UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
SECURITIES EXCHANGE ACT OF 1934
For
the quarterly period ended
or
SECURITIES EXCHANGE ACT OF 1934
For the transition period from _____ to _____
Commission
file number:
(Exact name of registrant as specified in its charter)
(State or other jurisdiction
of incorporation or organization) |
(I.R.S. Employer
Identification No.) |
|
||
| (Address of principal executive offices) | (Zip Code) |
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
Indicate
by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.
Indicate
by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule
405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer ☐ | Accelerated filer ☐ | |
| Smaller
reporting company | ||
| Emerging
growth company |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate
by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.
| Class | Outstanding at November 3, 2026 | |
| Common Stock, $ par value per share |
ACORN ENERGY, INC.
Quarterly Report on Form 10-Q
for the Quarterly Period Ended September 30, 2026
TABLE OF CONTENTS
Certain statements contained in this report are forward-looking in nature. These statements are generally identified by the inclusion of phrases such as “we expect”, “we anticipate”, “we believe”, “we estimate” and other phrases of similar meaning. Whether such statements ultimately prove to be accurate depends upon a variety of factors that may affect our business and operations. Many of these factors are described in our most recent Annual Report on Form 10-K as filed with the Securities and Exchange Commission.
| 2 |
PART I
| ITEM 1. | UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS |
ACORN ENERGY, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
As of
September 30, 2026 | As of
December 31, 2025 | |||||||
| (Unaudited) | ||||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash | $ | $ | ||||||
| Accounts receivable, net | ||||||||
| Inventory | ||||||||
| Other current assets | ||||||||
| State income tax receivable | ||||||||
| Deferred cost of goods sold (COGS) | ||||||||
| Total current assets | ||||||||
| Property and equipment, net | ||||||||
| Intangibles, net | ||||||||
| Goodwill | ||||||||
| Right-of-use assets, net | ||||||||
| Other assets | ||||||||
| Deferred tax assets | ||||||||
| Total assets | $ | $ | ||||||
| LIABILITIES AND EQUITY | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | $ | ||||||
| Accrued expenses | ||||||||
| Deferred revenue | ||||||||
| Current operating lease liabilities | ||||||||
| Deferred purchase consideration, current portion | ||||||||
| Other current liabilities | ||||||||
| State income tax payable | ||||||||
| Total current liabilities | ||||||||
| Long-term liabilities: | ||||||||
| Deferred revenue | ||||||||
| Noncurrent operating lease liabilities | ||||||||
| Deferred purchase consideration, net of current portion | ||||||||
| Other long-term liabilities | ||||||||
| Total liabilities | ||||||||
| Commitments and contingencies (Note 8) | ||||||||
| Equity: | ||||||||
| Acorn Energy, Inc. stockholders | ||||||||
| Common stock - $ par value per share: Authorized - shares; issued - at September 30, 2026 and at December 31, 2025; outstanding - at September 30, 2026 and at December 31, 2025 | ||||||||
| Additional paid-in capital | ||||||||
| Accumulated stockholders’ deficit | ( | ) | ( | ) | ||||
| Treasury stock, at cost – shares at September 30, 2026 and December 31, 2025 | ( | ) | ( | ) | ||||
| Total Acorn Energy, Inc. stockholders’ equity | ||||||||
| Non-controlling interests | ||||||||
| Total equity | ||||||||
| Total liabilities and equity | $ | $ | ||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
| 3 |
ACORN ENERGY, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED) (IN THOUSANDS, EXCEPT PER SHARE DATA)
Nine months ended
September 30, | Three months ended
September 30, | |||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Revenue | $ | $ | $ | $ | ||||||||||||
| COGS | ||||||||||||||||
| Gross profit | ||||||||||||||||
| Operating expenses: | ||||||||||||||||
| Research and development (R&D) expenses | ||||||||||||||||
| Selling, general and administrative (SG&A) expenses | ||||||||||||||||
| Total operating expenses | ||||||||||||||||
| Operating income | ||||||||||||||||
| Interest income, net | ||||||||||||||||
| Income before income taxes | ||||||||||||||||
| Provision for (benefit from) income taxes | ( | ) | ( | ) | ( | ) | ||||||||||
| Net income | ||||||||||||||||
| Non-controlling interest share of income | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Net income attributable to Acorn Energy, Inc. stockholders | $ | $ | $ | $ | ||||||||||||
| Net income per share attributable to Acorn Energy, Inc stockholders – basic and diluted | ||||||||||||||||
| Basic | $ | $ | $ | $ | ||||||||||||
| Diluted | $ | $ | $ | $ | ||||||||||||
| Weighted average number of shares outstanding attributable to Acorn Energy, Inc. stockholders – basic and diluted | ||||||||||||||||
| Basic | ||||||||||||||||
| Diluted | ||||||||||||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
| 4 |
ACORN ENERGY, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
(UNAUDITED) (IN THOUSANDS)
| Three and Nine Months Ended September 30, 2026 | ||||||||||||||||||||||||||||||||||||
Number of
Shares
Outstanding | Common
Stock | Additional
Paid-In
Capital | Accumulated
Deficit | Number
of
Treasury
Shares | Treasury
Stock | Total Acorn
Energy, Inc.
