What changed in this filing

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Item 9A. Controls and Procedures

2025-03-06 compared with 2024-03-07 · 732 added, 676 removed, 955 unchanged (60% of the section changed)

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when and where necessary.

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.

Management identified the following material weaknesses set forth below in our internal control over financial reporting:

The Company had ineffective design and operation of information technology general controls (ITGCs) over logical access, program change management, and vendor management controls.

The Company had ineffective design and operation of internal controls over financial reporting related to segregation of duties and journal entries.

The weakness related to segregation of duties arises due to insufficient segregation of duties within the Company’s ERP system.

Specifically, two individuals currently have access to both the recording and approval of financial transactions, which increases the risk of unauthorized adjustments.

The weakness related to journal entries stems from the ERP’s functionality that allows users to modify journal entries after they have been posted.

This capability creates a risk of unauthorized changes to financial records.

The Company had ineffective design and operation of controls including management review controls, over the Company’s projected financial information within the Company’s deferred tax asset valuation allowance analysis.

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, 2024.

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

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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.

and infrastructure to implement corrective actions.

in 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.

the year ended December 31, 2024, we have implemented the following (i) a process pursuant to which System and Organization Controls

(SOC) reports are obtained from third-party vendors on a recurring schedule and such reports are evaluated for any issues, (ii) provisioning/termination

controls with signed and authenticated authorizations, and (iii) change controls for development processes that require authorizations,

peer review, quality assurance documentation, ticket matching of changes to work authorizations and overall change controls.

belief that these added controls and related actions will effectively remediate the existing material weaknesses.

The material weaknesses

will not be considered remediated, however, until the applicable controls operate for a sufficient period of time and management has

concluded, through testing, that these controls are operating effectively.

than the remediation actions described above, there

were no other changes in our internal control over financial reporting (as such term is defined in Rule 13a-15(f) under the Exchange

Act) during the period covered by this report that has materially affected, or is reasonably likely to materially affect, our internal

control over financial reporting.

OTHER INFORMATION

the fourth quarter of fiscal year 2024, none of our directors or officers adopted or terminated a “Rule 10b5-1 trading arrangement”

or “non-Rule 10b5-1 trading arrangement,” as those terms are defined in Regulation S-K, Item 408.

DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS

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He has served as President, Executive Chairman and

board member of NovelStem International Corp since July 2018.

board member of NovelStem International Corp since July 2018, and as a board member of Gyrodyne, LLC since July 2023.

Attributes, Experience and Skills.

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general business consultancy nationally recognized for branding expertise of food products.

He is on the Board of Directors of Fields

He served in the United States Air Force/Air National Guard, 105th Airborne Division, from 1964 through 1970.

Osterer graduated

from Fordham University with a BA in Social Sciences, Magna Cum Laude .

He served in the United States Air Force/Air

National Guard, 105th Airborne Division, from 1964 through 1970.

Osterer graduated from Fordham University with a BA in Social Sciences,

Magna Cum Laude .

Attributes, Experience and Skills.

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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 is currently the chief financial officer for Grodivo, a corporate culture

measurement software company.

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.

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.

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.

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 Masters

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

Rabover has 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 investments.

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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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

of ethics by posting such information on our website, www.acornenergy.com.

We also intend to satisfy

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

posting such information on our website, www.acornenergy.com.

Trading Policy

have adopted an Insider Trading Policy governing the purchase, sale and/or other dispositions of

our securities by directors, officers and employees, and by the Company itself, that are reasonably designed to promote compliance with

insider trading laws, rules and regulations, and any listing standards applicable to us.

A copy of the policy is filed as Exhibit 19.1

to this Annual Report on Form 10-K.

EXECUTIVE COMPENSATION

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the grant date fair value calculated in accordance with applicable accounting principles with respect to 2,200 options granted on

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.

January 2, 2024 with an exercise price of $6.09.

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 4.0% (ii) an expected term of 4.88 years (iii) an assumed

volatility of 194.1% and (iv) no dividends.

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

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the grant date fair value calculated in accordance with applicable accounting principles with respect to 2,200 options granted on

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.

January 2, 2024 with an exercise price of $6.09.

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 4.0% (ii) an expected term of 4.88 years (iii) an assumed

volatility of 194.1% and (iv) no dividends.

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

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Compensation for 2024 and 2023

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 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,

2023, to purchase 2,187 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 $5.60 per share (as adjusted in connection with the September 2023 1-for-16 reverse stock

On January 2, 2024, the Company entered into a consulting agreement (the “2024

Loeb Consulting Agreement”) extending its arrangements for compensation of Mr.

Pursuant to the 2024 Loeb Consulting Agreement,

Loeb received cash compensation of $16,780 per month for service as President and CEO of Acorn, and an additional $10,000 per month

for serving 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.

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

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 remaining options vested 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 Consulting Agreement expired on December

the Company and Mr.

Loeb have entered into a new consulting

agreement for 2024 as described below under Employment Arrangements .

Loeb have entered into a new consulting agreement for 2025 as described below under Employment Arrangements .

January 1, 2023, the Company entered into a new consulting agreement (the “2023 Consulting Agreement”) with Jan H.

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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.

On 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 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, had an initial 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 2024 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.

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

Clifford receives cash compensation

of $18,025 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).

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

Clifford shall be entitled to 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

vested 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.

This agreement auto renewed on January 1, 2025.

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

Clifford (the “2023 Clifford Consulting

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).

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

the remaining options vested in three equal increments on September 1, 2023, December

1, 2023 and March 1, 2024.

On 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

From January to May 2023, Ms.

Clifford received cash compensation of $17,500 per month pursuant to the terms of the Amended

and Restated Consulting Agreement entered into by the Company and Tracy Clifford Consulting, LLC on June 1, 2022.

input on executive compensation .

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Loeb also received a grant of options on January 6, 2025 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.

which are exercisable at an exercise price equal to the January 3, 2025, closing price of the common stock of $17.50 per share.

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

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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.

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.

January 1, 2025, the 2024 Clifford Consulting Agreement discussed

above for the provision of Ms.

Clifford’s services as both CFO of Acorn and COO of OmniMetrix automatically renewed for another

one-year term .

