What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2024-11-07 compared with 2024-08-08 · 321 added, 334 removed, 264 unchanged (71% of the section changed)

2 unchanged sentences

THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)

June 30, 2024

September 30, 2024

December 31, 2023

receivable, net

cost of goods sold (COGS)

current assets

Accounts receivable, net

Inventory, net

Deferred cost of goods sold (COGS)

Other current assets

Total current assets

Property and equipment, net

Right-of-use assets, net

Deferred COGS

LIABILITIES AND DEFICIT

current assets

and equipment, net

AND EQUITY (DEFICIT)

operating lease liabilities

current liabilities

Accounts payable

Accrued expenses

Deferred revenue

Current operating lease liabilities

Other current liabilities

Total current liabilities

current liabilities

operating lease liabilities

long-term liabilities

Deferred revenue

Noncurrent operating lease liabilities

Other long-term liabilities

Total liabilities

Commitments and contingencies (Note 7)

Acorn Energy, Inc.

Common stock - $ 0.01 par value per share:

42,000,000 shares authorized, 2,537,485 and 2,534,969 shares issued at June 30, 2024 and December 31, 2023, respectively, and 2,487,307 and 2,484,791 shares outstanding at June 30, 2024 and December 31, 2023, respectively

Additional paid-in capital

Accumulated stockholders’ deficit

Treasury stock, at cost – 50,178 shares at June 30, 2024 and December 31, 2023

Total Acorn Energy, Inc.

and contingencies (Note 7)

stock - $ 0.01 par value per share:

42,000,000 shares authorized, 2,537,485 and 2,534,969 shares issued at September 30, 2024 and

December 31, 2023, respectively, and 2,487,307 and 2,484,791 shares outstanding at September 30, 2024 and December 31, 2023, respectively

paid-in capital

stockholders’ deficit

Non-controlling interest

Total deficit

Total liabilities and deficit

stock, at cost – 50,178 shares at September 30, 2024 and December 31, 2023

Acorn Energy, Inc.

stockholders’ equity (deficit)

Non-controlling

equity (deficit)

liabilities and equity (deficit)

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

2 unchanged sentences

(IN THOUSANDS, EXCEPT PER SHARE DATA)

Six months ended

Three months ended

and development expense (R&D)

general and administrative (SG&A) expense

operating expenses

Research and development expenses (R&D)

Selling, general and administrative (SG&A) expenses

Total operating expenses

Operating income (loss)

Interest income, net

Income before income taxes

Income tax expense

Non-controlling interest share of income

Net income attributable to Acorn Energy, Inc.

Basic and diluted net income per share attributable to Acorn Energy, Inc stockholders – basic and diluted

Weighted average number of shares outstanding attributable to Acorn Energy, Inc.

income (loss)

before income taxes

Non-controlling

interest share of income

income attributable to Acorn Energy, Inc.

and diluted net income per share attributable to Acorn Energy, Inc stockholders – basic and diluted

average number of shares outstanding attributable to Acorn Energy, Inc.

stockholders – basic and diluted

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

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

AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN DEFICIT

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (DEFICIT)

(IN THOUSANDS)

Outstanding *

Stockholders’

controlling interest

Three and Six Months Ended June 30, 2024

Three and Nine Months Ended September 30, 2024

of Shares Outstanding

Paid-In Capital

Stockholders’

controlling interest

Balances as of December 31, 2023

Equity (Deficit)

controlling interests

as of December 31, 2023

$ ( 101,148 )

1 unchanged sentence

Proceeds from warrant exercise, shares

Proceeds from stock option exercise

Accrued dividend in OmniMetrix preferred shares

Stock-based compensation

Balances as of March 31, 2024

from stock option exercise

dividend in OmniMetrix preferred shares

as of March 31, 2024

$ ( 101,083 )

Accrued dividend in OmniMetrix preferred shares

Stock-based compensation

Balances as of June 30, 2024

dividend in OmniMetrix preferred shares

as of June 30, 2024

$ ( 100,812 )

Three and Six Months Ended June 30, 2023

dividend in OmniMetrix preferred shares

as of September 30, 2024

$ ( 100,087 )

and Nine Months Ended September 30, 2023

of Shares Outstanding

Paid-In Capital

of Treasury Shares

Stockholders’

controlling interest

Balances as of December 31, 2022

controlling interests

as of December 31, 2022

$ ( 101,267 )