Stockholders’
Equity | Non-
controlling
interests | Total
Equity | ||||||||||||||||||||||||||||
| Balances as of December 31, 2025 | $ | $ | $ | ( | ) | $ | ( | ) | $ | $ | $ | |||||||||||||||||||||||||
| Net loss | — | ( | ) | — | ( | ) | ( | ) | ||||||||||||||||||||||||||||
| Stock option exercises | * | — | ||||||||||||||||||||||||||||||||||
| Accrued dividend in OmniMetrix preferred shares | — | — | ( | ) | ( | ) | ||||||||||||||||||||||||||||||
| Stock-based compensation | — | — | ||||||||||||||||||||||||||||||||||
| Balances as of March 31, 2026 | $ | $ | $ | ( | ) | $ | ( | ) | $ | $ | $ | |||||||||||||||||||||||||
| Net income | — | — | ||||||||||||||||||||||||||||||||||
| Stock option exercises | * | * | — | |||||||||||||||||||||||||||||||||
| Accrued dividend in OmniMetrix preferred shares | — | — | ( | ) | ( | ) | ||||||||||||||||||||||||||||||
| Stock-based compensation | — | — | ||||||||||||||||||||||||||||||||||
| Balances as of June 30, 2026 | $ | $ | $ | ( | ) | $ | ( | ) | $ | $ | $ | |||||||||||||||||||||||||
| Net income | — | — | ||||||||||||||||||||||||||||||||||
| Share exchange | * | — | ( | ) | ||||||||||||||||||||||||||||||||
| Accrued dividend in OmniMetrix preferred shares | — | — | ( | ) | ( | ) | ||||||||||||||||||||||||||||||
| Stock-based compensation | — | — | ||||||||||||||||||||||||||||||||||
| Balances as of September 30, 2026 | $ | $ | $ | ( | ) | $ | ( | ) | $ | $ | $ | |||||||||||||||||||||||||
| Three and Nine Months Ended September 30, 2025 | ||||||||||||||||||||||||||||||||||||
Number of
Shares
Outstanding | Common
Stock | Additional
Paid-In
Capital | Accumulated
Deficit | Number
of
Treasury
Shares | Treasury
Stock | Total Acorn
Energy, Inc.
Stockholders’
Equity | Non-
controlling interests | Total
Equity | ||||||||||||||||||||||||||||
| Balances as of December 31, 2024 | $ | $ | $ | ( | ) | $ | ( | ) | $ | $ | $ | |||||||||||||||||||||||||
| Net income | — | — | ||||||||||||||||||||||||||||||||||
| Accrued dividend in OmniMetrix preferred shares | — | — | ( | ) | ( | ) | ||||||||||||||||||||||||||||||
| Stock-based compensation | — | — | ||||||||||||||||||||||||||||||||||
| Balances as of March 31, 2025 | $ | $ | $ | ( | ) | $ | ( | ) | $ | $ | $ | |||||||||||||||||||||||||
| Net income | — | — | ||||||||||||||||||||||||||||||||||
| Stock option exercises | * | — | ||||||||||||||||||||||||||||||||||
| Accrued dividend in OmniMetrix preferred shares | — | — | ( | ) | ( | ) | ||||||||||||||||||||||||||||||
| Stock-based compensation | — | — | ||||||||||||||||||||||||||||||||||
| Balances as of June 30, 2025 | $ | $ | $ | ( | ) | $ | ( | ) | $ | $ | $ | |||||||||||||||||||||||||
| Net income | — | — | ||||||||||||||||||||||||||||||||||
| Stock option exercises | — | |||||||||||||||||||||||||||||||||||
| Shares repurchased and held in Treasury | — | ( | ) | ( | ) | ( | ) | |||||||||||||||||||||||||||||
| Accrued dividend in OmniMetrix preferred shares | — | — | ( | ) | ( | ) | ||||||||||||||||||||||||||||||
| Stock-based compensation | — | — | ||||||||||||||||||||||||||||||||||
| Balances as of September 30, 2025 | $ | $ | $ | ( | ) | $ | ( | ) | $ | $ | $ | |||||||||||||||||||||||||
| * |
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
| 5 |
ACORN ENERGY, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED) (IN THOUSANDS)
| Nine months ended September 30, | ||||||||
| 2026 | 2025 | |||||||
| Cash flows provided by operating activities: | ||||||||
| Net income | $ | $ | ||||||
| Depreciation and amortization | ||||||||
| Deferred income tax (benefit) expense | ( | ) | ||||||
| Provision for credit losses | ||||||||
| Impairment of inventory | ||||||||
| Non-cash lease expense | ||||||||
| Stock-based compensation | ||||||||
| Accretion of discount on deferred purchase consideration | ||||||||
| Change in operating assets and liabilities: | ||||||||
| (Increase) decrease in accounts receivable | ( | ) | ||||||
| Decrease (increase) in inventory | ( | ) | ||||||
| Decrease in deferred COGS | ||||||||
| (Increase) decrease in other current assets and other assets | ( | ) | ||||||
| Decrease in state income tax receivable | ||||||||
| Increase (decrease) in deferred revenue | ( | ) | ||||||
| Decrease in operating lease liability | ( | ) | ( | ) | ||||
| (Decrease) increase in state income tax payable | ( | ) | ||||||
| Increase (decrease) in accounts payable, accrued expenses, other current liabilities and non-current liabilities | ( | ) | ||||||
| Net cash provided by operating activities | ||||||||
| Cash flows used in investing activities: | ||||||||
| Equipment, furniture and trade show booth purchases | ( | ) | ( | ) | ||||
| Payment for exclusive distribution and commercialization rights | ( | ) | ||||||
| Acquisition of Gen-Tracker business | ( | ) | ||||||
| Patents | ( | ) | ||||||
| Investments in technology | ( | ) | ( | ) | ||||
| Leasehold improvements | ( | ) | ( | ) | ||||
| Net cash used in investing activities | ( | ) | ( | ) | ||||
| Cash flows provided by financing activities: | ||||||||
| Stock repurchases held in Treasury | ( | ) | ||||||
| Stock option exercise proceeds | ||||||||
| Net cash provided by financing activities | ||||||||
| Net increase in cash | ||||||||
| Cash at the beginning of the period | ||||||||
| Cash at the end of the period | $ | $ | ||||||
| Supplemental cash flow information: | ||||||||
| Cash paid during the year for: | ||||||||
| Interest | $ | $ | ||||||
| Income taxes | $ | $ | ||||||
| Non-cash investing and financing activities: | ||||||||
| Right-of-use assets | $ | $ | ||||||
| Operating lease liability | $ | |||||||
