ACORN ENERGY, INC. 10-K

ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Market Information Our common stock is traded under the symbol “ACFN” on the OTCQB marketplace. The following table sets forth, for the periods indicated, the high and low bid prices on the OTCQB marketplace. High Low 2020: First Quarter $ 0.40 $ 0.11 Second Quarter 0.28 0.16 Third Quarter 0.40 0.20 Fourth Quarter 0.50 0.29 2019: First Quarter $ 0.45 $ 0.26 Second Quarter 0.36 0.25 Third Quarter 0.36 0.20 Fourth Quarter 0.38 0.24 As 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. ITEM 6. SELECTED FINANCIAL DATA Not applicable. ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS OVERVIEW AND TREND INFORMATION The following discussion includes statements that are forward-looking in nature. Whether such statements ultimately prove to be accurate depends upon a variety of factors that may affect our business and operations. Certain of these factors are discussed in “Item 1A. Risk Factors.” We currently operate in two reportable operating segments, both of which are performed though our OmniMetrix subsidiary: ● The PG segment which provides wireless remote monitoring and control systems and services for critical assets as well as Internet of Things applications; and ● The CP segment which provides for remote monitoring of cathodic protection systems on gas pipelines for gas utilities and pipeline companies. The following analysis should be read together with the segment information provided in Note 11 to our consolidated financial statements included in this report. OmniMetrix Following 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. 16 OmniMetrix Line of Credit In 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 of 15%. 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. OmniMetrix had an outstanding balance of approximately $149,000 at December 31, 2020, pursuant to the loan and security agreement. We repaid 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. Small Business Administration Paycheck Protection Program (“SBA PPP”) On April 24, 2020, Acorn Energy, Inc. received SBA PPP loan proceeds in the amount of $41,600. On April 30, 2020, OmniMetrix, LLC received SBA PPP loan proceeds in the amount $419,800. Under 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. On 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. The 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. Intercompany During 2020, the intercompany amount due to Acorn from OmniMetrix increased by approximately $70,000. 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. 17 In 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. As of March 11, 2021, Acorn’s corporate operations (excluding cash at our OmniMetrix subsidiary) held a total of approximately $1,812,000 in cash. Other Matters On 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. On May 5, 2020, 2,142,857 warrants with a book value of approximately $1,018,000 expired in accordance with their terms. CRITICAL ACCOUNTING POLICIES The SEC defines “critical accounting policies” as those that require application of management’s most difficult, subjective or complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain and may change in subsequent periods. The following discussion of critical accounting policies represents our attempt to report on those accounting policies, which we believe are critical to our consolidated financial statements and other financial disclosure. It is not intended to be a comprehensive list of all of our significant accounting policies, which are more fully described in Note 2 of the Notes to the Consolidated Financial Statements included in this Annual Report. In many cases, the accounting treatment of a particular transaction is specifically dictated by generally accepted accounting principles, with no need for management’s judgment in their application. There are also areas in which the selection of an available alternative policy would not produce a materially different result. We have identified the following as critical accounting policies affecting our Company: principles of consolidation and investments in associated companies; revenue recognition and stock-based compensation. Principles of Consolidation Our consolidated financial statements include the accounts of all majority-owned subsidiaries. All intercompany balances and transactions have been eliminated. Revenue Recognition Our revenue recognition policy is consistent with applicable revenue recognition guidance and interpretations. The core principle of ASC 606 is to recognize revenue when promised goods or services are transferred to customers in an amount that reflects the consideration that is expected to be received for those goods or services. ASC 606 defines a five-step process to achieve this core principle, which includes: (1) identifying contracts with customers, (2) identifying performance obligations within those contracts, (3) determining the transaction price, (4) allocating the transaction price to the performance obligation in the contract, which may include an estimate of variable consideration, and (5) recognizing revenue when or as each performance obligation is satisfied. We assess whether payment terms are customary or extended in accordance