What changed in this filing

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Item 1. Business

2022-03-31 compared with 2021-03-16 · 164 added, 169 removed, 30 unchanged (92% of the section changed)

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.

OmniMetrix’s PG activities provide wireless remote monitoring and control

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

and its subsidiaries, OMX Holdings, Inc.

and OmniMetrix, LLC (collectively, “Acorn” or “the Company”)

is a Delaware corporation which is a holding company focused on technology driven solutions for energy infrastructure asset management.

We provide the following products and Internet of Things (“IoT”) applications and services through our OmniMetrix, LLC (“OmniMetrix”)

Generation (“PG”) monitoring.

OmniMetrix’s PG services provide wireless remote monitoring and control systems

and IIoT applications for residential and commercial/industrial power generation equipment.

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.

OmniMetrix’s CP activities provide for remote monitoring of cathodic protection

systems on gas pipelines for gas utilities and pipeline companies.

remotely monitors and controls industrial air compressors and our Smart Annunciator product which is typically sold with a new commercial

or industrial generator and has a display screen that indicates the current status of that generator.

Protection (“CP”) monitoring.

OmniMetrix’s CP services provide remote monitoring and control products for cathodic

protection systems on gas pipelines serving the gas utilities market and pipeline operators.

The CP product lineup includes solutions

to remotely monitor and control rectifiers, test stations and bonds, and offers a 21 st century data management platform

with OmniPRO.

2021, each of our PG and CP activities represented a reportable segment.

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

for a strategic event, which may include co-investment by one or more third parties and/or a synergistic acquisition of another

for a strategic event, which may include co-investment by one or more third parties and/or a synergistic acquisition of another company.

RESULTS BY COMPANY

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

our consolidated companies.

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

Year ended December 31, 2021

3 unchanged sentences

Operating income (loss)

Year ended December 31, 2019

ended December 31, 2020

Cost of sales

Gross profit margin

Selling, general and administrative expenses

Selling, general and

administrative expenses

Operating income (loss)

2 unchanged sentences

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 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 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.

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 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.

fire pumps and other industrial equipment) and multiple markets in the IoT ecosystem, as well as cathodic protection solutions for the

pipeline industry (gas utilities and pipeline companies).

Acorn owns 99% of OmniMetrix, with the remaining 1% owned by OmniMetrix’s

the emergence of IoT applications whereby companies aggregate multiple sensors and monitors into a simplified dashboard for customers,

OmniMetrix believes it plays a key role in this economic ecosystem.

In addition, OmniMetrix continues to see a rapidly growing need for

backup power infrastructure to secure critical military, government, and private sector assets against emergency events including terrorist

attacks, natural disasters, demand response and cybersecurity threats.

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 IoT applications.

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 is well-positioned to grow its customer base and expand its product

offerings in this market.

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

device is broadly applicable across all brands and models of emergency power generators and industrial engine applications.

TrueGuard product family connects directly to the engine’s control panel, and captures all data flowing through the control

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

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.

These devices

are broadly applicable across all brands and models of emergency power generators and industrial engine applications.

The TrueGuard product

family connects directly to the engine’s control panel and captures all data flowing through the control panel.

As a result, the

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

OmniMetrix also sells its

AIRGuard product which remotely monitors and controls industrial air compressors and our Smart Annunciator product which is typically

sold with a new commercial or industrial generator and indicates the current status of that generator on a large touch screen display.

the CP segment, OmniMetrix offers two primary product lines:

the Hero 2 Rectifier Monitor and the Patriot Test Station Monitor.

Both of these products are used to monitor cathodic protection systems, a process which reduces rust and corrosion on the steel

pipes used to transport natural gas.

As the name suggests, the Hero Rectifier Monitor product monitors the operation of the rectifiers,

which are a critical component in the effort to prevent corrosion and are also the most common point of failure in the pipeline

The Patriot Test Station Monitor is also used to provide data points along the pipeline segment powered by the rectifier.

its core, the OmniMetrix PG monitors (Trueguard PRO and Truegard 2) can remotely monitor and control a variety of industrial engine

applications, including engines, standby generators, air and gas compressors, fire pumps, batteries, turbines, pumps and other

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

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.

of these products are used to monitor cathodic protection systems, a process which reduces rust and corrosion on pipelines used to transport

As the name suggests, the Hero 2 Rectifier Monitor product monitors and controls the operation of the rectifiers, which

are a critical component in the effort to prevent corrosion and are also the most common point of failure in the pipeline system.

Patriot Test Station Monitor is also used to provide data points along the pipeline segment powered by the rectifier.

its core, the OmniMetrix PG monitors (TrueGuard PRO and TrueGuard 2) can remotely monitor and control a variety of industrial engine

applications, including engines, standby generators, air and gas compressors, fire pumps, batteries, turbines, pumps and other equipment.

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

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

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

the first stages of OmniMetrix’s PG product and market development, relatively unsophisticated generator controls and early

generation cellular and satellite communication processes limited the applications to alarm delivery.

Customers were notified

that some event had taken place after the fact.

