Item 7. Management’s Discussion and Analysis
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.”
All
dollar amounts in the discussion below are rounded to the nearest thousand and, thus, are approximate.
We
currently operate in two reportable operating segments, both of which are performed through our OmniMetrix subsidiary:
●
The
PG segment which provides wireless remote monitoring and control systems and IoT applications for residential and commercial/industrial
power generation equipment. This includes our AIRGuard product, which remotely monitors and controls industrial air compressors and
our Smart Annunciator product which is typically sold to commercial customers that require a visual representation of the generator’s
status and has a touch-screen display that indicates the current state of that generator; and
●
The
CP segment which provides remote monitoring and control products for cathodic protection systems on oil and 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. OmniMetrix also offers the industry’s first RAD TM (Remote AC Mitigation
Disconnect) that mounts onto existing Solid-state Decouplers in the field and can remotely disconnect/connect these AC mitigation
tools which can drastically reduce a company’s expense while increasing employee safety.
16
The
following analysis should be read together with the segment information provided in Notes 11 and 12 to our consolidated financial statements
included in this report.
OmniMetrix
Following
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. In addition, OmniMetrix
continues to see a 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. 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. OmniMetrix solutions monitor critical equipment used by cell towers, manufacturing plants, medical facilities, data
centers, retail stores, public transportation systems, energy distribution and federal, state and municipal government facilities, in
addition to residential back-up generators. 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 remains well-positioned as
a competitive participant in this market to continue to grow its customer base and expand its product offerings.
Intercompany
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 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. We believe that
OmniMetrix will not need working capital support in 2023. 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, 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 Acorn 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 or investments, will be available at the time and on terms acceptable to Acorn
and OmniMetrix cannot be determined at this time.
As
of March 14, 2023, Acorn’s corporate operations (excluding cash at our OmniMetrix subsidiary) held a total of $1,480,000 in cash.
Other
Matters
On
March 2, 2023, 35,000 warrants that were set to expire on March 16, 2023 were exercised at an exercise price of $0.13 per share by
our Chief Executive Officer.
On
February 27, 2023, 10,000 options in the aggregate were issued to the Director of Software Development and Technology with an exercise
price of $0.41 and that vested in equal increments over three years on the anniversary date of the grant, valued at $3,000 in the aggregate.
On
January 3, 2023, 30,000 options in the aggregate were issued to directors with an exercise price of $0.35 and that vested in equal increments
on January 1, 2023, April 1, 2023, July 1, 2023 and October 1, 2023, valued at $9,000 in the aggregate.
On
January 1, 2023, 35,000 options were issued to the CEO with an exercise price of $0.35 and that vest in equal increments on January 1,
2023, April 1, 2023, July 1, 2023 and October 1, 2023 valued at $9,000.
On
November 22, 2022, 10,000 vested options were exercised by a board member with an exercise price of $0.14 per share or $1,400 in the
aggregate. These options had an expiration date of January 1, 2023.
17
On
August 12, 2022, 25,000 vested options were exercised by the CEO with an exercise price of $0.20 per share or $5,000 in the aggregate.
These options had an expiration date of August 13, 2022.
On
March 4, 2022, 30,770 options were issued to the Vice President of Sales with an exercise price of $0.55 and that vest in equal increments
over three years on the anniversary date of the grant. These options are valued at $11,000.
On
June 1, 2022, 50,000 options were issued to the CFO with an exercise price of $0.44 and vesting in equal increments on June 1, 2022,
September 1, 2022, December 1, 2022 and March 1, 2023, valued at $16,000.
On
January 1, 2022, 30,000 options in the aggregate were issued to directors with an exercise price of $0.63 and that vested in equal increments
on January 1, 2022, April 1, 2022, July 1, 2022 and October 1, 2022, valued at $12,000 in the aggregate.