Proceeds from warrant exercise

Accrued dividend in OmniMetrix preferred shares

Stock-based compensation

Balances as of March 31, 2023

from warrant exercise

dividend in OmniMetrix preferred shares

as of March 31, 2023

$ ( 101,352 )

dividend in OmniMetrix preferred shares

as of June 30, 2023

$ ( 101,256 )

Net income (loss)

Accrued dividend in OmniMetrix preferred shares

Stock-based compensation

Balances as of June 30, 2023

$ ( 101,256 )

income (loss)

dividend in OmniMetrix preferred shares

as of September 30, 2023

$ ( 101,232 )

As adjusted to account for the September 2023 1-for-16 reverse stock split

$ ( 101,232 )

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

2 unchanged sentences

(IN THOUSANDS)

Six months ended June 30,

Cash flows provided by operating activities:

Depreciation and amortization

(Decrease) increase in the provision for credit loss

Impairment of inventory

Non-cash lease expense

Stock-based compensation

Change in operating assets and liabilities:

Decrease (increase) in accounts receivable

Decrease (increase) in inventory

Decrease in deferred COGS

flows provided by operating activities:

and amortization

increase in the provision for credit loss

lease expense

in operating assets and liabilities:

decrease in accounts receivable

(increase) in inventory

in deferred COGS

(increase) in other current assets and other assets

(Decrease) increase in deferred revenue

Decrease in operating lease liability

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 technology

Equipment purchases

Net cash used in investing activities

Cash flows provided by financing activities:

Stock option exercise proceeds

Warrant exercise proceeds

Net cash provided by financing activities

Net increase in cash

Cash at the beginning of the period

Cash at the end of the period

Supplemental cash flow information:

Cash paid during the year for:

Non-cash investing and financing activities:

Accrued preferred dividends to former CEO of OmniMetrix

increase in deferred revenue

in operating lease liability

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

cash provided by operating activities

flows used in investing activities:

in technology

cash used in investing activities

flows provided by financing activities:

option exercise proceeds

exercise proceeds

cash provided by financing activities

increase in cash

at the beginning of the period

at the end of the period

cash flow information:

paid during the period for:

investing and financing activities:

preferred dividends to former CEO of OmniMetrix

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

14 unchanged sentences

of normal recurring adjustments) considered necessary for a fair presentation have been included.

Operating results for the six- and

three-month periods ended June 30, 2024 and 2023 are not necessarily indicative of the results that may be expected for the year ending

December 31, 2024.

Operating results for the nine- and

three-month periods ended September 30, 2024 and 2023 are not necessarily indicative of the results that may be expected for the year

ending December 31, 2024.

dollar amounts, except per share data, are rounded to the nearest thousand and, thus, are approximate.

18 unchanged sentences

share repurchase for all prior periods presented.

Accordingly, the unaudited Condensed Consolidated Statement of Deficit reflects the

impact of the Reverse Stock Split by reclassifying from “Common Stock” to “Additional paid-in capital” an amount

equal to the aggregate par value of the number of shares by which the total number of shares outstanding decreased as a result of the

Reverse Stock Split.

Accordingly, the unaudited Condensed Consolidated Statements of Equity (Deficit) reflects

the impact of the Reverse Stock Split by reclassifying from “Common Stock” to “Additional paid in capital” an

amount equal to the aggregate par value of the number of shares by which the total number of shares outstanding decreased as a result

of the Reverse Stock Split.

2— ACCOUNTING POLICIES

7 unchanged sentences

of Credit Risk

instruments, which potentially subject the Company to concentrations of credit risk, consist principally of cash and trade accounts receivable.

instruments, which potentially subject the Company to concentrations of credit risk, consist principally of cash and trade accounts

The Company’s cash was deposited with a U.S.

bank and amounted to $ 1,463,000 at June 30, 2024.

The Company does not believe there

is a significant risk of non-performance by its counterparties.

For the six- and three-month periods, one customer represented

10 % and 12 % of the Company’s total invoiced sales, respectively.

At June 30, 2024, the Company

did not have any customers that represented 10 % or greater of our total accounts receivable.

Approximately 25 % of the accounts

receivable at December 31, 2023 was due from one customer which was subsequently collected in full.

Credit risk with respect to the balance of trade receivables is generally diversified due to the number of entities comprising the Company’s

bank and amounted to $ 2,153,000

at September 30, 2024.

