What changed in this filing

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Item 1A. Risk Factors

2023-03-16 compared with 2022-03-31 · 118 added, 108 removed, 319 unchanged (41% of the section changed)

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determinable, could cause actual results to differ from our expectations, statements or projections.

have a history of operating losses and have used significant amounts of cash for operations and to fund our acquisitions and investments.

we have had several consecutive quarters of profitability at our OmniMetrix subsidiary and also were able to cover corporate overhead

in the fourth quarter of 2021, we have had a history of losses from our OmniMetrix subsidiary and corporate overhead and have used significant

amounts of cash to fund our operating activities over the years.

have a history of operating losses and have used significant amounts of cash for operations and to fund our investments.

we have had several consecutive quarters of profitability at our OmniMetrix subsidiary, we have had a history of losses from our OmniMetrix

subsidiary plus corporate overhead and have used significant amounts of cash to fund our operating activities over the years.

we believe we have sufficient cash to finance our operations for at least twelve months from the issuance of the consolidated financial

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Additional sources of funding may include

additional loans from related and/or non-related parties, partial sale of, or finding a strategic partner for, OmniMetrix or equity financings.

additional loans from related and/or non-related parties, partial sale of, or finding a strategic partner for, OmniMetrix or equity financing.

There can be no assurance additional funding will be available at acceptable terms or that we will be able to successfully utilize any

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depend on key management for the success of our business.

success is largely dependent on the skills, experience and efforts of our senior management team, including Jan Loeb, who beneficially

owns approximately 20.1% of the Company’s stock, and Tracy Clifford.

The loss of the services of any of these key managers could

materially harm our business, financial condition, future results and cash flow.

We do not maintain “key person” life insurance

policies on any members of senior management.

We may also not be able to locate or employ on acceptable terms qualified replacements

for our senior management if their services were no longer available.

success is largely dependent on the skills, experience and efforts of our senior management team, including Jan Loeb, CEO of Acorn

and Acting CEO of OmniMetrix, who beneficially owns approximately 20.5% of the Company’s stock, Tracy Clifford, CFO of Acorn

and COO of OmniMetrix , and Harold Jarrett, our CTO.

The loss of the services of any of these key managers could materially harm our business, financial

condition, future results and cash flow.

We do not maintain “key person” life insurance policies on any members of

senior management.

We may also not be able to locate or employ on acceptable terms qualified replacements for our senior management

if their services were no longer available.

of the services of a few key employees could harm our operations.

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Consequently, these penny stock rules may affect the ability of broker-dealers to trade our securities.

We believe that the penny stock rules discourage investor interest in and limit the marketability of our common stock;

We believe that the penny stock rules discourage investor interest and limit the marketability of our common stock;

however, we have

the option to execute a reverse split which could mitigate this issue.

with changing regulation of corporate governance, public disclosure and financial accounting standards may result in additional expenses

with changing regulations of corporate governance, public disclosure and financial accounting standards may result in additional expenses

and affect our reported results of operations.

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affect our business, financial condition, future results and cash flow.

of our business model includes the acquisition of new companies either as new platform companies or complimentary companies.

of our business plan includes the acquisition of new companies either as new platform companies or complimentary companies.

to effectively integrate any future acquisition’s management into our controls, systems and procedures could materially adversely

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not be detected.

a result, we cannot assure you that additional significant deficiencies or material weaknesses in our internal control over financial

reporting will not be identified in the future or that we can effectively remediate our reported weaknesses.

Any failure to maintain

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There can be no assurance that we can secure all necessary

or appropriate insurance at an affordable price for the required limits.

or appropriate insurance at affordable prices for the required limits.

Our failure to obtain such insurance could lead to uninsured

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with our contractual obligations.

may in the future be involved in product liability and product warranty claims relating to the products we manufacture and distribute

that, if adversely determined, could adversely affect our financial condition, results of operations, and cash flows.

Product liability

claims can be expensive to defend and can divert the attention of management and other personnel for significant periods, regardless

of the ultimate outcome.

Claims of this nature could also have a negative impact on customer confidence in our products and our company.

While insurance can mitigate some of this risk, due to our current size and operating history, we have been unable to obtain product

liability insurance with significant coverage.

Our customers may not accept the terms we have been able to procure and seek to terminate

our existing contracts or cease to do business with us.

may in the future be involved in product liability and product warranty claims relating to the products we manufacture and

distribute that, if adversely determined, could adversely affect our financial condition, results of operations, and cash flows.