| Deferred purchase consideration for Gen-Tracker Acquisition | $ | $ | ||||||
| Accrued preferred dividends to former CEO of OmniMetrix | $ | $ | ||||||
| Common stock issued in exchange for non-controlling interest and accrued preferred dividends in OmniMetrix | $ | $ | ||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
| 6 |
ACORN ENERGY, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED STATEMENTS
(UNAUDITED)
NOTE 1— BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements of Acorn Energy, Inc. (“Acorn”) and its subsidiaries, OmniMetrix, LLC (“OmniMetrix”) and OMX Holdings, Inc. (collectively, with Acorn and OmniMetrix, “the Company”) have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and with the instructions to Article 8 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete consolidated financial statements. The December 31, 2025 consolidated balance sheet data were derived from audited financial statements but do not include all disclosures required by accounting principles generally accepted in the United States of America. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation have been included. Operating results for the nine- and three-month periods ended September 30, 2026 and 2025 are not necessarily indicative of the results that may be expected for the year ending December 31, 2026.
All dollar amounts, except per share data, are rounded to the nearest thousand; thus, they are approximate.
These unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and footnotes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025, filed with the Securities and Exchange Commission on March 5, 2026.
NOTE 2—ACCOUNTING POLICIES
Use of Estimates in Preparation of Financial Statements
The preparation of consolidated financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities as of the date of the consolidated financial statements, and the reported amounts of revenues and expenses during the reporting periods.
As applicable to these unaudited consolidated financial statements, the most significant estimates and assumptions relate to uncertainties with respect to valuation allowance.
Concentrations of Credit Risk
Financial
instruments, which potentially subject the Company to concentrations of credit risk, consist principally of cash and trade accounts receivable.
The Company’s cash was deposited with a U.S. bank and amounted to $
| 7 |
Inventory
Inventories are comprised of components (raw materials) and finished goods, which are measured at the lower of cost or net realizable value.
Raw materials inventory is generally comprised of radios, cables, antennas, and electrical components. Finished goods inventory consists of fully assembled systems ready for final shipment to the customer. Costs are determined at cost of acquisition on a weighted average basis and include all outside production and applicable shipping costs.
All inventories are periodically reviewed to identify slow-moving and obsolete inventory. Management conducts an assessment at the end of each reporting period of the Company’s inventory reserve and writes off any inventory items that are deemed obsolete.
Management
conducted an assessment and wrote off inventory deemed obsolete valued at $
Intangibles
The
Company’s intangible assets are subject to amortization. Intangible assets held prior to the Gen-Tracker Acquisition (see Note
14) are amortized over their estimated useful lives in proportion to the economic benefits received. Intangible assets acquired in a
business combination are recorded at their estimated fair values as of the acquisition date. The finite-lived intangible assets acquired
in the Gen-Tracker Acquisition, consisting of customer relationships of $
Goodwill
Goodwill
represents the excess of the purchase consideration over the fair value of the identifiable tangible and intangible assets acquired and
liabilities assumed in a business combination. Goodwill is not amortized but is tested for impairment at the reporting unit level annually,
or more frequently if events or changes in circumstances indicate that it is more likely than not that the fair value of a reporting
unit is less than its carrying amount. The Company may first assess qualitative factors to determine whether a quantitative impairment
test is necessary. If a quantitative test is performed, an impairment loss is recognized for the amount by which the carrying amount
of the reporting unit exceeds its fair value, not to exceed the carrying amount of goodwill. As of September 30, 2026, goodwill of $
Business Combinations
The Company accounts for business combinations under ASC 805, Business Combinations, using the acquisition method of accounting. Identifiable assets acquired and liabilities assumed are recorded at their estimated fair values as of the acquisition date, and any excess of the purchase consideration over those fair values is recorded as goodwill. Determining these fair values, particularly for acquired intangible assets, requires significant estimates and assumptions, including projected cash flows and discount rates. Purchase price allocations may be provisional and adjusted during the measurement period, which does not exceed one year from the acquisition date, as additional information about facts and circumstances that existed as of the acquisition date is obtained. Acquisition-related costs are expensed as incurred. Deferred consideration that is not contingent on future events is recorded at its acquisition-date fair value and subsequently carried at amortized cost, with the discount accreted to interest expense.
