ACORN ENERGY INC

Previous wording

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, 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, 2023 occur, actual outcomes and results could differ materially from those indicated in the forward-looking statements.

Current wording

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, 2023 occur, actual outcomes and results could differ materially from those indicated in the forward-looking statements.

Previous wording

As of June 30, 2024, OmniMetrix had a backlog of $4,580,000, primarily comprised of deferred revenue, of which $3,590,000 is expected to be recognized as revenue in the next twelve months. This compares to a backlog of $6,367,000 at June 30, 2023. 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.

Current wording

As of September 30, 2024, OmniMetrix had a backlog of $4,384,000, primarily comprised of deferred revenue, of which $3,572,000 is expected to be recognized as revenue in the next twelve months. This compares to a backlog of $6,211,000 at September 30, 2023. 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.

Previous wording

On June 1, 2024, we entered into a 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 monitoring hardware and monitoring services, which will be deployed over a two-year period, are expected to begin generating revenue in the third quarter, and are expected to generate total revenue over the life of the contract of approximately $5 million.

Current wording

On June 1, 2024, we entered into a 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 monitoring hardware and monitoring services, which will be deployed over a two-year period, commenced in the third quarter during which we recognized $724,000 in hardware revenue from this contract. We expect to generate total revenue over the life of the contract of approximately $5 million which encompasses the revenue from the sales of the hardware and the first year of monitoring.

Previous wording

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.

Current wording

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.

Previous wording

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, 2024 and 2023, 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 9 and 10 to the unaudited condensed consolidated financial statements included in this quarterly report.

Current wording

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, 2024 and 2023, 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 9 and 10 to the unaudited condensed consolidated financial statements included in this quarterly report.

Previous wording

Revenue for the six and three months ended June 30, 2024 and 2023

Current wording

Revenue for the nine and three months ended September 30, 2024 and 2023

Previous wording

Revenue increased by $685,000, or 18.4%, from $3,722,000 in the six-month period ended June 30, 2023 to $4,407,000 in the six-month period ended June 30, 2024. Hardware revenue increased by $562,000 from $1,633,000 in the six-month period ended June 30, 2023 to $2,195,000 in the six-month period ended June 30, 2024. During the six-month period 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 six-month period ended June 30, 2024. See the reconciliation of hardware revenue below. Monitoring revenue increased by $123,000, or 5.9%, from $2,089,000 in the six-month period ended June 30, 2023 to $2,212,000 in the six-month period ended June 30, 2024. The increase in monitoring revenue was due to an increase in the number of connections being monitored.

Current wording

Revenue increased by $1,648,000, or 28.4%, from $5,809,000 in the nine-month period ended September 30, 2023 to $7,457,000 in the nine-month period ended September 30, 2024. Hardware revenue increased by $1,470,000, or 55.7%, from $2,637,000 in the nine-month period ended September 30, 2023 to $4,107,000 in the nine-month period ended September 30, 2024. During the nine-month period ended September 30, 2024, we recognized $724,000 in hardware revenue pursuant to sales under the Material Contract discussed above underRecent Developments. See the reconciliation of hardware revenue below. Monitoring revenue increased by $178,000, or 5.6%, from $3,172,000 in the nine-month period ended September 30, 2023 to $3,350,000 in the nine-month period ended September 30, 2024. The monitoring revenue under the Material Contract is not permitted to be invoiced until the hardware is installed and the customer has accepted the monitoring services in their spend management software portal; thus, the increase in hardware and monitoring revenue will not align. The increase in monitoring revenue was due to an increase in the number of connections being monitored in the nine-month period ended September 30, 2024 compared to the nine-month-period ended September 30, 2023.

Previous wording

As discussed above, OmniMetrix has two reportable segments, PG and CP. Of the $4,407,000 in revenue recognized in the six-month period ended June 30, 2024, $3,855,000 was generated by PG activities and $552,000 was generated by CP activities. This represents an increase in revenue from PG activities of $659,000, or 20.6%, from $3,196,000 in the six-month period ended June 30, 2023, and an increase in revenue from CP activities of $26,000, or 4.9%, from $526,000 in the six-month period ended June 30, 2023.