with normal practice relative to the market in which the sale is occurring. Our sales arrangements generally include standard payment terms. These terms effectively relate to all customers, products, and arrangements regardless of customer type, product mix or arrangement size. 18 If 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. Sales of OmniMetrix monitoring systems include the sale of equipment (“HW”) and of monitoring services (“Monitoring”). Sales of OmniMetrix equipment do not qualify as a separate unit of accounting. As a result, revenue (and related costs) associated with sale of equipment are recorded to deferred revenue (and deferred charges) upon shipment for PG and CP monitoring units. Revenue and related costs with respect to the sale of equipment are recognized over the estimated life of the units which are currently estimated to be three years. Revenues from the prepayment of monitoring fees (generally paid twelve months 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. See Notes 11 and 12 for the disaggregation of our revenue for the periods presented. Stock-based Compensation We recognize stock-based compensation expense based on the fair value recognition provision of applicable accounting principles, using the Black-Scholes option valuation method. Accordingly, we are required to measure the cost of employee services received in exchange for an award of equity instruments based on the grant-date fair value of the award and to recognize that cost over the period during which an employee is required to provide service in exchange for the award. Under the Black-Scholes method, we make assumptions with respect to the expected lives of the options that have been granted and are outstanding, the expected volatility, the dividend yield percentage of our common stock and the risk-free interest rate at the respective dates of grant. For our Acorn options, the expected volatility factor used to value stock options in 2020 was based on the historical volatility of the market price of our common stock over a period equal to the expected term of the options. For the expected term of the option, we used an estimate of the expected option life based on historical experience. The risk-free interest rate used is based upon U.S. Treasury yields for a period consistent with the expected term of the options. We assumed no quarterly dividend rate. We recognize stock-based compensation expense on an accelerated basis over the requisite service period. Due to the numerous assumptions involved in calculating share-based compensation expense, the expense recognized in our consolidated financial statements may differ significantly from the value realized by employees on exercise of the share-based instruments. In accordance with the prescribed methodology, we do not adjust our recognized compensation expense to reflect these differences. For the years ended December 31, 2020 and 2019, we incurred stock compensation expense with respect to options of approximately $35,000 and $22,000, respectively. See 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. RESULTS OF OPERATIONS The selected consolidated statement of operations data for the years ended December 31, 2020 and 2019 and consolidated balance sheet data as of December 31, 2020 and 2019 has been derived from our audited consolidated financial statements included in this Annual Report. The selected consolidated statement of operations data for the years ended December 31, 2018, 2017 and 2016 has been derived from our consolidated financial statements not included herein. 19 This data should be read in conjunction with our consolidated financial statements and related notes included herein and “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.” Selected Consolidated Statement of Operations Data: For the Years Ended December 31, 2020 2019 (in thousands, except per share data) Revenue $ 5,922 $ 5,490 Cost of sales 1,791 1,900 Gross profit 4,131 3,590 Research and development expenses, net 619 559 Selling, general and administrative expenses 3,822 3,730 Operating loss (310 ) (699 ) Finance income (expense), net (35 ) 2 Gain on PPP loan extinguishment 421 — Income (loss) before income taxes 76 (697 ) Income tax expense — — Net income (loss) after income taxes 76 (697 ) Gain on sale of interest in DSIT — 50 Net income (loss) 76 (647 ) Non-controlling interest share of (income) loss (7 ) 29 Net income (loss) attributable to Acorn Energy, Inc. shareholders $ 69 $ (618 ) Basic and diluted net income (loss) per share attributable to Acorn Energy, Inc. shareholders: Net loss per share attributable to Acorn Energy, Inc. shareholders – basic and diluted $ 0.00 $ (0.02 ) Weighted average number of shares outstanding attributable to Acorn Energy, Inc. shareholders – basic 39,674 35,495 Weighted average number of shares outstanding attributable to Acorn Energy, Inc. shareholders – diluted 39,713 35,495 The following table sets forth certain information with respect to revenues and profits of our reportable business segments for the years ended December 31, 2020 and 2019 (dollars in thousands), including the percentages of revenues attributable to such segments. (See Note 12 to our consolidated financial statements for the definitions of our reporting segments). PG CP Total Year ended December 31, 2020: Revenues from external customers $ 4,988 $ 934 $ 5,922 Percentage of total revenues from external customers 84 % 16 % 100 % Segment gross profit 3,626 505 4,131 Year ended December 31, 2019: Revenues from external customers $ 4,282 $ 1,208 $ 5,490 Percentage of total revenues from external customers 78 % 22 % 100 % Segment gross profit 3,030 560 3,590 20 2020 COMPARED TO 2019 Revenue. 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: PG and CP. The PG 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 . 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 2019. This increase was the result of increased gross margins for PG hardware which grew from 34% in 2019 to 40% in 2020. 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 49% in 2020 from 43% in 2019 due to product mix. Gross margin on monitoring revenue remained strong at 84% during 2020 and 2019. Research 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. Selling, general and administrative expense (“SG&A”). 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. Finance expense, net. 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. 21 Loss on sale of DSIT . In the first quarter of 2018, we closed on the sale of our remaining interests in DSIT Solutions Ltd. In 2019, we received an additional tax benefit of approximately $50,000 that reduced the loss on the sale of DSIT. Gain 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. Under 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 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. On 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. We 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. Net loss attributable to Acorn Energy. 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. LIQUIDITY AND CAPITAL RESOURCES At 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. During 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. Net cash of approximately $101,000 was used in investing activities in 2020 which was primarily investments in software. Net 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. 22 As 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. 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 at this time. Rights Offering On June 28, 2019, we completed a rights offering, raising approximately $2,186,000 in proceeds, net of approximately $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 share. Under the terms of the rights offering, each right entitled securityholders as of June 3, 2019, the record date for the rights offering, to purchase 0.312 shares of our common stock at a subscription price of $0.24 per whole share. No fractional shares were issued. The closing price of our common stock on the record date of the rights offering was $0.2925. Distribution of the rights commenced on June 6, 2019 and were exercisable through June 24, 2019. In connection with the rights offering, we entered into a backstop agreement with certain of our directors and Leap Tide Capital Management LLC, the sole manager of which is our President and CEO, pursuant to which they agreed to purchase from us any and all unsubscribed shares of common stock in the rights offering, subject to the terms, conditions and limitations of the backstop agreement. The backstop purchasers did not receive any compensation or other consideration for entering into or consummating the backstop agreement. On July 1, 2019, we utilized a portion of the rights offering proceeds to complete the planned reacquisition of a 19% interest in our OMX Holdings, Inc. subsidiary for $1,273,000 discussed below. The balance of the rights offering net proceeds provides OmniMetrix with additional sales and marketing resources to facilitate expansion into additional geographic markets and new product applications, to support next-generation product development and for general working capital purposes. Purchase of Non-Controlling Interest In 2015, one of our then-current directors (the “Investor”) acquired a 20% interest in our OMX Holdings, Inc. subsidiary (“Holdings”) through the purchase of $1,000,000 of OmniMetrix Preferred Stock (“Preferred Stock”). Holdings 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. On 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 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. Other Liquidity Matters OmniMetrix owes Acorn approximately $4,575,000 for loans, accrued interest and expenses advanced to it by Acorn. 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. 23 We 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 sufficient liquidity to finance the operating activities of Acorn and the operations of its operating subsidiaries for at least the next twelve months. Contractual Obligations and Commitments The table below provides information concerning obligations under certain categories of our contractual obligations as of December 31, 2020. CASH PAYMENTS DUE TO CONTRACTUAL OBLIGATIONS Years Ending December 31, (in thousands) Total 2021 2022-2023 2024-2025 2026 and thereafter Software agreements $ 101 $ 70 $ 31 $ — $ — Operating leases 603 121 253 229 — Contractual services 211 160 51 — — Total contractual cash obligations $ 915 $ 351 $ 335 $ 229 $ —