Product liability claims can be expensive to defend and can divert the attention of management and other personnel for significant

periods, regardless of the ultimate outcome.

Claims of this nature could also have a negative impact on customer confidence in our

products and our company.

While insurance can mitigate some of this risk, due to our current size and operating history, we have

been unable to obtain product liability insurance with significant coverage.

Our customers may no longer accept the terms we have

been able to procure and seek to terminate our existing contracts or cease to do business with us.

financial instruments could subject us to concentrations of credit risk.

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Our cash was deposited with a U.S.

bank and amounted to approximately $1,722,000 at December 31, 2021.

We did not have any

customers that represented 10% or greater of the accounts receivable at December 31, 2021.

Credit risk with respect to the balance of

trade receivables is generally diversified due to the number of entities comprising our customer base.

Although we do not believe there

is significant risk of non-performance by these counterparties, any failures or defaults on their part could negatively impact the value

of our financial instruments and could have a material adverse effect on our business, operations or financial condition.

bank and amounted to $1,450,000 at December 31, 2022.

We had one customer that represented

12% of the accounts receivable at December 31, 2022.

Credit risk with respect to the balance of trade receivables is generally diversified

due to the number of entities comprising our customer base.

Although we do not believe there is significant risk of non-performance by

these counterparties, any failures or defaults on their part could negatively impact the value of our financial instruments and could

have a material adverse effect on our business, operations or financial condition.

are dependent on information technology and our systems and infrastructure face certain risks, including from cybersecurity breaches

and data leakage.

rely extensively on information technology systems, networks and services, including internet sites, data hosting and processing facilities

and tools, physical security systems and other hardware, software and technical applications and platforms, some of which are managed,

hosted, provided and/or used for third-parties or their vendors, to assist in conducting our business.

A significant breakdown, invasion,

corruption, destruction or interruption of critical information technology systems or infrastructure, by our workforce, others with authorized

access to our systems or unauthorized persons could negatively impact operations.

The ever-increasing use and evolution of technology,

including cloud-based computing, creates opportunities for the unintentional dissemination or intentional destruction or modification

of confidential information stored in our, or our third-party providers’ systems, portable media or storage devices.

We could also

experience a business interruption, theft of confidential information or reputational damage from industrial espionage attacks, malware

or other cyber-attacks, which may compromise our system infrastructure or lead to data leakage, either internally or at our third-party

As the COVID-19 pandemic progressed, there was an increase in cybersecurity incidents across all industries, predominantly

ransomware and social engineering attacks.

Further, government entities have also been the subject of cyberattacks.

As the cyber-threat

landscape evolves, these attacks are growing in frequency, sophistication and intensity, and due to the nature of some of these attacks,

there is also a risk that they may remain undetected for a period of time.

We have invested in industry-appropriate protections and monitoring

practices of our data and IT to reduce these risks and continue to monitor our systems on an ongoing basis for any current or potential

While we have purchased cybersecurity insurance, there are no assurances that the coverage would be adequate in relation to

any incurred losses.

Moreover, as cyber-attacks increase in frequency and magnitude, we may be unable to obtain cybersecurity insurance

in amounts and on terms we view as appropriate for our operations.

There can be no assurance that our continuing efforts will prevent

breakdowns or breaches to our or our third-party providers’ databases or systems that could adversely affect our business.

COVID-19 pandemic could negatively affect various aspects of our business, including our workforce and supply chain, and make it more

difficult and expensive to meet our obligations to our customers, and could result in reduced demand from our customers.

outbreak of the COVID-19 pandemic has caused governments around the world to implement quarantines of certain geographic areas and implement

significant restrictions on travel.

Several governments have also implemented work restrictions that prohibit many employees from going

to work, both around the world as well as in certain jurisdictions in the United States.

At this time, it is unclear if foreign governments

federal, state or local governments will further extend any of the current restrictions or if further restrictions will be put

In addition, many countries, including the United States, have placed significant bans on international travel.

It is possible

that restrictions or bans on domestic travel may be implemented by U.S.

federal, state or local governments.

As a result of the pandemic,

businesses can be shut down, supply chains can be interrupted, slowed, or rendered inoperable, and individuals can become ill, quarantined,

or otherwise unable to work and/or travel due to health reasons or governmental restrictions.

mandates may require forced shutdowns of our facilities for extended or indefinite periods.

