What changed in this filing

/stocks — the workspaceLOADING

Item 5. Market for Registrant’s Common Equity

2021-03-16 compared with 2020-03-25 · 236 added, 286 removed, 167 unchanged (76% of the section changed)

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Fourth Quarter

of March 20, 2020, the last reported sales price of our common stock on the OTCQB marketplace was [$0.XX], there were 87 record

holders of our common stock and we estimate that there were approximately 3,759 beneficial owners of our common stock.

of March 11, 2021, the last reported sales price of our common stock on the OTCQB marketplace was $0.55, there were 78

record holders of our common stock and we estimate that there were approximately 3,400 beneficial owners of our common stock.

SELECTED FINANCIAL DATA

Not applicable.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

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CP segment which provides for remote monitoring of cathodic protection systems on gas pipelines for gas utilities and pipeline

the closing of the 2016 DSIT Transaction, the Company no longer consolidated the results of DSIT, but rather reported on its investment

in DSIT on the equity method (until the closing of the 2018 DSIT Transaction).

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 additional gain of approximately

$50,300 which was net of professional fees of $11,200, on the 2018 DSIT Transaction as a result of the final settlement with the

Israel tax authorities and the related refund of withholding taxes net of professional fees related to the 2017 and 2018 Israeli

following analysis should be read together with the segment information provided in Note 11 to our consolidated financial statements

included in this report.

the emergence of machine-to-machine (M2M) and Internet of Things (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, and cybersecurity threats.

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 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 new market.

has two divisions:

In 2019, OmniMetrix recorded revenue of $5,490,000 ($4,282,000 in its PG activities and $1,208,000

in its CP activities) as compared to revenue of $5,087,000 recorded in 2018 ($3,656,000 in its PG activities and $1,431,000 in

its CP activities).

Increased revenue in 2019 was driven by monitoring revenue which increased 23% from $2,712,000 in 2018 to

$3,327,000 in 2019.

The increase in monitoring revenue was offset by a decrease in hardware revenue which decreased 9% from $2,375,000

in 2018 to $2,163,000 in 2019.

The increase in monitoring revenue is the result of an increase in the number of units being monitored.

The decrease in hardware revenue is the result of not being fully staffed on the sales team for the majority of the year.

now filled the open positions, including the director of sales role.

profit during 2019 was $3,590,000 reflecting a gross margin of 65% on revenue compared with a gross profit of $3,122,000 reflecting

a 61% gross margin in 2018.

The increased gross profit in 2019 was due to a change in the revenue mix with a higher percentage

of our total revenue being monitoring revenue which has a higher gross margin as well as to higher gross margin realized on hardware

Gross margin on hardware revenue increased in 2019 to 38% from 36% in 2018.

This increase was the result of increased

gross margins for PG hardware which grew from 32% in 2018 to 34% in 2019.

The increased margin was the result of reduced costs

in our PG units as we benefit from our redesigned products.

CP hardware gross margin increased to 43% in 2019 from 39% in 2018

due to product mix.

Gross margin on monitoring revenue remained strong at 84% during 2019 and 2018.

2019, OmniMetrix recorded $559,000 of R&D expense as compared to $542,000 in 2018.

The increase in R&D expense in 2019

is related to the continued development of next generation PG and CP products and exploration into new possible product lines.

We expect a moderate increase in R&D expense in 2020 as we continue to work on certain initiatives to redesign products and

expand product lines to increase the level of innovation and to reduce their costs in order to increase our future margins.

2019, OmniMetrix recorded $2,853,000 of SG&A costs compared to SG&A costs of $2,726,000 for 2018, an increase of $127,000

This increase was primarily due to increases in personnel costs, computer software, travel and entertainment and payment

processing service charges.

We anticipate that our annual SG&A costs in 2020 will increase approximately 15% due to having

a fully staffed sales team and as a result of our continuing investments in our IT infrastructure including completing the implementation

of a fully integrated Enterprise Resource Planning Systm.

the emergence of 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 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, and cybersecurity threats.

As residential, commercial 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 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.

Line of Credit

October 2017, OmniMetrix renewed its Loan and Security Agreement providing OmniMetrix with access to accounts receivable formula-based

financing of the lesser of 75% of eligible receivables or $1 million.

Debt incurred under this financing arrangement bore interest

at the greater of prime plus 2% or 6% per year.

In addition, OmniMetrix was to pay a monthly service charge of 0.9% of the average

aggregate principal amount outstanding for the prior month.

OmniMetrix also agreed to continue to maintain a minimum loan balance

of $150,000 in its line-of-credit with the lender for a minimum of one year beginning November 1, 2017.