Current wording

As discussed above, OmniMetrix has two reportable segments, PG and CP. Of the $7,457,000 in revenue recognized in the nine-month period ended September 30, 2024, $6,681,000 was generated by PG activities and $776,000 was generated by CP activities. This represents an increase in revenue from PG activities of $1,687,000, or 33.8%, from $4,994,000 in the nine-month period ended September 30, 2023, and a decrease in revenue from CP activities of $39,000, or 4.8%, from $815,000 in the nine-month period ended September 30, 2023.

Previous wording

The increase in PG revenue was due to an increase in the revenue recognized from TG Pro and TG2 products. The increase in CP revenue was due to an increase in the revenue recognized from Hero2 units in the first three months of 2024. We sold 23% more Hero2 units in the three-month period ended March 31, 2024 compared to the number of units sold in the three-month period ended March 31, 2023. In addition, the new version of the hardware was sold in 2024; thus, the revenue was recognized when the units were shipped instead of being deferred and amortized over three years. The increase in monitoring revenue is due to an increase in the number of connections being monitored.

Current wording

The increase in PG revenue was due to the revenue contribution from the Material Contract, an increase in the revenue recognized from TG Pro and TG2 products, and an increase in PG monitoring revenue due to an increase in the number of connections being monitored. The decrease in CP revenue was due to a decrease in installation income as we recognized $38,000 in CP installation income in the nine-month period ended September 30, 2023 which was nonrecurring. Other than this item, the period-over-period CP revenue was flat, with a decrease of $8,000 in monitoring revenue offset by a $7,000 increase in revenue from hardware and other accessories. The new version of the PG and CP hardware was sold in 2024; thus, the revenue was recognized when the units were shipped instead of being deferred and amortized over three years as had been the case prior to the September 1, 2023 product modification.

Previous wording

Revenue increased by $302,000, or 15.3%, from $1,973,000 in the three-month period ended June 30, 2023 to $2,275,000 in the three-month period ended June 30, 2024. Of the $2,275,000 in revenue recognized in the three-month period ended June 30, 2024, $2,061,000 was generated by PG activities and $214,000 was generated by CP activities. In the three-month period ended June 30, 2024, as compared to the three-month period ended June 30, 2023, revenue from PG activities increased $372,000, or 22.0%, from $1,689,000, and revenue from CP activities decreased $70,000, or 24.6%, from $284,000.

Current wording

Revenue increased by $963,000, or 46.1%, from $2,087,000 in the three-month period ended September 30, 2023 to $3,050,000 in the three-month period ended September 30, 2024. Of the $3,050,000 in revenue recognized in the three-month period ended September 30, 2024, $2,826,000 was generated by PG activities and $224,000 was generated by CP activities. In the three-month period ended September 30, 2024, as compared to the three-month period ended September 30, 2023, revenue from PG activities increased $1,028,000, or 57.2%, from $1,798,000, and revenue from CP activities decreased $65,000, or 22.5%, from $289,000.

Previous wording

Hardware revenue during the six- and three-month periods ended June 30, 2024 and 2023 is further detailed in the table below (in thousands):

Current wording

Hardware revenue during the nine- and three-month periods ended September 30, 2024 and 2023 is further detailed in the table below (in thousands):

Previous wording

Gross profit for the six-month period ended June 30, 2024 was $3,256,000, reflecting a gross margin of 73.9%, compared with a gross profit of $2,806,000, reflecting a gross margin of 75.4%, for the six-month period ended June 30, 2023.

Current wording

Gross profit for the nine-month period ended September 30, 2024 was $5,443,000, reflecting a gross margin of 73.0%, compared with a gross profit of $4,356,000, reflecting a gross margin of 75.0%, for the nine-month period ended September 30, 2023. The gross margin was lower in the current period due to a greater volume of hardware sales which have a lower gross margin than monitoring.

Previous wording

Gross margin on hardware revenue for the six-month period ended June 30, 2024 was 53.2% compared to 53.0% for the six-month period ended June 30, 2023. Gross margin on monitoring revenue for the six-month period ended June 30, 2024 was 94.4% compared to 92.9% for the six-month period ended June 30, 2023.

Current wording

Gross margin on hardware revenue for the nine-month period ended September 30, 2024 was 55.5% compared to 53.4% for the nine-month period ended September 30, 2023. Gross margin on monitoring revenue for the nine-month period ended September 30, 2024 was 94.5% compared to 93.0.% for the nine-month period ended September 30, 2023.

Previous wording

Gross profit for the three-month period ended June 30, 2024 was $1,665,000, reflecting a gross margin of 73.2%, compared with a gross profit for the three-month period ended June 30, 2023 of $1,490,000, reflecting a gross margin of 75.5%. Gross margin on hardware revenue for the three-month period ended June 30, 2024 was 52.9% compared to 54.8% for the three-month period ended June 30, 2023. Gross margin on monitoring revenue for the three-month period ended June 30, 2024 was 94.5% compared to 93.2% for the three-month period ended June 30, 2023.

Current wording

Gross profit for the three-month period ended September 30, 2024 was $2,187,000, reflecting a gross margin of 71.7%, compared with a gross profit for the three-month period ended September 30, 2023 of $1,550,000, reflecting a gross margin of 74.3%. The gross margin was lower in the current period due to a greater volume of hardware sales which have a lower gross margin than monitoring. Gross margin on hardware revenue for the three-month period ended September 30, 2024 was 58.1% compared to 54.1% for the three-month period ended September 30, 2023 which was due to the change in the product mix positively impacted by the Material Contract. Gross margin on monitoring revenue for the three-month period ended September 30, 2024 was 94.5% compared to 93.0% for the three-month period ended September 30, 2023.

Previous wording

Operating expenses for the six- and three-month periods ended June 30, 2024 and 2023

Current wording

Operating expenses for the nine- and three-month periods ended September 30, 2024 and 2023

Previous wording

R&D expense. During the six-month periods ended June 30, 2024 and 2023, R&D expense was $464,000 and $402,000, respectively. During the three-month period ended June 30, 2024, OmniMetrix recorded $226,000 of R&D expense as compared to $188,000 in the three-month period ended June 30, 2023. The increase in R&D expense is primarily related to increased salaries of our engineering staff that were effective October 1, 2023 and the continued investment to redesign and expand our product line to continue to increase our level of innovation ahead of our competitors.

Current wording

R&D expense. During the nine-month periods ended September 30, 2024 and 2023, R&D expense was $698,000 and $614,000, respectively. During the three-month period ended September 30, 2024, OmniMetrix recorded $234,000 of R&D expense as compared to $212,000 in the three-month period ended September 30, 2023. The increase in R&D expense is primarily related to the increased salaries of our engineering staff that were effective October 1, 2023 and the continued investment to redesign and expand our product line to continue to increase our level of innovation ahead of our competitors.

Previous wording

Selling, general and administrative expense. SG&A expense of the consolidated entities in the six-month period ended June 30, 2024 reflected an increase of $40,000, or 1.6%, as compared to the six-month period ended June 30, 2023. OmniMetrix’s SG&A expense decreased $20,000, or 1.1%, from $1,942,000 in the six-month period ended June 30, 2023 to $1,922,000 in the six-month period ended June 30, 2024. This decrease was primarily due to a decrease of (i) $18,000 in depreciation expense, (ii) $17,000 in sales tax and other business tax related expenses, (iii) $10,000 in travel and trade show expenses, and (iv) $9,000 in net decreases in the aggregate across other expense categories offset by increases of $23,000 in technology expenses for software and IT professional fees and $11,000 in personnel expenses due primarily to compensation increases. Corporate SG&A expense increased $60,000, or 12.7%, from $474,000 in the six-month period ended June 30, 2023 to $534,000 in the six-month period ended June 30, 2024. This increase was due to an increase of (i) $13,000 in tax fees primarily from the preparation of the 2023 tax provision, (ii) $12,000 in legal fees due to an increase in our monthly retainer effective January 1, 2024, (iii) $10,000 in audit fees due to an increase in engagement fees year over year of 14% and also to the timing of when the services were performed, (iv) $10,000 in stock compensation expense, (v) $8,000 in officer fees due to a 3% increase effective January 1, 2024 and (vi) $7,000 in other public company expenses.

Current wording

Selling, general and administrative expense. SG&A expense of the consolidated entities in the nine-month period ended September 30, 2024 reflected a decrease of $93,000, or 2.5%, as compared to the nine-month period ended September 30, 2023. OmniMetrix’s SG&A expense decreased $50,000, or 1.7%, from $2,932,000 in the nine-month period ended September 30, 2023 to $2,882,000 in the nine-month period ended September 30, 2024. This decrease was primarily due to a decrease of (i) $35,000 in personnel expenses due to two sales roles that have been unfilled for a portion of 2024 and that we are considering eliminating offset by annual salary increases that were effective October 1, 2023, (ii) $34,000 in sales tax and other business tax related expenses, (iii) $24,000 in depreciation expense, (iv) $29,000 in travel and trade show expenses, and (v) $13,000 in commission expense offset by increases of $82,000 in technology expenses for software and IT professional fees and a net increase in other business expenses of $3,000. Corporate SG&A expense decreased $43,000, or 5.3%, from $814,000 in the nine-month period ended September 30, 2023 to $771,000 in the nine-month period ended September 30, 2024. This decrease was due to a decrease of $102,000 in expenses related to the reverse stock split executed in September 2023 which were not reoccurring in 2024 and net aggregate decreases in other administrative expenses of $13,000 offset by increases of (i) $18,000 in legal fees due to an increase in our monthly retainer effective January 1, 2024, (ii) $18,000 in audit fees due to an increase in engagement fees year over year of 14% and also to the timing of when the services were performed, (iii) $12,000 in tax professional fees primarily due to the preparation of our 2023 tax provision, (iv) $12,000 in stock compensation expense due to options issued at higher exercise prices, and (v) $12,000 in officer fees due to a 3% increase effective January 1, 2024

Previous wording

SG&A expense of the consolidated entities in the three-month period ended June 30, 2024 reflected a decrease of $38,000, or 3.1%, as compared to the three-month period ended June 30, 2023. OmniMetrix’s SG&A expense decreased $27,000, or 2.8%, from $979,000 in the three-month period ended June 30, 2023 to $952,000 in the three-month period ended June 30, 2024. This decrease was primarily due to a decrease of (i) $25,000 in personnel expenses due to two sales roles that were unfilled in the second quarter of 2024 offset by annual salary increases that were effective October 1, 2023, (ii) $9,000 in depreciation expense, (iii) $6,000 in sales tax and other business tax related expenses and (iv) $5,000 in net decreases, in the aggregate, across other expense categories. These decreases were offset by increases of $10,000 in technology expenses for software and IT professional fees and $8,000 in facility expenses. Corporate SG&A expense decreased $11,000, or 4.6%, from $240,000 in the three-month period ended June 30, 2023 to $229,000 in the three-month period ended June 30, 2024. This decrease was due to $18,000 in audit and tax fees related to additional services rendered in the second quarter of 2023 that were not applicable in the second quarter of 2024 and a net decrease of $3,000 in other public company expenses offset by increases in legal fees of $6,000 and officer fees of $4,000 both resulting from an increase in monthly retainer fees effective January 1, 2024.

Current wording

SG&A expense of the consolidated entities in the three-month period ended September 30, 2024 reflected a decrease of $133,000, or 10.0%, as compared to the three-month period ended September 30, 2023. OmniMetrix’s SG&A expense decreased $30,000, or 3.0%, from $990,000 in the three-month period ended September 30, 2023 to $960,000 in the three-month period ended September 30, 2024. This decrease was primarily due to a decrease of (i) $46,000 in personnel expenses due to two sales roles that were unfilled in the third quarter of 2024 offset by annual salary increases that were effective October 1, 2023, (ii) $18,000 in travel and trade show expenses, (iii) $17,000 in sales tax and other business tax related expenses, and (iv) $12,000 in commission expense offset by an increase of $59,000 in technology expenses for software and IT professional fees and a $4,000 net increase, in the aggregate, across other expense categories. Corporate SG&A expense decreased $103,000, or 30.3%, from $340,000 in the three-month period ended September 30, 2023 to $237,000 in the three-month period ended September 30, 2024. This decrease was due to a decrease of $102,000 in expenses related to the reverse stock split executed in September 2023 which were not reoccurring in 2024 and net aggregate decreases in other administrative expenses of $16,000 offset by increases of $6,000 in legal fees due to an increase in the monthly retainer effective January 1, 2024 and $9,000 in audit fees due to an increase in engagement fees year over year of 14% and also to the timing of when the services were performed.