The Company does not believe there is a significant risk of non-performance by its counterparties.

nine- and three-month period ended September 30, 2024, there was one customer that represented 12 %

respectively, of the Company’s total invoiced sales.

At September 30, 2024, the Company had one customer that represented 37 %

of its total accounts receivable due by December 29, 2024 based on the customer’s payment terms.

The customer with this concentration of both invoiced sales and accounts receivable is the customer under the material contract that

was executed in June 2024.

See Note 10 for further discussion.

Approximately 25 %

of the accounts receivable at December 31, 2023 was due from one customer which was subsequently collected in full.

Credit risk with

respect to the balance of trade receivables is generally diversified due to the number of entities comprising the Company’s

customer base.

Although we do not believe there is significant risk of non-performance by these counterparties, any failures or defaults

on their part could negatively impact the value of our financial instruments and could have a material adverse effect on our business,

operations or financial condition.

Although we do not believe there is significant risk of non-performance by these counterparties, any failures or

defaults on their part could negatively impact the value of our financial instruments and could have a material adverse effect on

our business, operations or financial condition.

are comprised of components (raw materials), work-in-process and finished goods, which are measured at the lower of cost or net realizable

5 unchanged sentences

inventories are periodically reviewed to identify slow-moving and obsolete inventory.

Management conducts an assessment at each reporting

period of the Company’s inventory reserve and writes off any inventory items that are deemed obsolete.

Management conducts an assessment at the end of

each reporting period of the Company’s inventory reserve and writes off any inventory items that are deemed obsolete.

Company’s revenue recognition policy is consistent with applicable revenue recognition guidance and interpretations.

25 unchanged sentences

federal income tax and income taxes imposed in the state and local jurisdictions where it operates its businesses.

Deferred income taxes are determined using the liability method.

Deferred tax assets and liabilities are recognized for the future tax

consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their

respective tax bases.

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

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

Deferred income taxes are determined using the balance sheet approach.

Deferred tax assets and liabilities are recognized for the future

tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and

their respective tax bases.

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

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

The effect on deferred tax assets and liabilities

2 unchanged sentences

is established to reduce any deferred tax asset for which it is determined that it is more likely than not that some portion of the deferred

tax asset will be realized.

The income tax expense in the six-month period ended June 30, 2024 represents the estimated state tax of

various states on the 2023 income of OmniMetrix.

tax asset will not be realized.

The assessment of the realization of deferred tax assets is subject to significant judgement and the

Company evaluates its deferred tax assets for realizability at each reporting period.

The Company’s deferred tax assets consist

primarily of net operating loss carryforwards which may be able to be utilized against taxable income, however the changes in ownership

may limit the ability to fully utilize loss carryforwards under Internal Revenue Code Section 382.

The Company intends to perform a study

to determine what portion of its deferred tax assets may be subject to annual limitation due to the tax law limitations and complete

this analysis in the fourth quarter of 2024.

The income tax expense in the nine- and three- month periods ended September 30, 2024 represents

the tax by various states on the 2023 income of OmniMetrix.

Company identifies and evaluates uncertain tax positions, if any, and recognizes the impact of uncertain tax positions for which there

is a less than more-likely-than-not probability of the position being upheld when reviewed by the relevant taxing authority.

Such positions

are deemed to be unrecognized tax benefits, and a corresponding liability is established on the balance sheet.

The Company has not recognized

a liability for uncertain tax positions.

If there were an unrecognized tax benefit, the Company would recognize interest accrued related

to unrecognized tax benefits in interest expense and penalties in operating expenses.

The Company’s tax years subject to examination

based on the statute of limitations is generally three years;

however, the tax authorities may examine records and other evidence from

the year the net operating loss was generated when the Company utilizes net operating loss carryforwards in future periods.

and Diluted Net Income Per Share

4 unchanged sentences

average number of shares outstanding plus the dilutive potential of common shares which would result from the exercise of stock options.

and warrants.

The dilutive effects of stock options and warrants are excluded from the computation of diluted net income per share if

doing so would be antidilutive.

combined weighted average number of options (as adjusted to account for the September 2023 1-for-16 reverse stock split) that were excluded

from the computation of diluted net income per share, as they had an antidilutive effect, was 26,000 (with a weighted average exercise

price of $ 8.13 ) and 15,000 (with a weighted average exercise price of $ 9.17 ) for the six- and three-month periods ended June 30, 2024,

respectively.

