What changed in this filing

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Item 9A. Controls and Procedures

2026-03-05 compared with 2025-03-06 · 596 added, 510 removed, 1177 unchanged (48% of the section changed)

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Based on this evaluation, our CEO and

CFO concluded that, due to the material weaknesses in our internal control over financial reporting as described below, our disclosure

controls and procedures were not effective as of December 31, 2024.

CFO concluded that our disclosure controls and procedures were effective as of December 31, 2025.

Control Over Financial Reporting

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Control - Integrated Framework (2013)” issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”).

Based upon this assessment and those criteria, management concluded that due to the material weaknesses described below, our internal

control over financial reporting was not effective as of December 31, 2024.

Based upon this assessment and those criteria, management concluded that our internal control over financial reporting was effective

as of December 31, 2025.

Company employs a decentralized internal control methodology, coupled with management’s oversight, whereby its subsidiary is responsible

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duties, management must employ compensating mechanisms throughout the Company in a manner that is feasible within the constraints it

material weaknesses management identified were caused by an insufficient complement of resources at the Company’s OmniMetrix subsidiary

and limited IT system capabilities, such that individual control policies and procedures could not be implemented, maintained, or remediated

when and where necessary.

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.

Management expects to make progress towards reducing

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

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

and infrastructure to implement corrective actions.

in Internal Control Over Financial Reporting

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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.

has concluded, through testing, that these added controls and related actions effectively remediated the previously identified material

weaknesses and 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

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Rabover was appointed to the Board in March 2023.

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

Rabover is currently the CFO and Corporate Secretary of Grodivo.ai, a corporate culture

measurement software company.

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Attributes, Experience and Skills.

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.

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

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

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

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in Complex Analysis.

Zentman serves on the board of Hinson &

Hale Medical Technologies, Inc., as well as several national charitable organizations devoted to advancing the quality of education.

Zentman serves on the board of Klotho Neurosciences,

as well as several national charitable organizations devoted to advancing the quality of education.

Attributes, Experience and Skills.

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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.

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 4.9 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 2,200 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 4.9 years (iii) an assumed

volatility of 194.1% and (iv) no dividends.

Compensation for 2025 and 2024

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, 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 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.

On January 6, 2025, the Company entered into a new consulting agreement (the “2025 Loeb Consulting Agreement”)

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,

Pursuant to the 2025 Loeb Consulting Agreement, Mr.

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 service as Acting CEO of OmniMetrix.

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 January 3, 2025, closing price of the common stock of $17.50 per share.

Twenty-five percent

(25%) of the options were vested immediately;

the remaining options vested 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.

The 2025 Loeb Consulting Agreement expired on December 31, 2025.

The Company and Mr.

Loeb entered into

a new consulting agreement for 2026 as described below under Employment Arrangements .

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, Mr.

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.

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, 2024, July 1, 2024 and October

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

to its outside directors.

The 2024 Consulting Agreement expired on December 31, 2024.

On January 1, 2025, the 2024 Clifford Consulting Agreement discussed below for the provision of Ms.

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.

Clifford received cash compensation of $18,025 per month.

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,

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

2024, closing price of the common stock of $17.89 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.

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.

the remaining

options vested 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.

The Company and Ms.

entered into a new consulting agreement for 2026 as described below under Employment Arrangements .

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 amended, restated and replaced in its entirety the 2023 Clifford Consulting Agreement.

The 2024 Clifford Consulting Agreement

had an effective date of January 1, 2024, had an initial 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 2024 Clifford Consulting Agreement, Ms.

Clifford receives cash compensation

of $18,025 per month.

Clifford received cash compensation of $18,025 per month.

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.

Clifford was to 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.

Pursuant 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 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 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 was to grant Ms.

2,200 stock options exercisable at an exercise price equal to the then-current stock price.

Twenty-five percent (25%) of the options

were to be vested immediately as of the date of grant;

the remaining options were to 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 were to be 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.

as described above.

input on executive compensation .

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employment arrangements of each named executive officer are described below.

January 6, 2025, the Company entered into a new consulting agreement (the “2025 Loeb Consulting Agreement”) extending its

arrangements for compensation of Mr.

January 19, 2026, the Company entered into a new consulting agreement (the “2026 Loeb Consulting Agreement”) between Mr.

Loeb and the Company extending its arrangements for compensation of Mr.

Loeb for his services as President and CEO of Acorn and as principal

executive officer of OmniMetrix in the capacity of Acting CEO.

In such capacities, Mr.

Loeb acts as a consultant to, and not an employee

of, the Company.

Pursuant to the 2026 Loeb Consulting Agreement, Mr.

Loeb will receive cash compensation of

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

of OmniMetrix.

Loeb also received a grant of options on January 6, 2025 to purchase 2,200 shares of the Company’s common stock,

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;

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.