| 8 |
Revenue Recognition
The Company’s revenue recognition policy is consistent with applicable revenue recognition guidance and interpretations. The core principle of ASC 606 is to recognize revenue when promised goods or services are transferred to customers in an amount that reflects the consideration that is expected to be received for those goods or services. ASC 606 defines a five-step process to achieve this core principle, which includes: (1) identifying contracts with customers, (2) identifying performance obligations within those contracts, (3) determining the transaction price, (4) allocating the transaction price to the performance obligation in the contract, which may include an estimate of variable consideration, and (5) recognizing revenue when or as each performance obligation is satisfied. The Company assesses whether payment terms are customary or extended in accordance with normal practice relative to the market in which the sale is occurring. The Company’s sales arrangements generally include standard payment terms. These terms effectively relate to all customers, products, and arrangements regardless of customer type, product mix or arrangement size. See Note 12 - Revenue, for further discussion.
Product revenues are recognized at the point in time when control of the product is transferred to the customer, which typically occurs upon shipment or delivery except to the one customer under the Material Contract for which this occurs upon acceptance. To determine when control has transferred, the Company considers if there is a present right to payment and if legal title, physical possession, and the significant risks and rewards of ownership of the asset has transferred to the customer. Revenue from the prepayment of monitoring fees (generally paid twelve months in advance) are recorded as deferred revenue upon receipt of payment from the customer and then recognized to revenue over the monitoring service period. This method provides a faithful depiction of the transfer of services as it aligns the recognition of revenue with the period in which the monitoring services are provided. By deferring the revenue and recognizing it over the service period, the financial statements accurately reflect the Company’s performance and obligations to its customers. See Notes 11 and 12 for the disaggregation of the Company’s revenue for the periods presented.
Any sales tax, value added tax, and other tax the Company collects concurrent with revenue-producing activities are excluded from revenue.
Income Taxes
The Company accounts for income taxes under the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the consolidated financial statements. Under this method, the company determines deferred tax assets and liabilities on the basis of the differences between the financial statement and the tax bases of assets and liabilities by using enacted tax rates in effect for the year in which the differences are expected to reverse. The effect of a change in tax rates on deferred assets and liabilities is recognized in income in the period that includes the enactment date.
The
Company recognizes deferred tax assets to the extent that it believes that these assets are more likely than not to be realized. In making
such a determination, the Company considers all available positive and negative evidence, including future reversals of existing taxable
temporary differences, projected future taxable income, tax-planning strategies, and results of recent operations. If the Company determines
that it would be able to realize its deferred tax assets in the future in excess of their net recorded amount, the Company would make
an adjustment to the deferred tax asset valuation allowance, which would reduce the provision for income taxes. During the year ended
December 31, 2025, the Company recorded a reduction in the valuation allowance of $
| 9 |
The Company records uncertain tax positions in accordance with ASC 740 on the basis of a two-step process in which (1) the Company determines whether it is more likely than not that the tax positions will be sustained on the basis of the technical merits of the position and (2) for those tax positions that meet the more likely-than-not recognition threshold, the company recognizes the largest amount of tax benefit is more than 50 percent likely to be realized upon ultimate settlement with the related tax authority.
The Company recognizes interest and penalties related to unrecognized tax benefits on the income tax expense line in the accompanying unaudited condensed consolidated statements of operations. No accrued interest or penalties were required to be included in the related tax liability line in the unaudited condensed consolidated balance sheet as of September 30, 2026 and in the consolidated balance sheet as of December 31, 2025.
Basic 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 period, excluding treasury stock. 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 are excluded from the computation of diluted net income per share if doing so would be antidilutive.
The combined weighted average number of options that were excluded from the computation of diluted income per share, as they had an antidilutive effect, was (which have a weighted average exercise price of $) for the nine-month period ended September 30, 2026. The combined weighted average number of options that were excluded from the computation of diluted income per share, as they had an antidilutive effect, was (which have a weighted average exercise price of $) for the three-month period ended September 30, 2026. The combined weighted average number of options that were excluded from the computation of diluted net income per share, as they had an antidilutive effect, was (with a weighted average exercise price of $) for the nine-month period ended September 30, 2025. There were no antidilutive options excluded from the computation of diluted net income per share in the three-month period ended September 30, 2025.
Nine months ended
September 30, | Three months ended
September 30, | |||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Net income attributable to common stockholders | $ | $ | $ | $ | ||||||||||||
| Weighted average shares outstanding: | ||||||||||||||||
| -Basic | ||||||||||||||||
| Add: Stock options | ||||||||||||||||
| -Diluted | ||||||||||||||||
| Basic net income per share | $ | $ | $ | $ | ||||||||||||
| Diluted net income per share | $ | $ | $ | $ | ||||||||||||
| 10 |
Recent Accounting Pronouncements
In November 2024, the FASB issued Accounting Standards Update No. 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses (“ASU 2024-03”), and in January 2025, the FASB issued Accounting Standards Update No. 2025-01, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Clarifying the Effective Date (“ASU 2025-01”). ASU 2024-03 requires additional disclosure of the nature of expenses included in the income statement as well as disclosures about specific types of expenses included in the expense captions presented in the income statement. ASU 2024-03, as clarified by ASU 2025-01, is effective for us for our annual reporting for fiscal 2027 and for interim period reporting beginning in fiscal 2028 on a prospective basis. Both early adoption and retrospective application are permitted. The Company is currently evaluating the impact that the adoption of these standards will have on its consolidated financial statements and disclosures.