On
January 1, 2022, 35,000 options were issued to the CEO with an exercise price of $0.63 and that vested in equal increments on January
1, 2022, April 1, 2022, July 1, 2022 and October 1, 2022, valued at $14,000.
During
June 2022, we conducted an evaluation of the status of an ERP software customization project that had been initiated in July 2019 and
was ongoing. As a result of this evaluation, we elected to terminate this project effective June 30, 2022 and recorded an impairment
against the capitalized investment in this project of $51,000.
In
July 2022, we announced a partnership between OmniMetrix, CPower Energy Management (“ CPower ”), and Power Solutions
Specialists TX (“PSS”) designed to help homeowners that install next-generation standby generators to earn compensation for
offering grid relief, known as “demand response,” to the Electric Reliability Council of Texas (“ERCOT”). CPower’s
demand response solutions, combined with OmniMetrix’s remote control capabilities, allow the shifting of electricity production
to PSS’s best-in-class residential standby generators for a few hours each year when the grid is stressed or ERCOT energy pricing
is high, without the homeowner needing to take any action. Homeowners are compensated for signing up and possibly supplying grid offload
by running their generators for up to 12 hours per year. We do not expect this partnership to begin generating revenue until late 2023.
On
August 19, 2019, we entered into an agreement with a software development partner to create and license to us a new software platform
and application. Pursuant to this agreement, we paid this partner equal monthly payments over the first seven months of the term of the
agreement equal to $200,000 in the aggregate. We will also pay the partner (i) a per-sensor monitoring fee for each sensor connected
to the developed technology, or (ii) a percentage of any revenue received above a specified amount per sensor monitored per month, in
gas applications only. Commencing on January 1, 2021, we paid the partner a quarterly licensing fee of $12,500 which was renegotiated
to $4,450 effective October 1, 2021. The per-sensor monitoring fees have not yet commenced. The initial term of this agreement ended
on August 19, 2022 and would have automatically renewed for an additional year, but we delivered a written notice of termination to the
other party sixty days prior to the end of the initial term. We are currently on a month-to-month arrangement paying a monthly licensing
fee of $1,500, and are working with the software development partner to negotiate more favorable terms for future periods.
We
entered into a new agreement effective May 1, 2020 for data hosting services, replacing an expiring agreement with the same vendor. The
agreement had a twelve-month term. In January 2021, we elected to renew this agreement for an additional twelve months under the same
terms, extending the agreement to April 30, 2022. We did not extend this agreement for an additional one-year term beyond the expiration
of the previous term on April 30, 2022 and were under a month-to-month arrangement which we terminated effective September 30, 2022.
Under the applicable data hosting services agreements, we paid $110,000 and $158,000 in the years ended December 31, 2022 and 2021, respectively.
On
March 17, 2021, we entered into a master services agreement for the development of a new user interface for our customer data portal.
The cost of this project is $126,000 in design and development services ($14,000 was paid at the commencement of this project and three
equal installments of $23,000 were paid monthly starting in July 2021 with the fourth and final installment to be paid upon completion
and launch of the new interface). This project is substantially completed and the launch of the new customer portal is expected to occur
in the first half of 2023. We expect to incur additional costs to execute the launch plan for the interface and to develop the corresponding
mobile application. The cost of the design project is capitalized, and amortization will begin once the new interface is completed and
ready to deploy.
18
The
master services agreement also covers the design, set-up and deployment of a new Microsoft Azure cloud infrastructure to host our OmniView
data servers, which replaced our previous Peak 10 datacenter hosting environment. The new infrastructure provides a more modern, agile
and cost-effective environment in which to grow our IoT connections and services. We invested $272,000 in this initiative during the
year ended December 31, 2022 and $166,000 during the year ended December 31, 2021. The new Microsoft Azure cloud infrastructure environment
was completed and launched on May 1, 2022. The cost of this project was capitalized, and amortization over an estimated useful life of
seven years began on May 1, 2022.
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 disclosures. 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: revenue recognition and stock-based compensation.
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.
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.
19
For
our Acorn options, the expected volatility factor used to value stock options in 2022 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, 2022 and 2021, we incurred stock compensation expense with respect to options of $80,000 and $75,000, respectively.
See
Note 8 to the consolidated financial statements for the assumptions used to calculate the fair value of share-based employee compensation
for Acorn options.
RESULTS
OF OPERATIONS
The
selected consolidated statement of operations data for the years ended December 31, 2022 and 2021 and consolidated balance sheet data
as of December 31, 2022 and 2021 has been derived from our audited consolidated financial statements included in this Annual Report.
This
data should be read in conjunction with our consolidated financial statements and related notes included herein.
Selected
Consolidated Statement of Operations Data:
For
the Years Ended December 31,
2022
2021
(in
thousands, except per share data)
Revenue
$
7,000
$
6,776
Cost
of sales
1,929
1,877
Gross
profit
5,071
4,899
Research
and development expenses
845
739
Selling,
general and administrative expenses
4,804
4,168
Impairment
of software
51
—
Operating
loss
(629
)
(8
)
Finance
expense, net
(2
)
(5
)
Loss
before income taxes
(631
)
(13
)
Income
tax expense
—
—
Net
loss after income taxes
(631
)
(13
)
Non-controlling
interest share of loss
(2
)
(8
)
Net
loss attributable to Acorn Energy, Inc. stockholders
$
(633
)
$
(21
)
Basic
and diluted net loss per share attributable to Acorn Energy, Inc. stockholders:
Net
loss per share attributable to Acorn Energy, Inc. stockholders – basic and diluted
$
(0.02
)
$
(0.00
)
Weighted
average number of shares outstanding attributable to Acorn Energy, Inc. stockholders – basic
39,698
39,688
Weighted
average number of shares outstanding attributable to Acorn Energy, Inc. stockholders – diluted
39,698
39,688
20
The
following table sets forth certain information with respect to revenues and profits of our reportable business segments for the years
ended December 31, 2022 and 2021 (dollars in thousands), including the percentages of revenues attributable to such segments. (See Note
11 to our consolidated financial statements for the definitions of our reporting segments).
PG
CP
Total
Year ended December 31, 2022:
Revenues from customers
$ 5,894
$ 1,106
$ 7,000
Percentage of total revenues from customers
84 %
16 %
100 %
Segment gross profit
4,426
645
5,071
Year ended December 31, 2021:
Revenues from customers
$ 5,787
$ 989
$ 6,776
Percentage of total revenues from customers
85 %
15 %
100 %
Segment gross profit
4,328
571
4,899
2022
COMPARED TO 2021
Revenue.
In 2022, OmniMetrix recorded total revenue of $7,000,000, as compared to total revenue of $6,776,000 in 2021, for an increase of
$224,000 (3%). As previously stated, OmniMetrix has two divisions: PG and CP. The PG segment includes our monitoring device for generators,
industrial air compressors and our annunciator products. The CP segment includes our monitoring device for cathodic protection systems
on gas pipelines serving the gas utilities market and pipeline operators. In 2022, revenue of $5,894,000 was attributed to the PG segment
and revenue of $1,106,000 was attributed to the CP segment, as compared to the 2021 revenue of $5,787,000 that was attributed to the
PG segment and $989,000 that was attributed to the CP segment. Increased revenue in PG was due to an increase in hardware revenue. During
the year ended December 31, 2021, we recorded $112,000 in revenue from the sale of custom TG Pro units that were designed to large customer
specifications and monitored by the customer; thus, the revenue was not deferred. We did not have any custom unit orders in the year
ended December 31, 2022. The PG hardware revenue during the year ended December 31, 2021, excluding the revenue from the sale of the
custom units, was $1,906,000 compared to $2,234,000 during the year ended December 31, 2022; thus, the increase in PG hardware revenue
excluding the custom units was 17%. We also had an increase in CP hardware revenue of $126,000 (17%) from $728,000 during the year ended
December 31, 2021 to $854,000 during the year ended December 31, 2022. The overall increase in hardware revenue was due to a higher percentage
of commercial and industrial (C&I) customers in our customer mix for which the products have a higher price point versus residential
(RESI) customers. With respect to the specific products, this increase was attributed to Hero-2 and TG Pro revenue and to a lesser extent
TG-2 revenue in addition to engineering service income realized, offset by a decrease in revenue from the Hero-1, Patriot and TG-1 products.