The 2025 Loeb Consulting Agreement expires on December 31, 2025, unless terminated early 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 .

Loeb will receive annualized cash compensation of $207,400 for service

as President and CEO of Acorn, and an additional $10,300 per month for so long as he serves as Acting CEO of OmniMetrix.

received a grant of options on January 19, 2026 to purchase 25,000 shares of the Company’s common stock, which shall be exercisable

at an exercise price equal to the January 16, 2026, closing price of the common stock of $19.02 per share.

One-twelfth of the options

are immediately vested and exercisable;

the remaining options will vest and become exercisable in eleven equal quarterly increments beginning

on April 1, 2026, unless such vesting is accelerated in connection with a change of control of the Company.

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 2026 Loeb

Consulting Agreement expires on December 31, 2026, unless terminated early as provided therein.

January 19, 2026, the Company entered into an Amended and Restated Consulting Agreement with Tracy Clifford Consulting, LLC, for the

provision of Ms.

Clifford’s services to the Company as both CFO of Acorn and COO of OmniMetrix (the “2026 Clifford Consulting

In such capacity, Ms.

Clifford acts as a consultant to, and not an employee of, the Company.

The 2026 Clifford Consulting

Agreement amends, restates and replaces in its entirety the 2024 Clifford Consulting Agreement.

The 2026 Clifford Consulting Agreement

has an effective date of January 1, 2026, has a one-year term, and automatically renews for an additional year upon the expiration of

each one-year term unless earlier terminated as provided therein.

Pursuant to the 2026 Clifford Consulting Agreement, Ms.

Clifford receives cash compensation

of $18,025 per month.

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, 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.

Clifford receives

annualized cash compensation of $222,789.

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

Clifford shall be entitled

to a continuation, for a period of six months following the date of such termination by the Company, of the monthly cash compensation

in effect at the time of such termination by the Company.

Pursuant to the terms of the 2026 Clifford Consulting Agreement, Ms.

also received a grant of options on January 19, 2026, to purchase 25,000 shares of the Company’s common stock, which shall be exercisable

at an exercise price equal to the January 16, 2026, closing price of the common stock of $19.02 per share.

One-twelfth of the options

were immediately vested and exercisable;

the remaining options will vest and become exercisable in eleven equal quarterly increments

beginning on April 1, 2026, unless such vesting is accelerated in connection with a change of control of the Company.

On each subsequent

anniversary of January 1, 2026, so long as the 2026 Clifford Consulting Agreement has not been terminated, the Company will grant Ms.

Clifford 25,000 stock options exercisable at an exercise price equal to the then-current stock price.

One-twelfth of such options will

be vested immediately as of the date of the respective grant;

the remaining options will vest in eleven equal quarterly increments beginning

on April 1 of the year of the respective grant, unless such vesting is accelerated in connection with a change of control of the Company.

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

Equity Awards at 2025 Fiscal Year End

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Unexercisable

Exercise Price

Expiration Date

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January 2, 2031

January 1, 2032

June 25, 2026

January 2, 2031

January 1, 2032

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.

were exercised by Tracy Clifford on May 9, 2025, for 1,875 shares at an exercise price of $6.56 per share.

Non-qualified

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and Benefits Upon Termination or Change in Control

the terms of the consulting agreement with Mr.

Loeb, there are no amounts due under any termination scenario.

the terms of the consulting agreement with Ms.

Clifford, in the event of termination by the Company other than for cause, Ms.

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.

There are no other amounts due under any other termination scenario under the terms of her

consulting agreement.

the terms of the 2026 Loeb Consulting Agreement, there are no amounts due under any termination scenario.

vesting of the 25,000 stock options granted on January 19, 2026 under the 2026 Loeb Consulting Agreement would have their vesting accelerated

and become fully exercisable immediately prior to the first occurrence of any of the following:

(1) the acquisition by any entity or

natural person, or a group of entities and/or natural persons acting together, of a majority of the equity interests of the Company,

OMX Holdings, Inc.

or OmniMetrix, whether through purchase, merger, stock swap, or any similar deal structure;

and (2) the sale or other

disposition of all or substantially all the assets of the Company, OMX Holdings, Inc.

or OmniMetrix.

the terms of the 2026 Clifford Consulting Agreement, in the event of termination by the Company 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.

vesting of the 25,000 stock options granted on January 19, 2026 under the 2026 Clifford Consulting Agreement would have their vesting

accelerated and become fully exercisable immediately prior to the first occurrence of any of the following:

(1) the acquisition by any

entity or natural person, or a group of entities and/or natural persons acting together, of a majority of the equity interests of the

Company, OMX Holdings, Inc.

or OmniMetrix, whether through purchase, merger, stock swap, or any similar deal structure;

and (2) the sale

or other disposition of all or substantially all the assets of the Company, OMX Holdings, Inc.

or OmniMetrix.