The combined weighted average number of options excluded from the computation of diluted net income per share was 50,000

(with a weighted average exercise price of $ 7.20 ) and 58,000 (with a weighted average exercise price of $ 6.89 ) for the six- and three-month

periods ended June 30, 2023, respectively.

The dilutive effects of stock options are excluded from the computation of diluted net income per share if doing so would be antidilutive.

the nine-month period ending September 30, 2024, the weighted average number of options that were excluded from the computation of diluted

net income, as they had an antidilutive effect, was 17,000 (which have a weighted average exercise price of $ 9.09 ).

For the three-month

period ending September 30, 2024, the weighted average number of options that were excluded from the computation of diluted net income,

as they had an antidilutive effect, was 15,000 (which have a weighted average exercise price of $ 9.17 ).

For the nine-month period ending

September 30, 2023, the weighted average number of options that were excluded from the computation of diluted net income, as they had

an antidilutive effect, was 6,000 (which have a weighted average exercise price of $ 8.49 ).

For the three-month period ending September

30, 2023, there were no options that were excluded from the computation of diluted net income due to having an antidilutive effect.

following table represents the amounts used in computing earnings per share and the effect on net income 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) and is in thousands,

of potential dilutive shares of common stock (as adjusted to account for the September 2023 1-for-16 reverse stock split) and is in thousands,

except per share data:

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

Six months ended

Three months ended

Net income attributable to common stockholders

Weighted average share outstanding:

income attributable to common stockholders

average shares outstanding:

Stock options

Basic net income per share

Diluted net income per share

net income per share

Accounting Pronouncements

6 unchanged sentences

the adoption of ASU 2023-07 will have on its segment reporting disclosures.

December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740):

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 disclosures.

This ASU will be effective for the annual period ending December

The Company is currently evaluating the timing and impacts of adoption of this ASU.

of June 30, 2024, the Company had $ 1,463,000 of consolidated cash.

June 30, 2024, the Company had a negative working capital of $ 423,000 .

December 2023, the FASB issued ASU No.

2023-09, Income Taxes (Topic 740):

Improvements to Income Tax Disclosures, which requires additional

disclosures of income tax components that affect the rate reconciliation and income taxes paid, broken out by the applicable taxing jurisdictions.

The Company expects to adopt this ASU for the annual period beginning on January 1, 2025, and does not expect a material impact on the

consolidated financial statements.

of September 30, 2024, the Company had $ 2,153,000 of consolidated cash.

September 30, 2024, the Company had working capital of $ 277,000 .

Its working capital includes $ 2,153,000 of cash and deferred revenue

2 unchanged sentences

Total deferred revenue

decreased by $ 1,004,000 , from $ 5,584,000 at December 31, 2023 to $ 4,580,000 at June 30, 2024, as a result of the sales mix of products

decreased by $ 1,200,000 , from $ 5,584,000 at December 31, 2023 to $ 4,384,000 at September 30, 2024, as a result of the sales mix of products

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

The balance of deferred hardware revenue at June 30, 2024 will continue to be amortized over the months remaining in the three-year

period since the hardware’s original date of shipment.

Net cash increased during the six-month period ended June 30, 2024 by $ 14,000 ,

with $ 41,000 provided by operating activities, $ 40,000 used in investing activities, and $ 13,000 provided by financing activities.

of August 6, 2024, the Company had cash of $ 1,546,000 .

The balance of deferred hardware revenue at September 30, 2024 will continue to be amortized over the months remaining in the

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

Net cash increased during the nine-month period ended September

30, 2024 by $ 704,000 , with $ 739,000 provided by operating activities, $ 48,000 used in investing activities, and $ 13,000 provided by financing

of November 5, 2024, the Company had cash of $ 2,087,000 .

The Company believes that such cash, plus the cash expected to be generated

15 unchanged sentences

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, solar installers, 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 customers’ ability to pay.

These factors include the customers’ financial

condition and past payment experience.

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.

Company maintains an allowance for credit losses, which represents an estimate of expected losses over the remaining contractual life

7 unchanged sentences

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

As of June 30, 2024,

As of September 30,

2024, the Company had gross receivables of $ 900,000 and an allowance for credit losses of $ 6,000 .

