What changed in this filing

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Item 1. Business

2021-03-16 compared with 2020-03-25 · 62 added, 75 removed, 137 unchanged (50% of the section changed)

(“Acorn”

or “the Company”) is a holding company focused on technology driven solutions for

energy infrastructure asset management.

Following the sale of our remaining interests in DSIT Solutions Ltd.

(“DSIT”)

in February 2018 (see below), we provide the following services and products through our OmniMetrixTM, LLC (“OmniMetrix”)

and its subsidiaries, OmniMetrix, LLC and OMX Holdings, Inc.

(collectively, “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 OmniMetrix, LLC (“OmniMetrix”) subsidiary:

Generation (“PG”) monitoring.

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systems and services for critical assets as well as Internet of Things applications.

This includes our AIRGuard product, which

remotely monitors and controls air compressors.

In 2020, we expanded our product offering to our generator dealers with

the introduction of an Annunciator.

The annunciator is typically sold with a new commercial or industrial generator and indicates

the current status of that generator.

In many instances having a generator annunciator onsite is mandated by law.

Protection (“CP”) monitoring.

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2020, each of our PG and CP activities represented a reportable segment.

January 28, 2016, we entered into a Share Purchase Agreement for the sale of a portion of our interest in DSIT to Rafael Advanced

Defense Systems Ltd.

(“Rafael”), a major Israeli defense company (the “2016 DSIT Transaction”).

the closing of the transaction on April 21, 2016, we owned approximately 41.2% of DSIT and had limited representation on its Board.

Accordingly, from that date, we no longer consolidated the results of DSIT and instead reported DSIT’s results on the equity

Consequently, from April 21, 2016, we no longer reported segment information with respect to DSIT’s Energy &

Security Sonar Solutions segment or its other activities.

January 18, 2018, we entered into a Share Purchase Agreement for the sale of our remaining interest in DSIT to an Israeli investor

group (the “2018 DSIT Transaction”).

Following the closing of the transaction on February 14, 2018, we no longer reported

DSIT’s results on the equity method.

continually evaluate opportunities related to our activities, and our goal is to maximize shareholder value and position our holdings

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Gross profit margin

R& D expenses

Selling, general and administrative expenses

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Gross profit margin

R& D expenses

Selling, general and administrative expenses

Operating loss

Operating income (loss)

POWER GENERATION MONITORING AND CONTROL AND CATHODIC PROTECTION MONITORING AND CONTROL

LLC 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

systems and services for critical assets (including stand-by power generators, pumps, pumpjacks, light towers, turbines, compressors

and other industrial equipment) and multiple markets in the Internet of Things (“IoT”) ecosystem, as well as cathodic

protection for the pipeline industry (gas utilities and pipeline companies).

Acorn owned 80% of OmniMetrix until July 1, 2019

when it purchased 19% of OmniMetrix from a former director, which brought its ownership interest to 99%, with the remaining 1%

owned by OmniMetrix’s former CEO.

when it purchased an additional 19% of OmniMetrix from a former Acorn director, which brought its ownership interest to 99%, with

the remaining 1% owned by OmniMetrix’s former CEO.

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.

addition, OmniMetrix sees a rapidly growing need for backup power infrastructure to secure critical military, government, and

monitors into a simplified dashboard for customers, OmniMetrix believes it plays a key role in this economic ecosystem.

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, and cybersecurity threats.

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and industrial standby generators, turbines, compressors, pumps, pumpjacks, light towers and other industrial equipment are part

of the critical infrastructure increasingly becoming monitored in Internet of Things 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.

of the critical infrastructure increasingly becoming monitored in IoT applications, and given that OmniMetrix monitors all major

brands of critical equipment and continues to invest in research and development in response to customer and potential customer

feedback, OmniMetrix believes it is well-positioned as a competitive participant in this market to continue to grow its customer

base and expand its product offerings.

the PG segment, OmniMetrix sells a line of devices and services built on its baseline TrueGuard wireless remote monitor.

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As a result, the product provides the ability to identify whether an emergency generator is capable of operating as expected.

OmniMetrix also currently sells its AIRGuard product which remotely monitors and controls industrial air compressors.

OmniMetrix alsosells its AIRGuard product which remotely monitors and controls industrial air compressors.

In 2020, OmniMetrix

expanded its product offering to its generator dealers with the introduction of an Annunciator.

The annunciator is typically sold

with a new commercial or industrial generator and indicates the current status of that generator.

In many instances having a generator

annunciator onsite is mandated by law.

the CP segment, OmniMetrix offers two primary product lines:

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Early in the company’s history, a strategic decision was made to focus primarily on the standby power generation

Recently, the company has expanded its focus to add several additional applications where it sees demand.

Standby generator

monitoring is rapidly becoming part of the Internet of Things (IoT) ecosystem, whereby multiple sensing and monitoring devices

are aggregated into one simple dashboard for customers.

In the past several years, the company has expanded its focus to add several additional applications where it sees demand.

Standby generator monitoring is part of the IoT ecosystem, whereby multiple sensing and monitoring devices are aggregated into

one simple dashboard for customers.

OmniMetrix can monitor and control all major brands of standby generators, it is well-positioned to compete in this market.

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on remote equipment before dispatching service.

This was the beginning of the OmniMetrix SmartServiceTM Program.

It allowed the

service organization to put the right person in the right truck with the right parts to affect a one-trip or a zero-trip solution.