Monitoring revenue decreased $118,000 (3%) from $4,030,000 during the year ended December 31, 2021 to $3,912,000 during the year ended
December 31, 2022. The decrease in monitoring revenue was due to the impact of the connections for which monitoring was discontinued
as a result of sunsetting 3G technology in addition to certain monitoring rebates applied for two of our larger customers, one in CP
and one in PG.
Gross
profit . Gross profit was $5,071,000, reflecting a gross margin of 72% on revenue, in 2022 compared with a gross profit of $4,899,000,
also reflecting a 72% gross margin on revenue, in 2021. Gross margin on hardware revenue for the year ended December 31, 2022 was 48%
compared to 44% for the year ended December 31, 2021. Gross margin on monitoring revenue was 92% for the year ended December 31, 2022
compared to 91% for year ended December 31, 2021.
Research
and development (“R&D”) expense. During 2022, OmniMetrix recorded $845,000 of R&D expense as compared to $739,000
in 2021, an increase of $106,000 (14%). The increase in R&D expense in 2022 is related to increases in wages and bonuses paid to
our engineering personnel in 2022 and the expenses and materials paid to third-party consultants in 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 for 2023 due to
engineering salary increases granted effective October 1, 2022 and for continued investment in work on certain initiatives to redesign
products and expand product lines to increase our level of innovation ahead of our competitors.
21
Selling,
general and administrative (“SG&A”) expense. Consolidated SG&A expense in 2022 increased by $636,000 (15%), from
$4,168,000 in 2021 to $4,804,000 in 2022. Corporate overhead increased by $26,000, from $933,000 in 2021 to $959,000 in 2022, due to
increases in audit fees and investor relations expenses offset by a decrease in tax professional fees. OmniMetrix’s SG&A expense
increased $610,000 (19%), from $3,235,000 in 2021 to $3,845,000 in 2022. This increase was primarily due to increases of (i) $248,000
in personnel expenses related to bonuses, promotional wage increases, staff additions and stock compensation expense, (ii) $212,000 in
technology expenses related to technology consulting, amortization of technology investments and increased managed services expenses,
(iii) $55,000 in sales commissions, (iv) $53,000 in travel related expenses, and (v) $45,000 increase in depreciation related to additional
office equipment and computers purchased in 2021 and 2022 and a net decrease of $3,000 in other expense accounts. We anticipate that
our annual SG&A costs in 2023 will increase by approximately 15% due to increasing wage and benefit expenses and due to our continuing
investments in technology and operations.
During
June 2022, we conducted an evaluation of the status of an ERP software customization project that had been initiated in July 2019 and
was ongoing. As a result of this evaluation, we elected to terminate this project effective June 30, 2022 and recorded an impairment
against the capitalized investment in this project of $51,000.
Finance
expense, net. Finance expense in 2022 was $2,000, compared to $5,000 in 2021, primarily related to insurance financing arrangements.
Net
loss attributable to Acorn Energy. We had a net loss attributable to Acorn of $633,000 in 2022 as compared to net loss attributable
to Acorn of $21,000 in 2021. Our loss in 2022 is comprised of net income at OmniMetrix of $331,000, corporate expense of $962,000, offset
by $2,000 representing the non-controlling interest share of our income in OmniMetrix. Our loss in 2021 is comprised of net income at
OmniMetrix of $921,000, corporate expense of $934,000, offset by $8,000 representing the non-controlling interest share of our income
in OmniMetrix.