March 25, 2025, the Company entered into a Change in Control Bonus Agreement with Ms.

Pursuant to the agreement, if (1) the

Company were to consummate a Change in Control (as defined in the agreement) during the period of time beginning on the Effective Date

and ending eighteen (18) months thereafter (provided that such period would be extended up to an additional six (6) months if during

the aforementioned eighteen (18) month-period the Company were to enter into a definitive agreement or legally binding term sheet for

a transaction which would result in a Change in Control), and (2) Ms.

Clifford has remained in continuous service as Chief Operating

Officer of, or in a similar executive capacity at, OmniMetrix from the Effective Date through consummation of the Change in Control,

then the Company would pay her, contemporaneous with the consummation of the Change in Control, a lump-sum cash bonus payment equal to

$100,000 multiplied by the number of years (including partial years, for which an appropriate fraction will be added to the number of

whole years) in the period commencing December 1, 2019, and ending upon the earlier of (A) consummation of the Change in Control, (B)

the date of involuntary termination of her service other than for cause or due to death or disability, or (C) the date of voluntary termination

of her service (provided, however, that in the event of voluntary termination of service by Ms.

Clifford for any reason prior to a Change

in Control, she would be entitled to a payment equal to seventy percent (70%) of the bonus upon the occurrence of a Change in Control

within the Change in Control period, payable contemporaneous with the consummation of the Change in Control).

of Directors in 2025

Board reviews non-employee director compensation on an annual basis.

Our compensation policy for non-employee Directors for 2025 was

non-employee Director (other than the Executive Chairman) receives an annual retainer of $15,000, plus an annual grant on January 1 of

non-employee Director (other than the Executive Chairman) received an annual retainer of $15,000, plus an annual grant on January 1 of

an option to purchase 625 shares of Company Common Stock.

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The options had an exercise price of $17.89 and were to expire on January 1, 2032.

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 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 4.4%

(ii) an expected term of 5.6 years (iii) an assumed volatility of 181.8% 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.

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

Compensation Change for 2026

January 19, 2026, the Company amended its compensation policy for non-employee Directors.

On January 1, each non-employee Director will

receive an annual grant of options to purchase 3,125 shares of our common stock, with such options to vest and become exercisable in

four quarterly increments beginning on the grant date.

Upon a non-employee Director’s first election or appointment to the Board,

such newly elected/appointed Director will be granted an option to purchase 3,125 shares of Company Common Stock.

The other elements

of our compensation policy for non-employee Directors remain unchanged from 2025.

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

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Securities to be

Options, Warrants

and Rights (a)

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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.

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 2025 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.

provided for, on the date the agreement was executed, a grant to Mr.

Loeb of 2,200 stock options exercisable at an exercise price equal

to the then-current stock price.

The 2024 Clifford Consulting Agreement called for, on each anniversary of January 1, 2024, so long as

the 2024 Clifford Consulting Agreement had not been terminated, a grant to Ms.

Clifford of 2,200 stock options exercisable at an exercise

price equal to the then-current stock price (such a grant was made on January 1, 2025).

The 2026 Loeb Consulting Agreement and the 2026

Clifford Consulting Agreement each provided for, on the date the respective agreement was executed, a grant of 25,000 stock options,

respectively, to Mr.

Clifford, exercisable at an exercise price equal to the then-current stock price (and the 2026 Clifford

Consulting Agreement provides for additional grants to Ms.

Clifford of 25,000 stock options on each anniversary of January 1, 2026, so

long as the agreement has not been terminated).

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

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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.

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

CERTAIN RELATIONSHIPS, RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE

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the Compensation Committee and the Nominating Committee are independent under the NASDAQ independence standards for such committees.

PRINCIPAL ACCOUNTING FEES AND SERVICES

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

2024 and 2023.

PRINCIPAL ACCOUNTANT FEES AND SERVICES

following table summarizes the fees billed to Acorn for professional services rendered by CBIZ CPAs P.C and Marcum, LLP for the years

ended December 31, 2025 and 2024, respectively.

All other fees

services for the year ended December 31, 2025, was provided by CBIZ, Inc.

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

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

Fees generally consist of tax compliance and return preparation fees.

Fees generally consist of tax compliance fees.

Policies and Procedures

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

of Independent Registered Public Accounting Firm (PCAOB ID 688)

Report of Independent Registered Public Accounting Firm (PCAOB ID 199)

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

Consolidated Balance Sheets as of December 31, 2025 and 2024

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List of Exhibits

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

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

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”)).

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).

Specimen certificate for

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

Amended and Restated Certificate of Incorporation of the Registrant (incorporated herein by reference to Exhibit 3.1 to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2023, filed on November 9, 2023).

Amended By laws of the Registrant (incorporated herein by reference to Exhibit 3.2 to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2023, filed on November 9, 2023).