There was no diagnostic data opportunity, but service organizations could, at

best, practice a proactive service approach.

the advent of second-generation cellular systems and newer, computerized engine controls, OmniMetrix migrated to a design point

of collecting large amounts of performance data from the remote machinery, allowing service organizations to perform diagnostics

on remote equipment before dispatching service.

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.

They could also manage more

customers by using remote monitoring.

Customers have provided OmniMetrix feedback telling how customer service teams are able

to work “smarter”

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

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

PG monitors have been installed on commercial, industrial and residential generators from original equipment manufacturers (“OEMs”)

such as Caterpillar, Kohler, Generac, Cummins, MTU Energy and other generator manufacturers.

OmniMetrix provides dual value propositions

to the generator service organizations as well as to the machine owner.

The dealers benefit from the receipt of performance data

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 SmartService approach

to analyzing the remote machines before dispatching a service truck.

Since the majority of service and warranty costs are incurred

from service people driving trucks, preemptive analysis of customer site conditions prior to dispatch can reduce their labor cost.

From the machine owner’s perspective, the OmniMetrix product provides a powerful tool to be used in their constant effort

to avoid failures that come from consumables such as batteries and fuel.

With proper monitoring, the large majority of machine

failures can be avoided completely.

This migration from failure reporting to failure prevention is fundamental to the OmniMetrix

focus and is the result of a strong data collection and analysis design point.

We believe that this transition to prognostics

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

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.

the first stages of OmniMetrix’s PG product and market development, relatively unsophisticated generator controls and early generation

cellular and satellite communication processes limited the applications to alarm delivery.

Customers were notified that some event had

taken place after the fact.

There was no diagnostic data opportunity, but service organizations could, at best, practice a reactive service

the advent of second-generation cellular systems and newer, computerized engine controls, OmniMetrix migrated to a design point of collecting

large amounts of performance data from the remote machinery, allowing service organizations to perform diagnostics on equipment before

dispatching service.

These enhanced control panels 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.

At this phase, service organizations could be efficient, proactive, and provide

a higher level of customer satisfaction.

They could also manage more customers by using remote monitoring.

Customers have provided OmniMetrix

feedback telling how customer service teams are able to work “smarter” and more efficiently by going directly to sites with

problems, thus increasing the value of their businesses.

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.

For example, 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.

PG monitors have been installed on commercial, industrial and residential generators from original equipment manufacturers (“OEMs”)

such as Caterpillar, Kohler, Generac, Cummins, Briggs & Stratton, MTU Energy and other generator manufacturers.

OmniMetrix provides

dual value propositions to the generator service organizations as well as to the machine owner.

The dealers benefit from the receipt

of performance data 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 analyzing the remote machines before dispatching a service

Since the majority of service and warranty costs are incurred from the service providers, preemptive analysis of customer site

conditions prior to dispatch can reduce their labor cost.

From the machine owner’s perspective, the OmniMetrix product provides

a powerful tool to be used in their constant effort to avoid failures that come from consumables such as batteries and fuel.

monitoring, 95% of machine failures can be avoided completely.

This migration from failure reporting to failure prevention is fundamentally

OmniMetrix’s focus and is the result of a strong data collection and analysis design point.

We believe that this transition to

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

OmniMetrix has shifted its primary focus to the commercial and industrial segments from residential due, in part, 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

a complete end-to-end program for its customers.

Having been the first provider of wireless remote monitoring systems for standby

generators and pipeline corrosion programs, the company has had the opportunity to mature its offering to a level not offered

by others who might like to compete in these two segments.

This long experience working with key brand project partners over the

years has resulted in product offerings that are competitive.

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

end-to-end program for its customers.

Having been the first provider of wireless remote monitoring systems for standby generators, the

company has had the opportunity to mature its offering to a level not offered by others who might like to compete in these two segments.

This long experience working with key brand and project partners over the years has resulted in product offerings that are highly competitive.

are two types of competitors in the PG marketplace:

monitoring organizations (such as OmniMetrix) that produce the monitoring systems, but not the equipment being monitored.

Among these are companies such as Ayantra, FleetZOOM, Gen-Tracker, and PowerTelematics.

The other competitors operate in the

reactive “failure notification”

mode described in the early stages of the OmniMetrix business model.

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

are companies such as Ayantra, FleetZOOM, Gen-Tracker, and PowerTelematics.

The other competitors operate in the reactive “failure

notification” mode described in the early stages of the OmniMetrix business model.

These competitors position themselves at

a lower-performance, lower-price quadrant of the market typically due to reduced amount of data their products can collect from the

generator’s control panel compared to OmniMetrix

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 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.

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

such as Abriox, Elecsys, and American Innovations.

We believe that OmniMetrix systems provide greater functionality than these

competitors, though those competitors are much larger and have greater resources, potentially enabling better channel penetration

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 broad applications like the OmniMetrix products that service all brands.

They are also

generally designed for the machine owners’ 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.

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 companies that provide monitoring companies similar to OmniMetrix

such as Mobiltex Solutions, Abriox, Elecsys, and American Innovations.

