ACORN ENERGY, INC.

Previous wording

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

Current wording

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

Previous wording

As of March 31, 2025, OmniMetrix had a backlog of $3,955,000, comprised of deferred revenue, of which $3,394,000 is expected to be recognized as revenue in the next twelve months. This compares to a backlog of $5,028,000 at March 31, 2024. Now that we are selling hardware units that are capable of being distinct, 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 June 30, 2025, OmniMetrix had a backlog of $3,669,000, primarily comprised of deferred revenue, of which $3,155,000 is expected to be recognized as revenue in the next twelve months. This compares to a backlog of $4,580,000 at June 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.

Previous wording

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 monitoring 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. We recognized $876,000 in hardware revenue and $69,000 in monitoring revenue from this contract in the three months ended March 31, 2025.

Current wording

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 monitoring 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 six- and three-month periods ended June 30, 2025, we recognized $2,214,000 and $1,338,000 in hardware revenue, respectively, and $171,000 and $102,000 in monitoring revenue, respectively, from this contract.

Previous wording

Hardware revenue during the three-month periods ended March 31, 2025 and 2024 is further detailed in the table below (in thousands):

Current wording

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

Previous wording

Gross Profit. Gross profit during the three-month period ended March 31, 2025 was $2,326,000, reflecting a gross margin of 75.1% on revenue, compared with a gross profit during the three-month period ended March 31, 2024 of $1,591,000, also reflecting a gross margin of 74.6%.

Current wording

Gross profit for the six-month period ended June 30, 2025 was $4,965,000, reflecting a gross margin of 75.0%, compared with a gross profit of $3,256,000, reflecting a gross margin of 73.9%, for the six-month period ended June 30, 2024.

Previous wording

R&D expense. During the three-month periods ended March 31, 2025 and 2024, R&D expense was $291,000 and $238,000, respectively. The increase in R&D expense in the three-month period ended March 31, 2025 of approximately $53,000 is related to salary increases granted to our engineering personnel effective October 1, 2024, the hiring of another senior level engineer in November 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 throughout 2025 for continued investment in work on certain initiatives to launch the next generation of our products and expand product lines to increase our level of innovation ahead of our competitors.

Current wording

R&D expense. During the six-month periods ended June 30, 2025 and 2024, R&D expense was $556,000 and $464,000, respectively. During the three-month period ended June 30, 2025, OmniMetrix recorded $265,000 of R&D expense as compared to $226,000 in the three-month period ended June 30, 2024. The increase in R&D expense is related to salary increases granted to our engineering personnel effective October 1, 2024, the hiring of another senior level engineer in November 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 throughout 2025 for continued investment in work on certain initiatives to launch the next generation of our products and expand product lines 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 first three months of 2025 reflected an increase of $156,000, or 12.2%, as compared to the first three months of 2024. OmniMetrix’s SG&A expense increased $54,000, or 5.6%, from $970,000 in the first three months of 2024 to $1,024,000 in the first three months of 2025. This increase was primarily due to an increase of (i) $41,000 in personnel expenses due to compensation increases and staff additions, (ii) $18,000 in technology expenses, primarily consulting fees, (iii) $28,000 in sales commissions, offset by decreases of (iv) $23,000 in travel and trade show expenses and (v) a net decrease of $10,000 in other expenses in the aggregate. Corporate SG&A expense increased $102,000, or 33.4%, from $305,000 in the first three months of 2024 to $407,000 in the first three months of 2025. This increase was due to an increase of (i) $22,000 in audit fees incurred in the first quarter of 2025 primarily related to the audit work on the release of the income tax valuation allowance at December 31, 2024, (ii) $46,000 in tax professional fees from the preparation of the 2024 income tax provision and the calculations related to the release of the income tax valuation allowance and (iii) $36,000 in stock compensation expense due to the increase in the Company’s stock price, offset by a net decrease of $2,000 in other public company expenses.