Pursuant to the 2024 Clifford Consulting Agreement, Ms.

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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.

Clifford also received a grant of options on January 1, 2025 to purchase 2,200 shares of the Company’s

common stock, which are exercisable at an exercise price equal to the December 31, 2024, closing price of the common stock of $17.89

Twenty-five 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.

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.

the remaining options shall vest in three equal increments

on April 1, 2025, July 1, 2025 and October 1, 2025.

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 2024 Fiscal Year End

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.

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

OPTIONS TO PURCHASE ACORN ENERGY, INC.

Unexercisable

Expiration Date

January 1, 2027

January 1, 2028

January 1, 2029

January 1, 2030

January 2, 2031

June 25, 2026

January 2, 2031

and Warrant Exercises

were exercised by Jan Loeb on December 9, 2024, for 2,187 shares at an exercise price of $5.60 per share and on February 21, 2024, for

2,187 shares at an exercise price of $5.76 per share.

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).

an exercise price of $2.08 per share.

Non-qualified

Deferred Compensation

There was no executive non-qualified deferred compensation activity for

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

was no executive non-qualified deferred compensation activity for either of our named executive officers for the year ended December

and Benefits Upon Termination or Change in Control

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option to purchase 1,562 shares of Company Common Stock.

Each option so granted to a newly elected/appointed Director shall vest for

the purchase of one-third of the shares purchasable under such option on each of the three anniversaries following the date of first

Each option granted to a newly elected/appointed Director shall vest for the

purchase of one-third of the shares purchasable under such option on each of the three anniversaries following the date of the first

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 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.

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.

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).

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

ended December 31, 2024 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 2024

Fees Earned or

Paid in Cash ($)

Peter Rabover

January 1, 2024, Samuel M.

Zentman, Gary Mohr, and Michael F.

Osterer were each granted 625 options to acquire stock in the Company.

Zentman, Gary Mohr, Peter Rabover, and Michael F.

Osterer were each granted 625 options to acquire stock

in the Company.

The options had an exercise price of $6.09 and were to expire on January 1, 2031.

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 4.14% (ii) an expected term

of 3.7 years (iii) an assumed volatility of 94% and (iv) no dividends.

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 3.86% (ii)

an expected term of 4.9 years (iii) an assumed volatility of 194.1% and (iv) no dividends.

the annual retainer of $15,000 as a non-employee director and $10,000 received for services rendered as Chairman of the Audit Committee.

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.

the annual retainer of $15,000 as a non-employee director.

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

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

Number of Shares

Common Stock Beneficially

Percentage of

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

Joel Charles Sklar

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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For purposes of this

table, a person or group of persons is deemed to have “beneficial ownership” of any shares as of a given date which such

person has the right to acquire within 60 days after such date.

table, a person or group of persons is deemed to have “beneficial ownership” of any shares, as of a given date which

such person has the right to acquire within 60 days after such date.

Percentage information is based on the 2,491,130 shares outstanding

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of 68,238 shares beneficially held by Mr.

Mohr (including 52,083 shares held by UE Systems

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

Mohr (including 52,083 shares held by UE Systems Inc.), and 5,624 shares underlying currently

exercisable options.

of 176,107 shares beneficially held by Mr.

Osterer (including 52,083 shares held by

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

Osterer (including 52,083 shares held by UE Systems Inc.), and 5,951 shares underlying

currently exercisable options.

of 123,218 shares held by Artko Capital LP and 1,978 shares underlying currently exercisable options held by Mr.

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of 838,671 shares and 55,463 shares underlying currently exercisable options.

information is based on a Schedule 13G filed by Mr.

Sklar with the SEC on October 18, 2024, reporting beneficial ownership as of

Sklar reported that he has sole voting power and sole dispositive power with respect to all 162,111 shares of Common

COMPENSATION PLAN INFORMATION

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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 66,698 options which were granted under our

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

In March 2025, the Company’s Board ratified all option grants made under our Amended and Restated 2006 Stock

Incentive Plan following expiration of the Plan on December 31, 2024 and extended the expiration date of the Amended and Restated 2006

Stock Incentive Plan until December 31, 2034.

awards are granted to our named executive officers pursuant to the terms of their consulting agreements.

The 2024 Loeb Consulting Agreement

and the 2025 Loeb Consulting Agreement each provided for, on the date the respective agreement was executed, a grant of 2,200 stock options

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

The 2024 Clifford

Consulting Agreement calls for, on each anniversary of January 1, 2024, so long as the 2024 Clifford

Consulting Agreement has not been terminated, a grant of 2,200 stock options exercisable

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

Our director compensation policy currently calls for an annual grant

of stock options to our directors on the first day of the applicable fiscal year.

In addition, equity awards may be granted at other

times during the year to new hires, employees receiving promotions, and in other special circumstances.

do not grant equity awards in anticipation of the release of material, nonpublic information or time the release of material, nonpublic

information based on equity award grant dates, vesting events, or sale events.

For all stock option awards, the exercise price is the

closing price of our common stock on the OTCQB marketplace on the last trading day preceding the date of grant.

CERTAIN RELATIONSHIPS, RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE

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PRINCIPAL ACCOUNTING FEES AND SERVICES

LLP and Marcum LLP

following table summarizes the fees billed to Acorn for professional services rendered by Friedman LLP (through September 8, 2022) and

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

following table summarizes the fees billed to Acorn for professional services rendered by Marcum, LLP for the years ended December 31,

2024 and 2023.

All other fees

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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.

Fees generally consist of tax compliance and return preparation fees.

Policies and Procedures

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Firms are included in this Annual Report beginning on page F-1.

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

of Independent Registered Public Accounting Firm (PCAOB ID 688)

Consolidated Balance Sheets as of December 31, 2024 and 2023

Consolidated Statements of Operations

Consolidated Statements of Changes in Stockholders’ Deficit

Consolidated Statements of Changes in Equity (Deficit)

Consolidated Statements of Cash Flows

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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

S 1 (File No.

By laws of the Registrant

(incorporated herein by reference to Exhibit 3.2 to the Registrant’s Registration Statement on Form S 1 (File No.

