni Metrix Holdings, Inc. [Member]            
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]            
Lease description   The office equipment lease was entered into in April 2019 and has a sixty-month term        
Operating lease payments     $ 32,000 $ 32,000 $ 63,000 $ 62,000
[1] Includes current portion of $119,000 for operating leases.
v3.23.2
COMMITMENTS AND CONTINGENCIES (Details Narrative)
 6 Months Ended
Jun. 30, 2023
USD ($)
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]  
Operating lease obligations payable $ 279,000 [1]
Master Services Agreement [Member]  
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]  
Operating lease obligations payable 279,000
Operating leases and contractual services 41,000
Commitment payable $ 631,000
[1] Includes current portion of $119,000 for operating leases.
v3.23.2
SCHEDULE OF BLACK-SCHOLES OPTION PRICING ESTIMATE FAIR VALUE (Details) - USD ($)
 6 Months Ended 12 Months Ended
Jun. 30, 2023
Dec. 31, 2022
Equity [Abstract]    
Number of Options (in shares), Outstanding at beginning of year 943,790  
Weighted Average Exercise Price Per Share, Outstanding at beginning of year $ 0.42  
Weighted average remaining contractual life at end 4 years 6 months 4 years 3 months 18 days
Aggregate intrinsic value at beginning of year $ 16,000  
Number of Options (in shares), Granted 215,000  
Weighted Average Exercise Price Per Share, Granted $ 0.33  
Number of Options (in shares), Exercised  
Weighted Average Exercise Price Per Share, Exercised  
Number of Options (in shares), Forfeited or expired (20,501)  
Weighted Average Exercise Price Per Share, Forfeited or expired $ 0.40  
Number of Options (in shares), Outstanding at end of year 1,138,289 943,790
Weighted Average Exercise Price Per Share, Outstanding at end of year $ 0.40 $ 0.42
Aggregate intrinsic value at end of year $ 8,000 $ 16,000
Number of Options (in shares), Exercisable at end of year 899,258  
Weighted Average Exercise Price Per Share, Exercisable at end of year $ 0.41  
Weighted average remaining contractual life at exercisable at end of year 4 years  
Aggregate intrinsic value, Exercisable at end of year $ 8,000  
v3.23.2
SCHEDULE OF STOCK OPTIONS FAIR VALUE ASSUMPTIONS ESTIMATED USING BLACK-SCHOLES PRICING MODEL (Details)
 6 Months Ended
Jun. 30, 2023
Equity [Abstract]  
Risk-free interest rate 3.90%
Expected term of options, in years 4 years 1 month 6 days
Expected annual volatility 94.50%
Expected dividend yield
v3.23.2
SUMMARY OF WARRANT ACTIVITY (Details) - Warrant [Member] - $ / shares
 6 Months Ended 12 Months Ended
Jun. 30, 2023
Dec. 31, 2022
Accumulated Other Comprehensive Income (Loss) [Line Items]    
Number of Warrants (in Shares), Outstanding at beginning balance 35,000  
Weighted Average Exercise Price Per Share, Outstanding at beginning balance $ 0.13  
Weighted average remaining contractual life at begining   2 months 15 days
Number of Warrants (in Shares), Granted  
Weighted Average Exercise Price Per Share, Granted  
Number of Warrants (in Shares), Exercised (35,000)  
Weighted Average Exercise Price Per Share, Exercised $ 0.13  
Number of Warrants (in Shares), Forfeited or expired  
Weighted Average Exercise Price Per Share, Forfeited or expired  
Number of Warrants (in Shares), Outstanding at end balance 35,000
Weighted Average Exercise Price Per Share, Outstanding at end balance $ 0.13
v3.23.2
EQUITY (Details Narrative) - USD ($)
 3 Months Ended 6 Months Ended
Jun. 30, 2023
Jun. 30, 2022
Jun. 30, 2023
Jun. 30, 2022
Dec. 31, 2022
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]          
Common stock, shares issued 39,757,589   39,757,589   39,722,589
Common stock, shares outstanding 39,757,589   39,757,589   39,722,589
Common stock, par value $ 0.01   $ 0.01   $ 0.01
Number of options granted during period     215,000    
Intrinsic value of options outstanding $ 8,000   $ 8,000   $ 16,000
Intrinsic value of options exercisable 8,000   8,000    
Fair value of options granted     46,000    
Compensation cost, non-vested awards not yet recognized 43,000 $ 59,000 43,000 $ 59,000  
Selling, General and Administrative Expenses [Member]          
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]          
Stock based compensation expense 13,000 $ 22,000 30,000 $ 53,000  
Options Held [Member]          
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]          
Intrinsic value of options outstanding 8,000   8,000    
Intrinsic value of options exercisable $ 8,000   $ 8,000    
Share-Based Payment Arrangement, Employee [Member]          
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]          
Number of options granted during period     25,000    
Share-Based Payment Arrangement, Nonemployee [Member]          
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]          
Number of options granted during period 0   0    
Non-Employee Directors [Member]          
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]          
Number of options granted during period 110,000   215,000    
Director [Member]          
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]          
Number of options granted during period     55,000    
Chief Executive Officer [Member]          
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]          
Number of options granted during period     35,000    
Chief Financial Officer [Member]          
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]          
Number of options granted during period     100,000    
Amended and Restated 2006 Stock Incentive Plan [Member]          
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]          
Number of options available for grant 1,240,351   1,240,351    
v3.23.2
SUMMARY OF SEGMENTED DATA (Details) - USD ($)
$ in Thousands
 3 Months Ended 6 Months Ended
Jun. 30, 2023
Jun. 30, 2022
Jun. 30, 2023
Jun. 30, 2022
Segment Reporting Information [Line Items]        
Revenue from external customers $ 1,973 $ 1,621 $ 3,722 $ 3,372
Segment gross profit 1,490 1,246 2,806 2,504
Depreciation and amortization 38 29 76 49
Segment income (loss) before income taxes 339 49 [1] 490 217 [1]
Software impairment     8
Software [Member]        
Segment Reporting Information [Line Items]        
Software impairment   51,000   51,000
PG [Member]        
Segment Reporting Information [Line Items]        
Revenue from external customers 1,689 1,380 3,196 2,825
Segment gross profit 1,316 1,091 2,495 2,164
Depreciation and amortization 32 24 65 41
Segment income (loss) before income taxes 331 73 [1] 530 262 [1]
CP [Member]        
Segment Reporting Information [Line Items]        
Revenue from external customers 284 241 526 547
Segment gross profit 174 155 311 340
Depreciation and amortization 6 5 11 8
Segment income (loss) before income taxes $ 8 $ (24) [1] $ (40) $ (45) [1]
[1] Software impairment of $51,000 is not related to a specific segment and, thus, is not included in the “Segment income (loss) before income taxes” for the six and three months ended June 30, 2022.
v3.23.2
SUMMARY OF SEGMENTED DATA (Details) (Parenthetical) - USD ($)
$ in Thousands
 3 Months Ended 6 Months Ended
Jun. 30, 2022
Jun. 30, 2023
Jun. 30, 2022
Property, Plant and Equipment [Line Items]      
Software impairment   $ 8
Software [Member]      
Property, Plant and Equipment [Line Items]      
Software impairment $ 51,000   $ 51,000
v3.23.2
SCHEDULE OF RECONCILIATION OF SEGMENT DATA TO CONSOLIDATED STATEMENT OF OPERATIONS (Details) - USD ($)
$ in Thousands
 3 Months Ended 6 Months Ended
Jun. 30, 2023
Jun. 30, 2022
Jun. 30, 2023
Jun. 30, 2022
Segment Reporting [Abstract]        
Total net income before income taxes for reportable segments [1] $ 339 $ 49 $ 490 $ 217
Unallocated cost of corporate headquarters (240) (221) (475) (511)
Consolidated net income (loss) before income taxes $ 99 $ (172) $ 15 $ (294)
[1] Software impairment of $51,000 is not related to a specific segment and, thus, is not included in the “Total net income before income taxes for reportable segments” for the six and three months ended June 30, 2022.
v3.23.2
SCHEDULE OF RECONCILIATION OF SEGMENT DATA TO CONSOLIDATED STATEMENT OF OPERATIONS (Details) (Paranthetical) - USD ($)
$ in Thousands
 3 Months Ended 6 Months Ended
Jun. 30, 2022
Jun. 30, 2023
Jun. 30, 2022
Property, Plant and Equipment [Line Items]      
Software impairment   $ 8
Software [Member]      
Property, Plant and Equipment [Line Items]      
Software impairment $ 51,000   $ 51,000
v3.23.2
SCHEDULE OF DISAGGREGATES OF REVENUE (Details) - USD ($)
$ in Thousands
 3 Months Ended 6 Months Ended
Jun. 30, 2023
Jun. 30, 2022
Jun. 30, 2023
Jun. 30, 2022
Disaggregation of Revenue [Line Items]        
Total Revenue $ 1,973 $ 1,621 $ 3,722 $ 3,372
PG [Member]        
Disaggregation of Revenue [Line Items]        
Total Revenue 1,689 1,380 3,196 2,825
CP [Member]        
Disaggregation of Revenue [Line Items]        
Total Revenue 284 241 526 547
Hardware [Member]        
Disaggregation of Revenue [Line Items]        
Total Revenue 908 655 1,633 1,416
Hardware [Member] | PG [Member]        
Disaggregation of Revenue [Line Items]        
Total Revenue 688 479 1,237 1,002
Hardware [Member] | CP [Member]        
Disaggregation of Revenue [Line Items]        
Total Revenue 220 176 396 414
Monitoring [Member]        
Disaggregation of Revenue [Line Items]        
Total Revenue 1,065 966 2,089 1,956
Monitoring [Member] | PG [Member]        
Disaggregation of Revenue [Line Items]        
Total Revenue 1,001 901 1,959 1,823
Monitoring [Member] | CP [Member]        
Disaggregation of Revenue [Line Items]        
Total Revenue $ 64 $ 65 $ 130 $ 133
v3.23.2
SCHEDULE OF DEFERRED REVENUE ACTIVITY (Details)
$ in Thousands
 6 Months Ended
Jun. 30, 2023
USD ($)
Disaggregation of Revenue [Line Items]  
Balance at December 31, 2022 $ 6,171
Additions during the period 3,478
Recognized as revenue (3,282)
Balance at June 30, 2023 6,367
June 30, 2024 4,154
June 30, 2025 1,783
June 30, 2026 and thereafter 430
Total 6,367
Hardware [Member]  
Disaggregation of Revenue [Line Items]  
Balance at December 31, 2022 3,751
Additions during the period 1,278
Recognized as revenue (1,192)
Balance at June 30, 2023 3,837
June 30, 2024 2,099
June 30, 2025 1,312
June 30, 2026 and thereafter 426
Total 3,837
Monitoring [Member]  
Disaggregation of Revenue [Line Items]  
Balance at December 31, 2022 2,420
Additions during the period 2,200
Recognized as revenue (2,090)
Balance at June 30, 2023 2,530
June 30, 2024 2,055
June 30, 2025 471
June 30, 2026 and thereafter 4
Total $ 2,530
v3.23.2
SCHEDULE OF DEFERRED CHARGES ACTIVITY (Details)
$ in Thousands
 6 Months Ended
Jun. 30, 2023
USD ($)
Revenue from Contract with Customer [Abstract]  
Balance at December 31, 2022 $ 1,694
Additions, net of adjustments, during the period 496
Recognized as COGS (540)
Balance at June 30, 2023 1,650
June 30, 2024 917
June 30, 2025 563
June 30, 2026 and thereafter 170
Total $ 1,650
v3.23.2
SCHEDULE OF SALES COMMISSIONS CONTRACT ASSETS (Details)
$ in Thousands
 6 Months Ended
Jun. 30, 2023
USD ($)
Disaggregation of Revenue [Line Items]  
Balance at December 31, 2022 $ 399
Additions during the period 145
Amortization of sales commissions (114)
Balance at June 30, 2023 430
Hardware [Member]  
Disaggregation of Revenue [Line Items]  
Balance at December 31, 2022 319
Additions during the period 115
Amortization of sales commissions (97)
Balance at June 30, 2023 337
Monitoring [Member]  
Disaggregation of Revenue [Line Items]  
Balance at December 31, 2022 80
Additions during the period 30
Amortization of sales commissions (17)
Balance at June 30, 2023 $ 93
v3.23.2
SCHEDULE OF SALES COMMISSIONS EXPENSE (Details)
$ in Thousands
Jun. 30, 2023
USD ($)
Revenue from Contract with Customer [Abstract]  
June 30, 2024 $ 218
June 30, 2025 145
June 30, 2026 and thereafter 67
Total $ 430
v3.23.2
REVENUE (Details Narrative) - USD ($)
 3 Months Ended 6 Months Ended
Jun. 30, 2023
Jun. 30, 2022
Jun. 30, 2023
Jun. 30, 2022
Dec. 31, 2022
Disaggregation of Revenue [Line Items]          
Revenue $ 1,973,000 $ 1,621,000 $ 3,722,000 $ 3,372,000  
Data costs (COGS) 483,000 375,000 916,000 868,000  
Other current assets 398,000   398,000   $ 288,000
Capitalized Sales Commissions [Member]          
Disaggregation of Revenue [Line Items]          
Other current assets 218,000   218,000   196,000
Other assets 212,000   212,000   $ 203,000
Other Revenue Related to Accessories, Repairs and Other Miscellaneous Charges [Member]          
Disaggregation of Revenue [Line Items]          
Revenue     440,000    
Hardware [Member]          
Disaggregation of Revenue [Line Items]          
Revenue 908,000 655,000 1,633,000 1,416,000  
Deferred revenue recognized     1,018,000    
Monitoring [Member]          
Disaggregation of Revenue [Line Items]          
Revenue $ 1,065,000 $ 966,000 2,089,000 $ 1,956,000  
Deferred revenue recognized     1,472,000    
Upgrade Kits Accessories and Repairs [Member]          
Disaggregation of Revenue [Line Items]          
Data costs (COGS)     $ 376,000    
v3.23.2
RELATED PARTY BALANCES AND TRANSACTIONS (Details Narrative) - USD ($)
 3 Months Ended 6 Months Ended
Jun. 30, 2023
Jun. 30, 2022
Jun. 30, 2023
Jun. 30, 2022
Dec. 31, 2022
Related Party [Member]          
Related Party Transaction [Line Items]          
Accrued interest and expenses $ 3,112,000   $ 3,112,000   $ 3,677,000
Related party expenses paid       $ 97,000  
OmniMetrix, LLC [Member]          
Related Party Transaction [Line Items]          
Increase decrease in related parties     565,000 556,000  
Debt repayment     692,000 780,000  
Interest     89,000 89,000  
Dividends     38,000 38,000  
Officer [Member]          
Related Party Transaction [Line Items]          
Consulting and other fees to officer 131,000 $ 131,000 261,000 261,000  
Director [Member]          
Related Party Transaction [Line Items]          
Consulting and other fees to directors $ 19,000 $ 15,000 $ 34,000 $ 30,000  
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