What changed in this filing

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Item 9A. Controls and Procedures

2024-03-07 compared with 2023-03-16 · 745 added, 620 removed, 886 unchanged (61% of the section changed)

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when and where necessary.

As a result, a majority of the significant process areas management identified for the Company’s OmniMetrix

subsidiary had one or more material weaknesses present.

This condition was further exacerbated as the Company could not demonstrate that

each of the principles described within COSO’s document “Internal Control - Integrated Framework (2013)” were present

and functioning.

material weakness is defined as a deficiency, or a combination of deficiencies in internal control over financial reporting, such that

there is a reasonable possibility that a material misstatement of the Company’s annual or interim consolidated financial statements

will not be prevented or detected on a timely basis.

The material weakness identified, however, did not result in any material misstatements

of the Company’s consolidated financial statements and disclosures for any interim periods during, or for, the annual period ended

December 31, 2022.

intends to focus on strengthening the Company’s internal controls.

Management expects to make progress towards reducing the risk

that the material weakness could result in a material misstatement of the Company’s annual or interim consolidated financial statements.

As business conditions allow and resources permit, management will continue to systematically build the necessary capabilities and infrastructure

to implement corrective action.

More specifically, there were weaknesses identified in our internal control over financial reporting related

to ineffective design and implementation of information technology general controls (“ITGCs”) in the areas of user access,

program change management and vendor management controls.

a result, a majority of the significant process areas management identified for the Company’s OmniMetrix subsidiary had three material weaknesses present.

This condition was further exacerbated as the Company could not demonstrate that each of the principles

described within COSO’s document “Internal Control - Integrated Framework (2013)” were present and functioning.

material weakness is defined as a deficiency, or a combination of deficiencies in internal control over financial reporting, such

that there is a reasonable possibility that a material misstatement of the Company’s annual or interim consolidated financial

statements will not be prevented or detected on a timely basis.

The material weaknesses identified and the related risks are not

uncommon in a company of our size because of the limitations in the location, size and number of our staff.

The material weaknesses

identified, however, did not result in any material misstatements of the Company’s consolidated financial statements and

disclosures for any interim periods during, or for, the annual period ended December 31, 2023.

intends to continue to focus on strengthening the Company’s internal controls.

Management expects to make progress towards reducing

the risk that the material weakness could result in a material misstatement of the Company’s annual or interim consolidated financial

As business conditions allow and resources permit, management will continue to systematically build the necessary capabilities

and infrastructure to implement corrective action.

Our remediation actions include but are not limited to implementing change controls

to document approval of changes along with required peer review and tagging of changes to an approved help desk ticket, requesting SOC

reports from our vendors on a set schedule to review and address prior to year-end, and continue focused review of the COSO Framework

to identify areas where we can implement manual controls or multi-level reviews of additional staff members to more effectively address

segregation of duties.

in Internal Control Over Financial Reporting

There were no changes in our internal control over financial reporting

during our fourth quarter ended December 31, 2022, that could significantly affect, that materially

affected, or are reasonably likely to materially affect, our internal control over financial reporting.

than the material weaknesses and remediation actions noted above there were no material changes in our internal control over financial

reporting during our fourth quarter ended December 31, 2023, that could significantly affect, that materially affected, or are reasonably

likely to materially affect, our internal control over financial reporting.

OTHER INFORMATION

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long history of successful entrepreneurial pursuits, corporate leadership and oversight.

Rabover was appointed to the Board in March 2023.

He has been an active buyside investor for over 20 years, and is currently the

Managing Director of Artko Capital LP, a partnership focused on microcap investments, which is a role he has held since he founded the

partnership in 2015.

In such capacity, Mr.

Rabover has advised on a wide range of corporate finance activities for dozens of companies.

Prior to founding Artko Capital, he worked for Scharf Investments from 2012 to 2014, and Hahn Capital Management from 2005 to 2011 in

an analyst capacity.

He served in the United States Peace Corps in Kazakhstan from 2003 to 2005 as an Economic Development Volunteer.

Rabover started his career as an auditor for United States Steel Corporation from 2001 to 2003.

He holds an undergraduate degree

from Duquesne University, a Master of Business Administration from the University of Virginia’s Darden School of Business and is

a CFA Charterholder.

Attributes, Experience and Skills.

Rabover brings a wide range of corporate finance, audit and capital allocation acumen and

experience as well as a unique shareholder perspective gained through a long career of managing outside capital and finding successful

Zentman has been one of our directors since November 2004 and currently serves as Chairman of our Audit Committee and as a member

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work on the audit team of Deloitte & Touche (Miami).

Ms Clifford has served as a board member of Novelstem International Corp since

Clifford has served as a board member of NovelStem International Corp since

Clifford obtained a Bachelor of Science Degree in Accounting from the College of Charleston and a Master’s Degree

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forms or written representations from certain reporting persons, we believe that during 2023 our executive officers and directors complied

with the filing requirements of Section 16(a) other than Jan H.

Loeb, who filed a late Form 4 on January 3, 2023 to report purchases

made on December 1, 2022, December 27, 2022 and December 28, 2022.

with the filing requirements of Section 16(a).

have adopted a Code of Business Conduct and Ethics that applies to all our directors, officers and employees.

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designed to comply with the NASDAQ marketplace rules related to codes of conduct.

code of ethics may be accessed on the Internet under “Investor Relations” on our website at www.acornenergy.com.

code of ethics may be accessed under “Investor Relations” on our website at www.acornenergy.com.

We also intend

to satisfy any disclosure requirement under Item 5.05 of Form 8-K regarding an amendment to, or waiver from, a provision of our code

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Compensation Table

and Principal Position

and CEO of the Company and Acting CEO of OmniMetrix (1)

of the Company and COO of OmniMetrix (2)

Name and Principal Position

Option Awards

President and CEO of the Company and Acting CEO of OmniMetrix (1)

CFO of the Company and COO of OmniMetrix (2)

Loeb began serving as President and CEO of the Company on January 28, 2016 and as Acting CEO of OmniMetrix on December 1, 2019.

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the grant date fair value calculated in accordance with applicable accounting principles with respect to 2,187 options granted on

February 2, 2021 with an exercise price of $0.48.

The fair value of the options was determined using the Black-Scholes option pricing

model using the following assumptions:

(i) a risk-free interest rate of 0.26% (ii) an expected term of 3.61 years (iii) an assumed

volatility of 102% and (iv) no dividends.

January 1, 2023 with an exercise price of $5.60 (as adjusted in connection with the September 2023 1-for-16 reverse stock split).

The fair value of the options was determined using the Black-Scholes option pricing model using the following assumptions:

risk-free interest rate of 4.0% (ii) an expected term of 5.19 years (iii) an assumed volatility of 94.3% and (iv) no dividends.

the grant date fair value calculated in accordance with applicable accounting principles with respect to 2,187 options granted on

January 1, 2022 with an exercise price of $0.63.

The fair value of the options was determined using the Black-Scholes option pricing

model using the following assumptions:

(i) a risk-free interest rate of 1.07% (ii) an expected term of 3.69 years (iii) an assumed

volatility of 94% and (iv) no dividends.

the grant date fair value calculated in accordance with applicable accounting principles with respect to 100,000 options granted

on May 10, 2021 with an exercise price of $0.62.

The fair value of the options was determined using the Black-Scholes option pricing

model using the following assumptions:

(i) a risk-free interest rate of 0.6% (ii) an expected term of 4.0 years (iii) an assumed

volatility of 100% and (iv) no dividends.

January 1, 2022 with an exercise price of $10.08 (as adjusted in connection with the September 2023 1-for-16 reverse stock split).

The fair value of the options was determined using the Black-Scholes option pricing model using the following assumptions:

risk-free interest rate of 1.1% (ii) an expected term of 3.69 years (iii) an assumed volatility of 94.0% and (iv) no dividends.

the grant date fair value calculated in accordance with applicable accounting principles with respect to 6,250 options granted on

June 1, 2022 with an exercise price of $0.44.

The fair value of the options was determined using the Black-Scholes option pricing

model using the following assumptions:

(i) a risk-free interest rate of 2.9% (ii) an expected term of 3.69 years (iii) an assumed

volatility of 93% and (iv) no dividends.

June 1, 2023 with an exercise price of $4.96 (as adjusted in connection with the September 2023 1-for-16 reverse stock split).

fair value of the options was determined using the Black-Scholes option pricing model using the following assumptions:

(i) a risk-free

interest rate of 3.9% (ii) an expected term of 3.7 years (iii) an assumed volatility of 93.8% and (iv) no dividends.

the grant date fair value calculated in accordance with applicable accounting principles with respect to 3,125 options granted on

June 1, 2022 with an exercise price of $7.04 (as adjusted in connection with the September 2023 1-for-16 reverse stock split).

fair value of the options was determined using the Black-Scholes option pricing model using the following assumptions:

(i) a risk-free

interest rate of 2.9% (ii) an expected term of 3.69 years (iii) an assumed volatility of 93.0% and (iv) no dividends.

Compensation for 2023 and 2022

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2023, to purchase 2,187 shares of the Company’s common stock, which are exercisable at an exercise price equal to the December

31, 2021, closing price of the common stock of $0.63 per share.

30, 2022, closing price of the common stock of $5.60 per share (as adjusted in connection with the September 2023 1-for-16 reverse stock

Twenty-five percent (25%) of the options were vested immediately;

remaining options vested in three equal increments on April 1, 2022, July 1, 2022 and October 1, 2022.

The exercise period and other

terms are otherwise substantially the same as the terms of the options granted by the Company to its outside directors.

2022 Consulting Agreement expired on December 31, 2022;

the remaining options vested in three equal increments on April

1, 2023, July 1, 2023 and October 1, 2023.

The exercise period and other terms are otherwise substantially the same as the terms of the

options granted by the Company to its outside directors.

The 2023 Consulting Agreement expired on December 31, 2023;

the Company and Mr.

Loeb have entered into a new Consulting Agreement for 2023

as described below.

February 2, 2021, the Company entered into a new consulting agreement (the “2021 Consulting Agreement”) with Mr.

Loeb, extending

its arrangements for compensation of Mr.

Loeb for his services as President and CEO of the Company and as principle executive officer

of the Company’s OmniMetrix subsidiary in the capacity of Acting CEO.

Loeb have entered into a new consulting

agreement for 2024 as described below under Employment Arrangements .

January 1, 2022, the Company entered into a new consulting agreement (the “2022 Consulting Agreement”) with Jan H.

extending its arrangements for compensation of Mr.

Loeb for his services as President and CEO of the Company and as principle executive

officer of the Company’s OmniMetrix subsidiary in the capacity of Acting CEO.

to the 2022 Consulting Agreement, Mr.

Loeb received cash compensation, effective retroactively as of January 1, 2021, of $16,000 per

month for service as President and CEO of the Company, and an additional $10,000 per month for service as Acting CEO of OmniMetrix.