This was the beginning of the OmniMetrix SmartService Program.

the service organization to put the right person in the right truck with the right parts to effect a one-trip or a zero-trip solution.

At this phase, service organizations could be efficient, as well as proactive, in their operations.

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and more efficiently by going directly to sites with problems, thus increasing the value of their

is now in its third phase of evolution, maturing the high-performance data collection design point into the first provider offering

of automated prognostic solutions.

As most generator failures are the result of consumables, and as those consumables can be monitored,

the consumption trends can be extrapolated into predictions of the most common failure modes.

is now focused on expanding its product offerings while it also continues to execute in its third phase of evolution, maturing

the high-performance data collection design point into the first provider offering of automated prognostic solutions.

generator failures are the result of consumables, and as those consumables can be monitored, the consumption trends can be extrapolated

into predictions of the most common failure modes.

OmniMetrix’s

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and status conditions from the generators they service for their customers, which allows the dealer service organization to be

proactive in their delivery of service to their customers, as well as to implement the OmniMetrix SmartServiceTM approach

proactive in their delivery of service to their customers, as well as to implement the OmniMetrix SmartService approach

to analyzing the remote machines before dispatching a service truck.

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sets OmniMetrix apart from its competitors, many of whom are still in the failure reporting phase of application development.

We have also increased our marketing efforts to end-users in an effort to increase demand for our services.

These efforts have

proven to be very successful, and OmniMetrix continues to execute on that strategy.

2019, no single customer of OmniMetrix provided more than 10% of its sales.

OmniMetrix has successfully been able to mitigate

the risk of customer dependency by increasing its penetration rate, its sales pipeline and supporting a larger base of customers.

OmniMetrix expects to continue to expand its base of customers in 2020.

OmniMetrix has shifted its primary focus to the commercial and industrial segments from residential due to the ability to customize

our products to the customers’

specifications.

We have also increased our marketing efforts to end-users in an effort

to increase demand for our services.

These efforts have proven to be successful, and OmniMetrix continues to execute on that strategy.

is a vertical market company, deeply focused on providing an excellent customer experience and product and service designs for

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those competitors positioned themselves at a lower-performance, lower-price quadrant of the market.

such as generator manufacturers or generator controls manufacturers offer customer connectivity to their machinery.

a current generation connectivity replacing telephone dial-up modems that had been used in the past.

Their offerings are limited

to their own brands, so they do not fit into a broad application such as does the OmniMetrix SmartServiceTM, supporting

service organizations that service all brands.

such as generator manufacturers or generator controls manufacturers that offer customer connectivity to their machinery.

offer a current generation connectivity replacing telephone dial-up modems that had been used in the past.

Their offerings

are limited to their own brands, so they do not fit into a broad application such as does the OmniMetrix SmartService,

supporting service organizations that service all brands.

They are also generally designed for the machine owners’

use, in a reactive

use, in a reactive application.

believe OmniMetrix has a well-established and well-defended position in the high-performance PG monitoring segment, due to its

long history and numerous industry partner projects.

The company is currently applying an aggressive sales effort into both the

market segment requiring less technology and lower price (including the extremely large residential generator market) as well

as developing more sophisticated, diagnostic products and custom solutions for commercial and industrial clientele.

While the execution of our aggressive sales strategy was interrupted by the

impact of COVID-19, the company has recently resumed an aggressive sales effort into the market segment requiring less technology

and lower price (including the extremely large residential generator market) as well as developing more sophisticated, diagnostic

products and custom solutions for commercial and industrial clientele.

the CP marketplace, there are no OEM competitors, but there are several independent monitoring companies similar to OmniMetrix

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currently unused space and potentially sublease several available executive office spaces.

recorded $450,000 as our 41.2% share of DSIT’s net income for the year ending December 31, 2017.

On February 14, 2018, we

closed on the sale of our remaining interest in DSIT to a group of Israeli investors for $5.8 million before transaction costs

and withholding taxes.

Accordingly, we adjusted our equity investment balance in DSIT to be equal to the gross proceeds received

from the sale and recorded an impairment charge in 2017 of $308,000.

In 2018, we recorded our 41.2% share of DSIT’s income

or loss through the closing of the 2018 DSIT Transaction as well as our estimated transaction costs and withholding taxes on the

transaction ($441,000 and $388,000, respectively) offset by $222,000, net of professional fees less interest income, refunded

by the Israel Tax Authorities related to our 2016 Israeli tax return.

In 2019, we recorded an income tax recovery of $61,500 from

the Israel Tax Authority related to the 2017 and 2018 Israeli tax returns, net of professional fees of $11,200 for a gain on the

transaction of $50,300 in 2019.

of December 31, 2020, OmniMetrix had a backlog of approximately $4.5 million, primarily comprised of deferred revenue, of which

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all of which were full-time employees employed by OmniMetrix in

Our CEO and CFO are hired as consultants to us.

of OmniMetrix’s 23 employees are engaged in production, engineering and technical support, seven in marketing and sales

and five in finance and IT in addition to our CEO.

Our CEO, who also serves as acting CEO of OmniMetrix, and CFO, who also serves as COO of OmniMetrix, are hired as consultants

of OmniMetrix’s 23 employees are engaged in production, engineering and technical support, eight in marketing and sales

and five in finance and IT.

We consider our relationship with our employees to be satisfactory.

no collective bargaining agreements with any of our employees.

We have no collective bargaining

agreements with any of our employees.

FINANCIAL INFORMATION

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business