1 unchanged sentence

OF ALLOWANCES FOR CREDIT LOSSES

June 30, 2024

December 31, 2023

June 30, 2024

December 31, 2023

(in thousands)

Balance at beginning of period

Provision for credit losses adjustment

Net credits (charge-offs)

Balance at end of period

June 30, 2024

December 31, 2023

June 30, 2024

December 31, 2023

(in thousands)

Raw materials

Finished goods

September 30,

at beginning of period

for credit losses adjustment

credits (charge-offs)

at end of period

Inventory net

June 30, 2024 and December 31, 2023, the Company’s inventory reserve was $ 10,000 and $ 8,000 respectively.

September 30, 2024 and December 31, 2023, the Company’s inventory reserve was $ 11,000 and $ 8,000 , respectively.

leases office space and office equipment under operating lease agreements.

3 unchanged sentences

Company negotiates a new term.

Operating lease payments for the six-month periods ended June 30, 2024 and 2023 were $ 64,000 and $ 63,000 ,

Operating lease payments for the nine months ended September 30, 2024 and 2023 were $ 97,000 and $ 96,000 ,

respectively.

Operating lease payments for the three-month periods ended June 30, 2024 and 2023 were $ 32,000 and $ 32,000 , respectively.

The present value of future minimum lease payments on non-cancelable operating leases as of June 30, 2024 using a discount rate of 4.5 %

is $ 160,000 .

The 4.5 % discount rate used was the estimated incremental borrowing rate when the lease was entered into, which, as defined

Leases , is the rate of interest that a lessee would have had to pay to borrow, on a collateralized basis, over a similar

Operating lease payments for the three months ended September 30, 2024 and 2023 were $ 33,000 and $ 33,000 , respectively.

The present value of future minimum lease payments on non-cancellable operating leases as of September 30, 2024 using a discount rate

of 4.5 % is $ 129,000 .

The 4.5 % discount rate used was the estimated incremental borrowing rate when the lease was entered into, which,

as defined in ASC 842:

Leases, is the rate of interest that a lessee would have to pay to borrow, on a collateralized basis, over a similar

term and in a similar economic environment, an amount equal to the lease payments.

1 unchanged sentence

OF SUPPLEMENTAL CASH FLOW INFORMATION RELATED TO LEASES

For the Six Months

Ending June 30,

Cash paid for operating lease liabilities

the Nine Months

September 30,

paid for operating lease liabilities

balance sheet information related to leases consisted of the following:

OF SUPPLEMENTAL BALANCE SHEET INFORMATION RELATED TO LEASES

Weighted average remaining lease terms for operating leases

average remaining lease terms for operating leases

table below reconciles the undiscounted future minimum lease payments under non-cancelable lease agreements having initial terms of more

than one year to the total operating lease liabilities recognized on the unaudited condensed consolidated balance sheet as of June 30,

than one year to the total operating lease liabilities recognized on the unaudited condensed consolidated balance sheet as of September

30, 2024 (in thousands):

OF FUTURE MINIMUM LEASE PAYMENTS

Total undiscounted cash flows

undiscounted cash flows

Imputed interest

Present value of operating lease liabilities ( a )

current portion of $ 127,000 for operating leases.

value of operating lease liabilities (a)

total amount represents the current portion of $ 129,000 for operating leases.

July 6, 2021, the Company entered into an agreement with King Industrial Realty, Inc., to sublease from the Company 1,900 square feet

5 unchanged sentences

specific to the sublease.

During each of the six- and three-month periods ended June 30, 2024 and 2023, after the offset of the investment

in leasehold improvements and other expenses related to the sublease, the Company paid its landlord $ 7,000 and $ 3,000 , respectively.

During each of the nine- and three-month periods ended September 30, 2024 and 2023, after the offset of the

investment in leasehold improvements and other expenses related to the sublease, the Company paid its landlord $ 7,000 and $ 0 , respectively.

The Company has paid a total of $ 16,000 for its share of the sublease profit since the lease commencement.

The sublease commenced on

October 1, 2021 and will run through September 30, 2025 which is the end of the Company’s lease term with its landlord.

the future payments (in thousands) expected under the sublease net of the estimated annual service cost of $ 2,220 (gross of the estimated

amount expected to be remitted to our landlord):

Total undiscounted cash flows

In addition to the $ 16,000

paid since inception, $ 2,000 in sublease profit due has been accrued at September 30, 2024.

The sublease commenced on October 1, 2021

and will run through September 30, 2025 which is the end of the Company’s lease term with its landlord.

Below are the future payments

(in thousands) expected under the sublease net of the estimated annual service cost of $ 2,000 :

undiscounted cash flows - sublease:

7— COMMITMENTS AND CONTINGENCIES

1 unchanged sentence

The contractual

services include $ 242,000 payable through June 30, 2025, $ 208,000 payable through June 30, 2026, and $ 105,000 payable through June 30,

The Company also has $ 468,000 in open purchase order commitments payable through June 30, 2025.

8— STOCKHOLDERS’ DEFICIT

June 30, 2024, Acorn had 2,537,485 shares issued and 2,487,307 shares outstanding of its common stock, par value $ 0.01 per share.

of outstanding common stock are entitled to receive dividends when 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.

services include $ 240,000 payable through September 30, 2025, $ 196,000 payable through September 30, 2026, and $ 60,000 payable through

September 30, 2027.

The Company also has $ 757,000 in open purchase order commitments payable through September 30, 2025 of which $ 581,000

is to one electronics vendor.

8— STOCKHOLDERS’ EQUITY (DEFICIT)

September 30, 2024, Acorn had 2,537,485 shares issued and 2,487,307 shares outstanding of its common stock, par value $ 0.01 per share.

Holders of outstanding common stock are entitled to receive dividends when 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.

11 unchanged sentences

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

June 30, 2024, 68,869 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.

During the six-month period

ended June 30, 2024, 7,900 options were issued of which all were issued in the three-month period ended March 31, 2024.

No options were

issued in the three-month period ended June 30, 2024.

September 30, 2024, 69,973 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.

During the nine-month period ended September 30, 2024,

7,900 options were issued of which all were issued in the three-month period ended March 31, 2024.

No options were issued in the three-month

period ended September 30, 2024.

The options were issued as follows:

an aggregate of 2,500 to directors (excluding

the CEO), 2,200 to the CEO, 2,200 to the CFO and an aggregate of 1,000 to employees.

In the six- and three-month periods ended June 30,

2024, there were no grants to non-employees (other than the directors, CEO and CFO).

the six- and three-month periods ended June 30, 2024, 2,812 options were exercised of which all were exercised in the three-month period

ended March 31, 2024.

No options were exercised in the three-month period ended June 30, 2024.

an aggregate of 2,500 to directors (excluding the CEO), 2,200 to

the CEO, 2,200 to the CFO and an aggregate of 1,000 to employees.

In the nine- and three-month periods ended September 30, 2024, there

were no grants to non-employees (other than the directors, CEO and CFO).

the nine- and three-month periods ended September 30, 2024, 2,812 options were exercised, all of which were exercised in the three-month

period ended March 31, 2024.

No options were exercised in the three-month period ended September 30, 2024.

The Company utilized the Black-Scholes

1 unchanged sentence

OF BLACK-SCHOLES OPTION PRICING ESTIMATE FAIR VALUE

Contractual Life

Outstanding at December 31, 2023

Forfeited or expired

Outstanding at June 30, 2024

Exercisable at June 30, 2024

fair value of the options granted of $ 47,000 during the six-month period ended June 30, 2024 was estimated on the grant date using the

Black-Scholes option-pricing model with the following weighted average assumptions:

at December 31, 2023

at September 30, 2024

fair value of the options granted of $ 47,000 during the nine-month period ended September 30, 2024 was estimated on the grant date using

the Black-Scholes option-pricing model with the following weighted average assumptions:

OF STOCK OPTIONS FAIR VALUE ASSUMPTIONS ESTIMATED USING BLACK-SCHOLES

Risk-free interest rate

Expected term of options

Expected annual volatility

Expected dividend yield

Stock Option Compensation Expense

option compensation expense included in selling, general and administrative expenses in the Company’s unaudited condensed consolidated

statements of operations was $ 38,000 and $ 30,000 for the six-month periods ended June 30, 2024 and 2023, respectively, and $ 11,000 and

$ 13,000 for the three-month periods ended June 30, 2024 and 2023, respectively.

total compensation cost related to non-vested awards not yet recognized was $ 31,000 as of June 30, 2024 which will be recognized over

the next thirty-one months.

interest rate

term of options

annual volatility

dividend yield

Stock-based Compensation Expense

compensation expense included in selling, general, and administrative expense in the Company’s unaudited condensed consolidated

statements of operations was $ 52,000 and $ 46,000 for the nine-month periods ended September 30, 2024 and 2023, respectively, and $ 14,000

and $ 16,000 for the three-month periods ended September 30, 2024 and 2023, respectively.

total compensation cost related to non-vested awards not yet recognized was $ 17,000 and $ 17,000 as of September 30, 2024 and 2023, respectively.