Loeb also received a grant of options on February 2, 2021, to purchase 35,000 shares of the Company’s common stock, which are exercisable

at an exercise price equal to the February 1, 2021, closing price of the common stock of $0.48 per share.

Twenty-five percent (25%) of

the options were vested immediately;

the remaining options vested in three equal increments on April 1, 2021, July 1, 2021 and October

The exercise period and other terms are otherwise substantially the same as the terms of the options granted by the Company

to its outside directors.

On June 1, 2018, Tracy S.

Loeb received cash compensation of $16,000 per month for service as President and CEO of the Company,

and an additional $10,000 per month for service as Acting CEO of OmniMetrix.

Loeb also received a grant of options on January 1,

2022, to purchase 2,187 shares of the Company’s common stock, which are exercisable at an exercise price equal to the December

31, 2021, closing price of the common stock of $10.08 per share (as adjusted in connection with the September 2023 1-for-16 reverse stock

Twenty-five percent (25%) of the options were vested immediately;

the remaining options vested in three equal increments on April

1, 2022, July 1, 2022 and October 1, 2022.

The exercise period and other terms are otherwise substantially the same as the terms of the

options granted by the Company to its outside directors.

2022 Consulting Agreement expired on December 31, 2022;

the Company and Mr.

Loeb entered into a new Consulting Agreement for 2023 as

described above.

On June 1, 2023, the Company entered into an Amended and Restated Consulting Agreement with Ms.

Clifford (the

“2023 Clifford Consulting Agreement”).

The 2023 Clifford Consulting Agreement amended, restated and replaced in its

entirety the 2022 Clifford Consulting Agreement (described below).

The 2023 Clifford Consulting Agreement began on June 1, 2023, had

a one-year term, and was to automatically renew for an additional year upon the expiration of each one-year term unless earlier

terminated as provided therein.

Pursuant to the 2023 Clifford Consulting Agreement, Ms.

Clifford received cash compensation of

$17,500 per month, as well as a grant of options on June 1, 2023, to purchase 6,250 shares of our common stock, which are

exercisable at an exercise price per share equal to the May 31, 2023, closing price of the common stock of $4.96 per share (as

adjusted in connection with the September 2023 1-for-16 reverse stock split).

Twenty-five percent (25%) of the options were vested

the remaining options vested in three equal increments on September 1, 2023, December 1, 2023 and March 1, 2024.

January 2, 2024, the Company entered into a new consulting agreement with Tracy Clifford Consulting, LLC, that

amends, restates and replaces in its entirety the 2023 Clifford Consulting Agreement,

as described below under Employment

Arrangements .

June 1, 2018, Tracy S.

Clifford was appointed CFO of the Company.

Concurrent with the appointment of Ms.

as CFO, the Company entered into a consulting arrangement for the provision of her services.

She received cash compensation from January

1, 2021 through May 31, 2021, of $16,500 per month, and, effective June 1, 2021, $17,500 per month.

On June 1, 2022, the Company entered

into an Amended and Restated Consulting Agreement (the “New Consulting Agreement”) for the provision of Ms.

services as both CFO of Acorn and COO of OmniMetrix.

The New Consulting Agreement amends, restates and replaces in its entirety the Consulting

Agreement dated as of June 1, 2018.

The New Consulting Agreement began on June 1, 2022, has a one-year term, and automatically renews

for an additional year upon the expiration of each one-year term unless earlier terminated as provided therein.

Pursuant to the New Consulting

Agreement, Ms.

Clifford receives cash compensation of $17,500 per month, and received a grant on June 1, 2022 of options to purchase

50,000 shares of our common stock, with an exercise price of $0.44 per share, which was the closing price of the common stock on May

Clifford as CFO, the Company

entered into a consulting arrangement for the provision of her services.

She received cash compensation from June 1, 2021 through May

31, 2022, of $17,500 per month.

On June 1, 2022, the Company entered into an Amended and Restated Consulting Agreement (the “2022

Clifford Consulting Agreement”) for the provision of Ms.

Clifford’s services as both CFO of Acorn and COO of OmniMetrix.

The 2022 Clifford Consulting Agreement amended, restated and replaced in its entirety the Consulting Agreement dated as of June 1, 2018.

The 2022 Clifford Consulting Agreement began on June 1, 2022, had a one-year term, and was to automatically renew for an additional year

upon the expiration of each one-year term unless earlier terminated as provided therein.

Pursuant to the 2022 Clifford Consulting Agreement,

Clifford received cash compensation of $17,500 per month, and received a grant on June 1, 2022 of options to purchase 3,125 shares

of our common stock, with an exercise price of $7.04 per share, which was the closing price of the common stock on May 31, 2022 (as adjusted

in connection with the September 2023 1-for-16 reverse stock split).

Twenty-five percent (25%) of the options were vested immediately;

the remaining options vested in three equal increments on

September 1, 2022, December 1, 2022 and March 1, 2023, and shall expire upon the earlier of (a) seven years from the date of the grant

or (b) 18 months from the date Ms.

Clifford ceases to be a consultant to the Company.

received a grant on May 10, 2021 of options to purchase 100,000 shares of our common stock, with an exercise price of $0.62 per share,

which was the closing price of the common stock on May 9, 2021.

The options vested and became exercisable on the first anniversary of

the date of the grant and shall expire upon the earlier of (a) seven years from the date of the grant or (b) 18 months from the date

Clifford ceases to be a consultant to the Company.

the remaining options vested in three equal increments on September 1, 2022, December 1, 2022 and March 1, 2023, and shall expire upon

the earlier of (a) seven years from the date of the grant or (b) 18 months from the date Ms.

Clifford ceases to be a consultant to the

input on executive compensation .

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directly to our independent directors by emailing samzentman@yahoo.com to express their views on executive compensation matters.

employment arrangements of each named executive officer and certain other officers are described below.

From time to time, the Company

has made discretionary awards of management options as reflected in the table above.

On January 1, 2023, the Company entered into a new consulting agreement (the “2023 Consulting Agreement”)

Loeb, extending its arrangements for compensation of Mr.

Loeb for his services as President and CEO of the Company and as

principle executive officer of the Company’s OmniMetrix subsidiary in the capacity of Acting CEO.

to the 2023 Consulting Agreement, Mr.

Loeb will continue to receive cash compensation of $16,000 per month for service as President and

CEO of the Company, and an additional $10,000 per month for so long as he serves as Acting CEO of OmniMetrix.

Loeb also received

a grant of options on January 1, 2023, to purchase 35,000 shares of the Company’s common stock, which are exercisable at an exercise

price equal to the December 30, 2022, closing price of the common stock of $0.35 per share.

Twenty-five percent (25%) of the options

were vested immediately;

the remaining options shall vest in three equal increments on April 1, 2023, July 1, 2023 and October 1, 2023.

The exercise period and other terms are otherwise substantially the same as the terms of the options granted by the Company to its outside

Clifford On June 1, 2022, the Company entered into an Amended and Restated Consulting Agreement (the “New Consulting

employment arrangements of each named executive officer are described below.

January 2, 2024, the Company entered into a new consulting agreement (the “2024 Loeb Consulting Agreement”) extending its

arrangements for compensation of Mr.

Pursuant to the 2024 Loeb Consulting Agreement, Mr.

Loeb will receive cash compensation of

$16,780 per month for service as President and CEO of Acorn, and an additional $10,000 per month for so long as he serves as Acting CEO

of OmniMetrix.

Loeb also received a grant of options on January 2, 2024 to purchase 2,200 shares of the Company’s common stock,

which are exercisable at an exercise price equal to the December 29, 2023, closing price of the common stock of $6.09 per share.

percent (25%) of the options were vested immediately;

the remaining options shall vest in three equal increments on April 1, 2024, July

1, 2024 and October 1, 2024.

The exercise period and other terms are otherwise substantially the same as the terms of the options granted

by the Company to its outside directors.

The 2024 Loeb Consulting Agreement expires on December 31, 2024, unless terminated early as

provided therein.

January 2, 2024, the Company entered into an Amended and Restated Consulting Agreement with Ms.

Clifford (the “2024 Clifford Consulting

Agreement”) for the provision of Ms.

Clifford’s services as both CFO of Acorn and COO of OmniMetrix.

The New Consulting Agreement

amends, restates and replaces in its entirety her original Consulting Agreement dated as of June 1, 2018.

The New Consulting Agreement

began on June 1, 2022, has a one-year term, and automatically renews for an additional year upon the expiration of each one-year term

services as both CFO of Acorn and COO of OmniMetrix .

The 2024 Clifford Consulting Agreement amends,

restates and replaces in its entirety the 2023 Clifford Consulting Agreement.

The 2024 Clifford Consulting Agreement has an effective

date of January 1, 2024, has a one-year term, and automatically renews for an additional year upon the expiration of each one-year term

unless earlier terminated as provided therein.

Pursuant to the New Consulting Agreement, Ms.

Clifford receives cash compensation of $17,500

per month, and received a grant on June 1, 2022 of options to purchase 50,000 shares of our common stock, with an exercise price of $0.44

per share, which was the closing price of the common stock on May 31, 2022.

Pursuant to the 2024 Clifford Consulting Agreement, Ms.

Clifford receives cash compensation

of $18,025 per month.

In the event of termination other than for cause, Ms.

Clifford shall be entitled to a continuation, for a period

of six months following the date of such termination, of the monthly cash compensation in effect at the time of such termination.

to the terms of the 2024 Clifford Consulting Agreement, Ms.

Clifford also received a grant of options on January 2, 2024, to purchase

2,200 shares of the Company’s common stock, which are exercisable at an exercise price equal to the December 29, 2023, closing

price of the common stock of $6.09 per share.

Twenty-five percent (25%) of the options were vested immediately;

the remaining options vested in three equal increments on September 1, 2022, December 1, 2022 and March 1, 2023, and shall expire upon

the earlier of (a) seven years from the date of the grant or (b) 18 months from the date Ms.

Clifford ceases to be a consultant to the

the remaining options

shall vest in three equal increments on April 1, 2024, July 1, 2024 and October 1, 2024.

On each subsequent anniversary of January 1,

2024, so long as the 2024 Clifford Consulting Agreement has not been terminated, the Company will grant Ms.

Clifford 2,200 stock options

exercisable at an exercise price equal to the then-current stock price.

Twenty-five percent (25%) of the options will be vested immediately

as of the date of grant;

the remaining options will vest in three equal increments on April 1, July 1 and October 1 during the first

nine months following the date of grant.

The exercise period and other terms are otherwise substantially the same as the terms of the

options granted by the Company to its outside directors.

Equity Awards at 2023 Fiscal Year End

following tables set forth all outstanding equity awards made to each of the Named Executive Officers that were outstanding at December

TO PURCHASE ACORN ENERGY, INC.