In September 2025, the FASB issued Accounting Standards Update No. 2025-06, Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software (“ASU 2025-06”). ASU 2025-06 removes all references to prescriptive and sequential software development project stages and requires an entity to begin capitalizing software costs when management has authorized and committed to funding the software project and it is probable that the project will be completed and the software will be used to perform the function intended. ASU 2025-06 also incorporates the guidance on website development costs into Subtopic 350-40. ASU 2025-06 is effective for us for annual reporting periods beginning in fiscal 2028, including interim reporting periods within that annual period, and may be applied on a prospective, modified or retrospective basis. Early adoption is permitted as of the beginning of an annual reporting period. The Company is currently evaluating the impact that the adoption of this standard will have on its consolidated financial statements and disclosures.
In December 2025, the FASB issued Accounting Standards Update No. 2025-11, Interim Reporting (Topic 270): Narrow-Scope Improvements (“ASU 2025-11”). ASU 2025-11 clarifies the form, content and applicability of interim financial statements and notes and provides a comprehensive list of the disclosures required in interim reporting periods. ASU 2025-11 is effective for us for interim reporting periods beginning in fiscal 2028. Early adoption is permitted. The Company is currently evaluating the impact that the adoption of this standard will have on its interim consolidated financial statement disclosures.
Recently Adopted Accounting Standards
In 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. Although the Company qualifies as a public business entity and is therefore not eligible for the accounting policy election, the Company evaluated the practical expedient and determined that it did not have a material impact on its consolidated financial statements upon adoption effective January 1, 2026.
NOTE 3—LIQUIDITY
The
Company expects that its existing cash as of September 30, 2026 of $
At
September 30, 2026, the Company had working capital of $
| 11 |
NOTE 4—ACCOUNTS RECEIVABLE AND ALLOWANCE FOR CREDIT LOSSES
The
Company has historically experienced immaterial write-offs given the nature of the customers that receive credit. As of September 30,
2026, the Company had gross receivables of $
For the nine
months ended
September 30, 2026 | For the
year ended
December 31, 2025 | |||||||
| (in thousands) | ||||||||
| Accounts Receivable, net, beginning of period | $ | $ | ||||||
| Accounts Receivable, net, end of period | $ | $ | ||||||
In
connection with the Gen-Tracker Acquisition, the Company acquired trade accounts receivable with a contractual value of $
The following is a tabular reconciliation of the Company’s allowance for credit losses:
For the nine
months ended
September 30, 2026 | For the
year ended
December 31, 2025 | |||||||
| (in thousands) | ||||||||
| Balance at beginning of period | $ | $ | ||||||
| Increase in provision for credit losses | ||||||||
| Net credits | ||||||||
| Allowance on purchased credit-deteriorated receivables acquired in the Gen-Tracker Acquisition (see Note 14) | ||||||||
| Balance at end of period | $ | $ | ||||||
NOTE 5—INVENTORY
| As of | ||||||||
| September 30, 2026 | December 31, 2025 | |||||||
| (in thousands) | ||||||||
| Raw materials | $ | $ | ||||||
| Finished goods | ||||||||
| $ | $ | |||||||
At
September 30, 2026 and December 31, 2025, the Company’s inventory reserve for obsolescence was $
In
connection with the Gen-Tracker Acquisition, the Company acquired hardware inventory of $
| 12 |
NOTE 6—INTANGIBLES, NET
On January 1, 2026, OmniMetrix entered into a Technology Partnership Agreement (the “AIO Agreement”) with AIO Systems Ltd., an Israeli technology company (“AIO”). Under the AIO Agreement, OmniMetrix obtained the exclusive right to market, distribute, integrate, and sell AIO’s centralized monitoring and management related products and services. The Company evaluated the payment and concluded that the payment represents consideration for the acquisition of identifiable intangible rights and deliverables, principally consisting of (i) the exclusive distribution rights granted in the Territory, as defined in the AIO Agreement, and (ii) the contractually-required market-readiness deliverables.