Description of the Registrant’s common stock.

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.

Amended and Restated 2006 Stock Incentive Plan (incorporated herein by reference to Exhibit 10.1 of the Registrant’s Annual Report on Form 10-K for the year ended December 31, 2024).

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

Change in Control Bonus Agreement, dated as of March 25, 2025, by and between the Registrant and Tracy Clifford (incorporated herein by reference to Exhibit 10.1 of the Registrant’s Current Report on Form 8-K filed March 27, 2025).

Consulting Agreement, dated January 19, 2026, by and between the Registrant and Jan H.

Loeb (incorporated herein by reference to Exhibit 10.1 of the Registrant’s Current Report on Form 8-K filed January 8, 2025).

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).

Amended and Restated Consulting Agreement, dated January 19, 2026, by and between the Registrant and Tracy Clifford Consulting, LLC.

Form of Option Award Agreement for 2026 CEO/CFO option grants under the Registrant’s Amended and Restated 2006 Stock Incentive Plan.

Acorn Energy, Inc.

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List of subsidiaries.

Consent of CBIZ CPAs P.C.

Consent of Marcum LLP

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

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.

Policy Relating to Recovery of Erroneously-Awarded Compensation

following financial statements from Acorn Energy’s Form 10-K for the year ended December 31, 2025, filed on March 5, 2026,

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.

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 5, 2026.

ACORN ENERGY,

President and Chief Executive

and Chief Executive Officer

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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Report of Independent Registered Public Accounting Firm (PCAOB ID 199 )

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

Consolidated Balance Sheets

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of Independent Registered Public Accounting Firm

To the Stockholders and Board of Directors of

Acorn Energy, Inc.

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.

the Stockholders and Board of Directors of

on the Financial Statements

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

and subsidiaries (the “Company”) as of December

31, 2025, the related consolidated statements of operations, changes in equity (deficit) and cash flows for the year ended December 31,

2025, and the related notes (collectively referred to as the “financial statements”).

In our opinion, based on our audit, the

financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2025, and the

results of its operations and its cash flows for the year ended December 31, 2025, in conformity with accounting principles generally

accepted in the United States of America.

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

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

financial statements based on our audit.

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

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

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

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

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

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

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

As part of our audit

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

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

Accordingly, we express no such opinion.

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.

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

fraud, and performing procedures that respond to those risks.

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

the amounts and disclosures in the financial statements.

Our audit also included evaluating the accounting principles used and significant

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

We believe that our audit provides

a reasonable basis for our opinion.

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.

CBIZ CPAs P.C.

have served as the Company’s auditor since 2010 (such date takes into account the acquisition of the attest business of Marcum

LLP by CBIZ CPAs P.C.

effective November 1, 2024).

March 5, 2026

OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

the Stockholders and Board of Directors of

on the Financial Statements

We have audited the accompanying consolidated balance sheet of Acorn Energy,

(the “Company”) as of December 31, 2024, the related consolidated statements of operations, changes in equity (deficit),

and cash flows for the year 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 the results of its operations and its cash flows for the year ended December 31, 2024, in conformity with accounting principles

generally accepted in the United States of America.

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 audit.

We are a public accounting firm

registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with

respect to the Company in accordance with the U.S.

federal securities laws and the applicable rules and regulations of the Securities

and Exchange Commission and the PCAOB.

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

standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of

material misstatement, whether due to error or fraud.

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 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

Accordingly, we express no such opinion.

Our audit included performing procedures to assess the risks of material

misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

Such procedures

included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.

Our audit also included

evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation

of the financial statements.

We believe that our audit provides a reasonable basis for our opinion.

/s/ Marcum llp

have served as the Company’s auditor since 2010.

We have served as the Company’s auditor from 2010-2025.

AND SUBSIDIARIES

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Accumulated stockholders’ deficit

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

Treasury stock, at cost – 51,091 shares at December 31, 2025;

50,178 shares at December 31, 2024

Total Acorn Energy, Inc.

stockholders’ equity (deficit)

stockholders’ equity

Non-controlling interests

Total equity (deficit)

Total liabilities and equity (deficit)

Total liabilities and equity

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

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STATEMENTS OF CHANGES IN EQUITY (DEFICIT)

Acorn Energy, Inc.