(the “1992 Registration Statement”)).

to the By Laws of the Registrant adopted December 27, 1994 (incorporated herein by reference to Exhibit 3.3 of the Registrant’s

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

Amendments to the By Laws

of the Registrant adopted December 27, 1994 (incorporated herein by reference to Exhibit 3.3 of the Registrant’s 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).

Specimen certificate for

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

Form of Representative Warrant (incorporated herein by reference to Exhibit 4.1 of Registrant’s Current Report on Form 8-K filed October 15, 2013)

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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).

Amended and Restated 2006 Stock Incentive Plan.

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).

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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).

Acorn Energy, Inc.

Insider Trading Policy

List of subsidiaries.

4 unchanged sentences

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,

formatted in Inline XBRL (eXtensible Business Reporting Language):

(i) Consolidated Balance Sheets, (ii) Consolidated Statements

of Operations, (iii) Consolidated Statements of Comprehensive Income (Loss), (iv) Consolidated Statements of Changes in Equity, (v)

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

the Registrant participate.

exhibit is filed or furnished herewith.

The following

financial statements from Acorn Energy’s Form 10-K for the year ended December 31, 2024, filed on March 6, 2025, formatted

in Inline XBRL (eXtensible Business Reporting Language):

(i) Consolidated Balance Sheets, (ii) Consolidated Statements of Operations,

(iii) Consolidated Statements of Comprehensive Income (Loss), (iv) Consolidated Statements of Changes in Equity, (v) Consolidated

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

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

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

is filed or furnished herewith.

to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed

on its behalf by the undersigned, thereunto duly authorized, in the City of Wilmington, State of Delaware, on March 6, 2025.

and Chief Executive Officer

ACORN ENERGY,

President and Chief Executive

to the requirements of the Securities Exchange Act of 1934, this report has been signed by the following persons on behalf of the registrant,

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Peter Rabover

AND SUBSIDIARIES

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Consolidated Statements of Operations

Consolidated Statements of Stockholders’ Changes in Deficit

Consolidated Statements of Changes in Equity (Deficit)

Consolidated Statements of Cash Flows

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OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

the Board of Directors and

To the Stockholders and Board of Directors of

Acorn Energy, Inc.

on the Financial Statements

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

and subsidiaries (the “Company”) as of

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.

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

financial statements based on our audits.

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.

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

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

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.

Opinion on the Financial Statements

We have audited the accompanying consolidated balance

sheets of Acorn Energy, Inc.

(the “Company”) as of December 31, 2024 and 2023, the related consolidated statements of operations,

changes in equity (deficit), and cash flows for each of the two years in the period ended December 31, 2024, 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, 2024 and 2023, and the results of its operations and its cash flows for each

of the two years in the period ended December 31, 2024, in conformity with accounting principles generally accepted in the United States

Basis for Opinion

These 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 audits.

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.

We 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.

Our 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 provide a reasonable basis for our opinion.

Critical Audit Matters

The 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

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.

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.

Realizability of Deferred Tax Assets

Critical Audit Matter Description

As described in Note 10 of the financial statements,

at December 31, 2024, the Company had deferred tax assets of $4.4 million (net of a $11.4 million valuation allowance).

Deferred tax assets

are reduced by a valuation allowance if, based upon the weight of all available evidence, it is more likely than not that some portion,

or all, of the deferred tax assets will not be realized.

Auditing the Company’s analysis of the realizability

of its deferred tax assets required complex auditor judgment because the amounts are material to the financial statements and the assessment

process involves significant judgment related to the projections of future taxable income that may be affected by future market or economic

How the Critical Audit Matter Was Addressed in

We obtained an understanding and evaluated the design

of controls that address the risks of material misstatement relating to the realizability of deferred tax assets.

This included controls

over management’s projected financial information that have been identified as a source of future taxable income.

To test the Company’s assessment of the realizability of deferred tax assets and the resulting valuation allowance,

our audit procedures included, among others, testing the Company’s calculation of future taxable income from the reversal of existing

temporary taxable differences.

In addition, we evaluated projected future taxable income exclusive of reversing temporary differences

and carryforwards.

We involved our tax professionals to assist in evaluating the application of tax law in the Company’s consideration

of the sources of future taxable income.

/s/ Marcum llp

have served as the Company’s auditor since 2010.

AND SUBSIDIARIES

BALANCE SHEETS

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Other current assets

Deferred cost of goods sold

State income tax receivable

Deferred cost of goods sold (COGS)

Total current assets

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Right-of-use assets, net

Deferred cost of goods sold

LIABILITIES AND DEFICIT

Deferred COGS

Deferred tax assets

LIABILITIES AND EQUITY (DEFICIT)

Current liabilities:

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Other current liabilities

State income tax payable

Total current liabilities

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Commitments and contingencies (Note 8)

Stockholders’ Deficit:

Equity (deficit):

Acorn Energy, Inc.

Common stock – $ 0.01 par value per share;

Authorized – 42,000,000

issued and outstanding – 2,484,791

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*

Authorized – 42,000,000 shares;

issued – 2,541,308 and 2,534,969 shares at December 31, 2024 and 2023, respectively;

outstanding – 2,491,130 and 2,484,791 at December 31, 2024 and 2023, respectively

Additional paid-in capital

Accumulated stockholders’ deficit

Treasury stock, at cost – 50,178

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

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

Total Acorn Energy, Inc.

stockholders’ deficit

stockholders’ equity (deficit)

Non-controlling interests

Total stockholders’ deficit

Total liabilities and stockholders’ deficit

* As adjusted to

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

Total equity (deficit)

Total liabilities and equity (deficit)

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

AND SUBSIDIARIES

STATEMENTS OF OPERATIONS

THOUSANDS, EXCEPT NET LOSS PER SHARE DATA)

THOUSANDS, EXCEPT PER SHARE DATA)

Year ended December 31,

Cost of sales

Operating expenses:

Research and development expenses

Selling, general and administrative expenses

Impairment of software

Research and development expense (R&D)

Selling, general and administrative (SG&A) expense

Total operating expenses

Operating income (loss)

Finance income (expense), net

Income (loss) before income taxes

Income tax expense

Net income (loss)

Operating income

Interest income, net

Income before income taxes

Current state tax expense

Deferred income tax benefit

Non-controlling interest share of income

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

Net income attributable to Acorn Energy, Inc.

stockholders.