OmniMetrix allowed this

line to expire according to its terms at October 31, 2018.

March 2019, OmniMetrix reinstated its Loan and Security Agreement providing OmniMetrix with access to accounts receivable formula-based

financing of the lesser of 75% of eligible receivables or $1 million.

Debt incurred under this financing arrangement bears interest

at the greater of 6% and prime (4.25% at March 20, 2020) plus 1.5% per year.

In addition, OmniMetrix is to pay a monthly service

charge of 0.75% of the average aggregate principal amount outstanding for the prior month, for a current effective rate of interest

on advances of 15%.

OmniMetrix also agreed to continue to maintain a minimum loan balance of $150,000 in its line-of-credit with

the lender for a minimum of two years beginning March 1, 2019.

From time to time, the balance outstanding may fall below $150,000

based on collections applied against the loan balance and the timing of loan draws.

March 2019, OmniMetrix reinstated its loan and security agreement which provided OmniMetrix with access to accounts receivable

formula-based financing of the lesser of 75% of eligible receivables or $1 million.

Debt incurred under this financing arrangement

bore interest at the greater of 6% and prime plus 1.5% per year.

In addition, OmniMetrix was to pay a monthly service charge of

0.75% of the average aggregate principal amount outstanding for the prior month, for an effective rate of interest on advances

OmniMetrix also agreed to maintain a minimum loan balance of $150,000 in its line-of-credit with the lender for a minimum

of two years beginning March 1, 2019.

The monthly service charge and interest was calculated on the greater of the outstanding

balance or $150,000.

From time to time, the balance outstanding could fall below $150,000 based on collections applied against

the loan balance and the timing of loan draws.

had an outstanding balance of approximately $149,000 at December 31, 2020, pursuant to the loan and security agreement.

the outstanding balance in February 2021 and elected not to renew this line of credit, which expired in accordance with its terms

on February 28, 2021.

Business Administration Paycheck Protection Program (“SBA PPP”)

April 24, 2020, Acorn Energy, Inc.

received SBA PPP loan proceeds in the amount of $41,600.

April 30, 2020, OmniMetrix, LLC received SBA PPP loan proceeds in the amount $419,800.

the SBA PPP of the Coronavirus Aid, Relief and Economic Security Act (the “Act”), up to the full principal amount

of a loan and any accrued interest can be forgiven if the borrower uses all of the loan proceeds for forgivable purposes (payroll,

benefits, lease/mortgage payments and/or utilities) required under the Act and any rule, regulation, or guidance issued by the

SBA pursuant to the Act (collectively, the “Forgiveness Provisions”).

The amount of forgiveness of the SBA PPP loan

depends on the borrower’s payroll costs over either an eight-week or twenty-four-week period beginning on the date of funding.

Any processes or procedures established under the Forgiveness Provisions must be followed and any requirements of the Forgiveness

Provisions must be fully satisfied to obtain such loan forgiveness.

Pursuant to the provisions of the Act, the first six monthly

payments of principal and interest will be deferred.

Interest will accrue during the deferment period.

The borrower must pay principal

and interest payments on the fifth day of each month beginning seven months from the date of the applicable promissory note.

October 20, 2020, OmniMetrix submitted its SBA PPP Loan Forgiveness Application to the SBA.

On November 5, 2020, the SBA confirmed

that OmniMetrix’s application for forgiveness had been approved and that its SBA PPP loan, in the amount of

$419,800 plus accrued interest of $2,162, had been forgiven.

Company elected not to apply for forgiveness of the SBA PPP loan proceeds received by its parent entity, Acorn Energy, Inc., in

the amount of $41,600 plus accrued interest of $206.

This loan was repaid to the lender effective October 22, 2020.

2020, the intercompany amount due to Acorn from OmniMetrix increased by approximately $70,000.

This included $323,000

in funding for the repayment of the loan from a former director, accrued interest and dividends of $286,000 due to Acorn, less

repayments from OmniMetrix of $52,000, net of expenses paid by Acorn on OmniMetrix’s behalf.

We believe that OmniMetrix

will not need working capital support in 2020 beyond the amounts available to it under the amended Loan and Security Agreement.

However, we have no assurance that this will be the case.

Additional financing for OmniMetrix may be in the form of a bank line,

a new loan or investment by others, a loan by Acorn, or a combination of the above.

The availability and amount of any additional

loans from us to OmniMetrix may be limited by the working capital needs of our corporate activities.

Whether Acorn will have the

resources necessary to provide funding, or whether alternative funds, such as third-party loans, will be available at the time

and on terms acceptable to Acorn and OmniMetrix cannot be determined.

general and administrative (“G&A”) expense of $876,000 in 2019 reflected a decrease of $384,000 or 30% from the

$1,260,000 of G&A expense reported in 2018 which included combined one-time bonuses of $150,000 paid to our CEO and former

Executive Chairman of the Board in recognition of their performance in the 2018 DSIT Transaction and $20,000 in the aggregate

of transition consulting fees paid to our former CFO.

Excluding these non-recurring items from 2018, G&A expense decreased

in 2019 by $214,000 as compared to 2018 due to reductions in corporate overhead, primarily in compensation expense, board fees

and legal fees.

We do not expect our annual corporate G&A expense to materially change in 2020 other than expenses that may

be required to corporately support the growth in OmniMetrix.

Non-cash stock compensation decreased from $26,000 in 2018 to $22,000

closing of the 2018 DSIT Transaction provided us with approximately $1.9 million after assigning $1.6 million of the amounts we

owed to DSIT to the purchasers, paying transaction costs, withholding taxes and the repayment of director loans and associated

accrued interest.

In our sale of shares of DSIT Solutions Ltd.

(“DSIT”), the Israel Tax Authorities (“ITA”)

withheld tax of NIS 1,008,000, NIS 146,000 and NIS 1,359,000 in 2016, 2017 and 2018, respectively.

Such amounts were recorded

as expense ($266,000, $41,000, and $388,000) in each of those years.

In August 2018, we received back from the ITA NIS 1,087,000

($293,000 at the then exchange rate) consisting of $266,000 of tax, $21,000 of interest income and $6,000 of exchange rate gain.

We received the refund following the filing of our 2016 Israeli tax return in which we claimed that we were due a refund of the

withheld taxes in full as we believe that each of the sale transactions is exempt from tax under Israeli tax law.

have recorded the $222,000, net of fees of $65,000 offset by interest income of $21,000, as part of the gain (loss) on sale of

interest of DSIT in the third quarter of 2018 relating to the 2016 DSIT transaction withholding.

This offsets the loss on the

2018 DSIT transaction which reduced the loss recorded in 2018 to $607,000.

We committed not to transfer those funds out of Israel

until the completion of the ITA’s review, such funds were deemed to be restricted and were reflected as such on our balance

sheet as of December 31, 2018.

By statute, the funds would no longer be restricted the earlier of December 31, 2022 or the completion

of the ITA’s review of our tax position which occurred at the end of 2019.

December 24, 2019, we signed on an income tax assessment agreement for tax years 2013-2018, with the Israeli Tax Authority, according

to which, we had additional tax liability in the amount of NIS 1,306 (approximately $373,000), in tax year 2018, with respect

to our sale of DSIT Solutions Ltd.

a result, we received a tax refund in the amount of NIS 146,000 (approximately $42,000) and NIS 44,000 (approximately $12,500)

as principal, with interest and linkage in the amount of approximately NIS 14,500 (approximately $4,000) and approximately NIS

$1,900 (approximately $550), for the tax years 2017 and 2018, respectively.

Prior to receiving this refund, the balance in our

account in Israel was $313,000 which represented the $287,000 refund received for 2016 plus interest income of $21,000 and exchange

gain of $5,000(the fees of $65,000 were paid out of our US bank account).

Subsequent to year-end December 31, 2019, the aggregate

tax refunds held in the bank account in Israel of approximately $371,000 were transferred from our bank account in Israel to our

bank account in the US with exemption from withholding tax and our corporate income tax file was closed as of January 1, 2020.

This included interest of

approximately $253,000, dividends of $76,000 due to Acorn and approximately $176,000 in shared expenses paid by Acorn less repayments

from OmniMetrix of $435,000.

We believe that OmniMetrix will not need working capital support in 2021.

However, we have no assurance

that this will be the case.

Additional financing for OmniMetrix may be in the form of a bank line, a new loan or investment by

others, a loan by Acorn, or a combination of the above.

The availability and amount of any additional loans from us to OmniMetrix

may be limited by the working capital needs of our corporate activities.

Whether Acorn will have the resources necessary to provide

funding, or whether alternative funds, such as third-party loans, will be available at the time and on terms acceptable to Acorn

and OmniMetrix cannot be determined.

January 2020, the aggregate tax refunds held in the bank account in Israel of approximately $371,000 were transferred to our bank

account in the US with exemption from withholding tax, and our Israeli corporate income tax file related to a 2018 sale of our

ownership interest in an Israeli subsidiary was closed as of January 1, 2020.

of March 11, 2021, Acorn’s corporate operations (excluding cash at our OmniMetrix subsidiary) held a total of approximately

$1,555,000 in cash and cash equivalents.

$1,812,000 in cash.

April 28, 2020, we entered into a new agreement for data hosting services, replacing an expiring agreement with the same vendor,

effective May 1, 2020.

The agreement has a twelve-month term and the total payments under this agreement are approximately $148,000

in the aggregate.

This represents an increase of approximately $21,000 from the prior twelve-month term for additional services

including enhanced business continuity and disaster recovery services.

May 5, 2020, 2,142,857 warrants with a book value of approximately $1,018,000 expired in accordance with their terms.

ACCOUNTING POLICIES

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revenue recognition and stock-based compensation.

the closing of the 2018 DSIT Transaction, we no longer have any equity method investments.

of Consolidation and Investments in Associated Companies

of Consolidation

consolidated financial statements include the accounts of all majority-owned subsidiaries.

15 unchanged sentences

to all customers, products, and arrangements regardless of customer type, product mix or arrangement size.

revenue recognition criteria are not satisfied, amounts received from customers are classified as deferred revenue on the balance

sheet until such time as the revenue recognition criteria are met.

revenue recognition criteria are not satisfied, amounts received from customers are classified as deferred revenue on the consolidated

balance sheets until such time as the revenue recognition criteria are met.

of OmniMetrix monitoring systems include the sale of equipment (“HW”) and of monitoring services (“Monitoring”).

30 unchanged sentences

and $22,000, respectively.

Note 11 to the consolidated financial statements for the assumptions used to calculate the fair value of share-based employee

compensation for our Acorn options.

Note 8 to the consolidated financial statements for the assumptions used to calculate the fair value of share-based employee compensation

for our Acorn options.

OF OPERATIONS

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Consolidated Statement of Operations Data:

For the Years Ended December 31,

(in thousands, except per share data)

Cost of sales

Research and development expenses, net

Selling, general and administrative expenses

Operating loss

Finance income (expense), net

the Years Ended December 31,

thousands, except per share data)

and development expenses, net

general and administrative expenses

income (expense), net

on PPP loan extinguishment

(loss) before income taxes

Income tax expense

Net loss after income taxes

Impairment of investment in DSIT

Share of income in DSIT

Gain (loss) on sale of interest in DSIT, net of transaction costs and withholding taxes

Income (loss) before discontinued operations

Income from discontinued operations, net of income taxes

Non-controlling interest share of loss –

continuing operations

Non-controlling interest share of loss - discontinued operations

Net income (loss) attributable to Acorn Energy, Inc.

Basic and diluted net income (loss) per share attributable to Acorn Energy, Inc.

income (loss) after income taxes

on sale of interest in DSIT

income (loss)

Non-controlling

interest share of (income) loss

income (loss) attributable to Acorn Energy, Inc.

and diluted net income (loss) per share attributable to Acorn Energy, Inc.

shareholders:

Income (loss) from continuing operations

Loss from discontinued operations

Net income (loss) per share attributable to Acorn Energy, Inc.

loss per share attributable to Acorn Energy, Inc.

shareholders –

basic and diluted

Weighted average number of shares outstanding attributable to Acorn Energy, Inc.

average number of shares outstanding attributable to Acorn Energy, Inc.

shareholders –

basic and diluted

average number of shares outstanding attributable to Acorn Energy, Inc.

shareholders –

following table sets forth certain information with respect to revenues and profits of our reportable business segments for the

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COMPARED TO 2019

Consolidated revenue of $5,490,000 during 2019 reflected an increase of $403,000 or 8% as compared to 2018 revenues of $5,087,000.

The increase in revenue was due to the increase in OmniMetrix’s monitoring revenue.

OmniMetrix recorded increased revenue

in its PG activities but a decrease in revenue in its CP activities due to the fact that the sales team was not fully staffed

The sales director position was open for six months and three sales positions were open for the majority of the year.

These four positions were filled as of December 31, 2019.

PG revenue increased from $3,656,000 in 2018 to $4,282,000 in 2019 (17%)

while CP revenue decreased from $1,431,000 in 2018 to $1,208,000 in 2019 (16%).

Increased revenue in PG was due to an increase

in the number of units being monitored

OmniMetrix’s gross profit increased from $3,122,000 in 2018 to $3,590,000 in 2019.

OmniMetrix’s increased

gross profit was attributable to a combination of its increased revenue and increased gross margin from 61% in 2018 to 65% in

The increased gross margin is the result of the product mix of higher margin monitoring revenue and the increased gross

margins in hardware revenue which grew from 36% in 2018 to 38% in 2019 while maintaining an 84% gross margin on monitoring revenue.

and development (“R&D”) expense.