Number of Shares Outstanding

of Shares Outstanding

Paid-In Capital

Stockholders’

Equity (Deficit)

controlling interests

Equity (Deficit)

of Shares Outstanding

Paid-In Capital

Stockholders’

Equity (Deficit)

Non- controlling

Equity (Deficit)

Balances as of December 31, 2023

$ ( 101,148 )

Proceeds from stock option exercise

Proceeds from stock option exercises

Accrued dividend in OmniMetrix preferred shares

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Balances as of December 31, 2024

Shares repurchased and held in Treasury

Proceeds from stock option exercises

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Depreciation and amortization

Decrease in the provision for credit losses

Increase (decrease) in the provision for credit losses

Impairment of inventory

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Change in operating assets and liabilities:

(Increase) decrease in accounts receivable

Decrease (increase) in inventory

Decrease (increase) in accounts receivable

(Increase) decrease in inventory

Decrease in deferred COGS

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Decrease in operating lease liability

Increase in state income tax payable

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

(Decrease) increase in state income tax payable

(Decrease) increase 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

Leasehold improvements

Equipment purchases

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Cash flows provided by financing activities:

Warrant exercise proceeds

Stock repurchases held in Treasury

Stock option exercise proceeds

Net cash provided by financing activities

Net increase (decrease) in cash

Net increase in cash

Cash at the beginning of the year

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Cash paid during the year for:

North Carolina

Non-cash investing and financing activities:

Right-of-use assets

Operating lease liability

Accrued preferred dividends to former CEO of OmniMetrix (see Note 3)

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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.

for commercial/industrial and residential power generation equipment.

In 2025, the Company launched the Omni family of products—the

OmniPro commercial monitor and the Omni residential monitor—built on a new proprietary common communications core called the OCOM,

a platform designed to enhance connectivity, reliability, and performance in remote monitoring systems.

These products are replacing

the Company’s legacy TrueGuard product lines, offering enhanced flexibility, expandability, and improved connectivity with easier

installation.

OmniMetrix also offers the Smart Annunciator product for commercial customers who require a visual representation of generator

status via a touchscreen display.

Protection (“CP”).

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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.

In 2025, the Company launched the RADex, an OCOM-based expansion of our RAD™

(Remote AC Mitigation Disconnect) that adds cathodic protection measurements while retaining the ability to remotely disconnect/connect

AC mitigation tools on solid-state decouplers, reducing expense and increasing employee safety.

Notes 12 and 13 for segment information and major customers.

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

shares are traded on NASDAQ under the symbol ACFN.

of December 31, 2025, the Company had $ 4,454,000 of consolidated cash.

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Net cash increased during the year ended December 31, 2025 by

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

$ 2,128,000 , with $ 2,090,000 provided by operating activities, $ 33,000 used in investing activities, and $ 71,000 provided by financing

of March 3, 2026, the Company had cash of $ 4,131,000 .

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

Intercompany transactions and balances are eliminated in consolidation;

transactions and balances are eliminated in consolidation;

profits from intercompany sales are also eliminated;

non-controlling interests are included in equity.

and non-controlling interests

are included in equity.

of Estimates in Preparation of Financial Statements

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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.

the Company, contract assets 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.

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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.

During the year ended December 31, 2024, the Company capitalized internal-use software costs totaling $ 17,000 .

There were no

such costs capitalized during the year ended December 31,2025.

Sales Commissions

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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.

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lease classification, recognition, and measurement purposes.

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.

lease obligation liability was $ 1,042,000 and $ 98,000 as of December 31, 2025 and December 31, 2024, respectively.

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

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bank and amounted to $ 4,454,000 at December 31,

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

See Note 12(d) with respect

to revenue from significant customers and concentrations of trade accounts receivables.

Although this balance exceeds the FDIC insurable limit, the Company does not believe there is a significant risk of non-performance

by these counterparties.

See Note 12(d) with respect to revenue from significant customers and concentrations of trade accounts receivable.

values of financial instruments included in current assets and current liabilities are estimated to approximate their book values, due

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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.

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

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

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

Upon the exercise of options, it

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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.

See Note 10(d) for discussion around the impacts of the One Big Beautiful Bill of 2025.

of 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.

As of December 31, 2025, the Company recorded a reduction in the valuation allowance of $ 1,074,000 that was

previously recorded against our deferred tax assets.

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, 2025, we believe, based on our projections, that a partial valuation

allowance of $ 10,326,000 is necessary against our deferred tax assets.

Management will continue to assess the need for the valuation

allowance and will make adjustments when appropriate.

In forecasting future taxable income, 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 control.

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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Federal and state income tax.

As of January 1, 2024, the Company is no longer subject to examination by U.S.

As of December 31, 2025, the Company is no longer subject to examination by

Federal taxing authorities for years before 2022, or for years before 2021 for state income taxes.

and Diluted Net Income Per Share

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

net income per share is computed by dividing the net income 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

Diluted net income per share is computed by dividing the net income 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

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

doing so would be antidilutive.

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

they had an antidilutive effect, was 7,000 (which have a weighted average exercise price of $ 17.51 ) and 3,000 (which had a weighted average

exercise price of $ 11.25 ) for the years ending December 31, 2025 and 2024, respectively.