The
AIO Agreement has been classified as a finite-lived intangible asset and is being amortized on a straight-line basis over its estimated
useful life of five (
In
connection with the Gen-Tracker Acquisition on September 9, 2026, the Company acquired finite-lived intangible assets with an aggregate
preliminary fair value of $
Patents
are amortized over the patent term, which on average is
| Estimated | As of | |||||||||||
Useful Life
(in years) | September 30, 2026 | December 31, 2025 | ||||||||||
| (in thousands) | ||||||||||||
| Cost: | ||||||||||||
| Exclusive distribution and commercialization rights | $ | $ | ||||||||||
| Customer relationships | ||||||||||||
| Trade name | ||||||||||||
| Non-compete agreement | ||||||||||||
| Patents | ||||||||||||
| Accumulated amortization | ||||||||||||
| Exclusive distribution and commercialization rights | ||||||||||||
| Customer relationships | ||||||||||||
| Trade name | * | |||||||||||
| Non-compete agreement | ||||||||||||
| Patents | ||||||||||||
| Intangibles, net | $ | $ | ||||||||||
| 13 |
Estimated future amortization expense as of September 30, 2026 is as follows (in thousands):
Twelve months ended September 30, | ||||
| 2027 | ||||
| 2028 | ||||
| 2029 | ||||
| 2030 | ||||
| 2031 | ||||
| Thereafter | ||||
| Total | $ | |||
NOTE 7—LEASES
OmniMetrix
leases office space and office equipment under operating lease agreements. The office lease, originally set to expire on
In
connection with the Gen-Tracker Acquisition (see Note 14), OmniMetrix entered into a one-year lease of the Gen-Tracker facility in Minnesota
with an affiliate of Generator Solutions, at a monthly rent of $
The
present value of future minimum lease payments on non-cancelable operating leases as of September 30, 2026 using a discount rate of
Supplemental cash flow information related to leases consisted of the following (in thousands):
For the Nine Months
Ending September 30, | ||||||||
| 2026 | 2025 | |||||||
| Cash paid for operating lease liabilities | $ | $ | ||||||
Supplemental balance sheet information related to leases consisted of the following:
As of
September 30, 2026 | ||||
| Weighted average remaining lease terms for operating leases |
| 14 |
The table below reconciles the undiscounted future minimum lease payments under non-cancelable lease agreements having initial terms of more than one year to the total operating lease liabilities recognized on the unaudited condensed consolidated balance sheet as of September 30, 2026 (in thousands):
Year ended
September 30, | ||||
| 2027 | $ | |||
| 2028 | ||||
| 2029 | ||||
| 2030 | ||||
| 2031 | ||||
| Total undiscounted cash flows | ||||
| Less: Imputed interest | ( | ) | ||
| Present value of operating lease liabilities (a) | $ | |||
| (a) |
On
July 6, 2021, the Company entered into an agreement with King Industrial Realty, Inc., to sublease from the Company
Below are the future gross payments expected to be received by the Company under the sublease (in thousands):
| Year ended September 30, | ||||
| 2027 | $ | |||
| 2028 | ||||
| 2029 | ||||
| Total undiscounted cash flows | $ | |||
NOTE 8—COMMITMENTS AND CONTINGENCIES
The
Company has $
As
it relates to the AIO Agreement described in Note 6, the Company has commitments to share a defined portion of monitoring and SaaS-related
revenue generated under the agreement with AIO. The Company is obligated to remit to AIO a share of (i) the Company’s revenue from
ongoing monitoring contracts utilizing AIO’s products, net of data, communication, cloud server, and billing costs, and (ii) the
Company’s revenue from SaaS arrangements involving AIO’s products, net of the cost of products sold, installation costs,
and other directly attributable costs.
| 15 |
NOTE 9— STOCKHOLDERS’ EQUITY
(a) General
At September 30, 2026, Acorn had shares issued and shares outstanding of its common stock, par value $ per share. Holders of outstanding common stock are entitled to receive dividends when and if declared by the Board and to share ratably in the assets of the Company legally available for distribution in the event of a liquidation, dissolution or winding up of the Company.
The Company is t authorized to issue preferred stock. Accordingly, preferred stock is issued or outstanding.
On
August 17, 2026, Acorn entered into a letter agreement with Walter Czarnecki, the former Chief Executive Officer of OmniMetrix, under
which Mr. Czarnecki exchanged the shares of Series A preferred stock of OMX Holdings, Inc. (“OMX”) held by him, together
with all of his other rights in the equity of OMX, including accrued and unpaid dividends of approximately $
(b) Summary Employee Option Information
The Company’s stock option plans provide for the grant to officers, directors and employees of options to purchase shares of common stock. The purchase price may be paid in cash or, if the option is “in-the-money” at the end of the option term, it is automatically exercised “net.” In a net exercise of an option, the Company does not require a payment of the exercise price of the option from the option holder but reduces the number of shares of common stock issued upon the exercise of the option by the smallest number of whole shares that has an aggregate fair market value equal to or in excess of the aggregate exercise price for the option shares covered by the option exercised. Each option is exercisable for one share of the Company’s common stock. Most options expire within five to ten years from the date of the grant and generally vest over a three-year period from the date of the grant.
On September 16, 2026, the Company’s stockholders approved the Acorn Energy, Inc. 2026 Stock Incentive Plan (the “2026 Plan”) at the Company’s Annual Meeting of Stockholders. The 2026 Plan permits the grant of cash-based awards, nonqualified and incentive stock options, share appreciation rights, restricted shares, restricted share units, performance shares, performance units and other share-based awards to officers, employees, directors and third-party service providers of the Company and its existing or future subsidiaries. Subject to adjustment as provided in the 2026 Plan, a maximum of shares of common stock is authorized for issuance under the 2026 Plan. Options granted under the 2026 Plan must have an exercise price of not less than 100% of the fair market value of the common stock on the date of grant and may not be exercised later than the tenth anniversary of the date of grant. Unless sooner terminated, the 2026 Plan will terminate on December 31, 2036.