Current wording

Selling, general and administrative expense. SG&A expense of the consolidated entities in the six-month period ended June 30, 2025 reflected an increase of $402,000, or 16.4%, as compared to the six-month period ended June 30, 2024. OmniMetrix’s SG&A expense increased $251,000, or 13.1%, from $1,922,000 in the six-month period ended June 30, 2024 to $2,173,000 in the six-month period ended June 30, 2025. This increase was primarily due to an increase of (i) $90,000 in personnel expenses due to staff additions and increases in compensation to our team, (ii) $128,000 in commission expense primarily driven by sales under the Material Contract, (iii) $18,000 in technology fees and expenses, (iv) $12,000 in insurance expenses, (v) a net increase of $29,000 in other operating expenses in the aggregate, offset by a decrease of (vi) $26,000 in travel and trade show expenses. Corporate SG&A expense increased $151,000, or 28.3%, from $534,000 in the six-month period ended June 30, 2024 to $685,000 in the six-month period ended June 30, 2025. This increase was due to an increase of (i) $64,000 in tax professional fees from the preparation of the 2024 income tax provision and the calculations related to the release of the income tax valuation allowance, (ii) $23,000 in audit fees primarily related to the work on the release of the income tax valuation allowance at December 31, 2024, (iii) $59,000 in stock compensation expense and (vi) a net increase of $5,000, in the aggregate, of other public company expenses.

Previous wording

Net income attributable to Acorn Energy. We recognized net income attributable to Acorn stockholders of $464,000 in the first three months of 2025 compared to net income attributable to Acorn stockholders of $65,000 in the first three months of 2024. 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 taxes of $131,000 and state taxes of $23,000 on OmniMetrix income, corporate expenses, net of interest income, of $406,000, and $10,000 representing the non-controlling interest share of our income from OmniMetrix. Our net income during the three-month period ended March 31, 2024 is comprised of pre-tax net income at OmniMetrix of $364,000 less state taxes of $25,000 on OmniMetrix income, corporate expenses of $271,000, and $3,000 representing the non-controlling interest share of our income from OmniMetrix.

Current wording

Net income attributable to Acorn Energy. We recognized net income attributable to Acorn stockholders of $1,184,000 in the six-month period ended June 30, 2025, compared to net income attributable to Acorn stockholders of $336,000 in the six-month period ended June 30, 2024. Our net income during the six-month period ended June 30, 2025 is comprised of pre-tax net income at OmniMetrix of $2,285,000 less federal taxes of $337,000 and state taxes of $59,000 offset by corporate expenses of $683,000, net of $2,000 in interest income, and the non-controlling interest share of our income from OmniMetrix of $22,000. Our net income during the six-month period ended June 30, 2024 is comprised of net income at OmniMetrix of $878,000 offset by corporate expenses of $534,000 and the non-controlling interest share of our income from OmniMetrix of $8,000.

Previous wording

At March 31, 2025, we had working capital of $1,731,000. Our working capital includes $2,591,000 of cash and deferred revenue of $3,394,000. Such deferred revenue does not require a significant cash outlay for the revenue to be recognized.

Current wording

At June 30, 2025, we had working capital of $2,709,000. Our working capital includes $3,253,000 of cash and deferred revenue of $3,155,000. Such deferred revenue does not require a significant cash outlay for the revenue to be recognized.

Previous wording

During the three-month period ended March 31, 2025, our OmniMetrix subsidiary provided cash flow from operations of $646,000, while our corporate headquarters used $375,000 for operations during the same period.

Current wording

During the six-month period ended June 30, 2025, our OmniMetrix subsidiary provided cash flow from operations of $1,607,000, while our corporate headquarters used $707,000 for operations during the same period.

Previous wording

As of May 6, 2025, we had cash of $2,724,000. 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.

Current wording

As of August 5, we had cash of $3,428,000. 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.

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 payments to be made under the operating lease liabilities. Does not include rent amounts to be received under the sublease.