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

following data represents the amounts used in computing earnings per share and the effect on net income and the weighted average number

of shares of dilutive potential common stock (in thousands):

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Accounting Pronouncements

July 2025, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2025-05, which introduces a practical

expedient and an accounting policy election for estimating expected credit losses on current accounts receivable and contract assets

arising from revenue transactions under ASC Topic 606.

The practical expedient allows entities to assume that current conditions as of

the reporting date remain unchanged over the remaining life of the asset, thereby eliminating the need to incorporate forecasts of future

economic conditions.

The accounting policy election, available to entities other than public business entities, permits consideration

of post-balance sheet cash collections in estimating expected credit losses, provided the practical expedient is also elected.

the Company qualifies as a public business entity and is therefore not eligible for the accounting policy election, the Company has evaluated

the practical expedient and determined that it does not expect a material impact on its consolidated financial statements upon adoption.

2025-05 is effective for interim and annual periods beginning after December 15, 2025, with early adoption permitted.

The Company does

not plan to early adopt and will implement the guidance beginning with its first quarter of fiscal 2026.

November 2024, the FASB issued Accounting Standards Update No.

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statements and disclosures.

Adopted Accounting Standards

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

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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.

Adopted Accounting Standards

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.

The Company adopted ASU 2023-09 for the current year and

has elected to apply the standard on a prospective basis.

3— INVESTMENT IN OMNIMETRIX

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(in thousands)

Accounts Receivable, net, beginning of period

Accounts Receivable, net, end of period

Accounts Receivable, net, beginning of year

Accounts Receivable, net, end of year

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

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(in thousands)

Balance at beginning of period

Balance at beginning of year

(Decrease) increase in provision for credit losses

Net credits (charge-offs)

Balance at end of period

Balance at end of year

As of December 31,

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Finished goods

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

Inventory net

December 31, 2025 and 2024, the Company’s inventory reserve for obsolescence was $ 6,000 for both periods.

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.

These 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 $ 115,000 and $ 121,000 for 2025 and 2024, respectively.

leases office space and office equipment under operating lease agreements.

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

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):

The office lease, originally set to expire on September

was amended on June 20, 2025, to extend the lease term through November 30, 2030.

The amendment also includes scheduled increases in

monthly base rent and provides for conditional rent abatement for October and November 2025, as well as a tenant improvement allowance

of up to $ 14,000

qualifying alterations if completed by September 30, 2026.

Company concluded the amendment constitutes a modification event under ASC 842 and the Company reassessed and remeasured the lease.

Company remeasured the lease payments based on the updated lease term, incremental borrowing rate and adjusted the right of use asset

and lease liability accordingly.

The lease was determined to still represent an operating lease.

discount rate used is the estimated incremental borrowing rate when the lease was entered into, which, as defined in ASC 842:

is the rate of interest that a lessee would have had 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.

Operating lease cost, net of sublease, for the year ended December 31, 2025

and 2024 were $ 184,000

and $ 115,000 ,

respectively.

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

OF SUPPLEMENTAL CASH FLOW INFORMATION RELATED TO LEASES

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OF FUTURE MINIMUM LEASE PAYMENTS

Total undiscounted cash flows

Imputed interest

Present value of operating lease liabilities (a)

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

of office space of the Company’s 21,000 square feet of office and production space in the Hamilton Mill Business Park located in

Buford, Georgia, for a monthly sublease payment of $ 2,375 (plus an annual escalator each year of 3%) which includes the base rent plus

a pro-rata share of utilities, property taxes and insurance.

Fifty percent of any excess rent received above the per square foot amount

that the Company pays will be remitted to the Company’s landlord less the allocation of any shared expenses and leasehold improvements

specific to the sublease.

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 $ 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):

current portion of $ 158,000 for operating leases.

July 6, 2021, the Company entered into an agreement with King Industrial Realty, Inc.

to sublease from the Company 1,900 square feet

of the Company’s 21,000 square feet office and production space in the Hamilton Mill Business Park located in Buford, Georgia.

This sublease was amended on August 15, 2025 to extend the term through September 30, 2028 and to provide a monthly sublease payment

of $ 3,374 (plus an annual escalator each year of 4%) which includes the base rent plus a pro-rata share of utilities, property taxes

and insurance.

Fifty percent of any excess rent received above the per square foot amount that the Company pays will be remitted to the

Company’s landlord less the allocation of any shared expenses and leasehold improvements specific to the sublease.

ended December 31, 2025, after the offset of the investment in leasehold improvements and other expenses related to the sublease, the

total amount paid to our landlord under the sublease was $ 8,295 .

are the future gross payments expected to be received by the Company under the sublease:

Total undiscounted cash flows

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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.

services include $ 202,000 payable through December 31, 2026 and $ 15,000 payable through December 31, 2027.

The Company also has $ 434,000

in open purchase order commitments payable through September 30, 2026 of which $ 272,000 ( 63 %) is to one electronics vendor.