Unexercisable

Expiration Date

following table sets forth all outstanding equity awards (as adjusted in connection with the September 2023 1-for-16 reverse stock split)

made to each of the Named Executive Officers that were outstanding at December 31, 2023.

TO PURCHASE ACORN ENERGY, INC.

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Expiration Date

were held by Leap Tide Capital Management, LLC.

(2) Warrants were exercised in full on March 2, 2023.

and Warrant Exercises

were exercised by Leap Tide Capital Management, LLC (of which Mr.

Loeb is the Managing Member), on March 2, 2023, for 2,187 shares at

an exercise price of $2.08 per share (as adjusted in connection with the September 2023 1-for-16 reverse stock split).

Non-qualified

Deferred Compensation

following table provides information on the executive non-qualified deferred compensation activity for each of our named executive officers

for the year ended December 31, 2022.

Executive Officer

Contributions in Last

Contributions

Distributions

There was no executive non-qualified deferred compensation activity for

either of our named executive officers for the year ended December 31, 2023.

and Benefits Upon Termination or Change in Control

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election or appointment.

options granted to non-employee Directors shall have an exercise price equal to the closing price of the Company’s Common Stock

on its then-current trading platform or exchange on the last trading day immediately preceding the date of grant, and shall, except as

described in the preceding paragraph, vest in four installments quarterly in advance.

Once vested, such options shall be exercisable

in whole or in part at all times until the earliest of (i) seven years from the date of grant or (ii) 18 months from the date such Director

ceases to be a Director, officer, employee of, or consultant to, the Company.

options granted to non-employee Directors shall have an exercise price equal to the closing price of the Company’s Common

Stock on its then-current trading platform or exchange on the last trading day immediately preceding the date of grant, and shall,

except as described in the preceding paragraph, vest in four quarterly installments beginning on the grant date.

Once vested, such options

shall be exercisable in whole or in part at all times until the earliest of (i) seven years from the date of grant or (ii) 18 months

from the date such Director ceases to be a Director, officer, employee of, or consultant to, the Company.

chair of the Audit Committee receives an additional annual retainer of $10,000;

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immediately preceding the day of such newly elected/appointed Director’s election/appointment.

following table sets forth information concerning the compensation earned for service on our Board of Directors during the fiscal year

ended December 31, 2022 by each individual (other than Mr.

Loeb who was not separately compensated for his Board service) who served

as a director at any time during the fiscal year.

The following table sets forth information concerning the compensation

earned for service on our Board of Directors during the fiscal year ended December 31, 2023 by each individual who served as a director

at any time during the fiscal year (other than Mr.

Loeb who was not separately compensated for his Board service).

COMPENSATION IN 2023

Fees Earned or

Paid in Cash ($)

Peter Rabover

January 1, 2023, Samuel M.

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the annual retainer of $15,000 as a non-employee director plus $2,000 received for services rendered as a member of the Audit Committee.

the pro-rata annual retainer of $15,000 as a non-employee director from the date that Peter Rabover joined the Board.

March 21, 2023, Peter Rabover was granted 1,562 options to acquire stock in the Company.

The options had an exercise price of $4.80

and were to expire on March 21, 2030.

The fair value of the options was determined using the Black-Scholes option pricing model using

the following assumptions:

(i) a risk-free interest rate of 3.79% (ii) an expected term of 4.5 years (iii) an assumed volatility

of 96% and (iv) no dividends.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

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all executive officers and directors as a group, and (iv) each holder of 5% or more of the Company’s outstanding shares of common

and Address of Beneficial Owner (1) (2)

Name and Address of Beneficial Owner (1) (2)

Number of Shares

Common Stock Beneficially

Percentage of

Outstanding (2)

executive officers and directors of the Company as a group (5 people)

Peter Rabover

All executive officers and directors of the Company as a group (6 people)

otherwise indicated, the address for each of the beneficial owners listed in the table is in care of the Company, 1000 N West Street,

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of 240,011 shares held by Mr.

Loeb directly, 1,366,666 shares held by PENSCO Trust Company Custodian FBO JAN LOEB IRA, 4,372,017

shares held by Leap Tide Capital Acorn LLC, and 192,500 shares underlying currently exercisable options held by Mr.

is the sole manager of Leap Tide Capital Acorn LLC, with sole voting and dispositive power over the securities held by such entity.

Loeb disclaims beneficial ownership of the securities held by Leap Tide Capital Acorn LLC except to the extent of his pecuniary

interest therein.

Loeb directly, 273,251 shares held by Leap Tide Capital Acorn LLC, and 12,035 shares underlying currently

exercisable options held by Mr.

Loeb is the sole manager of Leap Tide Capital Acorn LLC, with sole voting and dispositive

power over the securities held by such entity.

Loeb disclaims beneficial ownership of the securities held by Leap Tide Capital

Acorn LLC except to the extent of his pecuniary interest therein.

of 68,238 shares beneficially held by Mr.

Mohr (including 833,332 shares held by UE Systems Inc.), and 70,000 shares underlying

currently exercisable options.

Mohr (including 52,083 shares held by UE Systems

Inc.), and 4,999 shares underlying currently exercisable options.

of 176,107 shares beneficially held by Mr.

Osterer (including 833,332 shares held by UE Systems Inc.), and 75,250 shares underlying

currently exercisable options.

Osterer (including 52,083 shares held by

UE Systems Inc.), and 5,326 shares underlying currently exercisable options.

of 123,218 shares held by Artko Capital LP and 833 shares underlying currently exercisable options held by Mr.

is Managing Director of Artko Capital LP, with sole voting and dispositive power over the securities held by such entity.

disclaims beneficial ownership of the securities held by Artko Capital LP except to the extent of his pecuniary interest therein.

of 5,992 shares and 4,062 shares underlying currently exercisable options.

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table below provides certain information concerning our equity compensation plans as of December 31, 2023.

Plan Category

Securities to be

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Plans (Excluding

Compensation Plans Approved by Security Holders

Compensation Plans Not Approved by Security Holders

grants made under our equity compensation plans not approved by security holders includes 843,540 options which were granted under our

2006 Stock Incentive Plan following the original expiration of the Plan on February 8, 2017, and 1,879 options granted in 2015 under

our 2006 Stock Option Plan for Non-Employee Directors but in excess of the maximum number of options available for grant under such plan

as approved by stockholders.

These grants were made to directors and officers at exercise prices equal to the fair market value on the

date of the grant.

The options generally vest over a one-year period and expire seven years from the date of the grant.

The grants made

under our equity compensation plans not approved by security holders also include 35,000 warrants issued as compensation to underwriters

for services provided in connection capital raise transactions.

In February 2019, the Company’s Board ratified all option grants

made under our 2006 Stock Incentive Plan following the original expiration of the Plan on February 8, 2017 and extended the expiration

date of the Amended and Restated 2006 Stock Incentive Plan until December 31, 2024.

Equity Compensation Plans Approved by Security Holders

Equity Compensation Plans Not Approved by Security Holders

numbers in this table are adjusted to account for the September 2023 1-for-16 reverse stock split.

grants made under our equity compensation plans not approved by security holders represent 65,630 options which were granted under our

2006 Stock Incentive Plan following the original expiration of the Plan on February 8, 2017.

These grants were made to directors and

officers at exercise prices equal to the fair market value on the date of the grant.

The options generally vest over a one-year period

and expire seven years from the date of the grant.

In February 2019, the Company’s Board ratified all option grants made under

our 2006 Stock Incentive Plan following the original expiration of the Plan on February 8, 2017 and extended the expiration date of the

Amended and Restated 2006 Stock Incentive Plan until December 31, 2024.

CERTAIN RELATIONSHIPS, RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE

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its post-merger successor Marcum LLP (after September 8, 2022) for the years ended December 31, 2023 and 2022.

All other fees

Fees were for professional services rendered for the audits of the consolidated financial statements of the Company, assistance with

review of documents filed with the SEC, consents, and other assistance required to be performed by our independent accountants.

fees per the engagement letters were $121,000 for 2023 and $99,500 for 2022 which represents a 22% increase year over year.

The difference

in the audit fees in the table above is due to the timing of when the audit services were performed.

Policies and Procedures

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Report of Independent Registered Public Accounting Firm (PCAOB ID 688)

Report of Independent Registered Public Accounting Firm (PCAOB ID 711)

Consolidated Balance Sheets as of December 31, 2023 and 2022

Consolidated Statements of Operations

Statements of Changes in Stockholders’ Deficit

Consolidated Statements of Changes in Stockholders’ Deficit

Consolidated Statements of Cash Flows

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List of Exhibits

Amended and Restated Certificate of Incorporation of the Registrant (incorporated herein by reference to Exhibit 3.1 to the Registrant’s Annual Report on Form 10-K for the year ended December 31, 2015).

Restated Certificate of Incorporation of the Registrant (incorporated herein by reference to Exhibit 3.1 to the Registrant’s Annual Report on Form 10-K for the year ended December 31, 2015).

Certificate of Amendment to Restated Certificate of Incorporation (incorporated herein by reference to Exhibit 3.1 of the Registrant’s Current Report on Form 8-K filed September 8, 2023).

laws of the Registrant (incorporated herein by reference to Exhibit 3.2 to the Registrant’s Registration Statement on Form

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Current Report on Form 8-K dated January 10, 1995).

Amendment to By-laws of the Registrant (incorporated herein by reference to Exhibit 3.2 of the Registrant’s Current Report on Form 8-K filed September 8, 2023).

certificate for the common stock (incorporated herein by reference to Exhibit 4.2 to the 1992 Registration Statement).

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Acorn Energy, Inc.

2006 Stock Option Plan for Non-Employee Directors (incorporated herein by reference to the appendix to the Registrant’s Definitive Proxy Statement on Schedule 14A filed July 26, 2012, and the Registrant’s Additional Definitive Proxy Soliciting Materials on Schedule 14A filed August 28, 2012).

Acorn Energy, Inc.

Amended and Restated 2006 Stock Incentive Plan (incorporated herein by reference to Exhibit 10.2 to the Registrant’s Annual report on Form 10-K for the year ended December 31, 2018).

Forms of Option Award Certificate and Option Award Agreement under the Registrant’s Amended and Restated 2006 Stock Incentive Plan (incorporated herein by reference to Exhibit 10.3 to the Registrant’s Annual report on Form 10-K for the year ended December 31, 2018).

Forms of Option Award Certificate and Option Award Agreement under the Registrant’s Amended and Restated 2006 Stock Option Plan for Non-Employee Directors (incorporated herein by reference to Exhibit 10.53 to Registrant’s Annual Report on Form 10-K for the year ended December 31, 2009).

Form of Indemnification Agreement (incorporated herein by reference to Exhibit 10.47 to the Registrant’s Annual report on Form 10-K for the year ended December 31, 2011).