At September 30, 2026, shares were available for grant under the 2026 Plan, and options were available for grant under the Amended and Restated 2006 Stock Incentive Plan (the “2006 Plan”), and no options were available for grant under the 2006 Stock Option Plan for Non-Employee Directors. During the nine-month period ended September 30, 2026, options were issued. The options were issued as follows: an aggregate of to directors (excluding the CEO), to the CEO and to the CFO. In the nine-month period ended September 30, 2026, there were no grants to non-employees (other than the directors, CEO and CFO). No options were issued during the three-month period ended September 30, 2026.
| 16 |
During the nine- and three-month periods ended September 30, 2026, and options were exercised, respectively. The Company utilized the Black-Scholes option-pricing model to estimate fair value, utilizing the following assumptions for the respective years (all in weighted averages):
Number of Options (in shares) | Weighted Average Exercise Price Per Share | Weighted Average Remaining Contractual Life | Aggregate Intrinsic Value | |||||||||||
| Outstanding at December 31, 2025 | $ | years | $ | |||||||||||
| Granted | ||||||||||||||
| Cancelled/expired | ( | ) | ||||||||||||
| Exercised | ( | ) | ||||||||||||
| Outstanding at September 30, 2026 | $ | years | $ | |||||||||||
| Exercisable at September 30, 2026 | $ | years | $ | |||||||||||
| Risk-free interest rate | % | |||
| Expected term of options | years | |||
| Expected annual volatility | % | |||
| Expected dividend yield | % |
(c) Stock Option Compensation Expense
Stock option compensation expense included in selling, general and administrative expenses in the Company’s unaudited condensed consolidated statements of operations was $ and $ for the nine-month periods ended September 30, 2026 and 2025, respectively, and $ and $ for the three-month periods ended September 30, 2026 and 2025, respectively.
The total compensation cost related to non-vested awards not yet recognized was $ as of September 30, 2026 which will be recognized over the next eight quarters.
NOTE 10— INCOME TAXES
The Company’s quarterly provision for income taxes is measured using an annual effective tax rate, adjusted for discrete items within the period presented. To determine the annual effective tax rate, the Company estimates both the total income (loss) before income taxes for the full year and the jurisdictions in which that income (loss) is subject to tax. The actual effective tax rate for the full year may differ from these estimates if income (loss) before income taxes is greater than or less than what was estimated or if the allocation of income (loss) to jurisdictions in which it is taxed is different from the estimated allocations.
For
the nine months ended September 30, 2026 and September 30, 2025, the Company recognized a net income tax benefit of $
The Company’s current position is to elect under Section 59(e) of the Internal Revenue Code to amortize its
domestic research and experimental expenditures over a longer recovery period. This lowers the Company’s annual tax amortization of these
costs and increases its projected taxable income in the near term. In addition, the Company’s updated forecasts reflect higher expected
future earnings due to the recent acquisition. As a result, the Company now expects to use certain federal net operating loss carryforwards
that were previously expected to expire unused. Based on this positive evidence, the Company concluded that it is more likely than not
that approximately $
| 17 |
The Company files a consolidated U.S. income tax return and tax returns in certain state and local jurisdictions. As of September 30, 2026, the Company is no longer subject to federal examination for years before 2022, or for years before 2021 for state income taxes. However, our tax attribute carryforwards from closed tax years may be subject to examination to the extent utilized in an open tax year. The Company does not expect that our unrecognized tax benefits will change within the next twelve months due to statute of limitation lapses.
NOTE 11— SEGMENT REPORTING
As
of September 30, 2026, the Company operates in
| ● | Power Generation (“PG”). OmniMetrix’s PG services provide wireless remote monitoring and control systems and Internet of Things (“IoT”) applications 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 and AIRGuard product lines, offering enhanced flexibility, expandability, and improved connectivity with easier installation. Following the Gen-Tracker Acquisition in September 2026 (see Note 14), PG also includes the Gen-Tracker product line: the GTU Series, which monitors standby generators of virtually any make, model or age through the automatic transfer switch, and the MBX Series, which connects directly to the generator controller. OmniMetrix also offers the Smart Annunciator product for commercial customers who require a visual representation of generator status via a touchscreen display. | |
| ● | Cathodic Protection (“CP”). OmniMetrix’s CP services provide remote monitoring and control products for cathodic protection systems on gas pipelines serving the gas utilities market and pipeline operators. The CP product lineup includes solutions to remotely monitor and control rectifiers, test stations and bonds. In 2025, the Company launched the RADex, an OCOM-based expansion of the Company’s 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. |
| ● | Infrastructure Solutions (“IS”). OmniMetrix’s IS services provide smart infrastructure monitoring hardware, software and solutions for telecommunications, energy and data center infrastructure asset management in the North American market. Under a Technology Partnership Agreement effective January 1, 2026 with AIO Systems Ltd. (“AIO”), an Israel-based technology company, OmniMetrix has the exclusive right to market, distribute, integrate and sell, on a white-label basis, AIO’s IoT monitoring controllers, sensors, power management devices, security products, environmental monitoring equipment, and a cloud-based Management-of-Management (MOM) platform that provides centralized monitoring, alerting, ticketing and workflow orchestration for telecommunications towers, energy sites and data centers. Revenue in the IS segment is expected to be derived from hardware product sales, recurring monitoring service contracts and other bundled arrangements. The IS segment had no revenue for the nine months ended September 30, 2026 as operations were in the pre-revenue stage. |
The Company’s reportable segments are strategic business units, offering different products and services, and are organized based on the end markets they serve.