9— STOCKHOLDERS’ EQUITY (DEFICIT)

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

In 2024 and 2023, 8,350 ( 6,900 to directors and executive

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.

In 2025, 6,900 options were granted which were to directors

and executive officers.

In 2024, 8,350 options were granted ( 6,900 to directors and executive officers and 1,450 to other employees).

In 2025 and 2024, there were no grants to non-employees (other than the non-employee directors and executive officers).

The fair value

of the options issued was $ 119,000 and $ 53,000 in 2025 and 2024, respectively.

options were exercised in the year ended December 31, 2025.

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.

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

7,708 options were exercised in the year ended December 31, 2024.

The intrinsic

value of options outstanding and of options exercisable at December 31, 2025 was $ 476,000 and $ 457,000 , respectively.

The intrinsic value

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

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

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is presented below:

SUMMARY OF STOCK OPTION ACTIVITY

SCHEDULE OF STOCK OPTION ACTIVITY

Price Per Share

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Granted at market price

Forfeited or expired

Cancelled/forfeited/expired

Outstanding at end of year

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$ 3.68 – $ 7.68

$ 9.92 – $ 13.60

$ 17.50 – $ 17.89

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

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total compensation cost related to non-vested awards not yet recognized was $ 9,000 and $ 19,000 as of December 31, 2025 and 2024, respectively,

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

A summary of warrant activity follows:

SUMMARY OF WARRANT ACTIVITY

Outstanding at beginning of year

Forfeited or expired

Outstanding and exercisable at end of year

for which the weighted average recognition period is 1.23 years

On July 2, 2025, the Company repurchased

843 shares at the July 1, 2025 closing market price of $ 16.95 per share.

These shares were the result of a net exercise of stock options

previously granted.

On August 19, 2025, the Company repurchased 70 shares at the August 18,

2025 closing market price of $ 26.25 per share.

These shares were the result of a net exercise of stock options previously granted.

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.

each reporting period, 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, 2025 and 2024 the Company recorded $ 15,513,000 and $ 15,933,000 of deferred tax assets before

valuation allowance, respectively, which was offset by $ 10,326,000 and $ 11,400,000 of valuation allowance, respectively.

has recorded deferred tax liabilities of $ 288,000 and $ 98,000 as of December 31, 2025 and 2024, respectively, which have all been determined

to be sources of future taxable income.

The reduction of $ 1,074,000 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):

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 before income taxes is as follows (in thousands):

OF COMPOSITION OF INCOME (LOSS) BEFORE INCOME TAXES

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State and local

Current income tax (benefit) expense

Current income tax expense

State and local

Deferred income tax benefit

Total income tax (benefit) expense

Deferred income tax expense (benefit)

Total income tax expense (benefit)

Effective Income Tax Rates

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Nondeductible/nontaxable items

Prior year rate change adjustment

Stock compensation

Other nondeductible/nontaxable items

State and local income taxes, net of federal taxes (a)

Rate change adjustment

Deferred true-ups

NOL Expirations

Other, net (primarily permanent differences)

Valuation allowance

Effective income tax rates

the year ended December 31, 2025, state taxes in the following states listed below made up

a majority (greater than 50% of the tax effect of the state and local income taxes, net of

federal taxes rate reconciliation line item).

rate reconciliation above has been adjusted to be presented in compliance with the guidance under ASU 2023-09.

The Company has adopted

this guidance on a prospective basis.

previously disclosed for the year ended December 31, 2024, prior to the adoption of ASU No.

2023-09, the following reconciles

the federal tax rate and the Company’s effective income tax rates with respect to continuing operations:

Statutory Federal rates

Increase (decrease) in income tax rate resulting from:

Nondeductible/nontaxable items

Rate change adjustment

Deferred true ups

Valuation allowance

Effective income tax rates

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

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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.

to the Company’s OmniMetrix subsidiary.

During the years ended December 31, 2025 and 2024, the valuation allowance decreased by

$ 1,074,000 and $ 4,686,000 , respectively.

Summary of Tax Loss Carryforwards

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2026 – 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

to research and experimentation (R&E) activities under IRC Section 174.

While taxpayers historically had the option of deducting

these expenses under IRC Section 174, the December 2017 Tax Cuts and Jobs Act mandates capitalization and amortization of R&E expenses

for tax years beginning after December 31, 2021.

Expenses incurred in connection with R&E activities in the US must be amortized

over a 5-year period if incurred.

R&E activities are broader in scope than qualified research activities considered under IRC Section

41 (relating to the research tax credit).

For the year ended December 31, 2024, the Company performed an analysis based on available

guidance and capitalized the required R&E costs.

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

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

In the normal course of business,

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

There are currently

no pending tax examinations.

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.