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and the Backstop Purchasers (incorporated by reference to Exhibit 10.2 of the Registrant’s Registration Statement on Form S-1/A filed on June 4, 2019).

Agreement, dated as of January 1, 2023, by and between the Registrant and Jan H.

Amended and Restated Consulting Agreement, dated June 1, 2022, by and between the Registrant and Tracy Clifford Consulting, LLC (incorporated by reference to Exhibit 10.1 of the Registrant’s Current Report on Form 8-K, filed June 1, 2022).

of subsidiaries.

of Marcum LLP.

of Friedman LLP.

Certification

of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

Certification

of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

Certification

of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

Certification

of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

Consulting Agreement, dated January 2, 2024, by and between the Registrant and Jan H.

Loeb (incorporated herein by reference to Exhibit 10.1 of the Registrant’s Current Report on Form 8-K filed January 5, 2024).

Amended and Restated Consulting Agreement, dated January 2, 2024, by and between the Registrant and Tracy Clifford Consulting, LLC (incorporated herein by reference to Exhibit 10.2 of the Registrant’s Current Report on Form 8-K filed January 5, 2024).

List of subsidiaries.

Consent of Marcum LLP.

Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

following financial statements from Acorn Energy’s Form 10-K for the year ended December 31, 2023, filed on March 7, 2024,

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Consolidated Statements of Cash Flows, and (vi) Notes to Consolidated Financial Statements, tagged as blocks of text.

Page Interactive Data File (embedded within the Inline XBRL document).

exhibit includes a management contract, compensatory plan or arrangement in which one or more directors or executive officers of

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and Principal Accounting Officer)

Peter Rabover

AND SUBSIDIARIES

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Report of Independent Registered Public Accounting Firm (PCAOB ID 688 )

Report of Independent Registered Public Accounting Firm (PCAOB ID 711 )

Consolidated Balance Sheets

Consolidated Statements of Operations

Statements of Stockholders’ Changes in Deficit

Consolidated Statements of Stockholders’ Changes in Deficit

Consolidated Statements of Cash Flows

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on the Financial Statements

have audited the accompanying consolidated balance sheet of Acorn Energy, Inc.

have audited the accompanying consolidated balance sheets of Acorn Energy, Inc.

and subsidiaries (the “Company”) as of

December 31, 2022, the related consolidated statement of operations , changes in stockholders’ deficit, and cash flows

for the year ended December 31, 2022, and the related notes (collectively referred to as the “financial statements”).

our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December

31, 2022 and the results of its operations and its cash flows for the year ended December 31, 2022, in conformity with accounting

principles generally accepted in the United States of America.

December 31, 2023 and 2022, the related consolidated statements of operations, changes in stockholders deficit , and cash

flows for each of the two years in the period ended December 31, 2023 and the related notes (collectively referred to as the

“financial statements”).

In our opinion, the financial statements present fairly, in all material respects, the

financial position of the Company as of December 31, 2023 and 2022, and the results of its operations and its cash flows for each of

the two years in the period ended December 31, 2023, in conformity with accounting principles generally accepted in the

United States of America.

financial statements are the responsibility of the Company’s management.

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securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

conducted our audits in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the

financial statements are free of material misstatement, whether due to error or fraud.

The Company is not required to have, nor were

we engaged to perform, an audit of its internal control over financial reporting.

As part of our audits we are required to obtain an

understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the

Company’s internal control over financial reporting.

Accordingly, we express no such opinion.

audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error

or fraud, and performing procedures that respond to those risks.

Such procedures included examining, on a test basis, evidence regarding

the amounts and disclosures in the financial statements.

Our audits also included evaluating the accounting principles used and significant

estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that our audits

provides a reasonable basis for our opinion.

Period Financial Statements

consolidated financial statements of Acorn Energy, Inc.

as of and for the year ended December 31, 2021, were audited by Friedman LLP

whose practice was combined with Marcum LLP as of September 1, 2022, and whose report dated March 30, 2022, expressed an unmodified opinion

on those statements.

conducted our audit s in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit s

to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or

The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.

As part of our audit s we are required to obtain an understanding of internal control over financial reporting but not for the

purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting.

we express no such opinion.

audit s included performing procedures to assess the risks of material misstatement of the financial statements, whether due to

error or fraud, and performing procedures that respond to those risks.

Such procedures included examining, on a test basis, evidence

regarding the amounts and disclosures in the financial statements.

Our audit s also included evaluating the accounting principles

used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements.

that our audit s provide a reasonable basis for our opinion.

Audit Matters

critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated

or required to be communicated to the board of directors and that:

(1) relate to accounts or disclosures that are material to the financial

statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of critical audit matters

does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit

matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

concern – Assessing the probability of the Company’s ability to continue as a going concern

of the Matter

described in Note 1 of the financial statements, the Company believes it has adequate cash on hand in addition to cash generated from

operations, which will provide sufficient liquidity to finance the operating activities of the Company at its current level of operations for the twelve months from the issuance of these financial statements.

We determined the Company’s

ability to continue as a going concern is a critical audit matter due to the estimation uncertainty regarding the Company’s

future cash flows and the risk of bias in management’s judgments and assumptions in estimating these cash flows.

We Addressed the Matter in Our Audit

audit procedures related to the Company’s assertion on its ability to continue as a going concern included the following,

among others;

we reviewed the design and underlying factors relating to the preparation of forecasted information and considerations

of the Company’s obligations;

we tested the reasonableness of the forecasted revenue, operating expenses, and uses and sources

of cash used in management’s assessment of whether the Company has sufficient liquidity to fund operations for at least one

year from the financial statement issuance date.

This testing included inquiries with management, comparison of prior period

forecasts to actual results, a sensitivity analysis, consideration of positive and negative evidence impacting management’s

forecasts, the Company’s financing arrangements in place as of the report date, market and industry factors.

have served as the Company’s auditor since 2010 (such date takes into account the acquisition of certain assets of Friedman LLP

by Marcum LLP effective September 1, 2022)

Marlton New Jersey

OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

the Board of Directors and

of Acorn Energy, Inc.

on the Financial Statements

have audited the accompanying consolidated balance sheet of Acorn Energy, Inc.

and subsidiaries (the “Company”) as of

December 31 2021, and the related consolidated statements of operations, changes in stockholders’ deficit, and cash flows for

the year ended December 31 2021, and the related notes (collectively referred to as the financial statements).

In our opinion, the

financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2021, and

the results of its operations and its cash flows for the year ended December 31, 2021, in conformity with accounting principles

generally accepted in the United States of America.

financial statements are the responsibility of the Company’s management.

Our responsibility is to express an opinion on the Company’s

financial statements based on our audit.

We are a public accounting firm registered with the Public Company Accounting Oversight Board

(United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S.

federal securities

laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

conducted our audit in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain

reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.

is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.

As part of our audit,

we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion

on the effectiveness of the Company’s internal control over financial reporting.

Accordingly, we express no such opinion.

audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or

fraud, and performing procedures that respond to those risks.

Such procedures included examining, on a test basis, evidence regarding

the amounts and disclosures in the financial statements.

Our audit also included evaluating the accounting principles used and significant

estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that our audit provides

a reasonable basis for our opinion.

have served as the Company’s auditor from 2010 to 2022.

AND SUBSIDIARIES

audit matters are matters arising from the current period audit of the financial statements that were communicated or required to be

communicated to the audit committee and that:

(1) relate to accounts or disclosures that are material to the financial statements and

(2) involved our especially challenging, subjective, or complex judgments.

We determined that there are no critical audit matters.

have served as the Company’s auditor since 2010.

BALANCE SHEETS

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Other long-term liabilities

Total long-term liabilities

Total liabilities

Commitments and contingencies (Note 8)

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issued and outstanding – 2,484,791

and 39,687,589

shares at December 31, 2022 and 2021, respectively

and 2,482,604 shares at December

31, 2023 and 2022, respectively *

Common stock - $0.01 par value per share:Authorized – 42,000,000 shares;

issued and outstanding – 2,484,791 and 2,482,604 shares at December 31, 2023 and 2022, respectively*

Additional paid-in capital *

Accumulated stockholders’ deficit

Treasury stock, at cost – 801,920 shares at December 31, 2022 and 2021

Treasury stock, at cost – 50,178

shares at December 31, 2023 and December 31, 2022 *

Total Acorn Energy, Inc.

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Total liabilities and stockholders’ deficit

* As adjusted to

reflect the September 2023 1-for-16 reverse stock split.

accompanying notes are an integral part of these consolidated financial statements.

AND SUBSIDIARIES

STATEMENTS OF OPERATIONS

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Total operating expenses

Operating loss

Finance expense, net

Loss before income taxes

Operating income (loss)

Finance income (expense), net

Income (loss) before income taxes

Income tax expense

Net income (loss)

Non-controlling interest share of income

Net loss attributable to Acorn Energy, Inc.

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

stockholders.

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

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

stockholders:

Net loss per share attributable to Acorn Energy, Inc.

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

stockholders – basic and diluted

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stockholders – diluted *

* As adjusted to

account for the September 2023 1-for-16 reverse stock split.

accompanying notes are an integral part of these consolidated financial statements.

AND SUBSIDIARIES

STATEMENTS OF CHANGES IN STOCKHOLDERS’ DEFICIT

Paid-In Capital

of Treasury Shares

Number of Shares *

Stockholders’

controlling interests

as of December 31, 2020

Acorn Energy, Inc.

Number of Shares*

Stockholders’

Balances as of December 31, 2021

$ ( 100,634 )

(loss) income

dividend in OmniMetrix preferred shares

option compensation

as of December 31, 2021

Balance value

(loss) income

from stock option exercise

dividend in OmniMetrix preferred shares

option compensation

as of December 31, 2022

Net (loss) income

Proceeds from stock option exercise

Accrued dividend in OmniMetrix preferred shares

Stock option compensation

Balances as of December 31, 2022

Net (loss) income

Proceeds from warrant exercise

Accrued dividend in OmniMetrix preferred shares

Stock option compensation

Balances as of December 31, 2023

$ ( 101,148 )

Balance value

$ ( 101,148 )

* As adjusted to

account for the September 2023 1-for-16 reverse stock split.

** less than $1

accompanying notes are an integral part of these consolidated financial statements.

AND SUBSIDIARIES

STATEMENTS OF CASH FLOWS

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Cash flows provided by operating activities:

Net income (loss)

Depreciation and amortization

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Change in operating assets and liabilities:

Decrease (increase) in accounts receivable

Decrease in accounts receivable

Increase in inventory

Increase in deferred cost of goods sold

Increase in other current assets and other assets

Increase in deferred revenue

Decrease (increase) in deferred cost of goods sold

Decrease (increase) in other current assets and other assets

(Decrease) increase in deferred revenue

Decrease in operating lease liability

(Decrease) increase in accounts payable, accrued expenses,

other current liabilities and non-current liabilities

Decrease in accounts payable, accrued expenses, other current liabilities and non-current liabilities

Net cash provided by operating activities

Cash flows used in investing activities:

Investments in Azure cloud hosting environment and other technology and software

Investments in technology

Other capital investments

Net cash used in investing activities

Cash flows provided by (used in) financing activities:

Short-term credit, net

Cash flows provided by financing activities:

Warrant exercise proceeds

Stock option exercise proceeds

Net cash provided by (used in) financing activities

Net cash provided by financing activities

Net decrease in cash

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accompanying notes are an integral part of these consolidated financial statements.

AND SUBSIDIARIES

to Consolidated Financial Statements

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Generation (“PG”) monitoring.

OmniMetrix’s PG services provide 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.

OmniMetrix offers PG wireless monitoring and control IoT solutions encompassing

wireless remote monitoring devices and applications for both residential and commercial/industrial power generation equipment.

suite includes the Company's suite of TrueGuard products as well as its AIRGuard product, designed for remote monitoring and control

of industrial air compressors, as well as a Smart Annunciator product.

This Smart Annunciator product, tailored for commercial

clients, provides a visual representation of a generator’s status through a touch-screen display, offering real-time updates

on its current state.

Protection (“CP”) monitoring.

OmniMetrix’s CP services provide 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

OmniMetrix specializes in CP monitoring, offering remote monitoring and control

products specifically tailored for cathodic protection systems utilized in gas pipelines, serving gas utilities market and pipeline

The Company's CP product lineup, which features solutions for remote monitoring and control of rectifiers, test stations and

bonds, is its Hero and Patriot lines of products.

Additionally, the Company offers the RAD TM (Remote AC Mitigation

Disconnect), an industry-first innovation designed to mount onto existing Solid-state Decouplers in the field.

This device enables

remote disconnection/connection of AC mitigation tools, significantly reducing a customer's expenses while enhancing employee

shares are traded on the OTCQB marketplace under the symbol ACFN.

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December 31, 2023, the Company had a negative working capital of $ 571,000 .

Its working capital included $ 1,450,000 of cash and deferred

Its working capital includes $ 1,449,000 of cash and deferred

revenue of $ 4,034,000 .

Such deferred revenue does not require a significant cash outlay for the revenue to be recognized.

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.

Total deferred

revenue decreased by $ 587,000 , from $ 6,171,000 at December 31, 2022 to $ 5,584,000 at December 31, 2023, as a result of the sales mix

of products sold.

Based on the current products being sold, the Company expects continued decreases in the deferred revenue balance in

the foreseeable future.

The balance of deferred hardware revenue at December 31, 2023 will continue to be amortized over the months remaining

in the three-year period since the hardware’s original date of shipment.

Net cash decreased during the year ended December 31,

2023 by $ 1,000 , with $ 72,000 provided by operating activities, $ 78,000 used in investing activities, and $ 5,000 provided

by financing activities.

of March 5, 2024, the Company had cash of $ 1,236,000 .

The Company believes that such cash, plus the cash 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 audited consolidated financial statements in particular.

The Company may, at some point, elect to obtain a new line of credit or other source of financing to fund additional investments in the

The Company believes that such cash, plus the cash expected to be generated from operations, will provide sufficient liquidity to finance

the corporate activities of Acorn and operating activities of OmniMetrix at their current level of operations for at least the twelve-month

period from the issuance of these audited consolidated financial statements.

The Company may, at some point, elect to obtain a new line

of credit or other source of financing to fund additional investments in the business.

If the Company decides to pursue additional financing

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 any combination thereof.

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.

2— SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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interests are included in equity.

Reclassifications

reclassifications have been made to the Company’s consolidated financial statements for the period ended December 31, 2021 to conform

to the current year’s consolidated financial statement presentation.

Approximately $ 22,000 in inventory that was written off in 2021 was reclassed

to its own line item to conform with current period presentation.

There was no effect on total assets, equity or net loss.

of Estimates in Preparation of Financial Statements

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of the possible impairments.

Receivable and Credit Losses

receivable consists of trade receivables.

Trade receivables are recorded at the invoiced amount , net of any allowance for doubtful

for Doubtful Accounts

Company maintains allowances for doubtful accounts for estimated losses resulting from the inability of customers to make required payments.

This allowance is based on specific customer account reviews and historical collections experience.

If the financial condition of the

Company’s funding parties or customers were to deteriorate, resulting in an impairment of their ability to make payments, additional

allowances may be required.

The Company performs ongoing credit evaluations of its customers and does not require collateral.

the years ended December 31, 2022 and 2021, $ 3,000 and $ 10,000 was charged to doubtful accounts expense, respectively.

At December 31,

2022 and 2021, the balance in allowance for doubtful accounts was $ 10,000 and $ 6,000 , respectively.

Trade receivables are recorded at the invoiced amount, net of any allowance for credit losses.

The Company’s trade receivables

primarily arise from the sale of our products to independent residential dealers, industrial distributors and dealers, national and regional

retailers, equipment distributors, and certain end users with payment terms generally ranging from 30 to 60 days.

The Company evaluates

the credit risk of a customer when extending credit based on a combination of various financial and qualitative factors that may affect

the customer’s ability to pay.

These factors include the customer’s financial condition and past payment experience.

The Company maintains an allowance for credit losses, which represents

an estimate of expected losses over the remaining contractual life of its receivables considering current market conditions and estimates

for supportable forecasts when appropriate.

The Company measures expected credit losses on its trade receivables on an entity-by-entity

The estimate of expected credit losses considers a historical loss experience rate that is adjusted for delinquency trends, collection

experience, and/or economic risk where appropriate.

Additionally, management develops a specific allowance for trade receivables known

to have a high risk of expected future credit loss.

the Company, ASU 2016-13, “Financial Instruments – Credit Losses (Topic 326):

Measurement of Credit Losses on Financial Instruments,”

applies to its contract assets (deferred COGS and deferred sales commissions, see Note 13), lease receivables (sublease, see Note 7)

and trade receivables.

There are no expected or estimated credit losses on the Company’s contract assets or its lease receivable

based on the Company’s implementation of ASU 2016-13.

See Note 4, Allowance for Credit Losses.

are comprised of components (raw materials), work-in-process and finished goods, which are measured at net realizable value.

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Capitalization

accordance with the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract

with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software.

During the years

ended December 31, 2022 and 2021, the Company capitalized internal-use software costs totaling $ 279,000

and $ 285,000 ,

respectively.

capitalizes certain implementation costs incurred in a hosting arrangement that is a

service contract to develop or obtain internal-use software.

During the years ended December 31, 2023 and 2022, the Company capitalized internal-use software costs totaling $ 29,000

and $ 279,000 , respectively.

Sales Commissions

Company pays its employees sales commissions for sales of hardware and for first sales of monitoring services (not for renewals).

In accordance

with Topic 606, Revenue from Contracts with Customers, of the FASB Accounting Standards Codification (“ASC 606”), the Company

capitalizes as a contract asset the sales commissions on these sales.

Contract assets associated with hardware are amortized over the estimated

life of the units which are currently estimated to be three years.

Contract assets associated with monitoring services are amortized

over the expected monitoring life, including renewals.

earned from the sales of the new hardware products will be recognized when the product is shipped.

Commissions earned from the sales

of monitoring services continue to be deferred and amortized over the period of service.

contract assets of deferred COGS and deferred sales commissions are subject to review under ASU 2016-13 (see Notes 2 and 4);

no credit losses on contract assets are expected based on the Company’s implementation of ASU 2016-13.

Company determines if a contractual arrangement is a lease at inception.

Operating leases are included in operating lease right-of-use

(“ROU”) assets, current operating lease liabilities, and noncurrent operating lease liabilities on the Company’s consolidated

balance sheets.

The Company evaluates and classifies leases as operating or finance leases for financial reporting purposes.

The classification

evaluation begins at the commencement date and the lease term used in the evaluation includes the non-cancellable period for which the

Company has the right to use the underlying asset, together with renewal option periods when the exercise of the renewal option is reasonably

certain and failure to exercise such option would result in an economic penalty.

All the Company’s real estate leases are classified

as operating leases.

Operating leases are included in operating lease

right-of-use (“ROU”) assets, current operating lease liabilities, and noncurrent operating lease liabilities on the

Company’s consolidated balance sheets.

The Company evaluates and classifies leases as operating or finance leases for

financial reporting purposes.

The classification evaluation begins at the commencement date and the lease term used in the

evaluation includes the non-cancellable period for which the Company has the right to use the underlying asset, together with

renewal option periods when the exercise of the renewal option is reasonably certain and failure to exercise such option would

result in an economic penalty.

All of the Company’s real estate leases are classified as operating leases.

assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the Company’s

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The core principle

of Accounting Standards Codification (“ASC”) 606:

Revenue from Contracts with Customers is to recognize revenue when promised

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

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product mix or arrangement size.

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

until such time as the revenue recognition criteria are met.

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

The majority of the 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

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.

In the rare instance that a specific sale of OmniMetrix equipment does qualify as a separate unit

of accounting (the unit is custom designed and sold without monitoring), the revenue is recognized when the unit is shipped to the customer

and not deferred.

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.

11 and 12 for the disaggregation of the Company’s revenue for the periods presented.

See Note 13, Revenue, for further discussion.

Revenue from sales of the hardware products that are distinct products

are recorded when shipped while the revenue from sales of the hardware products (product versions sold prior to September 1, 2023) that

were not separable from the Company’s monitoring services was deferred and amortized over the estimated unit life.

from the prepayment of monitoring fees (generally paid twelve months in advance) are recorded as deferred revenue upon receipt of payment

from the customer and then amortized to revenue over the monitoring service period.

See Notes 12 and 13 for the disaggregation of the

Company’s revenue for the periods presented.

sales tax, value added tax, and other tax the Company collects concurrent with revenue producing activities are excluded from revenue.

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Estimated warranty obligations are provided for as a cost of

sales in the period in which the related revenues are recognized, based on management’s estimate of future potential warranty obligations

and historical experience.

sales in the period in which the related revenues are recognized, based on management’s estimate of future potential warranty

obligations and historical experience.

Adjustments are made to accruals as warranty claim data and historical experience warrant.

Company’s warranty obligations may be materially affected by product or service failure rates and other costs incurred in correcting

a product or service failure.

Should actual product or service failure rates or other related costs differ from the Company’s estimates,

revisions to the accrued warranty liability would be required.

The Company’s warranty obligations may be materially affected by product or service failure rates and other costs incurred in

correcting a product or service failure.

Should actual product or service failure rates or other related costs differ from the

Company’s estimates, revisions to the accrued warranty liability would be required.