LIQUIDITY
AND CAPITAL RESOURCES
At
December 31, 2022, we had a negative working capital of $561,000. Our working capital includes $1,450,000 of cash and deferred
revenue of $3,984,000. Such deferred revenue does not require a significant cash outlay for the revenue to be recognized. Total
deferred revenue increased by $778,000, from $5,393,000 at December 31, 2021 to $6,171,000 at December 31, 2022,
as a result of the increase in cash sales which we amortize over a three-year period in accordance with GAAP. Net cash decreased
during the year ended December 31, 2022 by $272,000, of which $31,000 was provided by operating activities, $308,000 was used in
investing activities, and $5,000 was provided by financing activities.
During
the year ended December 31, 2022, our operating activities provided $31,000 of net cash. Our OmniMetrix subsidiary provided $916,000
from its operations while our corporate headquarters used $885,000 in its operating activities during the period. OmniMetrix’s
inventory balance increased by $172,000 at December 31, 2022 as compared to December 31, 2021, due to our continuing efforts to mitigate
the supply chain challenges and have adequate safety stock on hand. During the year ended December 31, 2021, our operating activities
provided $132,000. Our OmniMetrix subsidiary provided $1,035,000 from its operations while our corporate headquarters used $903,000 in
its operating activities during the same period.
During
the year ended December 31, 2022, net cash of $308,000 was used in investing activities, primarily in our technology infrastructure.
These investments were primarily related to the design of our new Azure cloud server environment, as well as investments in the development
of our new user interface for our PG customers and hardware and software upgrades. Net cash of $324,000 was used in investing activities
in 2021 which was also related to the technology investments in which we continued to invest in 2022.
22
Net
cash of $5,000 was provided by financing activities during the year ended December 31, 2022 which represents proceeds from the exercise
of stock options.
Net
cash of $149,000 was used by financing activities during the year ended December 31, 2021 as repayments on our line of credit. 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 Acorn 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 or investments, will be
available at the time and on terms acceptable to Acorn and OmniMetrix cannot be determined at this time.
Other
Liquidity Matters
OmniMetrix
owes Acorn $3,677,000 for loans, accrued interest and expenses advanced to it by Acorn. OmniMetrix has made monthly payments to Acorn
of varying amounts since the second quarter of 2019. In 2022, OmniMetrix made payments to Acorn 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. OmniMetrix will continue to make payments to Acorn against
this balance as long as OmniMetrix is generating sufficient cash to allow such repayments. This intercompany balance is eliminated in
consolidation.
We
had $1,450,000 of cash on December 31, 2022, and $1,480,000 on March 14, 2023. We believe that such cash, plus the cash expected to
be generated from operations, will provide sufficient liquidity to finance the operating activities of Acorn and OmniMetrix at their
current level of operations for the twelve months from the issuance of these consolidated financial statements
in particular. We may, at some point, elect to obtain a new line of credit or other source of financing to fund additional investments
in the business.
Contractual
Obligations and Commitments
The
table below provides information concerning obligations under certain categories of our contractual obligations as of December 31, 2022.
CASH
PAYMENTS DUE TO CONTRACTUAL OBLIGATIONS
Years Ending December 31,
(in thousands)
Total
2023
2024-2025
2026-2027
Software agreements
$ 32
$ 30
$ 2
$ —
Operating leases*
357
128
229
—
Contractual services
35
34
1
—
Purchase obligations**
255
255
—
—
Total contractual cash obligations
$ 679
$ 447
$ 232
$ —
*Reflects
the gross amount of the operating lease liabilities. Does not include rent amounts to be received under the sublease.
**Reflects
open purchase orders for components/parts to be delivered over the next twelve months as sales forecast requires.
23