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

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

stockholders:

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

stockholders – basic and diluted

Net income per share attributable to Acorn Energy, Inc.

stockholders – basic

Net income per share attributable to Acorn Energy, Inc.

stockholders –diluted

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

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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.

STATEMENTS OF CHANGES IN STOCKHOLDERS’ DEFICIT

Number of Shares *

Stockholders’

AND SUBSIDIARIES

STATEMENTS OF CHANGES IN EQUITY (DEFICIT)

Acorn Energy, Inc.

Number of Shares*

Number of Shares Outstanding

Stockholders’

controlling interests

Balances as of December 31, 2022

$ ( 101,267 )

Net (loss) income

Proceeds from stock option exercise

Accrued dividend in OmniMetrix preferred shares

Stock option compensation

Stock-based compensation

Balances as of December 31, 2023

Net (loss) income

Proceeds from warrant exercise

Proceeds from stock option exercises

Accrued dividend in OmniMetrix preferred shares

Stock option compensation

Stock-based compensation

Balances as of December 31, 2024

$ ( 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

Impairment of software

Decrease in the provision for credit losses

Impairment of inventory

Non-cash lease expense

Deferred income tax benefit

Stock-based compensation

Change in operating assets and liabilities:

Decrease in accounts receivable

Increase in inventory

Decrease (increase) in deferred cost of goods sold

Decrease (increase) in other current assets and other assets

(Decrease) increase in deferred revenue

(Increase) decrease in accounts receivable

Decrease (increase) in inventory

Decrease in deferred COGS

Decrease in other current assets and other assets

Increase in state income tax receivable

Decrease in deferred revenue

Decrease in operating lease liability

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

Increase in state income tax payable

Increase (decrease) in accounts payable, accrued expenses, other current liabilities and non-current liabilities

Net cash provided by operating activities

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Investments in technology

Other capital investments

Equipment purchases

Net cash used in investing activities

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Net cash provided by financing activities

Net decrease in cash

Net increase (decrease) in cash

Cash at the beginning of the year

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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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LLC (“OmniMetrix”) subsidiary:

Generation (“PG”) monitoring.

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 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.

Generation (“PG”).

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

for residential and commercial/industrial power generation equipment.

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”).

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

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

The CP product lineup includes solutions to remotely

monitor and control rectifiers, test stations and bonds.

OmniMetrix also offers the industry’s first RAD TM (Remote AC

Mitigation Disconnect) that mounts onto existing Solid-state Decouplers in the field and can remotely disconnect/connect these AC mitigation

tools, which can drastically reduce a company’s expense while increasing employee safety.

Notes 12 and 13 for segment information and major customers.

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

of December 31, 2024, the Company had $ 2,326,000 of consolidated cash.

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

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

revenue of $ 4,034,000 .

December 31, 2024, the Company had working capital of $ 1,115,000 .

Its working capital includes $ 2,326,000 of cash and deferred revenue

of $ 3,521,000 .

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

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.

Total deferred revenue

decreased by $ 1,351,000 , from $ 5,584,000 at December 31, 2023 to $ 4,233,000 at December 31, 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 December 31, 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 year ended December 31, 2024 by

$ 877,000 , with $ 905,000 provided by operating activities, $ 56,000 used in investing activities, and $ 28,000 provided by financing activities.

of March 4, 2025, the Company had cash of $2,800,000.

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.

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

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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of Consolidation and Presentation

consolidated financial statements include the accounts of the Company and its subsidiaries.

In these consolidated financial statements,

“subsidiaries” are companies that are over 50 % controlled, the accounts of which are consolidated with those of the Company.

consolidated financial statements include the accounts of Acorn Energy, Inc.

(“Acorn”) and its subsidiaries, OmniMetrix,

LLC (“OmniMetrix”) and OMX Holdings, Inc.

(collectively, with Acorn and OmniMetrix, “the Company”).

Intercompany transactions and balances are eliminated in consolidation;

profits from intercompany sales are also eliminated;

non-controlling

interests are included in equity.

non-controlling interests are included in equity.

of Estimates in Preparation of Financial Statements

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applicable to these consolidated financial statements, the most significant estimates and assumptions relate to uncertainties with respect

to income taxes, inventories, account receivable allowances, contingencies, revenue recognition, management’s projections and analyses

of the possible impairments.

to valuation allowance.

Receivable and Credit Losses

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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.

Company’s trade receivables primarily arise from the sale of our products to a national telecommunications company, 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.

Certain very large commercial customers have 90 day terms.

The Company evaluates

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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.

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 basis.

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, the contract assets of accounts receivable, deferred COGS and deferred sales commissions are subject to review under

ASC 326 however, no credit losses on contract assets were incurred.

are comprised of components (raw materials) and finished goods, which are measured at the lower cost or net realizable value.

materials inventory is generally comprised of radios, cables, antennas, and electrical components.

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

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.

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

Management conducted an assessment and wrote-off

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as the excess of the carrying value over the fair value.

June 2022, the Company conducted an evaluation of the status of an ERP software customization project that had been initiated in July

2019 and was ongoing.

As a result of this evaluation, the Company elected to terminate this project effective June 30, 2022 and recorded

an impairment against the capitalized investment in this project of $ 51,000 .

Non-Controlling

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Capitalization

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.

Company capitalizes certain implementation costs incurred in a hosting arrangement that is a service contract to develop or obtain internal-use

During the years ended December 31, 2024 and 2023, the Company capitalized internal-use software costs totaling $ 17,000 and

$ 29,000 , 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.

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.

Commissions 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 associated with monitoring services are amortized over the expected monitoring

life, including renewals.

contract assets of accounts receivable, deferred COGS and deferred sales commissions are subject to review under ASC 326 however, no

credit losses on contract assets were incurred.