Concentration

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period on an accelerated basis over the employee’s requisite service period (generally the vesting period of the equity grant).

Stock compensation expense is included in selling, general and administrative expenses.

Stock-based compensation expense is included in selling, general and administrative expenses.

The Company’s option pricing model requires

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with applicable accounting principles.

Such options are valued using the Black-Scholes option pricing model.

Such options are valued using the Black-Scholes option pricing model when the services are performed.

Note 9(b) for the assumptions used to calculate the fair value of stock-based employee compensation.

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states and other jurisdictions, which could result in recognizing materially different amounts in future periods.

income taxes reflects the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial

income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial

reporting purposes and the amounts used for income tax purposes, as well as operating loss, capital loss and tax credit carryforwards.

Deferred tax assets and liabilities are classified as non-current.

Valuation allowances are established against deferred tax assets if it is more likely than not that

the assets will not be realized.

Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable

income in the years in which those temporary differences are expected to be recovered or settled.

The effect on deferred tax assets and

liabilities of a change in tax rates or laws is recognized in operations in the period that includes the enactment date.

See Note 9(e)

for the impact of the Tax Cuts and Jobs Act of 2017.

Valuation allowances are established against deferred tax assets if

it is more likely than not that the assets will not be realized.

Deferred tax assets and liabilities are measured using enacted tax rates

expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled.

on deferred tax assets and liabilities of a change in tax rates or laws is recognized in operations in the period that includes the enactment

See Note 10(d) for the impact of the Tax Cuts and Jobs Act of 2017.

Tax Uncertainties

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Federal taxing authorities for years before 2019, or for years before 2018 for state income taxes.

and Diluted Net Loss Per Share

and Diluted Net Income (Loss) Per Share

net loss per share is computed by dividing the net loss attributable to Acorn Energy, Inc.

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be antidilutive.

combined number of options and warrants that were excluded from the computation of diluted net loss per share, as they had an antidilutive

effect, was 979,000 (which have a weighted average exercise price of $ 0.41 ) and 868,000 (which had a weighted average exercise price

of $ 0.38 ) for the years ending December 31, 2022 and 2021, respectively.

following data represents the amounts used in computing EPS and the effect on net loss and the weighted average number of shares of

dilutive potential common stock (in thousands):

SCHEDULE OF EFFECT ON NET

INCOME LOSS AND WEIGHTED AVERAGE NUMBER OF SHARES

combined weighted average number of options and warrants that were excluded from the computation of diluted net loss per share, as they

had an antidilutive effect, was 17,000 (which have a weighted average exercise price of $ 9.42 ) and 62,000 (which had a weighted average

exercise price of $ 6.29 ) for the years ending December 31, 2023 and 2022, respectively (as adjusted to account for the September 2023

1-for-16 reverse stock split).

following data represents the amounts used in computing earnings per share and the effect on net loss and the weighted average number of shares of dilutive

potential common stock (as adjusted to account for the September 2023 1-for-16 reverse stock split) (in thousands):

OF EFFECT ON NET INCOME LOSS AND WEIGHTED AVERAGE NUMBER OF SHARES

Year ended December 31,

Net loss available to common stockholders

Net income (loss) available to common stockholders

Weighted average shares outstanding:

Stock options

Basic and diluted net loss per share

Basic and diluted net income (loss) per share

Value Measurement

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participants would use in pricing the asset or liability developed based on market data obtained from sources independent of the Company.

Unobservable inputs are inputs that reflect the Company’s assumptions about the assumptions market participants would use in pricing

the asset or liability developed based on the best information available in the circumstances.

Unobservable inputs are inputs that reflect the assumptions market participants would use in pricing the asset or liability developed

based on the best information available in the circumstances.

The hierarchy is described below:

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The fair value hierarchy gives the lowest priority to Level

carrying amounts for cash, accounts receivable, and accounts payable approximate their fair value because of

their short-term maturity.

The Company determined that the carrying amount of the lease liabilities approximate fair value since the

applicable interest rate approximated fair value at the time the leases were entered into.

While the Company believes the carrying

value of the assets and liabilities are reasonable, considerable judgment is used to develop estimates of fair value;

estimates are not necessarily indicative of the amounts that could be realized in a current market exchange.

Issued Accounting Standards

than the pronouncement noted below, there have been no recent accounting pronouncements or changes in accounting standards during the year ended December 31, 2022, that are of material significance, or have potential material significance,

to the Company.

June 2016, the FASB issued ASU 2016-13, Financial Instruments-Credit Losses (“ASC 326”), authoritative guidance amending

how entities will measure credit losses for most financial assets and certain other instruments that are not measured at fair value through

The guidance requires the application of a current expected credit loss model, which is a new impairment model based on expected

The new guidance is effective for interim and annual reporting periods beginning after December 15, 2022.

The Company is currently

evaluating the impact of the new guidance on its consolidated financial statements and related disclosures.

carrying amounts for cash, accounts receivable, and accounts payable approximate their fair value because of their short-term maturity.

The Company determined that the carrying amount of the lease liabilities approximate fair value since the applicable interest rate approximated

fair value at the time the leases were entered into.

While the Company believes the carrying value of the assets and liabilities are

reasonable, considerable judgment is used to develop estimates of fair value;

thus, the estimates are not necessarily indicative of the

amounts that could be realized in a current market exchange.

Recent Accounting Pronouncements

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic

Improvements to Income Tax Disclosures, which requires disaggregated information about a reporting entity’s effective tax rate

reconciliation, as well as information related to income taxes paid to enhance the transparency and decision usefulness of income tax

This ASU will be effective for the annual period ending December 31, 2025.

The Company is currently evaluating the timing

and impacts of adoption of this ASU.

Adopted Accounting Standards

June 2018, the FASB issued ASU 2018-07, which simplifies the accounting for non-employee share-based payment transactions.

The amendments

specify that Topic 718 applies to all share-based payment transactions in which a grantor acquires goods or services to be used or consumed

in a grantor’s own operations by issuing share-based payment awards.

This standard was effective in the first quarter of fiscal

year 2020, and the adoption did not have a material impact on the consolidated financial statements.

January 1, 2023, the Company adopted ASU 2016-13, “Financial Instruments – Credit Losses (Topic 326):

Measurement of Credit

Losses on Financial Instruments.” This guidance was issued to provide financial statement users with more useful information about

the expected credit losses on financial instruments and other commitments to extend credit held by a reporting entity at each reporting

Specifically, this guidance requires entities to utilize a new “expected loss” model as it relates to trade and other

The adoption of the standard impacts the way the Company estimates the allowance for doubtful accounts on its trade and

other receivables.

Refer to Note 4, “Allowance for Credit Losses,” for further information regarding the Company’s

allowance for expected credit losses.

3— INVESTMENT IN OMNIMETRIX

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owns the remaining 1 %.

4— ALLOWANCE FOR CREDIT LOSSES

Company has historically experienced immaterial write-offs given the nature of the customers that receive credit.

As of December 31,

2023, the Company had gross receivables of $ 546,000 and an allowance for credit losses of $ 10,000 .

following is a tabular reconciliation of the Company’s allowance for credit losses:

OF ALLOWANCES FOR CREDIT LOSSES

As of December 31,

(in thousands)

Balance at beginning of period

Provision for credit losses

Net (charge-offs) credits

Balance at end of period

As of December 31,

(in thousands)

Raw materials

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SCHEDULE OF FUTURE MINIMUM LEASE PAYMENTS

undiscounted cash flows

Total undiscounted cash flows

Imputed interest

value of operating lease liabilities (a)

Present value of operating lease liabilities ( a )

current portion of $ 123,000 for operating leases.

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As of December 31, 2023, after the offset of the investment in leasehold improvements and other expenses related

to the sublease, the Company owes its landlord $ 6,000 for its share of the sublease profit since the lease commencement.

to the sublease, the Company paid its landlord $ 12,000 for its share of the sublease profit since the lease commencement.

The estimated

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the estimated amount expected to be remitted to our landlord):

undiscounted cash flows

Total undiscounted cash flows

8— COMMITMENTS AND CONTINGENCIES

August 19, 2019, OmniMetrix entered into an agreement with a software development partner to create and license to OmniMetrix a new software

platform and application for our CP customers.

Pursuant to this agreement, OmniMetrix paid this partner equal monthly payments over the

first seven months of the term of the agreement equal to $ 200,000 in the aggregate.

OmniMetrix 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, OmniMetrix 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 OmniMetrix

delivered a written notice of termination to the other party sixty days prior to the end of the initial term.

OmniMetrix is currently

on a month-to-month arrangement through December 31, 2022, paying a monthly licensing fee of $ 1,500 , and is working with the software

development partner to negotiate more favorable terms for future periods.

addition to the above, the Company has $ 336,000 in operating lease obligations payable through 2026 and $ 64,000 in other contractual

The Company also has $ 255,000 in open purchase order commitments payable through April 2023.

December 31, 2022 the Company had issued and outstanding 39,722,589 shares of its common stock, par value $ 0.01 per share.

outstanding common stock are entitled to receive dividends when, as and if declared by the Board and to share ratably in the assets of

the Company legally available for distribution in the event of a liquidation, dissolution or winding up of the Company.

Company is not authorized to issue preferred stock.

Accordingly, no preferred stock is issued or outstanding.

Company has $ 221,000 in operating lease obligations payable through 2026 and $ 119,000 in other contractual obligations.

The Company also

has $ 374,000 in open purchase order commitments payable through December 31, 2024.

See Note 14, Subsequent Events, for contractual obligations

entered into and effective subsequent to December 31, 2023.

information below includes adjustments where applicable to account for the September 2023 1-for-16 reverse stock split.

Summary Employee Option Information

Company’s stock option plans provide for the grant to officers, directors and employees of options to purchase shares of common

The purchase price may be paid in cash or, if the option is “in-the-money” at the end of the option term, it is automatically

exercised “net”.

In a net exercise of an option, the Company does not require a payment of the exercise price of the option

from the optionee but reduces the number of shares of common stock issued upon the exercise of the option by the smallest number of whole

shares that has an aggregate fair market value equal to or in excess of the aggregate exercise price for the option shares covered by

the option exercised.

Each option is exercisable for one share of the Company’s common stock.

Most options expire within five to

ten years from the date of the grant, and generally vest over a three-year period from the date of the grant.

December 31, 2022, 1,434,850 options were available for grant under the Amended and Restated 2006 Stock Incentive Plan and no options

were available for grant under the 2006 Stock Option Plan for Non-Employee Directors.

In 2022 and 2021, 145,770 ( 115,000 to directors

and executive officers and 30,770 to other employees) and 232,770 ( 165,000 to directors and executive officers and 67,770 to other employees)

options, respectively, were granted .

In 2022 and 2021, there were no grants to non-employees (other than the non-employee directors

and executive officers).

Company’s stock option plans provide for the grant to officers, directors and employees of options to purchase shares of

common stock.

The purchase price may be paid in cash or, if the option is “in-the-money” at the end of the option term,

it is automatically exercised “net”.

In a net exercise of an option, the Company does not require a payment of the

exercise price of the option from the option holder but reduces the number of shares of common stock issued upon the exercise of the

option by the smallest number of whole shares that has an aggregate fair market value equal to or in excess of the aggregate

exercise price for the option shares covered by the option exercised.

Each option is exercisable for one share of the

Company’s common stock.

Most options expire within five to ten years from the date of the grant, and generally vest over a

three-year period from the date of the grant.

December 31, 2023, 76,769 options were available for grant under the Amended and Restated 2006 Stock Incentive Plan and no options were

available for grant under the 2006 Stock Option Plan for Non-Employee Directors.

In 2023 and 2022, 14,936 ( 11,874 to directors and executive

officers and 3,062 to other employees) and 9,110 ( 7,187 to directors and executive officers and 1,923 to other employees) options, respectively,

were granted.

In 2023 and 2022, there were no grants to non-employees (other than the non-employee directors and executive officers).

The fair value of the options issued was $ 47,000 and $ 54,000 in 2023 and 2022, respectively.

warrants and no options were exercised in the year ended December 31, 2023.

2,187 options were exercised in the year ended December 31,

No options were exercised in the year ended December 31, 2021.

The intrinsic

value of options outstanding and of options exercisable at December 31, 2022 was $ 16,000 and $ 13,000 , respectively.

The intrinsic value

of options outstanding and of options exercisable at December 31, 2021 was $ 291,000 and $ 217,000 , respectively.

The intrinsic value of options outstanding and of options exercisable at December 31, 2023 was $ 40,000 and $ 35,000 , respectively.

The intrinsic value of options outstanding and of options exercisable at December 31, 2022 was $ 16,000 and $ 13,000 , respectively.

Company utilized the Black-Scholes option-pricing model to estimate fair value, utilizing the following assumptions for the respective

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SUMMARY OF INFORMATION REGARDING TO OPTIONS OUTSTANDING AND EXERCISABLE

Exercise Prices

$ 2.88 – $ 6.08

$ 6.10 – $ 10.08

compensation expense included in selling, general and administrative expense in the Company’s consolidated statements of operations

was $ 80,000 and $ 75,000 in the years ending December 31, 2022 and 2021, respectively.

total compensation cost related to non-vested awards not yet recognized was $ 33,000 as of December 31, 2022.

Company has issued warrants at exercise prices equal to or greater than market value of the Company’s common stock at the date

was $ 55,000 and $ 80,000 for the years ending December 31, 2023 and 2022, respectively.

total compensation cost related to non-vested awards not yet recognized was $ 18,000 and $ 33,000 as of December 31, 2023 and 2022, respectively.

Company has issued warrants at exercise prices equal to or greater than the market value of the Company’s common stock at the date

A summary of warrant activity follows:

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Outstanding and exercisable at end of year

warrants outstanding at December 31, 2022 had a weighted average remaining contractual life of 2.5 months.

10— INCOME TAXES

(a) Composition of loss before income taxes is as follows (in thousands):

Composition of income (loss) before income taxes is as follows (in thousands):

COMPOSITION OF LOSS FROM CONTINUING OPERATIONS BEFORE INCOME TAXES

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COMPONENTS OF INCOME TAX EXPENSE

income tax expense

State and local

Current income tax expense

State and local

income tax expense

Total income tax expense

Effective Income Tax Rates

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SUMMARY OF RECONCILIATION BETWEEN FEDERAL TAX RATE

ended December 31,

Federal rates

(decrease) in income tax rate resulting from:

net (primarily permanent differences)

income tax rates

Year ended December 31,

Statutory Federal rates

Increase (decrease) in income tax rate resulting from:

Nondeductible/nontaxable items

Prior year rate change adjustment

Deferred true-ups

Valuation allowance

Effective income tax rates

Analysis of Deferred Tax Assets and (Liabilities) (in thousands):

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Employee benefits and deferred compensation

Deferred revenue

Right-of-use assets

Lease liability

Intangible assets

Other temporary differences

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Net deferred tax assets

allowances relate principally to net operating loss carryforwards related to the Company’s consolidated tax losses as well as

state tax losses related the Company’s OmniMetrix subsidiary and book-tax differences related asset impairments and stock

compensation expense of the Company.

During the year ended December 31, 2022, the gross deferred tax asset and the valuation

allowance decreased by $ 945,000 .

allowances relate principally to net operating loss carryforwards related to the Company’s consolidated tax losses as well as state

tax losses related the Company’s OmniMetrix subsidiary and book-tax differences related to asset impairments, deferred revenue,

capitalized Section 174 expenditures, and stock-based compensation expense of the Company.

The Company continually evaluates the likelihood

of the realization of deferred tax assets and adjusts the carrying amount of the deferred tax assets by the valuation allowance to the

extent the future realization of the deferred tax assets is more likely than not.

The Company considers many factors when assessing the

likelihood of future realization of its deferred tax assets, including its recent cumulative earnings experience by taxing jurisdiction,

expectation of future taxable income or loss, the carryforward periods available to the Company for tax reporting purposes, and other

relevant factors.

As of December 31, 2023, based on the Company’s history of earnings and its assessment of future earnings, management

believes that it is more likely than not that future taxable income will not be sufficient to realize the deferred tax assets.

the year ended December 31, 2023, the gross deferred tax asset and the valuation allowance decreased by $ 567,000 .

Summary of Tax Loss Carryforwards

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OF TAX LOSS CARRYFORWARDS

2025 – 2031 *

utilization of a portion of these net operating loss carryforwards is limited due to limits

on utilizing net operating loss carryforwards under Internal Revenue Service regulations

for separate return limitation years.

utilization of a portion of these net operating loss carryforwards is limited due to limits on utilizing net operating loss carryforwards

under Internal Revenue Service regulations for separate return limitation years.

for tax years beginning after December 31, 2021, taxpayers are required to capitalize any expenses incurred that are considered incidental

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For the year ended December 31, 2023, the Company performed an analysis based on available

guidance and determined that it will continue to be in a loss position even after the required capitalization and amortization of its

R&E expenses.

The Company will continue to monitor this issue for future developments, but it does not expect R&E capitalization

and amortization to require it to pay cash taxes now or in the near future.

a holding company without other business activity in Delaware, the Company is exempt from Delaware state income tax.

Thus, the Company’s

statutory income tax rate on domestic earnings is the federal rate of 21 % .

guidance and capitalized the required R&E costs.

The Company will continue to monitor this issue for future developments.

Company files tax returns as prescribed by the tax laws of the jurisdictions in which it operates.

In the normal course of business,

the Company is subject to examinations by federal, foreign, and state and local jurisdictions, where applicable.

There are currently

no pending tax examinations.

The Company’s tax years are still open under statute from 2019 to the present in the U.S.

2017 to 2018 in the Company’s foreign operations.

To the extent the Company has tax attribute carryforwards, the tax years in

which the attribute was generated may still be adjusted upon examination by the Internal Revenue Service and state and local tax authorities

to the extent utilized in a future period.

Company is also subject to certain non-income taxes such as value added taxes, sales taxes, and property taxes.

The Company has taken

certain positions that management feels, although not free from doubt, should not result in a successful challenge by certain tax authorities.

11— RELATED PARTY BALANCES AND TRANSACTIONS

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in selling, general and administrative expenses.

Company recorded fees to directors of $ 59,000 for the years ended December 31, 2022 and 2021, which is included in selling, general and

administrative expenses.

Company issued 145,770 ( 115,000 to directors and executive officers and 30,770 to other employees) and 232,770 ( 165,000 to directors

and executive officers and 67,770 to other employees) options, in 2022 and 2021, respectively.

35,000 options were exercised in the year

Company recorded fees to directors of $ 71,000 and $ 59,000 for the years ended December 31, 2023 and 2022, which is included in selling,

general and administrative expenses.

Company issued 14,936 ( 11,874 to directors and executive officers and 3,062 to other employees) and 9,110 ( 7,187 to directors and executive

officers and 1,923 to other employees) options, in 2023 and 2022, respectively.

2,187 warrants and no options were exercised in the year

ended December 31, 2023.

No options were exercised in the year ended December 31, 2021.

2,188 options were exercised in the year ended December 31, 2022.

See Note 9 for further discussion.

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of the election year.

intercompany balance due to Acorn from OmniMetrix is $ 3,677,000 for amounts loaned, accrued interest and expenses paid by Acorn on Omni’s

behalf as of December 31, 2022 as compared to $ 4,217,000 as of December 31, 2021.

intercompany balance due to Acorn from OmniMetrix is $ 2,657,000

for amounts loaned, accrued interest and expenses paid by Acorn on Omni’s behalf as of December 31, 2023 as compared to $ 3,677,000

as of December 31, 2022.

This balance is eliminated in consolidation.

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.

During 2023, the intercompany amount due to Acorn from

OmniMetrix decreased by $ 1,020,000 .

This included repayments of $ 1,285,000

offset by interest of $ 164,000 ,

dividends of $ 76,000

due to Acorn and $ 25,000

in shared expenses paid by Acorn.

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.

This intercompany balance is eliminated in consolidation.

12— SEGMENT REPORTING AND GEOGRAPHIC INFORMATION

General Information

of December 31, 2022, the Company continues to operate in two reportable operating segments, both of which are performed through the

of December 31, 2023, the Company continues to operate in two reportable operating segments, PG and CP, both of which are performed through the

Company’s OmniMetrix subsidiary.

PG segment provides wireless remote monitoring and control systems and services for critical assets as well as Internet of Things

applications.

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

See Note 1, Nature of Operations , for a description of these segments.

Company’s reportable segments are strategic business units, offering different products and services and are managed separately

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following tables represent segmented data for the years ended December 31, 2023 and 2022 (in thousands).

The Company does not

currently break out total assets by reportable segment as there is a high level of shared utilization between the segments.

the CDM does not review the assets by segment.

The Company does not currently

break out total assets by reportable segment as there is a high level of shared utilization between the segments.

Further, the CDM does

not review the assets by segment.

SUMMARY OF SEGMENTED DATA

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Segment income (loss) before income taxes*

software impairment of $ 51,000

recorded during 2022 is not related to a specific segment and, thus, is not included in the

“Segment income (loss) before income taxes” for the year ended December 31, 2022.

The following tables represent a reconciliation of the segment data to consolidated statement of operations and balance sheet data for

the years ended and as of December 31, 2022 and 2021 (in thousands):

software impairment of $ 51,000 recorded during 2022 is not related to a specific segment and, thus, is not included in the “Segment

income (loss) before income taxes” for the year ended December 31, 2022.