9— SEGMENT REPORTING

of June 30, 2024, the Company operates in two reportable operating segments, both of which are performed through the Company’s

of September 30, 2024, the Company operates in two reportable operating segments, both of which are performed through the Company’s

OmniMetrix subsidiary:

2 unchanged sentences

applications for residential and commercial/industrial power generation equipment.

This includes OmniMetrix’s AIRGuard product,

which remotely monitors and controls industrial air compressors, and its Smart Annunciator product, which is typically sold to commercial

customers that require a visual representation of the generator’s status and has a touchscreen display that indicates the current

state of that generator.

This includes OmniMetrix’s TrueGuard power

generator monitors and AIRGuard product, which remotely monitors and controls industrial air compressors, and its Smart Annunciator

product, which is typically sold to commercial customers that require a visual representation of the generator’s status and

has a touchscreen display that indicates the current state of that generator.

Protection (“CP”).

8 unchanged sentences

as each business requires different technology and marketing strategies.

following tables represent segmented data for the six- and three-month periods ended June 30, 2024 and 2023 (in thousands):

following tables represent segmented data for the nine-month and three-month periods ended September 30, 2024 and 2023 (in thousands):

OF SEGMENTED DATA

Six months ended June 30, 2024:

Revenues from external customers

Segment gross profit

Depreciation and amortization

Segment income (loss) before income taxes

Six months ended June 30, 2023:

Revenues from external customers

Segment gross profit

Depreciation and amortization

Segment income (loss) before income taxes

Three months ended June 30, 2024:

Revenues from external customers

Segment gross profit

Depreciation and amortization

Segment income (loss) before income taxes

Three months ended June 30, 2023:

Revenues from external customers

Segment gross profit

Depreciation and amortization

Segment income before income taxes

months ended September 30, 2024:

from external customers

and amortization

income before income taxes

months ended September 30, 2023:

from external customers

and amortization

income (loss) before income taxes

months ended September 30, 2024:

from external customers

and amortization

income before income taxes

months ended September 30, 2023:

from external customers

and amortization

income before income taxes

Company does not currently break out total assets by reportable segment as there is a high level of shared utilization between the segments.

3 unchanged sentences

OF RECONCILIATION OF SEGMENT DATA TO CONSOLIDATED STATEMENT OF OPERATIONS

Six months ended

Three months ended

net income before income taxes for reportable segments

cost of corporate headquarters

net income (before income taxes

following table disaggregates the Company’s revenue for the nine-month and three-month periods ended September 30, 2024 and 2023

(in thousands):

Total net income before income taxes for reportable segments

Unallocated cost of corporate headquarters

Consolidated net income before income taxes

following table disaggregates the Company’s revenue for the six- and three-month periods ended June 30, 2024 and 2023 (in thousands):

SCHEDULE OF DISAGGREGATES OF REVENUE

Six months ended June 30, 2024:

Total Revenue

Six months ended June 30, 2023:

Total Revenue

Three months ended June 30, 2024:

Total Revenue

Three months ended June 30, 2023:

Total Revenue

revenue activity for the six months ended June 30, 2024 can be seen in the table below (in thousands):

months ended September 30, 2024:

months ended September 30, 2023:

months ended September 30, 2024:

months ended September 30, 2023:

Concentrations of Credit Risk in Note 2 for additional discussion.

revenue activity for the nine months ended September 30, 2024 can be seen in the table below (in thousands):

OF DEFERRED REVENUE ACTIVITY

Balance at December 31, 2023

Additions during the period

Recognized as revenue

Balance at June 30, 2024

Amounts to be recognized as revenue in the twelve-month-period ending:

June 30, 2025

June 30, 2026

June 30, 2027 and thereafter

amount of hardware revenue recognized during the six months ended June 30, 2024 that was included in deferred revenue at the beginning

at December 31, 2023

during the period

at September 30, 2024

to be recognized as revenue in the twelve-month period ending:

30, 2027 and thereafter

amount of hardware revenue recognized during the nine months ended September 30, 2024 that was included in deferred revenue at the beginning

of the fiscal year was $ 1,463,000 .

The amount of monitoring revenue during the six months ended June 30, 2024 that was included in deferred

revenue at the beginning of the fiscal year was $ 1,633,000 .

following table provides a reconciliation of the Company’s hardware revenue for the six- and three-month periods ended June 30,

The amount of monitoring revenue during the nine months ended September 30, 2024 that was included

in deferred revenue at the beginning of the fiscal year was $ 2,081,000 .

following table provides a reconciliation of the Company’s hardware revenue for the nine- and three-month periods ended September

30, 2024 and 2023 (in thousands):

OF RECONCILIATION OF HARDWARE REVENUE

Reconciliation of Hardware Revenue

Six months ended

Three months ended

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

Reconciliation

of Hardware Revenue

Reconciliation

of Hardware Revenue

of deferred revenue

of custom designed units and related accessories

sales (new product versions)

accessories, services, shipping and miscellaneous charges

hardware revenue

COGS relate only to the sale of equipment.

Deferred COGS activity for the six-month period ended June 30, 2024 can be seen in the table

below (in thousands):

Deferred COGS activity for the nine-month period ended September 30, 2024 can be seen in the

table below (in thousands):

OF DEFERRED CHARGES ACTIVITY

Balance at December 31, 2023

Additions, net of adjustments, during the period

Recognized as COGS

Balance at June 30, 2024

Amounts to be recognized as COGS in the twelve-month-period ending:

June 30, 2025

June 30, 2026

June 30, 2027 and thereafter

following table provides a reconciliation of the Company’s COGS expense for the six- and three-month periods ended June 30, 2024

at December 31, 2023

net of adjustments, during the period

at September 30, 2024

to be recognized as COGS in the twelve-month-period ending:

30, 2027 and thereafter

following table provides a reconciliation of the Company’s COGS expense for the nine- and three-month periods ended September 30,

2024 and 2023 (in thousands):

1 unchanged sentence

Reconciliation of COGS Expense

Six months ended

Nine months ended

September 30,

Three months ended

September 30,

Reconciliation of COGS Expense

5 unchanged sentences

Total COGS expense

following table provides a reconciliation of the Company’s sales commissions contract assets for the six-month period ended June

following table provides a reconciliation of the Company’s sales commissions contract assets for the nine-month period ended September

30, 2024 (in thousands):

OF SALES COMMISSIONS CONTRACT ASSETS

at December 31, 2023

during the period

of sales commissions

at June 30, 2024

Balance at December 31, 2023

Additions during the period

Amortization of sales commissions

Balance at September 30, 2024

capitalized sales commissions are included in other current assets ($ 150,000 ) and other assets ($ 86,000 ) in the Company’s unaudited

condensed consolidated balance sheet at June 30, 2024.

condensed consolidated balance sheets as of September 30, 2024.

The capitalized sales commissions are included in other current assets

($ 202,000 ) and other assets ($ 162,000 ) in the Company’s condensed consolidated balance sheet at December 31, 2023.

to be recognized as sales commission expense in the twelve-month-period ending (in thousands):

to be recognized as sales commission expense in the twelve-month-period ending:

OF SALES COMMISSIONS EXPENSE

June 30, 2025

June 30, 2026

June 30, 2027 and thereafter

September 30, 2025

September 30, 2026

September 30, 2027 and thereafter

11— RELATED PARTY BALANCES AND TRANSACTIONS

and Director Fees

Company recorded consulting service fees to officers of $ 269,000 and $ 261,000 for the six-month

periods ended June 30, 2024 and 2023, respectively, and $ 135,000 and $ 131,000 for the three-month periods ended June 30, 2024 and 2023,

respectively, which are included in selling, general and administrative expenses.

Company recorded fees to directors of $ 37,000 and $ 34,000 for the six-month periods ended June 30, 2024 and 2023, respectively, and $ 19,000

and $ 19,000 for the three-month periods ended June 30, 2024 and 2023, respectively, which are included in selling, general and administrative

Company recorded consulting service fees to officers of $ 403,000 and $ 391,000 for the nine-month periods ended September 30, 2024 and

2023, respectively, and $ 134,000 and $ 131,000 for the three-month periods ended September 30, 2024 and 2023, respectively, which are

included in selling, general and administrative expense.

Company recorded fees to directors of $ 56,000 and $ 52,000 for the nine-month periods ended September 30, 2024 and 2023, respectively,

and $ 19,000 and $ 18,000 for the three-month periods ended September 30, 2024 and 2023, respectively, which are included in selling, general

and administrative expense.

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-Q

Item 1. Financial Statements