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 of 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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lease classification, recognition, and measurement purposes.

lease obligation liability was $ 221,000 and $ 336,000 as of December 31, 2023 and December 31, 2022, respectively, which includes the

office space lease and an office equipment lease entered into in April 2019.

lease obligation liability was $ 98,000 and $ 221,000 as of December 31, 2024 and December 31, 2023, respectively, which includes the office

space lease and, in 2023, an office equipment lease entered into in April 2019.

of common stock repurchased are recorded at cost as treasury stock.

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to accumulated stockholders’ deficit.

segments are defined as components of an enterprise for which separate financial information is available and that is evaluated on a

regular basis by the chief operating decision-maker (“CODM”) in deciding how to allocate resources to an individual segment

and in assessing performance.

The Company’s operations are organized into two reportable segments:

See Note 1, Nature

of Operations , for the description of each of these segments.

The Company’s organizational structure is based on factors that

the CODM uses to evaluate, view and run the business operations, which include, but are not limited to, the customer base, market share,

competitive landscape and technology.

The CODM uses several metrics to evaluate the performance of the overall business, including number

of connections, revenue and profit margin and uses these results to allocate resources to each of the segments.

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

The core principle

of ASC 606 is to recognize revenue when promised

goods or services are transferred to customers in an amount that reflects the consideration that is expected to be received for those

goods or services.

ASC 606 defines a five-step process to achieve this core principle, which includes:

(1) identifying contracts with

customers, (2) identifying performance obligations within those contracts, (3) determining the transaction price, (4) allocating the

transaction price to the performance obligation in the contract, which may include an estimate of variable consideration, and (5) recognizing

revenue when or as each performance obligation is satisfied.

The Company assesses whether payment terms are customary or extended in

accordance with normal practice relative to the market in which the sale is occurring.

The Company’s sales arrangements generally

include standard payment terms.

These terms effectively relate to all customers, products, and arrangements regardless of customer type,

product mix or arrangement size.

of ASC 606 is to recognize revenue when promised goods or services are transferred to customers in an amount that reflects the consideration

that is expected to be received for those goods or services.

ASC 606 defines a five-step process to achieve this core principle, which

(1) identifying contracts with customers, (2) identifying performance obligations within those contracts, (3) determining the

transaction price, (4) allocating the transaction price to the performance obligation in the contract, which may include an estimate

of variable consideration, and (5) recognizing revenue when or as each performance obligation is satisfied.

The Company assesses whether

payment terms are customary or extended in accordance with normal practice relative to the market in which the sale is occurring.

Company’s sales arrangements generally include standard payment terms.

These terms effectively relate to all customers, products,

and arrangements regardless of customer type, product mix or arrangement size.

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.

from sales of the hardware products that are distinct products are recorded when shipped (with the exception of the hardware products

under a material contract with one customer for which revenue is recognized when the unit is accepted) 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.

Product revenues are recognized at the point in time when control of

the product is transferred to the customer, which typically occurs upon shipment or delivery to the one customer under a material contract.

To determine when control has transferred, the Company considers if there is a present right to payment and if legal title, physical

possession, and the significant risks and rewards of ownership of the asset has transferred to the customer.

Revenue 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.

This method provides a faithful depiction of the transfer of services

as it aligns the recognition of revenue with the period in which the monitoring services are provided.

By deferring the revenue and recognizing

it over the service period, the financial statements accurately reflect the company’s performance and obligations to its customers.

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.

generally grants their customers a one-year warranty on their products;

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.

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

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.

however, large volume contracts may receive a longer-term warranty.

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.

Adjustments are made to accruals as

warranty claim data and historical experience warrant.

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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bank and amounted to $ 2,326,000 at December 31,

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

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

See Note 12(d) with respect

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

The Company’s option pricing model requires

the input of highly subjective assumptions, including the expected stock price volatility, expected term, and forfeiture rate.

in these highly subjective assumptions significantly impact stock-based compensation expense.

The Company’s option pricing model

requires the input of highly subjective assumptions, including the expected stock price volatility, expected term, and forfeiture rate.

Any changes in these highly subjective assumptions significantly impact stock-based compensation expense.

awarded to purchase shares of common stock issued to non-employees in exchange for services are accounted for as variable awards in accordance

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is the Company’s policy to issue new shares rather than utilizing treasury shares.

June 21, 2018, the U.S.

Supreme Court issued an opinion in South Dakota v.

Wayfair, Inc., 138 S.

2080 (2018), whereby the longstanding

Quill Corp v.

North Dakota sales tax case was overruled, and states may now require remote sellers to collect sales tax under certain

circumstances.

In 2020, the Company began collecting sales tax in nearly all states that have sales tax.

The Company accrued sales taxes

in the states with sales tax.

The Company accrued the liability from the effective date of a state’s adoption of the Wayfair decision

up to the date the Company began collecting and filing sales taxes in the various states.

At December 31, 2023 and December 31, 2022,

the amount of such accrual was $ 13,000 and $ 51,000 , respectively.

Company accrues sales taxes based on determination of which of its products/services are subject to sales tax, and in which states and

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

At December 31, 2024

and December 31, 2023, the amount of such accrual was $ 36,000 and $ 13,000 , respectively.

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

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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

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

of the enactment.

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

of December 31, 2023, the Company had a full valuation allowance of $ 16,086,000 .

During the year ended December 31, 2024, the Company

recorded a reduction in the valuation allowance of $ 4,686,000 that was previously recorded against our deferred tax assets.

considered all the positive and negative evidence related to the likelihood of realization of the deferred tax assets and determined,

based on the weight of available evidence, it is more likely than not that some of the deferred tax assets will be realized.

the Company has released valuation allowance on its deferred tax assets (other than as stated above) in the amount of $ 4,435,000 for

the year ended December 31, 2024.

As of December 31, 2024, we believe, based on our projections, that a partial valuation allowance of

$ 11,400,000 is necessary against our deferred tax assets.

Management will continue to assess the need for the valuation allowance and

will make adjustments when appropriate.

Management’s projections and beliefs are based upon a variety of estimates and numerous

assumptions made by our management with respect to, among other things, interest rates, forecasted revenue of the hardware sales and

monitoring revenue or revenue streams that could generate sufficient income so that the Company can utilize our net operating loss (NOL)

carryforwards and other matters, many of which are difficult to predict, are subject to significant uncertainties and are beyond our

As a result, there is inherently uncertainty that the estimates and assumptions upon which these projections and beliefs are

based will prove to be accurate, that the anticipated results will be realized or that the actual results will not be substantially higher

or lower than the Company projected.

Tax Uncertainties

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The Company recognizes interest and penalties as incurred in

finance income (expense), net in the consolidated statements of operations.

interest income, net in the consolidated statements of operations.

of December 31, 2024 and 2023, no interest or penalties were accrued on the consolidated balance sheets related to uncertain tax positions.

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Federal taxing authorities for years before 2021, or for years before 2020 for state income taxes.

and Diluted Net Income (Loss) Per Share

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

by the weighted average number of shares outstanding

during the year, excluding treasury stock.

Diluted net loss per share is computed by dividing the net loss by the weighted 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 loss per share if doing so would

be antidilutive.

and Diluted Net Income Per Share

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

by the weighted average number of shares

outstanding during the year, excluding treasury stock.

Diluted net loss per share is computed by dividing the net loss by the weighted

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 loss per share if doing

so would be antidilutive.

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 3,000 (which have a weighted average exercise price of $ 11.25 ) and 17,000 (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):

exercise price of $ 9.42 ) for the years ending December 31, 2024 and 2023, respectively.

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 (in thousands):

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

Year ended December 31,

Net income (loss) available to common stockholders

Net income attributable to common stockholders

Weighted average shares outstanding:

Stock options

Basic and diluted net income (loss) per share

Basic net income per share

Diluted net income per share

Value Measurement

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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

Accounting Pronouncements

November 2024, the FASB issued Accounting Standards Update No.

2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation

Disclosures (Subtopic 220-40):

Disaggregation of Income Statement Expenses (“ASU 2024-03”), and in January 2025, the FASB

issued Accounting Standards Update No.

2025-01, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures

(Subtopic 220-40):

Clarifying the Effective Date (“ASU 2025-01”).

ASU 2024-03 requires additional disclosure of the nature

of expenses included in the income statement as well as disclosures about specific types of expenses included in the expense captions

presented in the income statement.

ASU 2024-03, as clarified by ASU 2025-01, is effective for us for our annual reporting for fiscal

2027 and for interim period reporting beginning in fiscal 2028 on a prospective basis.

Both early adoption and retrospective application

are permitted.

The Company is currently evaluating the impact that the adoption of these standards will have on its consolidated financial

statements and 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.

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

Adopted Accounting Standards

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.

November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update No.

2023-07, Segment

Reporting (Topic 280):

Improvements to Reportable Segment Disclosures (“ASU 2023-07”).

ASU 2023-07 updates reportable segment

disclosure requirements, primarily through enhanced disclosures about significant segment expenses and information used to assess segment

This update is effective and was adopted for this annual reporting period, fiscal year-ended December 31, 2024.

3— INVESTMENT IN OMNIMETRIX

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owns the remaining 1 %.

4— ALLOWANCE FOR CREDIT LOSSES

4— ACCOUNTS RECEIVABLE AND ALLOWANCE FOR CREDIT LOSSES

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

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2024, the Company had gross receivables of $ 1,937,000 and an allowance for credit losses of $ 4,000 .

OF ACCOUNTS RECEIVABLE

As of December 31,

(in thousands)

Accounts Receivable, net, beginning of period

Accounts Receivable, net, end of period

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

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Balance at beginning of period

Provision for credit losses

Net (charge-offs) credits

(Decrease) increase in provision for credit losses

Net credits (charge-offs)

Balance at end of period

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Finished goods

Inventory net

December 31, 2023 and 2022, the Company’s inventory reserve was $ 8,000 and $ 4,000 , respectively.

December 31, 2024 and 2023, the Company’s inventory reserve for obsolescence was $ 6,000 and $ 8,000 , respectively.

6— PROPERTY AND EQUIPMENT, NET

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Property and equipment, net

less than $1,000

the year ended December 31, 2024, the Company wrote off fully depreciated equipment and software with an original cost of $ 294,000 .

assets were no longer in use and had no remaining economic value.

The write-off had no impact on the Company’s financial position

or results of operations, as the assets were fully depreciated.

and amortization in respect of property and equipment amounted to $ 121,000 and $ 161,000 for 2024 and 2023, respectively.

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The office lease has an expiration date of September 30, 2025.

The office equipment lease was entered into in April 2019 and has a sixty-month term.

Operating lease payments for 2023 and 2022 were

$ 128,000 and $ 124,000 , respectively.

The future minimum lease payments on non-cancelable operating leases as of December 31, 2023 using

a discount rate of 4.5 % are $ 221,000 .

The 4.5 % used is the incremental borrowing rate (established at the commencement of the lease)

which, as defined in ASC 842, 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.

The office equipment lease was entered into in April 2019 and had a sixty-month term.

This lease is currently month-to-month until the

Company negotiates a new term.

Operating lease payments for 2024 and 2023 were $ 129,000 and $ 128,000 , respectively.

The future minimum

lease payments on non-cancelable operating leases as of December 31, 2024 using a discount rate of 4.5 % are 98,000 .

The 4.5 % used is

the incremental borrowing rate (established at the commencement of the lease) which, as defined in ASC 842, 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.

Supplemental cash flow information related to leases consisted of the following (in thousands):

OF SUPPLEMENTAL CASH FLOW INFORMATION RELATED TO LEASES

For the year ended

Cash paid for operating lease liabilities

balance sheet information related to leases consisted of the following:

SCHEDULE OF SUPPLEMENTAL BALANCE SHEET INFORMATION RELATED TO LEASES

OF SUPPLEMENTAL BALANCE SHEET INFORMATION RELATED TO LEASES

Weighted average remaining lease terms for operating leases

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

of one year to the total operating lease liabilities recognized on the consolidated balance sheet as of December 31, 2023 (in thousands):

SCHEDULE OF FUTURE MINIMUM LEASE PAYMENTS

Total undiscounted cash flows

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 December

31, 2024 (in thousands):

OF FUTURE MINIMUM LEASE PAYMENTS

Imputed interest

Present value of operating lease liabilities (a)

current portion of $ 123,000 for operating leases.