The following tables represent a reconciliation of the segment data to the consolidated statement of operations and balance sheet

data for the years ended and as of December 31, 2023 and 2022 (in thousands):

SCHEDULE OF RECONCILIATION OF SEGMENT DATA TO CONSOLIDATED STATEMENT OF OPERATIONS

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Unallocated net cost of corporate headquarters

Consolidated net loss before taxes on income

SCHEDULE OF RECONCILIATION OF SEGMENT DATA TO CONSOLIDATED STATEMENT BALANCE SHEET

of December 31,

assets for OmniMetrix subsidiary

of corporate headquarters

consolidated assets

Consolidated net income (loss) before taxes on income

OF RECONCILIATION OF SEGMENT DATA TO CONSOLIDATED STATEMENT BALANCE SHEET

As of December 31,

Total assets for OmniMetrix subsidiary

Assets of corporate headquarters

Total consolidated assets

SCHEDULE OF REVENUE FROM CUSTOMERS BY GEOGRAPHICAL AREAS

based on location of customer:

Revenues based on location of customer:

United States

of the Company’s long-lived assets are located in the United States.

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SCHEDULE OF REVENUES, ACCOUNTS RECEIVABLE FROM MAJOR CUSTOMERS

Invoiced Sales

Accounts Receivable

is not significant.

sells monitoring equipment (“HW”) and monitoring services (“Monitoring”).

Prior to September 1, 2023, sales of

OmniMetrix equipment typically did not qualify as a separate unit of accounting.

As a result, revenue (and related costs) associated

with sale of equipment was recorded to deferred revenue (and deferred cost of goods sold) upon shipment of PG and CP monitoring units.

Revenue and related costs with respect to the sale of equipment were recognized over the estimated life of the units which was estimated

to be three years.

On September 1, 2023, OmniMetrix launched an updated version of its products that includes new functionality in its

TrueGuard, AIRGuard, Patriot and Hero products that allows its customers to have options as it relates to obtaining and utilizing the

data that is provided by its hardware devices.

This new functionality allows for SIM card options, configuration options regarding IP

address endpoints and DNS routes, and access to OmniMetrix’s over-the-air data protocol.

This product update allows customers to

have the option to purchase OmniMetrix’s monitoring service, monitor the products themselves if they have the ability in-house,

or choose another monitoring provider if they so desire.

OmniMetrix’s prior hardware product version could not function as a distinct

product from its monitoring services.

This new version’s functionality results in OmniMetrix’s hardware and monitoring services

being capable of being two distinct products and services.

OmniMetrix recognizes revenue, COGS and commissions from the sale of the new

version of its hardware products sold when the product is shipped rather than over the estimated time that the unit is in service for

the customer.

The remaining balance of deferred hardware revenue from the prior version of these products will continue to be amortized

each period until it is fully amortized.

The modification to the circuit boards and embedded firmware of hardware enclosures in inventory

as of August 31, 2023 were made such that only the new version of these products was sold subsequent to this date.

following table disaggregates the Company’s revenue for the years ended December 31, 2023 and 2022 (in thousands):

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Total Revenue

ended December 31, 2021:

Year ended December 31, 2022:

Total Revenue

revenue activity for the year ended December 31, 2023 can be seen in the table below (in thousands):

SCHEDULE OF DEFERRED REVENUE ACTIVITY

at December 31, 2021

during the period

at December 31, 2022

to be recognized as revenue in the year ending:

31, 2025 and thereafter

revenue of $ 780,000 is related to custom design hardware, accessories, repairs, and other miscellaneous charges that are recognized to

revenue when sold and are not deferred.

Balance at December 31, 2022

Additions during the period

Recognized as revenue

Balance at December 31, 2023

Amounts to be recognized as revenue in the year ending:

December 31, 2024

December 31, 2025

December 31, 2026 and thereafter

amount of hardware revenue recognized during the year ended December 31, 2023 that was included in deferred revenue at the beginning

of the fiscal year was $ 1,890,000 .

The amount of monitoring revenue during the year ended December 31, 2023 that was included in deferred

revenue at the beginning of the fiscal year was $ 2,054,000 .

revenue activity for the year ended December 31, 2022 can be seen in the table below (in thousands):

at December 31, 2020

Deferred revenue, beginning balance

during the period

at December 31, 2021

Deferred revenue ending balance

to be recognized as revenue in the year ending:

31, 2024 and thereafter

revenue of $ 890,000 is related to revenue from sales of custom design hardware, accessories, repairs, and other miscellaneous charges

that are recognized to revenue when sold and are not deferred.

charges relate only to the sale of equipment.

Balance at December 31, 2021

Additions during the period

Recognized as revenue

Balance at December 31, 2022

OF RECONCILIATION OF HARDWARE REVENUE

Reconciliation of Hardware Revenue

Amortization of deferred revenue

Sales of custom designed units and related accessories

Hardware sales (new product versions)

Other accessories, services, shipping and miscellaneous charges

Total hardware revenue

charges relate only to the sale of HW.

Deferred charges activity for the year ended December 31, 2023 can be seen in the table

below (in thousands):

SCHEDULE OF DEFERRED CHARGES ACTIVITY

at December 31, 2021

during the period

as cost of sales

at December 31, 2022

to be recognized as cost of sales in the year ending:

31, 2025 and thereafter

costs paid to AT&T and the COGS related to sales of upgrade kits, accessories and repairs of $ 843,000 in the aggregate are expensed

as incurred and are not deferred.

charges activity for the year ended December 31, 2021 can be seen in the table below (in thousands):

at December 31, 2020

Deferred charges beginning balance

during the period

as cost of sales

at December 31, 2021

Deferred charges ending balance

to be recognized as cost of sales in the year ending:

31, 2024 and thereafter

costs paid to AT&T and the COGS related to sales of custom design hardware, accessories and repairs of $ 929,000 in the aggregate

are expensed as incurred and are not deferred.

Company pays its employees sales commissions for sales of HW and for first sales of monitoring services (not for renewals).

In accordance

with Topic 606, Revenue from Contracts with Customers, of the FASB Accounting Standards Codification (“ASC 606”), the Company

capitalizes as a contract asset the sales commissions on these sales.

Contract assets associated with HW are amortized over the estimated

life of the units which are currently estimated to be three years.

Contract assets associated with monitoring services are amortized

over the expected monitoring life including renewals.

OF DEFERRED CHARGES ACTIVITY

Balance at December 31, 2022

Additions during the period

Recognized as cost of sales

Balance at December 31, 2023

Amounts to be recognized as cost of sales in the year ending:

December 31, 2024

December 31, 2025

December 31, 2026 and thereafter

charges relate only to the sale of HW.

Deferred charges activity for the year ended December 31, 2022 can be seen in the table

below (in thousands):

Balance at December 31, 2021

Additions during the period

Recognized as cost of sales

Balance at December 31, 2022

OF RECONCILIATION OF COGS EXPENSE

Reconciliation of COGS Expense

Amortization of deferred COGS

COGS of custom designed units and related accessories

COGS of hardware sales (new product versions)

Data costs for monitoring

Other accessories, services, shipping and miscellaneous charges

Total COGS expense

following table provides a reconciliation of the Company’s sales commissions contract assets for the year ended December 31, 2023

(in thousands):

SCHEDULE OF SALES COMMISSIONS CONTRACT ASSETS

at December 31, 2021

during the period

of sales commissions

at December 31, 2022

OF SALES COMMISSIONS CONTRACT ASSETS

Balance at December 31, 2022

Additions during the period

Amortization of sales commissions

Balance at December 31, 2023

capitalized sales commissions are included in other current assets ($ 202,000 ) and other assets ($ 162,000 ) in the Company’s Consolidated

Balance Sheets at December 31, 2023.

OF SALES COMMISSIONS EXPENSE

Amounts to be recognized as sales commissions expense in the year ending:

December 31, 2024

December 31, 2025

December 31, 2026 and thereafter

following table provides a reconciliation of the Company’s sales commissions contract assets for the year ended December 31, 2022

(in thousands):

at December 31, 2020

Sales commissions contract assets beginning balance

during the period

of sales commissions

at December 31, 2021

Sales commissions contract assets ending balance

Balance at December 31, 2021

Additions during the period

Amortization of sales commissions

Balance at December 31, 2022

capitalized sales commissions are included in other current assets ($ 196,000 ) and other assets ($ 203,000 ) in the Company’s Consolidated

1 unchanged sentence

14— SUBSEQUENT EVENTS

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 .

January 3, 2023, 30,000 options in the aggregate were issued to directors 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 in the aggregate.

February 27, 2023, 10,000 options were issued to the new Director of Software Development and Technology with an exercise price of $ 0.41

and that vest in equal increments over three years on the anniversary date of the issuance with the last tranche vesting on February

These options are valued at $ 3,000 .

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 the

Chief Executive Officer.

January 2, 2024, 4,400

options were issued to the CEO and CFO in the

aggregate with an exercise price of $ 6.09

and that vest

in equal increments on January 2, 2024, April 1, 2024, July 1, 2024 and October 1, 2024 with

a fair value of $ 1,000

in the aggregate.

On January 1, 2024, 2,500

options in the aggregate were issued to directors

with an exercise price of $ 6.09

and that vest

in equal increments on January 1, 2024, April 1, 2024, July 1, 2024 and October 1, 2024 with

a fair value of $ 600

in the aggregate.

On January 31, 2024, 1,000

options were issued to the Company’s Director

of Business Development with an exercise price of $ 6.00

and that vest

in equal increments over three years on the anniversary date of the issuance with the last tranche vesting on January 31, 2027

with a fair value of $ 700 .

On January 1, 2024, 625

options that were set to expire on January

1, 2024 were exercised at an exercise price of

per share by one of the Company’s directors.

The transaction was a cashless exercise in which 296

shares were deposited to treasury stock in payment

of the exercise price and 329

shares were issued to the director.

21, 2024, 2,187

options that were set to expire that day

were exercised at an exercise price of $ 5.76

per share by the CEO.

January 12, 2024, we entered into a new contract with our current primary data provider for Internet of Things (IoT) wireless services

for a 36-month contract term with automatic one-year extensions, subject to termination notice.

The pricing structure involves account

setup, SIM charges, monthly revenue obligations, and various rate plans based on data usage and regions along with other optional services.

The monthly revenue obligation is $ 10,000 for the first 6 months and $ 15,000 thereafter.

We will also be eligible for volume discounts

based on total monthly service revenue.

Additionally, the agreement includes an IoT Enhanced Support and Priority Care Services Rate

Plan with various support service types and pricing tiers based on the number of devices and terms for SIM migrations, including tiered

pricing and conditions for waiver of certain charges during migration.

This new agreement will allow us to migrate our customers to higher

tier data plans for nominal additional cost.

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 9A. Controls and Procedures