ACORN ENERGY, INC.

Previous wording

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

Current wording

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

Previous wording

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.

Current wording

As of March 31, 2026, OmniMetrix had a backlog of $3,269,000, comprised of deferred revenue, of which $2,934,000 is expected to be recognized as revenue in the next twelve months. This compares to a backlog of $3,955,000 at March 31, 2025.

Previous wording

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.

Current wording

Each of our PG, CP and IS activities represents a reportable segment. The following analysis should be read together with the segment and revenue information provided in Notes 11 and 12 to the unaudited condensed consolidated financial statements included in this quarterly report.

Previous wording

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.

Current wording

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

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 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 economic ecosystem. In addition, OmniMetrix continues to see a rapidly growing need for backup power infrastructure to secure critical military, government, and private sector assets against emergency events including terrorist attacks, natural disasters, cybersecurity threats, and other issues related to the reliability of the electric power grid. As residential and industrial standby generators, turbines, compressors, pumps, pumpjacks, light towers and other industrial equipment are part of the critical infrastructure increasingly monitored in IoT applications and given that OmniMetrix monitors all major brands of critical equipment, OmniMetrix believes it is well-positioned as a competitive participant in this market.

Previous wording

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).

Current wording

OmniMetrix sells monitoring hardware devices and data monitoring services. Revenue from hardware sales is recognized upon shipment or upon acceptance (specific to the Material Contract). Revenues from the payment of monitoring fees (generally paid in advance) are initially recorded as deferred revenue upon receipt of payment from the customer and then amortized to revenue over the monitoring service period (typically twelve-month, renewable periods).

Previous wording

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.

Current wording

We record a valuation allowance to reduce our deferred tax assets to the net amount that we believe is more likely than not to be realized. The net carrying amount of the Company’s deferred tax assets is based on the Company’s belief that it is more likely than not that the Company will generate sufficient future taxable income in certain jurisdictions to realize these deferred tax assets. The ultimate realization of the deferred tax assets depends upon our ability to generate sufficient taxable income in the future. In forecasting future taxable income, management’s projections and beliefs are based upon a variety of estimates and numerous assumptions made by our management with respect to, among other things, interest rates, forecasted revenue of the hardware sales and monitoring revenue or revenue streams that could generate sufficient income. In evaluating our ability to recover our deferred tax assets, we consider and weigh all available positive and negative evidence, including our past operating results, the existence of cumulative losses in the most recent years and our forecast of future taxable income. When the likelihood of the realization of existing deferred tax assets changes, adjustments to the valuation allowance are charged in the period in which the determination is made. If our estimates and assumptions change in the future, the Company may be required to record additional valuation allowances against its deferred tax assets, resulting in additional income tax expense in the Company’s Consolidated Statements of Operations, or conversely to reduce the existing valuation allowance resulting in less income tax expense.

Previous wording

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.

Current wording

The Company currently has a three-year cumulative income position which is positive evidence that it is more likely than not the deferred tax assets will be realized. As of March 31, 2026, we believe, based on our projections, that a partial valuation allowance of $10,326,000, continues to be necessary against our deferred tax assets. Uncertainty exists related to the generation of future hardware and monitoring revenue, nonetheless the Company believes sufficient positive evidence exists which supports the partial reversal of the valuation allowance. At this time, however, we cannot assure you that we will be successful in doing so. Accordingly, our management will continue to assess the need for this valuation allowance and will make adjustments when appropriate.

Previous wording

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.

Current wording

Future changes in the Company’s stock ownership, which may be outside of the Company’s control or future equity offerings or acquisitions that have equity as a component of the purchase price consideration may trigger an “ownership change” and the utilization of the Company’s federal and state net operating losses may be subject to a limitation under the Internal Revenue Code, as well as similar state provisions. Such limitations may result in the expiration of net operating loss (NOL) carryforwards before their utilization.

Previous wording

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.

Current wording

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 March 31, 2026 and March 31, 2025, 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 11 and 12 to the unaudited condensed consolidated financial statements included in this quarterly report.

Previous wording

Hardware revenue during the nine- and three-month periods ended September 30, 2025 and 2024 is further detailed in the table below (in thousands):

Current wording

Hardware revenue during the three-month periods ended March 31, 2026 and 2025 is further detailed in the table below (in thousands):

Previous wording

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.

Current wording

R&D expense. During the three-month periods ended March 31, 2026 and 2025, R&D expense was $255,000 and $291,000, respectively. The decrease in R&D expense in the three-month period ended March 31, 2026 of approximately $36,000 is related to a decrease in expenses and materials paid to third-party consultants offset by salary increases granted to our engineering personnel effective January 1, 2026.

Previous wording

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.

Current wording

*Selling, general and administrative expense.*SG&A expense of the consolidated entities in the first three months of 2026 reflected an increase of $228,000, or 15.9%, as compared to the first three months of 2025. OmniMetrix’s SG&A expense increased $111,000, or 10.8%, from $1,024,000 in the first three months of 2025 to $1,135,000 in the first three months of 2026. This increase was primarily due to an increase of (i) $25,000 in personnel expenses due to compensation increases and staff additions, (ii) $43,000 in technology expenses, primarily consulting fees for staff augmentation and special projects, (iii) $27,000 in travel and trade show expenses, (iv) $26,000 in facility expenses, and an increase of (iv) $6,000 in other expenses in the aggregate offset by a decrease of (v) $16,000 in commission expenses. Corporate SG&A expense increased $117,000, or 28.7%, from $407,000 in the first three months of 2025 to $524,000 in the first three months of 2026. This increase was due to an increase of $136,000 in stock compensation expense due to a higher number of options being issued to our officers and directors in January 2026 than in historical periods and the higher stock price and related volatility offset by a net decrease of $19,000 in other public company expenses in the aggregate.

Previous wording

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:

Current wording

Net (loss) income attributable to Acorn Energy. We recognized a net loss attributable to Acorn stockholders of $77,000 in the first three months of 2026 compared to net income attributable to Acorn stockholders of $464,000 in the first three months of 2025. Our net income during the three-month period ended March 31, 2026 is comprised of pre-tax net income at OmniMetrix of $426,000 plus a tax benefit of $25,000, corporate expenses, net of interest income, of $524,000, and $4,000 representing the non-controlling interest share of our income from OmniMetrix. Our net income during the three-month period ended March 31, 2025 is comprised of pre-tax net income at OmniMetrix of $1,034,000 less federal and state taxes of $154,000, in the aggregate, corporate expenses, net of interest income, of $406,000, and $10,000 representing the non-controlling interest share of our income from OmniMetrix.

Previous wording

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.

Current wording

At March 31, 2026, we had working capital of $3,115,000. Our working capital includes $4,257,000 of cash and deferred revenue of $2,934,000. Such deferred revenue does not require a significant cash outlay for the revenue to be recognized.

Previous wording

*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.

Current wording

*Reflects the gross amount of the operating lease liabilities. Imputed interest is $150,000 resulting in $163,000 included in current liabilities. Does not include rent amounts to be received under the sublease.