Previous wording

For the three-month period ended June 30, 2024, we recognized net income attributable to Acorn stockholders of $271,000, compared to a net income attributable to Acorn stockholders of $96,000 for the three- month period ended June 30, 2023. Our net income during the three-month period ended June 30, 2024 is comprised of net income at OmniMetrix of $539,000 offset by corporate expenses of $263,000 and the non-controlling interest share of our income from OmniMetrix of $5,000. Our net income during the three-month period 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 income from OmniMetrix of $3,000.

Current wording

Net income attributable to Acorn Energy. We recognized net income attributable to Acorn stockholders of $1,061,000 in the nine-month period ended September 30, 2024, compared to net income attributable to Acorn stockholders of $35,000 in the nine-month period ended September 30, 2023. For the three-month period ended September 30, 2024, we recognized net income attributable to Acorn stockholders of $725,000, compared to a net income attributable to Acorn stockholders of $24,000 for the three- month period ended September 30, 2023. Our net income during the nine- and three-month periods ended September 30, 2024 and 2023 is comprised of the components listed in the table below:

Previous wording

At June 30, 2024, we had a negative working capital of $423,000 which includes $1,463,000 of cash and deferred revenue of $3,590,000. Such deferred revenue does not require a significant cash outlay for the revenue to be recognized.

Current wording

At September 30, 2024, we had working capital of $277,000. Our working capital includes $2,153,000 of cash and deferred revenue of $3,572,000. The deferred revenue does not require a significant cash outlay for the revenue to be recognized.

Previous wording

During the six-month period ended June 30, 2024, our OmniMetrix subsidiary provided cash flow from operations of $693,000, while our corporate headquarters used $652,000 for operations during the same period.

Current wording

During the nine months ended September 30, 2024, our OmniMetrix subsidiary provided $1,647,000 from operations while our corporate headquarters used $908,000 during the same period.

Previous wording

During the six-month period ended June 30, 2024, we invested $40,000 in technology and equipment and received proceeds of $13,000 from financing activities related to the exercise of stock options.

Current wording

During the nine months ended September 30, 2024, we invested $48,000 in technology and other capital projects and received proceeds of $13,000 from financing activities related to the exercise of options.

Previous wording

OmniMetrix owes Acorn $2,362,000 for amounts loaned, accrued interest and expenses paid by Acorn on OmniMetrix’s behalf as of June 30, 2024 as compared to $2,657,000 as of December 31, 2023. During the six-month period ended June 30, 2024, the intercompany amount due to Acorn from OmniMetrix decreased by $295,000. This included repayments of $484,000 offset by interest of $68,000, dividends of $38,000 due to Acorn and $83,000 in shared expenses paid by Acorn. These intercompany balances and amounts are eliminated in consolidation.

Current wording

OmniMetrix owes Acorn $2,158,000 for amounts loaned, accrued interest and expenses paid by Acorn on OmniMetrix’s behalf as of September 30, 2024 as compared to $2,657,000 as of December 31, 2023. During the nine-month period ended September 30, 2024, the intercompany amount due to Acorn from OmniMetrix decreased by $499,000. This included repayments of $784,000 offset by interest of $96,000, dividends of $57,000 due to Acorn and $132,000 in shared expenses paid by Acorn. These intercompany balances and amounts are eliminated in consolidation.

Previous wording

As of August 6, 2024, we had cash of $1,546,000. We believe that such cash, plus the cash expected to be generated from operations, will provide sufficient liquidity to finance our activities 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 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 and on terms acceptable to Acorn and OmniMetrix cannot be determined at this time.

Current wording

As of November 5, 2024, we had cash of $2,087,000. 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 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 and on terms acceptable to Acorn and OmniMetrix cannot be determined at this time.

Previous wording

*Reflects the gross amount of the operating lease liabilities. Does not include rent amounts to be received under the sublease.

Current wording

*Reflects the gross amount of the operating lease liabilities. Does not include rent amounts to be received under the sublease and it is gross of the imputed interest of $3,000.