The Company’s chief operating decision maker (“CODM”) is the Company’s Chief Executive Officer (CEO).
| 18 |
(b) Information about profit or loss and assets
The accounting policies of all the segments are those described in the summary of significant accounting policies. The Company evaluates performance by segment based on revenue (driven by the number of connections), gross profit and net income or loss before taxes.
The Company does not allocate assets, liabilities or equity to its segments. Only income statement activity is reported by segment, and segment results include depreciation expense without allocation of the related assets.
Segment expenses that are routinely provided to the CODM are COGS and R&D expense. R&D expense may be allocated to each segment based on the percentage of segment revenue to total revenue or based on estimated time on dedicated projects within the segment. SG&A expense and interest income is allocated to each segment based on the percentage of segment revenue to total revenue instead of being specifically identified to each segment since the Company’s resources have a high level of shared utilization between the segments. Further, the CODM does not review the assets by segment.
The following tables represent segment data for the nine- and three-month periods ended September 30, 2026 and 2025 (in thousands):
| PG | CP | IS | Total | |||||||||||||
| Nine months ended September 30, 2026: | ||||||||||||||||
| Revenues from external customers | $ | $ | $ | $ | ||||||||||||
| COGS | ||||||||||||||||
| Segment gross profit | ||||||||||||||||
| R&D expense | ||||||||||||||||
| SG&A expense | ||||||||||||||||
| Segment operating income (loss) | ( | ) | ( | ) | ||||||||||||
| Interest income | ||||||||||||||||
| Interest expense – accretion of discount on deferred acquisition consideration | ( | ) | ( | ) | ||||||||||||
| Segment income (loss) before income taxes | $ | $ | ( | ) | $ | ( | ) | $ | ||||||||
| Nine months ended September 30, 2025: | ||||||||||||||||
| Revenues from external customers | $ | $ | $ | |||||||||||||
| COGS | ||||||||||||||||
| Segment gross profit | ||||||||||||||||
| R&D expense | ||||||||||||||||
| SG&A expense | ||||||||||||||||
| Segment operating income | ||||||||||||||||
| Interest income, net | ||||||||||||||||
| Segment income before income taxes | $ | $ | $ | |||||||||||||
| 19 |
| PG | CP | IS | Total | |||||||||||||
| Three months ended September 30, 2026: | ||||||||||||||||
| Revenues from external customers | $ | $ | $ | $ | ||||||||||||
| COGS | ||||||||||||||||
| Segment gross profit | ||||||||||||||||
| R&D expense | ||||||||||||||||
| SG&A expense | ||||||||||||||||
| Segment operating income (loss) | ( | ) | ( | ) | ||||||||||||
| Interest income, net | ||||||||||||||||
| Interest expense – accretion of discount on deferred acquisition consideration | ( | ) | ( | ) | ||||||||||||
| Segment income (loss) before income taxes | $ | $ | ( | ) | $ | ( | ) | $ | ||||||||
| Three months ended September 30, 2025: | ||||||||||||||||
| Revenues from external customers | $ | $ | $ | |||||||||||||
| COGS | ||||||||||||||||
| Segment gross profit | ||||||||||||||||
| R&D expense | ||||||||||||||||
| SG&A expense | ||||||||||||||||
| Segment operating income | ||||||||||||||||
| Interest income, net | ||||||||||||||||
| Segment income before income taxes | $ | $ | $ | |||||||||||||
Reconciliation of Segment Income to Consolidated Net Income Before Income Taxes
Nine months ended
September 30, | Three months ended
September 30, | |||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| (in thousands) | ||||||||||||||||
| Total net income before income taxes for reportable segments | $ | $ | $ | $ | ||||||||||||
| Unallocated cost of corporate headquarters | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Consolidated net income before income taxes | $ | $ | $ | $ | ||||||||||||
NOTE 12—REVENUE
Revenue from the prepayment of monitoring fees (generally paid twelve months in advance) are recorded as deferred revenue upon receipt of payment from the customer and then amortized to revenue over the monitoring service period. This method provides a faithful depiction of the transfer of services as it aligns the recognition of revenue with the period in which the monitoring services are provided. By deferring the revenue and recognizing it over the service period, the financial statements accurately reflect the company’s performance and obligations to its customers.
| 20 |
The following table disaggregates the Company’s revenue for the nine- and three-month periods ended September 30, 2026 and 2025 (in thousands):
| Hardware | Monitoring | Total | ||||||||||
| Nine months ended September 30, 2026: | ||||||||||||
| PG Segment | $ | $ | $ | |||||||||
| CP Segment | ||||||||||||
| Total Revenue | $ | $ | $ | |||||||||
| Hardware | Monitoring | Total | ||||||||||
| Nine months ended September 30, 2025: | ||||||||||||
| PG Segment | $ | $ | $ | |||||||||
| CP Segment | ||||||||||||
| Total Revenue | $ | $ | $ | |||||||||
The IS segment had no revenue for the nine months ended September 30, 2026 as operations were in the pre-revenue stage.
| Hardware | Monitoring | Total | ||||||||||
| Three months ended September 30, 2026: | ||||||||||||
| PG Segment | $ | $ | $ | |||||||||
| CP Segment | ||||||||||||
| Total Revenue | $ | $ | $ | |||||||||
| Hardware | Monitoring | Total | ||||||||||
| