[10-Q] ACORN ENERGY, INC. Quarterly Earnings Report
Acorn Energy (ACFN) filed its Q3 2025 10‑Q, reporting nine‑month revenue of $9.101 million and net income attributable to stockholders of $1.436 million. Gross profit reached $6.910 million with a 76% margin.
For the quarter, revenue was $2.478 million and net income attributable to stockholders was $0.252 million. Cash was $4.167 million at September 30, 2025, up from $2.326 million at year‑end, driven by $1.795 million of operating cash flow year‑to‑date. Deferred revenue totaled $3.477 million, with $3.158 million expected to be recognized over the next twelve months.
The Power Generation segment delivered $8.507 million of nine‑month revenue; Cathodic Protection contributed $0.594 million. Backlog was $3.575 million, primarily monitoring services. Shares outstanding were 2,504,626 as of November 4, 2025.
- None.
- None.
Insights
Solid 9M growth and cash build; Q3 revenue lighter year over year.
Acorn Energy grew nine‑month revenue to
Quarterly trends were mixed: Q3 revenue was
Key items to track include deferred revenue of
UNITED STATES
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WASHINGTON, D.C. 20549
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ACORN ENERGY, INC.
Quarterly Report on Form 10-Q
for the Quarterly Period Ended September 30, 2025
TABLE OF CONTENTS
| PAGE | ||
| PART I Financial Information | ||
| Item 1. Financial Statements: | 3 | |
| Condensed Consolidated Balance Sheets as of September 30, 2025 (unaudited) and December 31, 2024 | 3 | |
| Condensed Consolidated Statements of Operations (unaudited) for the nine and three months ended September 30, 2025 and 2024 | 4 | |
| Condensed Consolidated Statements of Changes in Equity (Deficit) (unaudited) for the three and nine months ended September 30, 2025 and 2024 | 5 | |
| Condensed Consolidated Statements of Cash Flows (unaudited) for the nine months ended September 30, 2025 and 2024 | 6 | |
| Notes to Condensed Consolidated Financial Statements (unaudited) | 7 | |
| Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations | 19 | |
| Item 3. Quantitative and Qualitative Disclosures About Market Risk | 26 | |
| Item 4. Controls and Procedures | 26 | |
| PART II Other Information | ||
| Item 2. Unregistered Sales of Equity Securities and Use of Proceeds | 27 | |
| Item 5. Other Information | 27 | |
| Item 6. Exhibits | 28 | |
| Signatures | 29 |
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 September 30, 2025 | As of December 31, 2024 | |||||||
| (Unaudited) | ||||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash | $ | $ | ||||||
| Accounts receivable, net | ||||||||
| Inventory | ||||||||
| Other current assets | ||||||||
| State income tax receivable | — | |||||||
| Deferred cost of goods sold (COGS) | ||||||||
| Total current assets | ||||||||
| Property and equipment, net | ||||||||
| Right-of-use assets | ||||||||
| Deferred COGS | — | |||||||
| Other assets | ||||||||
| Deferred tax assets | ||||||||
| Total assets | $ | $ | ||||||
| LIABILITIES AND EQUITY | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | $ | ||||||
| Accrued expenses | ||||||||
| Deferred revenue | ||||||||
| Current operating lease liabilities | ||||||||
| Other current liabilities | ||||||||
| State income tax payable | ||||||||
| Total current liabilities | ||||||||
| Long-term liabilities: | ||||||||
| Deferred revenue | ||||||||
| Noncurrent operating lease liabilities | — | |||||||
| Other long-term liabilities | ||||||||
| Total liabilities | ||||||||
| Commitments and contingencies (Note 7) | - | - | ||||||
| Equity: | ||||||||
| Acorn Energy, Inc. stockholders | ||||||||
| Common stock - $ | ||||||||
| Additional paid-in capital | ||||||||
| Accumulated stockholders’ deficit | ( | ) | ( | ) | ||||
| Treasury stock, at cost – | ( | ) | ( | ) | ||||
| Total Acorn Energy, Inc. stockholders’ equity | ||||||||
| Non-controlling interests | ||||||||
| Total equity | ||||||||
| Total liabilities and equity | $ | $ | ||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
| 3 |
ACORN ENERGY, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED) (IN THOUSANDS, EXCEPT PER SHARE DATA)
| 2025 | 2024 | 2025 | 2024 | |||||||||||||
Nine months ended September 30, | Three months ended September 30, | |||||||||||||||
| 2025 | 2024 | 2025 | 2024 | |||||||||||||
| Revenue | $ | $ | $ | $ | ||||||||||||
| COGS | ||||||||||||||||
| Gross profit | ||||||||||||||||
| Operating expenses: | ||||||||||||||||
| Research and development (R&D) expenses | ||||||||||||||||
| Selling, general and administrative (SG&A) expenses | ||||||||||||||||
| Total operating expenses | ||||||||||||||||
| Operating income | ||||||||||||||||
| Interest income, net | ||||||||||||||||
| Income before income taxes | ||||||||||||||||
| Provision for (benefit from) income taxes | ( | ) | ||||||||||||||
| Net income | ||||||||||||||||
| Non-controlling interest share of income | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Net income attributable to Acorn Energy, Inc. stockholders | $ | $ | $ | $ | ||||||||||||
| Net income per share attributable to Acorn Energy, Inc stockholders – basic and diluted | ||||||||||||||||
| Basic | $ | $ | $ | $ | ||||||||||||
| Diluted | $ | $ | $ | $ | ||||||||||||
| Weighted average number of shares outstanding attributable to Acorn Energy, Inc. stockholders – basic and diluted | ||||||||||||||||
| Basic | ||||||||||||||||
| Diluted | ||||||||||||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
| 4 |
ACORN ENERGY, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (DEFICIT)
(UNAUDITED) (IN THOUSANDS)
| Number of Shares Outstanding | Common Stock | Additional Paid-In Capital | Accumulated Deficit | Number of Treasury Shares | Treasury Stock | Total Acorn Energy, Inc. Stockholders’ Equity | Non- controlling interests | Total Equity | ||||||||||||||||||||||||||||
| Three and Nine Months Ended September 30, 2025 | ||||||||||||||||||||||||||||||||||||
| Number of Shares Outstanding | Common Stock | Additional Paid-In Capital | Accumulated Deficit | Number of Treasury Shares | Treasury Stock | Total Acorn Energy, Inc. Stockholders’ Equity | Non- controlling interests | Total Equity | ||||||||||||||||||||||||||||
| Balances as of December 31, 2024 | $ | $ | $ | ( | ) | $ | ( | ) | $ | $ | $ | |||||||||||||||||||||||||
| Net Income | — | — | — | — | — | |||||||||||||||||||||||||||||||
| Accrued dividend in OmniMetrix preferred shares | — | — | — | — | — | — | — | ( | ) | ( | ) | |||||||||||||||||||||||||
| Stock-based compensation | — | — | — | — | — | — | ||||||||||||||||||||||||||||||
| Balances as of March 31, 2025 | $ | $ | $ | ( | ) | $ | ( | ) | $ | $ | $ | |||||||||||||||||||||||||
| Net income | — | — | — | — | — | |||||||||||||||||||||||||||||||
| Proceeds from stock options | -* | — | — | — | — | |||||||||||||||||||||||||||||||
| Accrued dividend in OmniMetrix preferred shares | — | — | — | — | — | — | — | ( | ) | ( | ) | |||||||||||||||||||||||||
| Stock-based compensation | — | — | — | — | — | — | ||||||||||||||||||||||||||||||
| Balances as of June 30, 2025 | $ | $ | $ | ( | ) | $ | ( | ) | $ | $ | $ | |||||||||||||||||||||||||
| Net income | — | — | — | — | — | |||||||||||||||||||||||||||||||
| Proceeds from stock option exercise | — | — | — | — | — | |||||||||||||||||||||||||||||||
| Shares repurchased and held in Treasury | — | — | — | — | ( | ) | ( | ) | — | ( | ) | |||||||||||||||||||||||||
| Accrued dividend in OmniMetrix preferred shares | — | — | — | — | — | — | — | ( | ) | ( | ) | |||||||||||||||||||||||||
| Stock-based compensation | — | — | — | — | — | — | ||||||||||||||||||||||||||||||
| Balances as of September 30, 2025 | $ | $ | $ | ( | ) | $ | ( | ) | $ | $ | $ | |||||||||||||||||||||||||
| Three and Nine Months Ended September 30, 2024 | ||||||||||||||||||||||||||||||||||||
| Number of Shares Outstanding | Common Stock | Additional Paid-In Capital | Accumulated Deficit | Number of Treasury Shares | Treasury Stock | Total Acorn Energy, Inc. Stockholders’ Equity (Deficit) | Non- controlling interests | Total Equity (Deficit) | ||||||||||||||||||||||||||||
| Balances as of December 31, 2023 | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | $ | ( | ) | |||||||||||||||||||||
| Net income | — | — | — | — | — | |||||||||||||||||||||||||||||||
| Proceeds from warrant exercise | -* | — | — | — | — | |||||||||||||||||||||||||||||||
| Accrued dividend in OmniMetrix preferred shares | — | — | — | — | — | — | — | ( | ) | ( | ) | |||||||||||||||||||||||||
| Stock-based compensation | — | — | — | — | — | — | ||||||||||||||||||||||||||||||
| Balances as of March 31, 2024 | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | $ | ( | ) | |||||||||||||||||||||
| Net income | — | — | — | — | — | |||||||||||||||||||||||||||||||
| Accrued dividend in OmniMetrix preferred shares | — | — | — | — | — | — | — | ( | ) | ( | ) | |||||||||||||||||||||||||
| Stock-based compensation | — | — | — | — | — | — | ||||||||||||||||||||||||||||||
| Balances as of June 30, 2024 | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | $ | ( | ) | |||||||||||||||||||||
| Balances | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | $ | ( | ) | |||||||||||||||||||||
| Net income | — | — | — | — | — | |||||||||||||||||||||||||||||||
| Accrued dividend in OmniMetrix preferred shares | — | — | — | — | — | — | — | ( | ) | ( | ) | |||||||||||||||||||||||||
| Stock-based compensation | — | — | — | — | — | — | ||||||||||||||||||||||||||||||
| Balances as of September 30, 2024 | $ | $ | $ | ( | ) | $ | ( | ) | $ | $ | $ | |||||||||||||||||||||||||
| Balances | $ | $ | $ | ( | ) | $ | ( | ) | $ | $ | $ | |||||||||||||||||||||||||
| * |
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)
| 2025 | 2024 | |||||||
| Nine months ended September 30, | ||||||||
| 2025 | 2024 | |||||||
| Cash flows provided by operating activities: | ||||||||
| Net income | $ | $ | ||||||
| Depreciation and amortization | ||||||||
| Deferred tax expense | — | |||||||
| Decrease in the provision for credit loss | — | ( | ) | |||||
| Impairment of inventory | ||||||||
| Non-cash lease expense | ||||||||
| Stock-based compensation | ||||||||
| Change in operating assets and liabilities: | ||||||||
| Decrease (increase) in accounts receivable | ( | ) | ||||||
| (Increase) decrease in inventory | ( | ) | ||||||
| Decrease in deferred COGS | ||||||||
| Decrease in other current assets and other assets | ||||||||
| Decrease in state income tax receivable | — | |||||||
| Decrease in deferred revenue | ( | ) | ( | ) | ||||
| Decrease in operating lease liability | ( | ) | ( | ) | ||||
| Increase in state income tax payable | — | |||||||
| (Decrease) increase in accounts payable, accrued expenses, other current liabilities and non-current liabilities | ( | ) | ||||||
| Net cash provided by operating activities | ||||||||
| Cash flows used in investing activities: | ||||||||
| Investments in technology | ( | ) | ( | ) | ||||
| Leasehold improvements | ( | ) | — | |||||
| Patents | ( | ) | — | |||||
| Purchases of furniture and equipment | ( | ) | ( | ) | ||||
| Net cash used in investing activities | ( | ) | ( | ) | ||||
| Cash flows provided by financing activities: | ||||||||
| Stock repurchases held in Treasury | ( | ) | — | |||||
| Stock option exercise proceeds | ||||||||
| Net cash provided by financing activities | ||||||||
| Net increase in cash | ||||||||
| Cash at the beginning of the period | ||||||||
| Cash at the end of the period | $ | $ | ||||||
| Supplemental cash flow information: | ||||||||
| Cash paid during the year for: | ||||||||
| Interest | $ | — | $ | |||||
| Income Taxes | $ | $ | ||||||
| Non-cash investing and financing activities: | ||||||||
| Right-of-use assets | $ | — | ||||||
| Operating lease liability | — | |||||||
| Accrued preferred dividends to former CEO of OmniMetrix | $ | $ | ||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
| 6 |
ACORN ENERGY, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED STATEMENTS
(UNAUDITED)
NOTE 1— BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements of Acorn Energy, Inc. (“Acorn”) and its subsidiaries, OmniMetrix, LLC (“OmniMetrix”) and OMX Holdings, Inc. (collectively, with Acorn and OmniMetrix, “the Company”) have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and with the instructions to Article 8 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete consolidated financial statements. The December 31, 2024 consolidated balance sheet data were derived from audited financial statements but do not include all disclosures required by accounting principles generally accepted in the United States of America. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation have been included. Operating results for the nine- and three-month periods ended September 30, 2025 and 2024 are not necessarily indicative of the results that may be expected for the year ending December 31, 2025.
All dollar amounts, except per share data, are rounded to the nearest thousand; thus, they are approximate.
These unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and footnotes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024, filed with the Securities and Exchange Commission on March 6, 2025.
NOTE 2—ACCOUNTING POLICIES
Use of Estimates in Preparation of Financial Statements
The preparation of consolidated financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities as of the date of the consolidated financial statements, and the reported amounts of revenues and expenses during the reporting periods.
As applicable to these unaudited consolidated financial statements, the most significant estimates and assumptions relate to uncertainties with respect to valuation allowance.
Concentrations of Credit Risk
Financial
instruments, which potentially subject the Company to concentrations of credit risk, consist principally of cash and trade accounts receivable.
The Company’s cash was deposited with a U.S. bank and amounted to $
Inventory
Inventories are comprised of components (raw materials) and finished goods, which are measured at the lower of cost or net realizable value.
| 7 |
Raw materials inventory is generally comprised of radios, cables, antennas, and electrical components. Finished goods inventory consists of fully assembled systems ready for final shipment to the customer. Costs are determined at cost of acquisition on a weighted average basis and include all outside production and applicable shipping costs.
All inventories are periodically reviewed to identify slow-moving and obsolete inventory. Management conducts an assessment at the end of each reporting period of the Company’s inventory reserve and writes off any inventory items that are deemed obsolete.
Management
conducted an assessment and wrote off inventory deemed obsolete valued at $
Revenue Recognition
The Company’s revenue recognition policy is consistent with applicable revenue recognition guidance and interpretations. The core principle of ASC 606 is to recognize revenue when promised goods or services are transferred to customers in an amount that reflects the consideration that is expected to be received for those goods or services. ASC 606 defines a five-step process to achieve this core principle, which includes: (1) identifying contracts with customers, (2) identifying performance obligations within those contracts, (3) determining the transaction price, (4) allocating the transaction price to the performance obligation in the contract, which may include an estimate of variable consideration, and (5) recognizing revenue when or as each performance obligation is satisfied. The Company assesses whether payment terms are customary or extended in accordance with normal practice relative to the market in which the sale is occurring. The Company’s sales arrangements generally include standard payment terms. These terms effectively relate to all customers, products, and arrangements regardless of customer type, product mix or arrangement size. See Note 11, Revenue, for further discussion.
Revenue from sales of the hardware products that are distinct products are recorded when shipped (with the exception of the hardware products under a material contract with one customer for which revenue is recognized when the unit is accepted) while the revenue from sales of the hardware products (product versions sold prior to September 1, 2023) that were not separable from the Company’s monitoring services was deferred and amortized over the estimated unit life. Product revenues are recognized at the point in time when control of the product is transferred to the customer, which typically occurs upon shipment or delivery except to the one customer under a material contract for which this occurs upon acceptance. To determine when control has transferred, the Company considers if there is a present right to payment and if legal title, physical possession, and the significant risks and rewards of ownership of the asset has transferred to the customer. Revenue from the prepayment of monitoring fees (generally paid twelve months in advance) are recorded as deferred revenue upon receipt of payment from the customer and then amortized to revenue over the monitoring service period. This method provides a faithful depiction of the transfer of services as it aligns the recognition of revenue with the period in which the monitoring services are provided. By deferring the revenue and recognizing it over the service period, the financial statements accurately reflect the Company’s performance and obligations to its customers. See Notes 10 and 11 for the disaggregation of the Company’s revenue for the periods presented.
Any sales tax, value added tax, and other tax the Company collects concurrent with revenue producing activities are excluded from revenue.
Income Taxes
The Company accounts for income taxes under the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the consolidated financial statements. Under this method, the company determines deferred tax assets and liabilities on the basis of the differences between the financial statement and the tax bases of assets and liabilities by using enacted tax rates in effect for the year in which the differences are expected to reverse. The effect of a change in tax rates on deferred assets and liabilities is recognized in income in the period that includes the enactment date.
| 8 |
The
Company recognizes deferred tax assets to the extent that it believes that these assets are more likely than not to be realized. In making
such a determination, the Company considers all available positive and negative evidence, including future reversals of existing taxable
temporary differences, projected future taxable income, tax-planning strategies, and results of recent operations. If the Company determines
that it would be able to realize its deferred tax assets in the future in excess of their net recorded amount, the Company would make
an adjustment to the deferred tax asset valuation allowance, which would reduce the provision for incomes taxes. During the year ended
December 31, 2024, the Company recorded a reduction in the valuation allowance of $
The Company records uncertain tax positions in accordance with ASC 740 on the basis of a two-step process in which (1) the Company determines whether it is more likely than not that the tax positions will be sustained on the basis of the technical merits of the position and (2) for those tax positions that meet the more-likely-than-not recognition threshold, the company recognizes the largest amount of tax benefit that more than 50 percent likely to be realized upon ultimate settlement with the related tax authority.
The Company recognizes interest and penalties related to unrecognized tax benefits on the income tax expense line in the accompanying unaudited condensed consolidated statements of operations. No accrued interest or penalties were required to be included in the related tax liability line in the unaudited condensed consolidated balance sheet as of September 30, 2025 and in the consolidated balance sheet as of December 31, 2024.
Basic and Diluted Net Income Per Share
Basic net income per share is computed by dividing the net income attributable to Acorn Energy, Inc. by the weighted average number of shares outstanding during the period, excluding treasury stock. Diluted net income per share is computed by dividing the net income by the weighted average number of shares outstanding plus the dilutive potential of common shares which would result from the exercise of stock options and warrants. The dilutive effects of stock options and warrants are excluded from the computation of diluted net income per share if doing so would be antidilutive.
The
combined weighted average number of options that were excluded from the computation of diluted net income per share, as they had an antidilutive
effect, was
The following data represents the amounts used in computing earnings per share and the effect on net income and the weighted average number of shares of dilutive potential common stock (in thousands, except per share data):
SCHEDULE OF EFFECT ON NET INCOME LOSS AND WEIGHTED AVERAGE NUMBER OF SHARES
| 2025 | 2024 | 2025 | 2024 | |||||||||||||
Nine months ended September 30, | Three months ended September 30, | |||||||||||||||
| 2025 | 2024 | 2025 | 2024 | |||||||||||||
| Net income attributable to common stockholders | $ | $ | $ | $ | ||||||||||||
| Weighted average share outstanding: | ||||||||||||||||
| -Basic | ||||||||||||||||
| Add: Stock options | ||||||||||||||||
| -Diluted | ||||||||||||||||
| Basic net income per share | $ | $ | $ | $ | ||||||||||||
| Diluted net income per share | $ | $ | $ | $ | ||||||||||||
| 9 |
Recent Accounting Pronouncements
In July 2025, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2025-05, which introduces a practical expedient and an accounting policy election for estimating expected credit losses on current accounts receivable and contract assets arising from revenue transactions under ASC Topic 606. The practical expedient allows entities to assume that current conditions as of the reporting date remain unchanged over the remaining life of the asset, thereby eliminating the need to incorporate forecasts of future economic conditions. The accounting policy election, available to entities other than public business entities, permits consideration of post-balance sheet cash collections in estimating expected credit losses, provided the practical expedient is also elected.
Although the Company qualifies as a public business entity and is therefore not eligible for the accounting policy election, the Company has evaluated the practical expedient and determined that it does not expect a material impact on its consolidated financial statements upon adoption.
ASU 2025-05 is effective for interim and annual periods beginning after December 15, 2025, with early adoption permitted. The Company does not plan to early adopt and will implement the guidance beginning with its first quarter of fiscal 2026.
In November 2024, the FASB issued Accounting Standards Update No. 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses (“ASU 2024-03”), and in January 2025, the FASB issued Accounting Standards Update No. 2025-01, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Clarifying the Effective Date (“ASU 2025-01”). ASU 2024-03 requires additional disclosure of the nature of expenses included in the income statement as well as disclosures about specific types of expenses included in the expense captions presented in the income statement. ASU 2024-03, as clarified by ASU 2025-01, is effective for us for our annual reporting for fiscal 2027 and for interim period reporting beginning in fiscal 2028 on a prospective basis. Both early adoption and retrospective application are permitted. The Company is currently evaluating the impact that the adoption of these standards will have on its consolidated financial statements and disclosures.
In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which requires disaggregated information about a reporting entity’s effective tax rate reconciliation, as well as information related to income taxes paid to enhance the transparency and decision usefulness of income tax disclosures. This ASU will be effective for the annual period ending December 31, 2025. The Company is currently evaluating the timing and impacts of adoption of this ASU.
NOTE 3—LIQUIDITY
As
of September 30, 2025, the Company had $
At
September 30, 2025, the Company had working capital of $
As
of November 4, 2025, the Company had cash of $
NOTE 4—ALLOWANCE FOR CREDIT LOSSES
For the Company, ASC 326, “Financial Instruments – Credit Losses (Topic 326)” 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 analysis of ASC 326.
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, and certain end users with payment terms generally ranging from 30 to 90 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 customer’s ability to pay. These factors include the customer’s financial condition and past payment experience.
| 10 |
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 September 30,
2025, the Company had gross receivables of $
SCHEDULE OF ACCOUNTS RECEIVABLE
September 30, 2025 | December 31, 2024 | |||||||
| As of | ||||||||
September 30, 2025 | December 31, 2024 | |||||||
| (in thousands) | ||||||||
| Accounts Receivable, net, beginning of period | $ | $ | ||||||
| Accounts Receivable, net, end of period | $ | $ | ||||||
The following is a tabular reconciliation of the Company’s allowance for credit losses:
SCHEDULE OF ALLOWANCES FOR CREDIT LOSSES
September 30, 2025 | December 31, 2024 | |||||||
| As of | ||||||||
September 30, 2025 | December 31, 2024 | |||||||
| (in thousands) | ||||||||
| Balance at beginning of period | $ | $ | ||||||
| Decrease in provision for credit losses | — | ( | ) | |||||
| Net charge-offs | ( | ) | — | |||||
| Balance at end of period | $ | $ | ||||||
NOTE 5—INVENTORY
SCHEDULE OF INVENTORY
September 30, 2025 | December 31, 2024 | |||||||
| As of | ||||||||
September 30, 2025 | December 31, 2024 | |||||||
| (in thousands) | ||||||||
| Raw materials | $ | $ | ||||||
| Finished goods | ||||||||
| Inventory net | $ | $ | ||||||
At
both September 30, 2025 and December 31, 2024, the Company’s inventory reserve for obsolescence was $
NOTE 6—LEASES
| 11 |
Supplemental cash flow information related to leases consisted of the following (in thousands):
SCHEDULE OF SUPPLEMENTAL CASH FLOW INFORMATION RELATED TO LEASES
For the Nine Months Ending September 30, | ||||||||
| 2025 | 2024 | |||||||
| Cash paid for operating lease liabilities | $ | $ | ||||||
Supplemental balance sheet information related to leases consisted of the following:
SCHEDULE OF SUPPLEMENTAL BALANCE SHEET INFORMATION RELATED TO LEASES
As of September 30, 2025 | ||||
| Weighted average remaining lease terms for operating leases | ||||
The table below reconciles the undiscounted future minimum lease payments under non-cancelable lease agreements having initial terms of more than one year to the total operating lease liabilities recognized on the unaudited condensed consolidated balance sheet as of September 30, 2025 (in thousands):
SCHEDULE OF FUTURE MINIMUM LEASE PAYMENTS
Year ended September 30, | ||||
| 2026 | $ | |||
| 2027 | ||||
| 2028 | ||||
| 2029 | ||||
| 2030 | ||||
| Thereafter | ||||
| Total undiscounted cash flows | ||||
| Less: Imputed interest | ( | ) | ||
| Present value of operating lease liabilities (a) | $ | |||
| (a) |
On
July 6, 2021, the Company entered into an agreement with King Industrial Realty, Inc., to sublease from the Company
SCHEDULE OF SUBLEASES
| Year ended September 30, | ||||
| 2026 | $ | |||
| 2027 | ||||
| 2028 | ||||
| Total undiscounted cash flows | $ | |||
NOTE 7—COMMITMENTS AND CONTINGENCIES
The
Company has $
| 12 |
NOTE 8— STOCKHOLDERS’ EQUITY
(a) General
At
September 30, 2025, Acorn had
The
Company is
(b) Summary Employee Option Information
The Company’s stock option plans provide for the grant to officers, directors and employees of options to purchase shares of common stock. The purchase price may be paid in cash or, if the option is “in-the-money” at the end of the option term, it is automatically exercised “net.” In a net exercise of an option, the Company does not require a payment of the exercise price of the option from the option holder but reduces the number of shares of common stock issued upon the exercise of the option by the smallest number of whole shares that has an aggregate fair market value equal to or in excess of the aggregate exercise price for the option shares covered by the option exercised. Each option is exercisable for one share of the Company’s common stock. Most options expire within five to ten years from the date of the grant and generally vest over a three-year period from the date of the grant.
At
September 30, 2025,
During
the nine- and three-month periods ended September 30, 2025,
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, 2024 | $ | $ | ||||||||||||
| Granted | ||||||||||||||
| Cancelled | ( | ) | ||||||||||||
| Exercised | ( | ) | ||||||||||||
| Outstanding at September 30, 2025 | $ | $ | ||||||||||||
| Exercisable at September 30, 2025 | $ | $ | ||||||||||||
The
fair value of the options granted of $
SCHEDULE OF STOCK OPTIONS FAIR VALUE ASSUMPTIONS ESTIMATED USING BLACK-SCHOLES
| Risk-free interest rate | % | |||
| Expected term of options | ||||
| Expected annual volatility | % | |||
| Expected dividend yield | — | % |
| 13 |
(c) Stock Option Compensation Expense
Stock
option compensation expense included in selling, general and administrative expenses in the Company’s unaudited condensed consolidated
statements of operations was $
The
total compensation cost related to non-vested awards not yet recognized was $
(d) Stock Repurchases
On
July 2, 2025, the Company repurchased
On
August 19, 2025, the Company repurchased
NOTE 9— INCOME TAXES
The Company’s quarterly provision for income taxes is measured using an annual effective tax rate, adjusted for discrete items within the period presented. To determine the annual effective tax rate, the Company estimates both the total income (loss) before income taxes for the full year and the jurisdictions in which that income (loss) is subject to tax. The actual effective tax rate for the full year may differ from these estimates if income (loss) before income taxes is greater than or less than what was estimated or if the allocation of income (loss) to jurisdictions in which it is taxed is different from the estimated allocations.
For
the nine months ended September 30, 2025 and September 30, 2024 the Company recognized income tax expense of $
For
the three months ended September 30, 2025 and September 30, 2024 the Company recognized income tax benefit of $
The
difference between the Company’s effective tax rate and the U.S. statutory tax rate of
The Company files a consolidated U.S. income tax return and tax returns in certain state and local jurisdictions. As of September 30, 2025, the Company is no longer subject to federal examination for years before 2021, or for years before 2020 for state income taxes. However, our tax attribute carryforwards from closed tax years may be subject to examination to the extent utilized in an open tax year. The Company does not expect that our unrecognized tax benefits will change within the next twelve months due to statute of limitation lapses.
NOTE 10— SEGMENT REPORTING
As
of September 30, 2025, the Company operates in
| ● | 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 TrueGuard power generator monitors and 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 touchscreen 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 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. |
| 14 |
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 CODM is the Company’s Chief Executive Officer (CEO).
The accounting policies of all the segments are those described in Note 2, Accounting Policies. The Company evaluates performance by segment based on revenue (driven by the number of connections), gross profit and net income or loss before taxes.
The Company does not systematically allocate assets to the divisions of the subsidiaries constituting its consolidated group, unless the division constitutes a significant operation. Further, the CODM does not review the assets by segment.
Segment expenses that are routinely provided to the CODM are COGS and R&D expense. R&D expense may be allocated to each segment based on the percentage of segment revenue to total revenue or based on estimated time on dedicated projects within the segment. SG&A expense and interest income is allocated to each segment based on the percentage of segment revenue to total revenue instead of being specifically identified to each segment since the Company’s resources have a high level of shared utilization between the segments.
The following tables represent segmented data for the nine- and three-month periods ended September 30, 2025 and 2024 (in thousands):
SUMMARY OF SEGMENTED DATA
| PG | CP | Total | ||||||||||
| Nine months ended September 30, 2025: | ||||||||||||
| Revenues from external customers | $ | $ | $ | |||||||||
| COGS | ||||||||||||
| Segment gross profit | ||||||||||||
| R&D expense | ||||||||||||
| SG&A expense | ||||||||||||
| Segment operating income | ||||||||||||
| Interest income, net | ||||||||||||
| Segment income before income taxes | $ | $ | $ | |||||||||
| Nine months ended September 30, 2024: | ||||||||||||
| Revenues from external customers | $ | $ | $ | |||||||||
| COGS | ||||||||||||
| Segment gross profit | ||||||||||||
| R&D expense | ||||||||||||
| SG&A expense | ||||||||||||
| Segment operating income | ||||||||||||
| Interest income, net | ||||||||||||
| Segment income before income taxes | $ | $ | $ | |||||||||
| PG | CP | Total | ||||||||||
| Three months ended September 30, 2025: | ||||||||||||
| Revenues from external customers | $ | $ | $ | |||||||||
| COGS | ||||||||||||
| Segment gross profit | ||||||||||||
| R&D expense | ||||||||||||
| SG&A expense | ||||||||||||
| Segment operating income | ||||||||||||
| Interest income, net | ||||||||||||
| Segment income before income taxes | $ | $ | $ | |||||||||
| Three months ended September 30, 2024: | ||||||||||||
| Revenues from external customers | $ | $ | $ | |||||||||
| COGS | ||||||||||||
| Segment gross profit | ||||||||||||
| R&D expense | ||||||||||||
| SG&A expense | ||||||||||||
| Segment operating income | ||||||||||||
| Interest income, net | ||||||||||||
| Segment income before income taxes | $ | $ | $ | |||||||||
| 15 |
Reconciliation of Segment Income to Consolidated Net Income Before Income Taxes
SCHEDULE OF RECONCILIATION OF SEGMENT DATA TO CONSOLIDATED STATEMENT OF OPERATIONS
| 2025 | 2024 | 2025 | 2024 | |||||||||||||
Nine months ended September 30, | Three months ended September 30, | |||||||||||||||
| 2025 | 2024 | 2025 | 2024 | |||||||||||||
| (in thousands) | ||||||||||||||||
| Total net income before income taxes for reportable segments | $ | $ | $ | $ | ||||||||||||
| Unallocated cost of corporate headquarters | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Consolidated net income before income taxes | $ | $ | $ | $ | ||||||||||||
NOTE 11—REVENUE
Prior to September 1, 2023, sales of OmniMetrix equipment typically did not qualify as a separate unit of accounting. As a result, revenue (and related costs) associated with sale of equipment was recorded to deferred revenue (and deferred cost of goods sold) upon shipment of PG and CP monitoring units. Revenue and related costs with respect to the sale of equipment were recognized over the estimated life of the units which was estimated to be three years. On September 1, 2023, OmniMetrix launched an updated version of its products that includes new functionality in its TrueGuard, AIRGuard, Patriot and Hero products that allows its customers to have options as it relates to obtaining and utilizing the data that is provided by its hardware devices. This new functionality allows for SIM card options, configuration options regarding IP address endpoints and DNS routes, and access to OmniMetrix’s over-the-air data protocol. This product update allows customers to have the option to purchase OmniMetrix’s monitoring service, monitor the products themselves if they have the ability in-house, or choose another monitoring provider if they so desire. OmniMetrix’s prior hardware product version could not function as a distinct product independent from its monitoring services. This new version’s functionality results in OmniMetrix’s hardware and monitoring services being capable of being two distinct products and services. OmniMetrix recognizes revenue, COGS and commissions from the sale of the new version of its hardware products when the product is shipped rather than over the estimated time that the unit is in service for the customer. The remaining balance of deferred hardware revenue from the prior version of these products will continue to be amortized each period until it is fully amortized. The modifications to the circuit boards and embedded firmware of hardware enclosures in inventory as of August 31, 2023 were made such that only the new version of these products was sold subsequent to that date.
The following table disaggregates the Company’s revenue for the nine- and three-month periods ended September 30, 2025 and 2024 (in thousands):
SCHEDULE OF DISAGGREGATES OF REVENUE
| Hardware | Monitoring | Total | ||||||||||
| Nine months ended September 30, 2025: | ||||||||||||
| PG Segment | $ | $ | $ | |||||||||
| CP Segment | ||||||||||||
| Total Revenue | $ | $ | $ | |||||||||
| Hardware | Monitoring | Total | ||||||||||
| Nine months ended September 30, 2024: | ||||||||||||
| PG Segment | $ | $ | $ | |||||||||
| CP Segment | ||||||||||||
| Total Revenue | $ | $ | $ | |||||||||
| 16 |
| Hardware | Monitoring | Total | ||||||||||
| Three months ended September 30, 2025: | ||||||||||||
| PG Segment | $ | $ | $ | |||||||||
| CP Segment | ||||||||||||
| Total Revenue | $ | $ | $ | |||||||||
| Hardware | Monitoring | Total | ||||||||||
| Three months ended September 30, 2024: | ||||||||||||
| PG Segment | $ | $ | $ | |||||||||
| CP Segment | ||||||||||||
| Total Revenue | $ | $ | $ | |||||||||
Deferred revenue activity for the nine months ended September 30, 2025 can be seen in the table below (in thousands):
SCHEDULE OF DEFERRED REVENUE ACTIVITY
| Hardware | Monitoring | Total | ||||||||||
| Balance at December 31, 2024 | $ | $ | $ | |||||||||
| Additions during the period | — | |||||||||||
| Recognized as revenue | ( | ) | ( | ) | ( | ) | ||||||
| Balance at September 30, 2025 | $ | $ | $ | |||||||||
| Amounts to be recognized as revenue in the twelve-month-period ending: | ||||||||||||
| September 30, 2026 | $ | |||||||||||
| September 30, 2027 | — | |||||||||||
| September 30, 2028 and thereafter | — | |||||||||||
| Total | $ | |||||||||||
The
amount of hardware revenue recognized during the nine months ended September 30, 2025 that was included in deferred revenue at the beginning
of the fiscal year was $
The following table provides a reconciliation of the Company’s hardware revenue for the nine- and three-month periods ended September 30, 2025 and 2024 (in thousands):
SCHEDULE OF RECONCILIATION OF HARDWARE REVENUE
| Reconciliation of Hardware Revenue | 2025 | 2024 | 2025 | 2024 | ||||||||||||
Nine months ended September 30, | Three months ended September 30, | |||||||||||||||
| Reconciliation of Hardware Revenue | 2025 | 2024 | 2025 | 2024 | ||||||||||||
| Amortization of deferred revenue | $ | $ | $ | $ | ||||||||||||
| Sales of custom designed units and related accessories | — | — | — | |||||||||||||
| Hardware sales (new product versions) | ||||||||||||||||
| Other accessories, services, shipping and miscellaneous charges | ||||||||||||||||
| Total hardware revenue | $ | $ | $ | $ | ||||||||||||
Deferred COGS relate only to the sale of equipment. Deferred COGS activity for the nine-month period ended September 30, 2025 can be seen in the table below (in thousands):
SCHEDULE OF DEFERRED CHARGES ACTIVITY
| Balance at December 31, 2024 | $ | |||
| Additions, net of adjustments, during the period | — | |||
| Recognized as COGS | ( | ) | ||
| Balance at September 30, 2025 | $ | |||
| Amounts to be recognized as COGS in the twelve-month-period ending: | ||||
| September 30, 2026 | $ |
| 17 |
The following table provides a reconciliation of the Company’s COGS expense for the nine- and three-month periods ended September 30, 2025 and 2024 (in thousands):
SCHEDULE OF RECONCILIATION OF COGS EXPENSES
| Reconciliation of COGS Expense | 2025 | 2024 | 2025 | 2024 | ||||||||||||
Nine months ended September 30, | Three months ended September 30, | |||||||||||||||
| Reconciliation of COGS Expense | 2025 | 2024 | 2025 | 2024 | ||||||||||||
| Amortization of deferred COGS | $ | $ | $ | $ | ||||||||||||
| COGS of custom designed units and related accessories | — | — | — | |||||||||||||
| COGS of hardware sales (new product versions) | ||||||||||||||||
| Data costs for monitoring | ||||||||||||||||
| Other COGS of accessories, services, shipping and miscellaneous charges | ||||||||||||||||
| Total COGS expense | $ | $ | $ | $ | ||||||||||||
The following table provides a reconciliation of the Company’s sales commissions contract assets for the nine-month period ended September 30, 2025 (in thousands):
SCHEDULE OF SALES COMMISSIONS CONTRACT ASSETS
| Hardware | Monitoring | Total | ||||||||||
| Balance at December 31, 2024 | $ | $ | $ | |||||||||
| Additions during the period | — | |||||||||||
| Amortization of sales commissions | ( | ) | ( | ) | ( | ) | ||||||
| Balance at September 30, 2025 | $ | |||||||||||
The
capitalized sales commissions are included in other current assets ($
Amounts to be recognized as sales commission expense in the twelve-month-period ending (in thousands):
SCHEDULE OF SALES COMMISSIONS EXPENSE
| September 30, 2026 | $ | |||
| September 30, 2027 | ||||
| September 30, 2028 and thereafter | ||||
| Total | $ |
NOTE 12—RELATED PARTY BALANCES AND TRANSACTIONS
Officer and Director Fees
The
Company recorded consulting service fees to officers of $
The
Company recorded fees to directors of $
| 18 |
| 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, 2024 occur, actual outcomes and results could differ materially from those indicated in the forward-looking statements.
Any forward-looking statement speaks only as of the date on which such statement is made, and the Company undertakes no obligation to update any forward-looking statement or statements to reflect events or circumstances after the date on which such statement is made or to reflect the occurrence of unanticipated events. New factors emerge from time to time, and it is not possible for management to predict all such factors, nor can it assess the impact of each such factor on the business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements.
All dollar amounts in the tables and discussion below are rounded to the nearest thousand, except per share data; thus, they are approximate.
FINANCIAL RESULTS BY COMPANY
The following table shows, for the periods indicated, the financial results (dollar amounts in thousands) attributable to each of our consolidated companies.
| Nine months ended September 30, 2025 | ||||||||||||
| OmniMetrix | Acorn | Total | ||||||||||
| Revenue | $ | 9,101 | $ | — | $ | 9,101 | ||||||
| COGS | 2,191 | — | 2,191 | |||||||||
| Gross profit | 6,910 | — | 6,910 | |||||||||
| Gross profit margin | 76 | % | 76 | % | ||||||||
| R&D expenses | 823 | — | 823 | |||||||||
| SG&A expenses | 3,245 | 1,132 | 4,377 | |||||||||
| Operating income (loss) | $ | 2,842 | $ | (1,132 | ) | $ | 1,710 | |||||
| Nine months ended September 30, 2024 | ||||||||||||
| OmniMetrix | Acorn | Total | ||||||||||
| Revenue | $ | 7,457 | $ | — | $ | 7,457 | ||||||
| COGS | 2,014 | — | 2,014 | |||||||||
| Gross profit | 5,443 | — | 5,443 | |||||||||
| Gross profit margin | 73 | % | 73 | % | ||||||||
| R&D expenses | 698 | — | 698 | |||||||||
| SG&A expenses | 2,882 | 771 | 3,653 | |||||||||
| Operating income (loss) | $ | 1,863 | $ | (771 | ) | $ | 1,092 | |||||
| 19 |
| Three months ended September 30, 2025 | ||||||||||||
| OmniMetrix | Acorn | Total | ||||||||||
| Revenue | $ | 2,478 | $ | — | $ | 2,478 | ||||||
| COGS | 533 | — | 533 | |||||||||
| Gross profit | 1,945 | — | 1,945 | |||||||||
| Gross profit margin | 78 | % | 78 | % | ||||||||
| R&D expenses | 267 | — | 267 | |||||||||
| SG&A expenses | 1,072 | 447 | 1,519 | |||||||||
| Operating income (loss) | $ | 606 | $ | (447 | ) | $ | 159 | |||||
| Three months ended September 30, 2024 | ||||||||||||
| OmniMetrix | Acorn | Total | ||||||||||
| Revenue | $ | 3,050 | $ | — | $ | 3,050 | ||||||
| COGS | 863 | — | 863 | |||||||||
| Gross profit | 2,187 | — | 2,187 | |||||||||
| Gross profit margin | 72 | % | 72 | % | ||||||||
| R&D expenses | 234 | — | 234 | |||||||||
| SG&A expenses | 960 | 237 | 1,197 | |||||||||
| Operating income (loss) | $ | 993 | $ | (237 | ) | $ | 756 | |||||
BACKLOG
As of September 30, 2025, OmniMetrix had a backlog of $3,575,000, primarily comprised of deferred revenue, of which $3,158,000 is expected to be recognized as revenue in the next twelve months. This compares to a backlog of $4,384,000 at September 30, 2024. Now that we are selling hardware units that are capable of operating distinctly from our monitoring and control software, the hardware backlog will no longer continue to grow and will be fully amortized by August 31, 2026, while the monitoring backlog will continue to be deferred and amortized over the period of service.
RECENT DEVELOPMENTS
On July 23, 2025, we announced that we had received formal approval from The Nasdaq Stock Market LLC to uplist our common stock from the OTCQB to the Nasdaq Capital Market. Our common stock commenced trading on the Nasdaq Capital Market under the ticker symbol “ACFN” on July 24, 2025. The uplisting reflects our ongoing efforts to enhance shareholder value, improve liquidity, and increase visibility within the investment community. The application fee we paid was $50,000 and the pro-rated annual listing fee for the remainder of 2025 is $26,500.
On June 1, 2024, we entered into a contract (the “Material Contract”) with one of the nation’s largest cell phone providers to provide monitoring hardware and services. Under the contract, OmniMetrix will provide monitoring devices and related remote monitoring and control services for between 5,000 to 10,000 cell tower backup generators in the U.S. The hardware and monitoring services, which are being deployed over a one-to-two-year period. Shipping of hardware commenced in the third quarter of 2024 and installation and monitoring services commenced in the fourth quarter of 2024. During the nine- and three-month periods ended September 30, 2025, we recognized $2,214,000 and $0 in hardware revenue, respectively, and $319,000 and $148,000 in monitoring revenue, respectively, from this contract. During the nine- and three-month periods ended September 30, 2024, we recognized $724,000 in hardware revenue in both the nine- and three-month periods, and $0 in monitoring revenue in both the nine- and three-month periods, from this contract.
| 20 |
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 OmniMetrix’s TrueGuard power generator monitors and 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 touchscreen 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 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 10 and 11 to the unaudited condensed consolidated financial statements included in this quarterly report.
OmniMetrix
OmniMetrix is a Georgia limited liability company based in Buford, Georgia that develops and markets wireless remote monitoring and control systems and services for multiple markets in the 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 monitored in IoT applications and given that OmniMetrix monitors all major brands of critical equipment, OmniMetrix believes it is well-positioned as a competitive participant in this market.
OmniMetrix sells monitoring hardware devices and data monitoring services. On September 1, 2023, we launched an updated version of our products that includes new functionality in our TrueGuard, AIRGuard, Patriot and Hero products that allows our customers to have options as it relates to obtaining and utilizing the data that is provided by our hardware devices. This new functionality allows for SIM card options, configuration options regarding IP address endpoints and DNS routes, and access to our over-the-air data protocol. This product update allows customers to have the option to purchase our monitoring service, monitor the products themselves if they have the ability in-house, or choose another monitoring provider if they so desire, whereas, historically, our standard products only functioned with our monitoring services. The modification to the circuit boards and embedded firmware of hardware enclosures in stock as of August 31, 2023 were made such that only the new version of these products was sold subsequent to that date. Prior to such product modification, revenue (and related costs) associated with sale of equipment was recorded to deferred revenue (and deferred charges) upon shipment for PG and CP monitoring units. This deferred revenue and the deferred cost of the hardware with respect to the sale of new equipment was recognized over the life of the units, which was estimated to be three years. Revenue from hardware sales subsequent to August 31, 2023 is recognized upon shipment or upon acceptance (specific to the Material Contract), instead of being deferred. Revenues from the payment of monitoring fees (generally paid in advance) are initially recorded as deferred revenue upon receipt of payment from the customer and then amortized to revenue over the monitoring service period (typically twelve-month, renewable periods).
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Critical Accounting Estimates
In preparing the financial statements, management is required to make estimates and assumptions that have an impact on the asset, liability, revenue and expense amounts reported. These estimates can also affect our supplemental information disclosures, including information about contingencies, risk and financial condition. We believe, given current facts and circumstances, that our estimates and assumptions are reasonable, adhere to U.S. GAAP, and are consistently applied. Inherent in the nature of an estimate or assumption is the fact that actual results may differ from estimates and estimates may vary as new facts and circumstances arise. We make routine estimates and judgments in determining net realizable value of accounts receivable, inventories, property and equipment, prepaid expenses, product warranties and other reserves as well as the amortization period for deferred commissions payable. Management believes our most critical accounting estimates and assumptions are in the area of valuation allowance.
Valuation Allowance
We regularly review our deferred tax assets for recoverability considering historically profitability, projected future taxable income, the expected timing of the reversals of existing temporary differences and tax planning strategies. In assessing the need for a valuation allowance, we consider both positive and negative evidence related to the likelihood of realization of the deferred tax assets. The weight given to the positive and negative evidence is commensurate with the extent to which the evidence may be objectively verified.
We record a valuation allowance to reduce our deferred tax assets to the net amount that we believe is more likely than not to be realized. The net carrying amount of the Company’s deferred tax assets is based on the Company’s belief that it is more likely than not that the Company will generate sufficient future taxable income in certain jurisdictions to realize these deferred tax assets. The ultimate realization of the deferred tax assets depends upon our ability to generate sufficient taxable income in the future. In forecasting future taxable income, management uses estimates and makes assumptions regarding significant future events, including the timing and number of new hardware sales contracts and associated monitoring revenue. In evaluating our ability to recover our deferred tax assets, we consider and weigh all available positive and negative evidence, including our past operating results, the existence of cumulative losses in the most recent years and our forecast of future taxable income. When the likelihood of the realization of existing deferred tax assets changes, adjustments to the valuation allowance are charged in the period in which the determination is made. If our estimates and assumptions change in the future, the Company may be required to record additional valuation allowances against its deferred tax assets, resulting in additional income tax expense in the Company’s Consolidated Statements of Operations, or conversely to reduce the existing valuation allowance resulting in less income tax expense.
The Company generated a three-year cumulative positive income through December 31, 2024. Based on its earnings, the Company released a portion of its valuation allowance on its deferred tax assets during the year ended December 31, 2024. As of September 30, 2025, we believe, based on our projections, that a partial valuation allowance of $10,963,000, continues to be necessary against our deferred tax assets. Uncertainty exists related to the generation of future hardware and monitoring revenue, nonetheless the Company believes sufficient positive evidence exists which supports the partial reversal of the valuation allowance. In recent years, the Company executed new contracts, growing hardware and monitoring revenue which resulted in cumulative pre-tax earnings over the prior three years which we believe is significant positive evidence to support the reversal of valuation allowance during 2024. At this time, however, we cannot assure you that we will be successful in doing so. Accordingly, our management will continue to assess the need for this valuation allowance and will make adjustments when appropriate.
The utilization of the Company’s federal and state net operating losses may be subject to a limitation due to the “change in ownership provisions” under Section 382 of the Internal Revenue Code, as well as similar state provisions. Such limitations may result in the expiration of net operating loss (NOL) carryforwards before their utilization. Future changes in the Company’s stock ownership, which may be outside of the Company’s control, may trigger an “ownership change.” In addition, future equity offerings or acquisitions that have equity as a component of the purchase price could result in an “ownership change. During Q3 of 2025 the Company completed a Section 382 study and determined that no change of control occurred and the NOLs, other than acquired NOLs, will not be subject to limitation. It is possible that a limitation could still apply, however the Company does not anticipate any limitation would impact the company’s income tax expense.
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Results of Operations
The following table sets forth certain information with respect to the unaudited condensed consolidated results of operations of the Company for the nine-month periods ended September 30, 2025 and 2024, including the percentage of total revenues during each period attributable to selected components of the operations statements data and for the period-to-period percentage changes in such components. For segment data, see Notes 10 and 11 to the unaudited condensed consolidated financial statements included in this quarterly report.
| Nine months ended September 30, | ||||||||||||||||||||
| 2025 | 2024 | Change | ||||||||||||||||||
| ($,000) | % of revenues | ($,000) | % of revenues | From 2024 to 2025 | ||||||||||||||||
| Revenue | $ | 9,101 | 100 | % | $ | 7,457 | 100 | % | 22 | % | ||||||||||
| COGS | 2,191 | 24 | % | 2,014 | 27 | % | 9 | % | ||||||||||||
| Gross profit | 6,910 | 76 | % | 5,443 | 73 | % | 27 | % | ||||||||||||
| R&D expenses | 823 | 9 | % | 698 | 9 | % | 18 | % | ||||||||||||
| SG&A expenses | 4,377 | 48 | % | 3,653 | 49 | % | 20 | % | ||||||||||||
| Operating income | 1,710 | 19 | % | 1,092 | 15 | % | 57 | % | ||||||||||||
| Interest income, net | 85 | 1 | % | 53 | 1 | % | 60 | % | ||||||||||||
| Income before income taxes | 1,795 | 20 | % | 1,145 | 15 | % | 57 | % | ||||||||||||
| Income tax expense | 331 | 4 | % | 67 | 1 | % | 491 | % | ||||||||||||
| Net income | 1,464 | 16 | % | 1,078 | 14 | % | 31 | % | ||||||||||||
| Non-controlling interest share of net income | (28 | ) | * | % | (17 | ) | * | % | 65 | % | ||||||||||
| Net income attributable to Acorn Energy, Inc. | $ | 1,436 | 16 | % | $ | 1,061 | 14 | % | 35 | % | ||||||||||
*Result is less than 1% or not meaningful.
The following table sets forth certain information with respect to the unaudited condensed consolidated results of operations of the Company for the three-month periods ended September 30, 2025 and 2024, 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 10 and 11 to the unaudited condensed consolidated financial statements included in this quarterly report.
| Three months ended September 30, | ||||||||||||||||||||
| 2025 | 2024 | Change | ||||||||||||||||||
| ($,000) | % of revenues | ($,000) | % of revenues | from 2024 to 2025 | ||||||||||||||||
| Revenue | $ | 2,478 | 100 | % | $ | 3,050 | 100 | % | (19 | )% | ||||||||||
| COGS | 533 | 22 | % | 863 | 28 | % | (38 | )% | ||||||||||||
| Gross profit | 1,945 | 78 | % | 2,187 | 72 | % | (11 | )% | ||||||||||||
| R&D expenses | 267 | 11 | % | 234 | 8 | % | 14 | % | ||||||||||||
| SG&A expense | 1,519 | 61 | % | 1,197 | 39 | % | 27 | % | ||||||||||||
| Operating income | 159 | 6 | % | 756 | 25 | % | (79 | )% | ||||||||||||
| Interest income, net | 34 | 1 | % | 20 | 1 | % | 70 | % | ||||||||||||
| Income before income taxes | 193 | 8 | % | 776 | 25 | % | (75 | )% | ||||||||||||
| Benefit from (provision for) income taxes | (65 | ) | (3 | )% | 42 | 1 | % | (255 | )% | |||||||||||
| Net income | 258 | 10 | % | 734 | 24 | % | (65 | )% | ||||||||||||
| Non-controlling interest share of net income | (6 | ) | *% | (9 | ) | *% | (33 | )% | ||||||||||||
| Net income attributable to Acorn Energy, Inc. | $ | 252 | 10 | % | $ | 725 | 24 | % | (65 | )% | ||||||||||
*Result is less than 1%.
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Revenue for the nine- and three-month periods ended September 30, 2025 and 2024
Revenue increased by $1,644,000, or 22.0%, from $7,457,000 in the nine-month period ended September 30, 2024 to $9,101,000 in the nine-month period ended September 30, 2025. Hardware revenue increased by $845,000, or 20.6%, from $4,107,000 in the nine-month period ended September 30, 2024 to $4,952,000 in the nine-month period ended September 30, 2025. See the reconciliation of hardware revenue below. Monitoring revenue increased by $799,000, or 23.9%, from $3,350,000 in the nine-month period ended September 30, 2024 to $4,149,000 in the nine-month period ended September 30, 2025. 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 $9,101,000 in revenue recognized in the nine-month period ended September 30, 2025, $8,507,000 was generated by PG activities and $594,000 was generated by CP activities. This represents an increase in revenue from PG activities of $1,826,000, or 27.3%, from $6,681,000 in the nine-month period ended September 30, 2024, and a decrease in revenue from CP activities of $182,000, or 23.5%, from $776,000 in the nine-month period ended September 30, 2024. The increase in PG revenue was due to sales under our Material Contract described above under “Recent Developments.” The decrease in CP revenue was due to fewer Hero2 units being sold in the current-year period
Revenue decreased by $572,000, or 18.8%, from $3,050,000 in the three-month period ended September 30, 2024 to $2,478,000 in the three-month period ended September 30, 2025. Of the $2,478,000 in revenue recognized in the three-month period ended September 30, 2025, $2,260,000 was generated by PG activities and $218,000 was generated by CP activities. In the three-month period ended September 30, 2025, as compared to the three-month period ended September 30, 2024, revenue from PG activities decreased $566,000, or 20.0%, from $2,826,000, and revenue from CP activities decreased $6,000, or 2.7%, from $224,000. The decrease in revenue from PG activities was primarily due to the fact that there were no hardware sales under the Material Contract in the three months ended September 30, 2025 compared to $724,000 in hardware sales under the Material Contract in the three months ended September 30, 2024.
Hardware revenue during the nine- and three-month periods ended September 30, 2025 and 2024 is further detailed in the table below (in thousands):
Nine months ended September 30, | Three months ended September 30, | |||||||||||||||
| Reconciliation of Hardware Revenue | 2025 | 2024 | 2025 | 2024 | ||||||||||||
| Amortization of deferred revenue | $ | 800 | $ | 1,463 | $ | 215 | $ | 436 | ||||||||
| Sales of custom designed units and related accessories | 58 | — | — | — | ||||||||||||
| Hardware sales (new product versions) | 3,708 | 2,297 | 548 | 1,342 | ||||||||||||
| Other accessories, services, shipping and miscellaneous charges | 386 | 347 | 155 | 134 | ||||||||||||
| Total hardware revenue | $ | 4,952 | $ | 4,107 | $ | 918 | $ | 1,912 | ||||||||
Gross profit for the nine- and three-month periods ended September 30, 2025 and 2024
Gross profit for the nine-month period ended September 30, 2025 was $6,910,000, reflecting a gross margin of 75.9%, compared with a gross profit of $5,443,000, reflecting a gross margin of 73.0%, for the nine-month period ended September 30, 2024.
Gross margin on hardware revenue for the nine-month period ended September 30, 2025 was 60.2% compared to 55.5% for the nine-month period ended September 30, 2024. The increase in gross margin on hardware was a result of the product and customer mix of sales during the period. Gross margin on monitoring revenue for the nine-month period ended September 30, 2025 was 94.7% compared to gross margin of 94.5% for the nine-month period ended September 30, 2024.
Gross profit for the three-month period ended September 30, 2025 was $1,945,000, reflecting a gross margin of 78.5%, compared with a gross profit for the three-month period ended September 30, 2024 of $2,187,000, reflecting a gross margin of 71.7%. Gross margin on hardware revenue for the three-month period ended September 30, 2025 was 50.0% compared to 58.1% for the three-month period ended September 30, 2024. The decrease in gross margin on hardware during the three-month period was a result of the same drivers as described above for the nine-month period. Gross margin on monitoring revenue for the three-month period ended September 30, 2025 was 95.3% compared to 94.5% for the three-month period ended September 30, 2024.
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Operating expenses for the nine- and three-month periods ended September 30, 2025 and 2024
R&D expense. During the nine-month periods ended September 30, 2025 and 2024, R&D expense was $823,000 and $698,000, respectively. During the three-month period ended September 30, 2025, OmniMetrix recorded $267,000 of R&D expense as compared to $234,000 in the three-month period ended September 30, 2024. The increase in R&D expense is related to salary increases granted to our engineering personnel effective October 1, 2024, engineering team additions in the fourth quarter of 2024, and the expenses and materials paid to third-party consultants in the continued development of next-generation PG and CP products and exploration into potential new product lines. We expect a moderate increase in R&D expense during the remainder of 2025 for continued investment in product enhancements and expanding product lines to continue to increase our level of innovation ahead of our competitors.
Selling, general and administrative expense. SG&A expense of the consolidated entities in the nine-month period ended September 30, 2025 reflected an increase of $724,000, or 19.8%, as compared to the nine-month period ended September 30, 2024. OmniMetrix’s SG&A expense increased $363,000, or 12.6%, from $2,882,000 in the nine-month period ended September 30, 2024 to $3,245,000 in the nine-month period ended September 30, 2025. This increase was primarily due to an increase of (i) $175,000 in personnel expenses due to staff additions and increases in compensation to our team, (ii) $68,000 in commission expense primarily driven by sales under the Material Contract, (iii) $52,000 in technology fees and expenses, (iv) $30,000 in facilities expense , and (v) a net increase of $62,000 in other operating expenses in the aggregate, offset by a decrease of (vi) $24,000 in travel and trade show expenses. Corporate SG&A expense increased $361,000, or 46.8%, from $771,000 in the nine-month period ended September 30, 2024 to $1,132,000 in the nine-month period ended September 30, 2025. This increase was due to an increase of (i) $124,000 in tax professional fees from the preparation of the 2024 and 2025 income tax provision, the calculations related to the release of the income tax valuation allowance, and the preparation of an updated 382 Study, (ii) $115,000 in expenses related to uplisting to NASDAQ which includes the NASDAQ application fee, the prorated listing fee and the legal fees associated with the uplisting process, (iii) $78,000 in stock compensation expense, (iv) $29,000 in audit fees primarily related to the work on the release of the income tax valuation allowance at December 31, 2024, and (vi) a net increase of $15,000, in the aggregate, of other public company expenses.
SG&A expense of the consolidated entities in the three-month period ended September 30, 2025 reflected an increase of $322,000, or 26.9%, as compared to the three-month period ended September 30, 2024. OmniMetrix’s SG&A expense increased $112,000, or 11.7%, from $960,000 in the three-month period ended September 30, 2024 to $1,072,000 in the three-month period ended September 30, 2025. This increase was primarily due to an increase of (i) $86,000 in personnel expenses due to staff additions and increases in compensation to our team, (ii) $35,000 in technology consulting fees and other expenses, and (iii) a net decrease of $9,000 in other operating expenses in the aggregate. Corporate SG&A expense increased $210,000, or 88.6%, from $237,000 in the three-month period ended September 30, 2024 to $447,000 in the three-month period ended September 30, 2025. This increase was due to an increase of (i) $60,000 in tax professional fees from the preparation of the 2025 income tax provision, the calculations related to the release of the income tax valuation allowance, and the preparation of an updated 382 Study, (ii) $110,000 in expenses related to uplisting to NASDAQ which includes the NASDAQ application fee, the prorated listing fee and the legal fees associated with the uplisting process, (iii) $19,000 in stock compensation expense, and (iv) a net increase of $21,000, in the aggregate, of other public company expenses.
Net income attributable to Acorn Energy. We recognized net income attributable to Acorn stockholders of $1,436,000 in the nine-month period ended September 30, 2025, compared to net income attributable to Acorn stockholders of $1,061,000 in the nine-month period ended September 30, 2024. For the three-month period ended September 30, 2025, we recognized net income attributable to Acorn stockholders of $252,000, compared to a net income attributable to Acorn stockholders of $725,000 for the three- month period ended September 30, 2024. Our net income during the nine- and three-month periods ended September 30, 2025 and 2024 is comprised of the components listed in the table below:
Nine months ended September 30, | Three months ended September 30, | |||||||||||||||
| Net Income Attributable to Acorn Energy, Inc. Stockholders | 2025 | 2024 | 2025 | 2024 | ||||||||||||
| Income before income taxes - OmniMetrix | $ | 2.924 | $ | 1,915 | $ | 639 | $ | 1,012 | ||||||||
| Corporate expense, net of interest income | (1,129 | ) | (770 | ) | (446 | ) | (236 | ) | ||||||||
| Provision for (benefit from) income taxes - federal | (253 | ) | — | 84 | — | |||||||||||
| Provision for income taxes – states | (78 | ) | (67 | ) | (19 | ) | (42 | ) | ||||||||
| Non-controlling interest share of net income | (28 | ) | (17 | ) | (6 | ) | (9 | ) | ||||||||
| Net income attributable to Acorn Energy, Inc stockholders | $ | 1,436 | $ | 1,061 | $ | 252 | $ | 725 | ||||||||
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Liquidity and Capital Resources
At September 30, 2025, we had working capital of $2,789,000. Our working capital includes $4,167,000 of cash and deferred revenue of $3,158,000. Such deferred revenue does not require a significant cash outlay for the revenue to be recognized.
During the nine-month period ended September 30, 2025, our OmniMetrix subsidiary provided cash flow from operations of $2,893,000, while our corporate headquarters used $1,098,000 for operations during the same period.
During the nine-month period ended September 30, 2025, we invested (i) $13,000 in technology, (ii) $7,000 in equipment, (iii) $4,000 in leasehold improvements and (iv) $1,000 in patent acquisition.
During the nine-month period ended September 30, 2025, we recognized $71,000 from financing activities which included $87,000 in proceeds from the exercise of stock options net of $16,000 used to repurchase Company stock.
Liquidity
As of November 4, 2025 we had cash of $4,372,000. We believe that such cash, plus the cash expected to be generated from operations, will provide sufficient liquidity to finance the corporate activities of Acorn and the operating activities of OmniMetrix at their current level of operations for at least the twelve-month period from the issuance of the unaudited condensed consolidated financial statements contained in this Quarterly Report. 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. If we decide to pursue additional financing in the future, it may be in the form of a bank line, a new loan or investment by others, an equity raise by Acorn, which could then facilitate a loan by Acorn to OmniMetrix, or any combination thereof. Whether alternative funds, such as third-party loans or investments, will be available at the time required and on terms acceptable to Acorn and OmniMetrix cannot be determined at this time.
Contractual Obligations and Commitments
The table below provides information concerning obligations under certain categories of our contractual obligations as of September 30, 2025.
CASH PAYMENTS DUE TO CONTRACTUAL OBLIGATIONS
| Twelve-Month Periods Ending September 30, (in thousands) | ||||||||||||||||||||
| Total | 2026 | 2027-2028 | 2029-2030 | 2031 and thereafter | ||||||||||||||||
| Software agreements | $ | 5 | $ | 5 | $ | — | $ | — | $ | — | ||||||||||
| Operating leases* | 1,241 | 190 | 483 | 522 | 46 | |||||||||||||||
| Contractual services | 272 | 212 | 60 | — | — | |||||||||||||||
| Purchase commitments** | 706 | 706 | — | — | — | |||||||||||||||
| Total contractual cash obligations | $ | 2,224 | $ | 1,113 | $ | 543 | $ | 522 | $ | 46 | ||||||||||
*Reflects the gross amount of the payments to be made under the operating lease liabilities. Does not include rent amounts to be received under the sublease.
**Reflects open purchase orders for components/parts to be delivered over the next twelve months as sales forecast requires.
| ITEM 3. | QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK |
Not applicable.
| ITEM 4. | CONTROLS AND PROCEDURES |
Evaluation of Disclosure Controls and Procedures
Our management, with the participation of our CEO and CFO, has evaluated the effectiveness of the design and operation of our disclosure controls and procedures as of the end of the period covered by this quarterly report on Form 10-Q. Based on this evaluation, our CEO and CFO concluded that, due to the material weaknesses in our internal control over financial reporting as described in our Annual Report on Form 10-K for the year ended December 31, 2024, our disclosure controls and procedures were not effective as of September 30, 2025.
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As noted in our Annual Report on Form 10-K for the year ended December 31, 2024, we employ a decentralized internal control methodology, coupled with management’s oversight, whereby its subsidiary is responsible for mitigating its risks to financial reporting by implementing and maintaining effective control policies and procedures and subsequently translating that respective risk mitigation up and through to the parent level and to the Company’s external consolidated financial statements. Also, as the Company’s subsidiary is not large enough to effectively mitigate certain risks by segregating incompatible duties, management must employ compensating mechanisms throughout the Company in a manner that is feasible within the constraints it operates.
The material weaknesses management identified were caused by an insufficient complement of resources at the Company’s OmniMetrix subsidiary and limited IT system capabilities, such that individual control policies and procedures could not be implemented, maintained, or remediated when and where necessary. Management identified the following material weaknesses set forth below in our internal control over financial reporting:
| ● | The Company had ineffective design and operation of information technology general controls (ITGCs) over logical access, program change management, and vendor management controls. | |
| ● | The Company had ineffective design and operation of internal controls over financial reporting related to segregation of duties and journal entries. The weakness related to segregation of duties arises due to insufficient segregation of duties within the Company’s ERP system. Specifically, two individuals currently have access to both the recording and approval of financial transactions, which increases the risk of unauthorized adjustments. The weakness related to journal entries stems from the ERP’s functionality that allows users to modify journal entries after they have been posted. This capability creates a risk of unauthorized changes to financial records. | |
| ● | The Company had ineffective design and operation of controls including management review controls, over the Company’s projected financial information within the Company’s deferred tax asset valuation allowance analysis. |
Changes in Internal Control Over Financial Reporting
During the latter six months of 2024, we implemented the following (i) provisioning/termination controls with signed and authenticated authorizations, (ii) change controls for development processes that require authorizations, peer review, quality assurance documentation, ticket matching of changes to work authorizations and overall change controls, and (iii) a more detailed review process of our valuation allowance analysis. It is our belief that these added controls, and related actions will effectively remediate the existing material weaknesses detailed in the first and third bullets above. The material weaknesses will not be considered remediated, however, until the applicable controls operate for a sufficient period of time and management has concluded, through testing, that these controls are operating effectively.
Other than the remediation actions described above, there were no other changes 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.
PART II
| ITEM 2. | UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS |
| Period | Total number of shares purchased (1) | Average price paid per share ($) | Total number of shares purchased as part of publicly announced plans or programs | Maximum number of shares that may yet be repurchased under the plans or programs | ||||||||||||
| 7/1/25 - 7/31/25 | 843 | 16.95 | 0 | n/a | ||||||||||||
| 8/1/25 - 8/31/25 | 70 | 26.25 | 0 | n/a | ||||||||||||
| Total | 913 | 17.66 | 0 | n/a | ||||||||||||
(1) On July 2, 2025, the Company repurchased 843 shares at the July 1, 2025 closing market price of $16.95 per share. These shares were the result of a net exercise of stock options previously granted to a now-deceased employee. On August 19, 2025, the Company repurchased 70 shares at the August 18, 2025 closing market price of $26.25 per share. These shares were the result of a net exercise of stock options previously granted to a now-terminated employee.
| ITEM 5. | OTHER INFORMATION |
During
the third quarter of fiscal year 2025, none of our directors or officers
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| ITEM 6. | EXHIBITS |
| 3.1 | Amended and Restated Certificate of Incorporation of the Registrant (incorporated herein by reference to Exhibit 3.1 to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2023, filed on November 9, 2023). | |
| 3.2 | Amended By laws of the Registrant (incorporated herein by reference to Exhibit 3.2 to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2023, filed on November 9, 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 September 30, 2025, filed on November 6, 2025, formatted in XBRL (eXtensible Business Reporting Language): (i) Condensed Consolidated Balance Sheets, (ii) Condensed Consolidated Statements of Operations, (iii) Condensed Consolidated Statements of Changes in Equity, (iv) Condensed Consolidated Statements of Cash Flows and (v) Notes to Condensed Consolidated Financial Statements, tagged as blocks of text. | |
| #104.1 | Cover Page Interactive Data File (embedded within the Inline XBRL document) |
| # | This exhibit is filed or furnished herewith. |
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by its principal financial officer thereunto duly authorized.
| ACORN ENERGY, INC. | ||
| Dated: November 6, 2025 | ||
| By: | /s/ TRACY S. CLIFFORD | |
| Tracy S. Clifford | ||
| Chief Financial Officer | ||
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FAQ
How did ACFN perform in Q3 2025 and year-to-date?
What were ACFN’s cash and deferred revenue balances?
What is ACFN’s gross margin and operating cash flow?
How did segments contribute to revenue for ACFN?
What is ACFN’s backlog and near-term revenue visibility?
How many shares of ACFN common stock are outstanding?
What were ACFN’s Q3 hardware and monitoring revenues?