In addition, the pandemic could adversely

affect our workforce resulting in serious health issues and absenteeism.

The pandemic could also substantially interfere with general

commercial activity related to our supply chain and customer base, which could have a material adverse effect on our financial condition,

results of operations, business, or prospects.

Some of the electronic devices and hardware we purchase, like antennas, radios, and GPS

modules are very specific to our application;

a result of the COVID-19 pandemic, businesses can be shut down, supply chains can be interrupted, slowed, or rendered inoperable, and

individuals can become ill, quarantined, or otherwise unable to work and/or travel.

The full extent to which the COVID-19 pandemic

may affect our results of operations, financial condition and cash flows will depend on future developments that are highly uncertain.

pandemic could adversely affect our workforce resulting in serious health issues and absenteeism.

The pandemic could also substantially

interfere with general commercial activity related to our supply chain and customer base, which could have a material adverse effect

on our financial condition, results of operations, business, or prospects.

Some of the electronic devices and hardware we purchase, like

antennas, radios, and GPS modules are very specific to our application;

there are not likely to be practical alternatives.

In some cases, our circuit boards were

designed around specific electronic hardware that met our specifications.

We are working closely with our contract manufacturers and

suppliers in order to mitigate as much as possible the risks to our supply chain for these critical devices and hardware, including identifying

any lead-time issues and any potential alternate sources.

We are also examining all currently open purchase orders in an effort to identify

whether we need to issue additional orders to secure product that is critical, already has questionable lead times and/or is unique to

our requirements.

In some cases,

our circuit boards were designed around specific electronic hardware that met our specifications.

We are working closely with our contract

manufacturers and suppliers in order to mitigate as much as possible the risks to our supply chain for these critical devices and hardware,

including identifying any lead-time issues and any potential alternate sources.

We are also examining all currently open purchase orders

in an effort to identify whether we need to issue additional orders to secure product that is critical, already has questionable lead

times and/or is unique to our requirements.

to date, has been deemed an essential business;

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has had a history of incurring net losses since it was acquired by us and may never achieve sustained profitability.

OmniMetrix realized an operating profit of approximately $940,000 in 2021 and $580,000 in 2020, OmniMetrix has a history of incurring

operating losses since it was acquired by Acorn in 2012.

While OmniMetrix has significantly reduced its losses and its cash needs from

us and we expect positive cash flow from its operations in 2022, we can provide no assurance that OmniMetrix will be able to generate

sufficient revenues to allow it to sustain profitability and to have sustained positive cash flows.

OmniMetrix realized an operating profit of $330,000 in 2022 and $925,000 in 2021, OmniMetrix has a history of incurring operating losses

since it was acquired by Acorn in 2012.

While OmniMetrix has significantly reduced its losses and its cash needs from us and we expect

positive cash flow from its operations in 2023, we can provide no assurance that OmniMetrix will be able to generate sufficient revenues

to allow it to sustain profitability and to have sustained positive cash flows.

increase in customer terminations would negatively affect our business by reducing OmniMetrix’s revenue or requiring us to spend

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Therefore, if we are unsuccessful

in retaining customers or are required to spend significant amounts to acquire new customers, our revenue could decrease and our operating

in retaining customers or are required to spend significant amounts to acquire new customers, our revenue could decrease and/or our operating

results could be affected.

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As of December

31, 2021, OmniMetrix owes Acorn approximately $4,217,000 from such funding support which includes accrued dividends of $190,000, a loan

in the principal amount of $2,985,000 and accrued interest and other advances of approximately $1,042,000.

During 2021, the intercompany

amount due to Acorn from OmniMetrix decreased by approximately $359,000.

This included repayments of approximately $677,000 offset by

interest of approximately $194,000, dividends of $76,000 due to Acorn and approximately $48,000 in shared expenses paid by Acorn.

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

This included repayments of approximately

$435,000 offset by interest of approximately $253,000, dividends of $76,000 due to Acorn and approximately $176,000 in shared expenses

paid by Acorn.

31, 2022, OmniMetrix owes Acorn $3,677,000 from such funding support which includes accrued dividends of $266,000, a loan in the principal

amount of $2,985,000 and accrued interest and other advances of $426,000.

During 2022, the intercompany amount due to Acorn from OmniMetrix

decreased by $540,000.

This included repayments of $985,000 offset by interest of $179,000, dividends of $76,000 due to Acorn and $190,000

in shared expenses paid by Acorn.

During 2021, the intercompany amount due to Acorn from OmniMetrix decreased by $359,000.

This included

repayments of $677,000 offset by interest of $194,000, dividends of $76,000 due to Acorn and $48,000 in shared expenses paid by Acorn.

have no assurance that current cash balances plus cash flow from operations will provide sufficient liquidity for OmniMetrix’s

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If purchases of such

products decline, the associated need for OmniMetrix’s products and services is expected to decline as well.

products decline, the associated need for OmniMetrix’s products and services would be expected to decline as well.

OmniMetrix is unable to keep pace with changing market or customer-mandated product and service improvements, OmniMetrix’s results

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systems is an important component of its customer value proposition.

OmniMetrix utilizes off-site data servers, housed within a commercial

data center utilizing accepted data and power monitoring and protection processes, but whether a data loss can be avoided cannot be assured

in every case.

OmniMetrix utilizes Microsoft Azure cloud-hosted data servers

utilizing accepted data and power monitoring and protection processes, but whether a data loss can be avoided cannot be assured in

OmniMetrix’s information technology systems are vulnerable to damage or interruption from natural disasters, sabotage

(including theft and attacks by computer viruses or hackers), power outages, and computer systems, Internet, telecommunications or data

network failure.

Any interruption of OmniMetrix’s information technology systems could result in decreased revenue, increased expenses,

increased capital expenditures, customer dissatisfaction and potential lawsuits, any of which could have a material adverse effect on

its results of operations and financial condition.

(including theft and attacks by computer viruses or hackers), power outages, and computer systems, Internet, telecommunications or

data network failure.

Any interruption of OmniMetrix’s information technology systems could result in decreased revenue, increased

expenses, increased capital expenditures, customer dissatisfaction and potential lawsuits, any of which could have a material adverse

effect on its results of operations and financial condition.

RELATED TO OUR SECURITIES

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share price may decline due to the large number of shares of our common stock eligible for future sale in the public market including

shares underlying warrants and options.

all of our outstanding shares of common stock are, or could upon exercise of options or warrants become, eligible for sale in the public

shares underlying options.

all of our outstanding shares of common stock are, or could upon exercise of options become, eligible for sale in the public

market as described below.

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of March 14, 2023, 39,757,589 shares of our common stock were issued and outstanding.

As of that date we had 35,000 warrants outstanding

and exercisable with a weighted average exercise price of $0.13 per share and 573,492 options outstanding and exercisable with

a weighted average exercise price of $0.34 per share, which if exercised would result in the issuance of additional shares of

our common stock.

In addition to the options noted above, at March 28, 2022, there were 355,298 options outstanding that

have not yet vested and are not yet exercisable.

As of that date we had 835,251 options outstanding

and exercisable with a weighted average exercise price of $0.41 per share, which if exercised would result in the issuance of additional

shares of our common stock.

In addition to the options noted above, at March 14, 2023, there were 170,205 options outstanding that have

not yet vested and are not yet exercisable.

Substantially

all of our currently outstanding shares and shares issuable under our outstanding options and warrants are or would be freely tradable.

all of our currently outstanding shares and shares issuable under our outstanding options are or would be freely tradable.

may have to offer additional securities for sale in the near future.

of March 28, 2022, we had consolidated cash of approximately $1,825,000 which we believe is sufficient for at least

the next twelve months.

Despite this, we may ultimately not have sufficient cash to allow us to execute our plans, and the occurrence

of one or more unanticipated events may require us to make significant expenditures.

Accordingly, we may need to raise additional amounts

to finance our operations.

If we were to do so by selling shares of our common stock and/or other securities convertible into shares

of our common stock, current investors may incur dilution in the value of their shares.

of March 14, 2023, we had consolidated cash of $1,480,000 which we believe is sufficient for at least the next twelve months.

this, we may ultimately not have sufficient cash to allow us to execute our plans, and the occurrence of one or more unanticipated events

may require us to make significant expenditures.

Accordingly, we may need to raise additional amounts to finance our operations.

were to do so by selling shares of our common stock and/or other securities convertible into shares of our common stock, current investors

may incur dilution in the value of their shares.

UNRESOLVED STAFF COMMENTS

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 1A. Risk Factors