We believe that OmniMetrix systems provide greater functionality

than these competitors, though those competitors are much larger and have greater resources, potentially enabling better channel penetration

than OmniMetrix can accomplish.

has always focused on being the technology leader in its markets, and as a result has created many “industry firsts”.

Initially, the company only pursued patents on the most valuable processes and systems and otherwise made public disclosure of

many processes to prevent others from making later patent claims on those items.

Nonetheless, OmniMetrix has five issued patents.

Furthermore, the company has agreements with its employees and consultants which establish certain non-disclosure and, in some

cases, non-compete, requirements.

has always focused on being the technology leader in its markets, and as a result has created many “industry firsts” and

“trade secrets”.

Initially, the company only pursued patents on the most valuable processes and systems and otherwise made

public disclosure of many processes to prevent others from making later patent claims on those items.

Nonetheless, OmniMetrix has six

issued patents.

Furthermore, the company has agreements with its employees and consultants which establish certain non-disclosure and,

in some cases, non-compete, requirements.

OmniMetrix continually evaluates whether and how to best protect its intellectual property,

but there can be no assurance that its efforts will be successful in all cases.

OmniMetrix’s

activities are currently conducted in approximately 21,000 square feet of office and production space in the Hamilton Mill Business

Park located in Buford, Georgia under a lease that has been extended from its original expiration date of April 30, 2020 to September

OmniMetrix is currently utilizing only a portion of these leased facilities and expects to grow into a portion of the

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

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

approximately $3.2 million is expected to be recognized as revenue in 2021.

activities are currently conducted in approximately 21,000 square feet of office and production space in the Hamilton Mill Business Park

located in Buford, Georgia under a lease that has been extended from its original expiration date of April 30, 2020 to September 30,

OmniMetrix is currently utilizing only a portion of these leased facilities and expects to grow into a portion of the currently

unused space.

On July 6, 2021, the Company entered into an agreement with King Industrial Realty, Inc., to sublease from the Company

1,900 square feet of unused office space.

The sublease commenced on October 1, 2021 and will run through September 30, 2025 which is

the end of the Company’s lease term with its landlord.

of December 31, 2021, OmniMetrix had a backlog of approximately $5.4 million, primarily comprised of deferred revenue, of which approximately

$3.5 million is expected to be recognized as revenue in 2022.

This compares to a backlog of approximately $4.5 million at December 31,

AND DEVELOPMENT EXPENSE, NET

and development expense recorded for the years ended December 31, 2020 and 2019 for our OmniMetrix subsidiary in continuing operations

is as follows (amounts in thousands of U.S.

December 31, 2020, we employed a total of 23 employees –

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

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.

and development expense recorded for the years ended December 31, 2021 and 2020 for our OmniMetrix subsidiary is as follows (amounts

in thousands of U.S.

ended December 31,

December 31, 2021, we employed a total of 25 employees – all of which were full-time employees employed by OmniMetrix in the U.S.

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

OmniMetrix also has consultants that supplement our employed staff and provide monthly recurring services in human resources, accounting

and information technology.

of OmniMetrix’s 25 employees are engaged in production, engineering and technical support, ten in marketing and sales and four

in finance and IT.

We consider our relationship with our employees to be satisfactory.

We have no collective bargaining

agreements with any of our employees.

We have no collective bargaining agreements with

any of our employees.

FINANCIAL INFORMATION

additional financial information regarding our operating segments, foreign and domestic operations and sales, see “Item

Management’s Discussion and Analysis of Financial Condition and Results of Operations”

and Note 11 to our Consolidated

Financial Statements included in this Annual Report.

file annual, quarterly and current reports, proxy statements and other information with the Securities and Exchange Commission

(the “SEC”).

These filings are available to the public over the internet at the SEC’s website at http://www.sec.gov.

You may also read and copy any document we file at the SEC’s public reference room located at 100 F Street, NE, Washington,

Please call the SEC at 1-800-SEC-0330 for further information on the public reference room.

additional financial information regarding our operating segments, foreign and domestic operations and sales, see “Item 7.

Discussion and Analysis of Financial Condition and Results of Operations” and Notes 12 and 13 to our Consolidated Financial Statements

included in this Annual Report.

file annual, quarterly and current reports, proxy statements and other information with the Securities and Exchange Commission (the “SEC”).

These filings are available to the public over the internet at the SEC’s website at http://www.sec.gov.

You may also read and copy

any document we file at the SEC’s public reference room located at 100 F Street, NE, Washington, DC 20549.

Please call the SEC

at 1-800-SEC-0330 for further information on the public reference room.

website can be found at http://www.acornenergy.com.

We make available free of charge on or through our website, access to our

annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to those reports as soon

as reasonably practicable after such material is electronically filed, or furnished, to the SEC.

Our website also includes our

Code of Business Conduct and Ethics, and our Board of Directors’

Committee Charter for the Audit Committee.

We make available free of charge on or through our website, access to our annual

report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to those reports as soon as reasonably

practicable after such material is electronically filed, or furnished, to the SEC.

Our website also includes our Code of Business Conduct

and Ethics, and our Board of Directors’ Committee Charter for the Audit Committee.

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