One hundred percent of

this amount represents the current portion 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

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As of December 31, 2024, after the offset of the investment in leasehold improvements and other expenses related

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

The estimated

amount the Company expects to remit to the landlord each year of the sublease subsequent to December 31, 2023 is $ 6,500 per year.

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 expected under the sublease net of the estimated annual service cost of $ 2,750 (gross of

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

to the sublease, the Company paid its landlord $ 7,000 , 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.

Below are the future payments expected under the sublease net of the estimated annual

service cost of $ 3,000 (gross of the estimated amount expected to be remitted to our landlord):

Total undiscounted cash flows

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Company has $ 98,000 in operating lease obligations payable through 2025 and $ 496,000 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.

The contractual

services include $ 233,000 payable through December 31, 2025, $ 195,000 payable through December 31, 2026, and $ 15,000 payable through

December 31, 2027.

The Company also has $ 603,000 in open purchase order commitments payable through December 31, 2025 of which $ 377,000

( 63 %) is to one electronics vendor.

9— STOCKHOLDERS’ EQUITY (DEFICIT)

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 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.

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 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, 2024, 70,806 options were available for grant under the Amended and Restated 2006 Stock Incentive Plan and no options were

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In 2024 and 2023, 8,350 ( 6,900 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).

officers and 1,450 to other employees) and 14,936 ( 11,874 to directors and executive officers and 3,062 to other employees) options,

respectively, were granted.

In 2024 and 2023, there were no grants to non-employees (other than the non-employee directors and executive

The fair value of the options issued was $ 53,000 and $ 47,000 in 2024 and 2023, respectively.

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

options were exercised in the year ended December 31, 2024.

2,187 warrants and no options were exercised in the year ended December 31,

The intrinsic value of options outstanding and of options exercisable at December 31, 2024 was $ 806,000 and $ 758,000 , respectively.

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expected term of the options is the length of time until the expected date of exercising the options.

With respect to determining expected

exercise behavior, the Company has grouped its option grants into certain groups in order to track exercise behavior and establish historical

The Company estimated volatility by considering historical stock volatility over the expected term of the option.

The risk-free

interest rates are based on the U.S.

Treasury yields for a period consistent with the expected term.

The Company expects no dividends

The Company believes that the valuation technique and the approach utilized to develop the underlying assumptions are appropriate

in determining the estimated fair value of the Company’s stock options granted in the years ended December 31, 2023 and 2022.

of fair value are not intended to predict actual future events or the value ultimately realized by persons who receive equity awards.

The Company estimated volatility

by considering historical stock volatility over the expected term of the option.

The risk-free interest rates are based on the U.S.

yields for a period consistent with the expected term.

The Company expects no dividends to be paid.

The Company believes that the valuation

technique and the approach utilized to develop the underlying assumptions are appropriate in determining the estimated fair value of

the Company’s stock options granted in the years ended December 31, 2024 and 2023.

Estimates of fair value are not intended to

predict actual future events or the value ultimately realized by persons who receive equity awards.

Summary Option Information

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SUMMARY OF STOCK OPTION ACTIVITY

Price Per Share

Outstanding at beginning of year

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$ 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

8 unchanged sentences

10— INCOME TAXES

to 2024, based on negative evidence (primarily a cumulative history of operating losses), the Company had a full valuation allowance

against its net deferred tax assets.

As of December 31, 2024, the Company considered all the positive and negative evidence related

to the likelihood of realization of the deferred tax assets and determined, based on the weight of available evidence, it is more

likely than not that some of the deferred tax assets will be realized.

As of December 31, 2024 and 2023 the Company had recorded

and $ 16,215,000

of deferred tax assets before valuation allowance, respectively, which was offset by $ 11,400,000

and $ 16,086,000

of valuation allowance, respectively.

The Company has recorded deferred tax liabilities of $ 98,000

and $ 129,000

as of December 31, 2024 and 2023, respectively, which have all been determined to be sources of future taxable income.

reduction of $ 4,686,000

of the valuation allowance is based on cumulative positive operating results over the prior three-year period and expectations about

generating U.S.

taxable income in the future.

The remaining valuation allowance relates primarily to anticipated expirations of U.S.

net operating losses prior to utilization based on our forecasts of future taxable income.

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

COMPOSITION OF LOSS FROM CONTINUING OPERATIONS BEFORE INCOME TAXES

tax expense consists of the following (in thousands):

COMPONENTS OF INCOME TAX EXPENSE

OF COMPOSITION OF INCOME (LOSS) BEFORE INCOME TAXES

tax (benefit) expense consists of the following (in thousands):

OF INCOME TAX (BENEFIT) EXPENSE

State and local

Current income tax expense

Current income tax (benefit) expense

State and local

income tax expense

Total income tax expense

Deferred income tax benefit

Total income tax (benefit) expense

Effective Income Tax Rates

forth below is a reconciliation between the federal tax rate and the Company’s effective income tax rates with respect to continuing

SUMMARY OF RECONCILIATION BETWEEN FEDERAL TAX RATE

Year ended December 31,

OF RECONCILIATION BETWEEN FEDERAL TAX RATE AND EFFECTIVE INCOME TAX RATES

Statutory Federal rates

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SCHEDULE OF DEFERRED TAX ASSETS AND (LIABILITIES)

As of December 31,

Deferred tax assets (liabilities) consist of the following:

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Deferred revenue

Right-of-use assets

Lease liability

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Section 174 expenditures

Net operating loss and capital loss carryforwards

Deferred tax assets, gross

NOL and capital loss carryforwards

Total deferred tax assets

Valuation allowance

Net deferred tax asset

Right-of-use asset

Total deferred tax liabilities

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 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 .

allowances relate primarily to NOL carryforwards related to the Company’s consolidated tax losses as well as state tax losses related

to the Company’s OmniMetrix subsidiary and book-tax differences related to asset impairments and stock compensation expense of

During the year ended December 31, 2024 and 2023, the valuation allowance decreased by $ 4,686,000 and $ 567,000 , respectively.

Summary of Tax Loss Carryforwards

of December 31, 2023, the Company had various operating loss carryforwards expiring as follows (in thousands):

OF TAX LOSS CARRYFORWARDS

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.

of December 31, 2024, the Company had various NOL carryforwards expiring as follows (in thousands):

OF NET OPERATING LOSS CARRYFORWARDS

2025 – 2031 *

2032 – 2037 *

The utilization of a portion

of these NOL carryforwards is limited due to limits on utilizing NOL carryforwards under Internal Revenue Service regulations following

a change of control.

Section 382 of the Internal Revenue Code, the yearly utilization of a corporation’s NOL carryforwards may be limited following

a change in ownership of greater than 50% (by value) over a three-year period.

The yearly limitation is based on the value of the corporation

immediately before the ownership change multiplied by the federal long-term tax-exempt rate.

We are currently subject to the annual limitation

under Sections 382 and 383 of the Internal Revenue Code for NOLs generated prior to 2014.

As of December 31, 2024, the Company has not

completed a recent 382 study and the remaining NOL carryforwards may be limited in the amount.

The Company has maintained a full valuation allowance against the deferred tax assets for all NOLs which may be subject

to the annual limitations under Section 382.

The Company has determined that no limitation

on the unreserved NOL carryforwards exists.

The Company will complete a full analysis of the tax attribute carryforwards prior to any

utilization of NOLs which are currently reserved.

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

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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.

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.

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11— RELATED PARTY BALANCES AND TRANSACTIONS

Officer and Director Fees

Company recorded fees to officers of $ 538,000 and $ 522,000 for the years ended December 31, 2024 and 2023, respectively, which is included

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officers and 3,062 to other employees) options, in 2024 and 2023, respectively.

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

ended December 31, 2023.

7,708 options were exercised in the year ended December

2,187 warrants and no options were exercised in the year ended December 31, 2023.

See Note 9 for further discussion.

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of the election year.

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.

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, 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.

of December 31, 2024, the Company continues to operate in two reportable operating segments, PG and CP, both of which are performed through

the Company’s OmniMetrix subsidiary.

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

by the Chief Decision Maker (CDM) as each business requires different technology and marketing strategies.

by the CODM as each business requires different technology and marketing strategies.

CODM is the Company’s Chief Executive Officer (CEO).

Information about profit or loss and assets

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The Company evaluates

performance based on net income or loss before taxes.

performance by segment based on revenue (driven by the number of connections), gross profit and net income or loss before taxes.

Company does not systematically allocate assets to the divisions of the subsidiaries constituting its consolidated group, unless the

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does meet the quantitative thresholds, related depreciable assets, along with other identifiable assets, are allocated to such division.

expense that is routinely provided to the CODM is COGS and R&D expense.

R&D expense is allocated to each segment based on estimated

time on projects within the segment.

SG&A expense and interest income is allocated to each segment based on the percentage of segment

revenue to total revenue instead of being specifically identified to each segment since the Company’s resources have a high level

of shared utilization between the segments.

Further, the CODM does not review the assets by segment.

following tables represent segmented data for the years ended December 31, 2024 and 2023 (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.

Further, the CDM does

not review the assets by segment.

SUMMARY OF SEGMENTED DATA

OF SEGMENTED DATA

Year ended December 31, 2024:

Revenues from customers

Revenues from external customers

Segment gross profit

Depreciation and amortization

Segment income (loss) before income taxes

Segment operating income

Interest income, net

Segment income before income taxes

Year ended December 31, 2023:

Revenues from customers

Revenues from external customers

Segment gross profit

Depreciation and amortization

Segment operating income (loss)

Interest income, net

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 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

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, 2024 and 2023 (in thousands):

OF RECONCILIATION OF SEGMENT DATA TO CONSOLIDATED STATEMENT OF OPERATIONS

Total net income before income taxes for reportable segments

Unallocated net cost of corporate headquarters

Consolidated net income (loss) before taxes on income

Unallocated cost of corporate headquarters

Consolidated net income before income taxes

OF RECONCILIATION OF SEGMENT DATA TO CONSOLIDATED STATEMENT BALANCE SHEET

As of December 31,

Total assets for OmniMetrix subsidiary

Assets of corporate headquarters

Deferred tax assets

Total consolidated assets

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Revenues and Accounts Receivable Balances from Major Customers (in thousands):

SCHEDULE OF REVENUES, ACCOUNTS RECEIVABLE FROM MAJOR CUSTOMERS

Invoiced Sales

Accounts Receivable

OF REVENUES AND ACCOUNTS RECEIVABLE BALANCES FROM MAJOR CUSTOMERS

is not significant.

revenue and accounts receivable of both customer A and B are within the PG segment.

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

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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.

product independent 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 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

The modifications 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.

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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):

Deferred charges activity for the year ended December 31, 2024 can be seen in the table below

(in thousands):

OF DEFERRED CHARGES ACTIVITY

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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):

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

(in thousands):

Balance at December 31, 2022

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Balance at December 31, 2023

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, 2024

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14— SUBSEQUENT EVENTS

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

January 1, 2025, 2,200 options were issued to the CFO with an exercise price of $ 17.89 and that vest in equal increments on January 1,

2025, April 1, 2025, July 1, 2025 and October 1, 2025 with a fair value of $ 38,000 .

On January 1, 2025, 2,500 options in the aggregate

were issued to directors with an exercise price of $ 17.89 and that vest in equal increments on January 1, 2025, April 1, 2025, July 1,

2025 and October 1, 2025 with a fair value of $ 43,000 in the aggregate.

On January 6, 2025, 2,200 options were issued to the CEO with

an exercise price of $ 17.50 and that vest in equal increments on January 6, 2025, April 1, 2025, July 1, 2025 and October 1, 2025 with

a fair value of $ 37,000 .

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.

March 2025, the Company’s Board ratified all option grants made under its Amended and Restated 2006 Stock Incentive Plan following

expiration of the Plan on December 31, 2024 and extended the expiration date of the Amended and Restated 2006 Stock Incentive Plan until

December 31, 2034.

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