R&D expense increased by $17,000 (3%) from $542,000 in 2018 to $559,000

in 2019 as OmniMetrix continues development of next-generation PG and CP monitors and explore other complimentary products in

response to customer needs.

In 2020, OmniMetrix recorded total revenue of approximately $5,922,000, as compared to total revenue of approximately $5,490,000

in 2019, for an increase of approximately $432,000 (8%).

As previously stated, OmniMetrix has two divisions:

segment includes our monitoring device for generators, industrial air compressors and dryers, and a new line of annunciators.

In 2020, revenue of approximately $4,988,000 was attributed to the PG segment and revenue of approximately $934,000 was

attributed to the CP segment, as compared to the 2019 revenue of approximately $4,282,000 that was attributed to

the PG segment and approximately $1,208,000 that was attributed to the CP segment.

PG revenue increased from approximately

$4,282,000 in 2019 to approximately $4,988,000 in 2020 (16%) while CP revenue decreased from approximately $1,208,000 in 2019

to approximately $934,000 in 2020 (23%).

Increased revenue in PG was due to an increase in monitoring revenue of 15% from approximately

$3,327,000 in 2019 to approximately $3,819,000 in 2020.

The increase in monitoring revenue is the result of an increase in the

number of units being monitored.

The increase in monitoring revenue was offset by a decrease in hardware revenue which decreased

3% from approximately $2,163,000 in 2019 to approximately $2,103,000 in 2020.

The decrease in hardware revenue is primarily due

to a decrease of hardware sales in the CP segment.

CP hardware revenue decreased approximately $290,000 (30%) as a result of the

longer sales and closing cycle of a CP sale compared to a PG sale and the impact of COVID-19 on our ability to meet with potential

customers and to act timely and effectively on sales leads.

A CP sales cycle can typically take twelve to eighteen months from

customer introduction to closing.

This decrease in CP hardware revenue was offset by an increase in PG hardware revenue of approximately

$230,000 (19%).

Gross profit for 2020 was approximately $4,131,000 reflecting a gross margin of 70% on revenue, compared with a gross

profit of approximately $3,590,000 reflecting a 65% gross margin in 2019.

The increased gross profit in 2020 was due to a change

in the revenue mix with a higher percentage of our total revenue being monitoring revenue which has a higher gross margin as well

as to higher gross margin realized on hardware revenue.

Gross margin on hardware revenue increased in 2020 to 44% from 38% in

This increase was the result of increased gross margins for PG hardware which grew from 34% in 2019 to 40% in 2020.

increased margin was the result of reduced costs in our PG units as we benefit from our redesigned products.

CP hardware gross

margin increased to 49% in 2020 from 43% in 2019 due to product mix.

Gross margin on monitoring revenue remained strong at 84%

during 2020 and 2019.

and development.

During 2020, OmniMetrix recorded approximately $619,000 of R&D expense as compared to approximately $559,000

in 2019, an increase of approximately $60,000 (11%).

The increase in R&D expense in 2020 is related to the continued development

of next generation PG and CP products and exploration into new possible product lines.

We expect a moderate increase in R&D

expense in 2021 as we continue to work on certain initiatives to redesign products and expand product lines to increase the level

of innovation and gain more market share.

general and administrative expense (“SG&A”).

SG&A expense in 2019 decreased by $256,000 (6%) as compared

The decrease in our Corporate overhead of $384,000 was offset by an increase in OmniMetrix’s SG&A of $127,000

which increased from $2,726,000 in 2018 to $2,853,000 in 2019.

OmniMetrix’s SG&A increase was due to increases in personnel

costs, computer software expenses, travel and entertainment expenses and payment processing service charges.

The decrease in corporate

expense from $1,260,000 in 2018 to $876,000 in 2019 reflected a decrease of $384,000, or 30%.

Corporate G&A expense in 2018

included combined one-time bonuses of $150,000 paid to our CEO and former Executive Chairman of the Board in recognition of their

performance in the 2018 DSIT Transaction and $20,000 in the aggregate of transition consulting fees paid to our former CFO.

these non-recurring items from 2018, SG&A expense decreased in 2019 by $214,000 as compared to 2018 due to reductions in corporate

overhead, primarily in compensation expenses, board fees, and legal fees.

Consolidated SG&A expense in 2020 increased by approximately

$92,000 (2%) as compared to 2019.

Corporate overhead increased by approximately $14,000 from approximately $876,000

in 2019 to approximately $890,000 in 2020 due to additional professional fees incurred.

OmniMetrix’s SG&A increased

approximately $79,000 (3%) from approximately $2,854,000 in 2019 to approximately $2,932,000 in 2020.

This increase was

primarily due to increases in occupancy expense (in 2019 these expenses were primarily applied to a restructuring accrual) and

personnel costs offset by a reduction in travel and sales tax expenses.

We anticipate that our annual SG&A costs in 2021 will

increase approximately 15% due to having a fully staffed and expanded sales team and due to our continuing investments in technology

and operations.

expense, net.

We had net finance related income of $2,000 in 2019 due to the gains on the exchange rate related to the funds

that were held in a bank in Israel as of December 31, 2019 compared to finance expense of $74,000 in 2018 which was primarily

interest from our accounts receivable factoring line in 2018.

Our balances outstanding under the line during 2018 were higher

than the average balances outstanding in 2019 which we maintained at an average of $150,000.

Finance expense in 2019 was primarily

comprised of interest expense and services charges of $23,000 associated with OmniMetrix’s line of credit, corporate interest

income of $3,000 net of Corporate interest expense of $1,000 and currency exchange net gain of $23,000.

The decrease in the interest

expense on the credit line is due to the lower average balance outstanding during the year coupled with a reduction in the applicable

aggregate interest rate and service charge when the line was reinstated in March 2019.

Finance expense in 2018 was primarily comprised

of interest expense and service charges of $54,000 associated with OmniMetrix’s line of credit, other OmniMetrix interest

expense of $6,000, in addition to corporate interest expense of $23,000 net of Corporate interest income of $6,000 and currency

exchange net gain of $3,000.

Finance expense in 2020 was primarily comprised of interest expense and service charges of approximately $28,000

associated with OmniMetrix’s line of credit, miscellaneous net interest expense of approximately $3,000 and currency exchange

loss of approximately $4,000.

Finance expense in 2019 was primarily comprised of interest expense and service charges of approximately

$23,000 associated with OmniMetrix’s line of credit, miscellaneous net interest income of approximately $2,000 and currency

exchange net gain of approximately $23,000.

on sale of DSIT .

In the first quarter of 2018, we closed on the sale of our remaining interests in DSIT Solutions Ltd., receiving

gross proceeds of $5.8 million before transaction costs, professional fees and withholding taxes.

We recorded a loss on the sale

This loss was offset by $222,000, net of fees of $44,000, from a tax benefit received in 2018 which reduced the loss

In 2019, we received an additional tax benefit of $50,000 further reducing the loss on the sale of DSIT.

of income in DSIT.

Following the partial sale of DSIT in April 2016, we no longer consolidate their results, but rather record

our share (approximately 41.2%) of their income (or loss).

Our share of DSIT’s income in the period prior to the sale of

our remaining interest in DSIT was $33,000.

of investment in DSIT.

As a result of the sale of our remaining interest in DSIT in February 2018 at a gross sales price of

$5.8 million which was below the carrying value of our DSIT investment, we recorded an impairment of $308,000 as of December 31,

2017 to reduce the carrying value of our investment to the selling price at which we sold our investment.

We recorded an additional

impairment loss of $33,000, equivalent to our share of the 2018 DSIT income.

In the first quarter of 2018, we closed on the sale of our remaining interests in DSIT Solutions Ltd.

2019, we received an additional tax benefit of approximately $50,000 that reduced the loss on the sale of DSIT.

on PPP loan extinguishment .

On April 24, 2020, Acorn Energy, Inc.

received Paycheck Protection Program (“PPP”)

loan proceeds in the amount of $41,600.

On April 30, 2020, OmniMetrix, LLC received PPP loan proceeds in the amount $419,800.

the PPP of the Coronavirus Aid, Relief and Economic Security Act (the “Act”), up to the full principal amount of a

loan and any accrued interest can be forgiven if the borrower uses all of the loan proceeds for forgivable purposes (payroll,

benefits, lease/mortgage payments and/or utilities) required under the Act and any rule, regulation, or guidance issued by the

Small Business Administration (the “SBA”) pursuant to the Act (collectively, the “Forgiveness Provisions”).

The amount of forgiveness of the PPP loan depends on the borrower’s payroll costs over either an eight-week or twenty-four-week

period beginning on the date of funding.

Any processes or procedures established under the Forgiveness Provisions must be followed

and any requirements of the Forgiveness Provisions must be fully satisfied to obtain such loan forgiveness.

Pursuant to the provisions

of the Act, the first six monthly payments of principal and interest will be deferred.

Interest will accrue during the deferment

The borrower must pay principal and interest payments on the fifth day of each month beginning seven months from the date

of the applicable promissory note.

October 20, 2020, OmniMetrix submitted its PPP Loan Forgiveness Application to the SBA.

On November 5, 2020, the SBA confirmed

that OmniMetrix’s application for forgiveness had been approved and that its PPP loan, in the amount of $419,800 plus accrued

interest of $2,162, had been forgiven.

elected not to apply for forgiveness of the PPP loan proceeds received by our parent entity in the amount of $41,600 plus accrued

interest of $206.

This loan was repaid to the lender effective October 22, 2020.

loss attributable to Acorn Energy.

We had a net loss attributable to Acorn Energy of $618,000 in 2019 as compared with a net

loss of $2,001,000 in 2018.

Our loss in 2019 is comprised of net income at OmniMetrix of $184,000, corporate expense of $852,000

partially offset by the gain of $50,000 related to the tax recovery on the sale of our remaining interest in DSIT which occurred

We had net income attributable to Acorn Energy of approximately $69,000 in 2020 as compared

with a net loss of approximately $618,000 in 2019.

Our income in 2020 is comprised of net income at OmniMetrix of approximately

$549,000, corporate expense of approximately $894,000 offset by the gain on the extinguishment of the PPP loan of approximately

$421,000 and approximately $7,000 representing the non-controlling interest share of our income in OmniMetrix.

Our loss in 2019

is comprised of net income at OmniMetrix of approximately $184,000, corporate expense of approximately $852,000 partially offset

by the gain of approximately $50,000 related to the tax recovery on the sale of our remaining interest in DSIT, which occurred

in February 2018, and by $29,000 representing the non-controlling interest share of our loss in OmniMetrix.

Our loss in 2018 is

comprised of a loss at OmniMetrix of $206,000, corporate expense of $1,274,000 and the loss of $607,000 on the sale of our remaining

interest in DSIT.

These losses were partially offset by $86,000 representing the non-controlling interest share of our loss in

AND CAPITAL RESOURCES

December 31, 2019, we had a negative working capital of $164,000.

Our working capital includes approximately $1,247,000 of cash

and deferred revenue of approximately $3.0 million.

Such deferred revenue does not require significant cash outlay for the revenue

to be recognized.

Net cash decreased during the year ended December 31, 2019 by $16,000, of which $1,220,000 was used in operating

activities, $1,116,000 was used in investing activities, $2,320,000 was provided by financing activities.

the year ended December 31, 2019, we used $1,220,000 in operating activities.

Our OmniMetrix subsidiary used $404,000 in its operations,

of which $323,000 was used to pay off a loan from a former director, while our corporate headquarters used $816,000 during the

Of the cash used in our corporate operating activities, $280,000 was used to pay off expenses incurred in the prior

cash of $1,116,000 was used in investing activities in 2019 which included purchases of software of $166,000, and $950,000 used

in the reacquisition of a 19% interest in our OmniMetrix subsidiary as described below under the heading “Purchase of Non-Controlling

Interest.”

cash of $2,320,000 was provided by financing activities which was comprised of $2,184,000 from our equity raise described below

under the heading “Rights Offering”

and $136,000 in net proceeds from OmniMetrix’s line of credit described

above under the heading “OVERVIEW AND TREND INFORMATION —

OmniMetrix Line of Credit.”

financing for OmniMetrix may be in the form of a bank line, a new loan or investment by others, a loan by Acorn, or a combination

December 31, 2020, we had a negative working capital of approximately $95,000.

Our working capital includes approximately $2,063,000

of cash and deferred revenue of approximately $3,214,000.

Such deferred revenue does not require significant cash outlay for the

revenue to be recognized.

Net cash increased during the year ended December 31, 2020 by approximately $816,000, of which approximately

$464,000 was provided by operating activities, approximately $101,000 was used in investing activities, and approximately $453,000

was provided by financing activities, of which approximately $421,000 was net proceeds from the SBA PPP loan.

the year ended December 31, 2020, our operating activities provided approximately $464,000.

Our OmniMetrix subsidiary provided

approximately $1,366,000 from its operations while our corporate headquarters used approximately $902,000 in its operating activities

during the same period.

cash of approximately $101,000 was used in investing activities in 2020 which was primarily investments in software.

cash of approximately $453,000 was provided by financing activities which was comprised of approximately $421,000 in proceeds,

net of repayments, from the PPP loan, approximately $13,000 in net proceeds from OmniMetrix’s line of credit described above

under the heading “OVERVIEW AND TREND INFORMATION —

OmniMetrix Line of Credit”, and approximately $19,000 in

proceeds from the exercise of stock options.

previously discussed, we elected not to renew OmniMetrix’s line of credit and it expired in accordance with its terms on

February 28, 2021.

If we decide to pursue additional financing for OmniMetrix 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 a combination

of the above.

4 unchanged sentences

at this time.

June 28, 2019, we completed a rights offering, raising $2,186,000 in proceeds, net of $208,000 in expenses.

Pursuant to the rights

offering, our securityholders and parties to a backstop agreement purchased 9,975,553 shares of our common stock for $0.24 per

June 28, 2019, we completed a rights offering, raising approximately $2,186,000 in proceeds, net of approximately $208,000 in

Pursuant to the rights offering, our securityholders and parties to a backstop agreement purchased 9,975,553 shares

of our common stock for $0.24 per share.

the terms of the rights offering, each right entitled securityholders as of June 3, 2019, the record date for the rights offering,

11 unchanged sentences

our OMX Holdings, Inc.

subsidiary (“Holdings”) for $1,273,000 discussed below.

subsidiary for $1,273,000 discussed below.

balance of the rights offering net proceeds provides OmniMetrix with additional sales and marketing resources to facilitate expansion

2 unchanged sentences

of Non-Controlling Interest

2015, one of our then-current directors (the “Investor”) acquired a 20% interest in the our OMX Holdings, Inc.

2015, one of our then-current directors (the “Investor”) acquired a 20% interest in our OMX Holdings, Inc.

(“Holdings”) through the purchase of $1,000,000 of OmniMetrix Preferred Stock (“Preferred Stock”).

is the holder of 100% of the membership interests of OmniMetrix, LLC through which we operate our Power Generation and Cathodic

Protection monitoring activities.

is the holder of 100% of the membership interests of OmniMetrix, LLC through which we operate our PG and CP monitoring activities.

The $1,000,000 investment by the Investor was recorded as an increase in non-controlling interests.

dividend of 10% per annum accrued on the Preferred Stock.

The dividend was payable on the first anniversary of the funding of

the investment and quarterly thereafter for so long as the Preferred Stock was outstanding and had not been converted to Common

Through December 31, 2016, a dividend payable of $115,000 was recorded with respect to the Preferred Stock.

31, 2016, the Investor agreed to treat the $115,000 of accrued dividends and all subsequent accrued and unpaid dividends as a

loan to Holdings which bore interest at 8% per year.

In December 2016, the Investor provided Holdings with an additional $50,000

loan under the same terms as the above-mentioned accrued dividends.

May 14, 2018, Holdings and the Investor entered into an agreement whereby effective May 1, 2018, the dividend on the Preferred

Stock was reduced to 8%.

In addition, all the amounts due to the Investor (accrued dividends, loan and accrued interest) and all

future dividends that would accrue on the Preferred Stock through June 30, 2020, were to be paid by Holdings pursuant to an agreed-upon

payment schedule which was scheduled to end on June 30, 2020.

During the six months ended June 30, 2019, the Company accrued $40,000

in quarterly dividends in the aggregate.

At June 30, 2019, the obligation to the Investor was $323,000, representing unpaid accrued

July 1, 2019, in accordance with terms established in 2015 at the time of the original investment, the Company utilized a portion

of the rights offering proceeds, as discussed above, to repurchase from the Investor the shares of Preferred Stock then held by

the Investor for a purchase price of $1,273,000 (which included the $323,000 of unpaid accrued dividends through June 30, 2019).

The repurchase raised the Company’s ownership in Holdings from 80% to 99%, with the remaining 1% owned by the former CEO

of OmniMetrix, LLC.

of the rights offering proceeds to repurchase from the Investor the shares of Preferred Stock then held by the Investor for a

purchase price of $1,273,000 (which included $323,000 of unpaid accrued dividends through June 30, 2019).

The repurchase raised

the Company’s ownership in Holdings from 80% to 99%, with the remaining 1% owned by the former CEO of OmniMetrix, LLC.

Liquidity Matters

owes Acorn approximately $4,575,000 for loans, accrued interest and expenses advanced to it by Acorn.

Such amounts will only be

repaid to Acorn when OmniMetrix is generating sufficient cash to allow such repayment.

OmniMetrix has made

monthly payments to Acorn of varying amounts, $570,000 in the aggregate, since the second quarter of 2019.

OmniMetrix will

continue to make payments to Acorn against this balance while as long as OmniMetrix is generating sufficient cash to allow

such repayments.

had approximately $2,063,000 of cash on December 31, 2020, and approximately $1,812,000 on March 11, 2021.

We believe that our

current cash plus the cash expected to be generated from operations and borrowing from available lines of credit will provide

We believe that

our current cash plus the cash expected to be generated from operations and borrowing from available lines of credit will provide

sufficient liquidity to finance the operating activities of Acorn and the operations of its operating subsidiaries for at least

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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 5. Market for Registrant’s Common Equity