Subject to Expiration

utilization of a portion of these NOL carryforwards is limited due to limits on utilizing NOL carryforwards under Internal Revenue

Service regulations.

utilization of the Company’s pre 2012 federal and state net operating losses may be subject to limitation under the Internal Revenue

Code, as well as similar state provisions.

Such limitations may result in the expiration of those net operating loss (NOL) carryforwards

before their utilization.

During 2025 the Company completed a Section 382 study and determined that no change of control occurred and

the NOLs generated during the period of 2012 – 2024 will not be subject to limitation.

Future changes in the Company’s stock

ownership, which may be outside of the Company’s control may trigger an “ownership change” which could result in limitations

under the Internal Revenue Code.

Company maintains a valuation allowance against certain deferred tax assets where management has determined it is more-likely-than-not

that such assets will not be realized.

Any limitation under Section 382 may require the Company to increase its valuation allowance or

could otherwise adversely impact the timing of tax benefits recognized in future periods.

July 4, 2025, the One Big Beautiful Bill was enacted (“OBBBA”), introducing significant and wide-ranging changes to the U.S.

federal tax system.

Significant components include restoration of 100% accelerated tax depreciation on qualifying property including

expansion to cover qualified production property.

Another major aspect includes the return to immediate expensing of domestic research

and experimental expenditures (“R&E”) which in some cases may include retroactive application back to 2021 for businesses

with gross receipts of less than $31 million or accelerated tax deductions of R&E that was previously capitalized for larger businesses.

The legislation also reinstates EBITDA-based interest deductions for tax purposes and makes several business tax incentives permanent.

Less favorable business provisions include limitations on tax deductions for charitable contributions.

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

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

in selling, general and administrative expenses.

Company recorded fees to directors of $ 74,000 and $ 71,000 for the years ended December 31, 2024 and 2023, which is included in selling,

general and administrative expenses.

Company issued 8,350 ( 6,900 to directors and executive officers and 1,450 to other employees) and 14,936 ( 11,874 to directors and executive

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

Company recorded fees to officers of $ 538,000 for each of the years ended December 31, 2025 and 2024, which is included in selling, general

and administrative expenses.

Company recorded fees to directors of $ 74,000 for each of the years ended December 31, 2025 and 2024, which is included in selling, general

and administrative expenses.

Company granted 6,900 options (all to directors and executive officers) and 8,350 options ( 6,900 to directors and executive officers

and 1,450 to other employees) in 2025 and 2024, respectively.

13,257 options were exercised in the year ended December 31, 2025.

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

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

See Note 9 for further discussion.

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Segment gross profit

Segment operating income (loss)

Segment operating income

Interest income, net

Segment income (loss) before income taxes

Segment income before income taxes

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

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Total net income before income taxes for reportable segments

Unallocated cost of corporate headquarters

Unallocated cost of corporate headquarters, net of interest income

Consolidated net income before income taxes

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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.

Invoiced Sales

Accounts Receivable

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

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

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Sales of custom designed units and related accessories

Hardware sales (new product versions)

Hardware sales under the Material Contract

Hardware sales

Other accessories, services, shipping and miscellaneous charges

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December 31, 2026

December 31, 2026 and thereafter

charges relate only to the sale of HW.

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capitalized sales commissions are included in other current assets ($ 76,000 ) and other assets ($ 88,000 ) in the Company’s Consolidated

Balance Sheets at December 31, 2024.

Balance Sheet at December 31, 2025.

OF SALES COMMISSIONS EXPENSE

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14— SUBSEQUENT EVENTS

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

January 1, 2026, the Company entered into a strategic technology partnership with AIO Systems, Ltd.

to expand the Company’s infrastructure

asset management technology offerings for cell towers, data centers, and utility assets in North America.

Under the agreement, the Company

has exclusive rights to market, distribute, integrate, and sell AIO’s cloud-based monitoring and analytics solutions under the

OmniMetrix brand in the United States, Canada, and Mexico, significantly expanding the Company’s product portfolio and addressable

The partnership leverages AIO’s globally-deployed technology and provides for shared Software-as-a-Solution (SaaS) and

monitoring revenues, with Acorn expecting a phased rollout and limited near-term revenue contribution as integration and market expansion

efforts progress.

January 19, 2026, 50,000 options, 25,000 each, were issued to the CEO and CFO with an exercise price of $ 19.02 and that vest in equal

increments on January 19, 2026 and subsequently on the first day of each quarter for eleven quarters commencing on April 1, 2026 with

a fair value of $ 912,000 .

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.

On January 19, 2026, 12,500 options in the aggregate were issued to directors with an exercise price

of $ 19.02 and that vest in equal increments on January 19, 2026, April 1, 2026, July 1, 2026 and October 1, 2026 with a fair value of

$ 228,000 in the aggregate.

February 4, 2026, 1,875 options, in the aggregate, previously issued to board members and that were set to expire on February 5, 2026

were exercised at an exercise price of $ 4.96 /share.

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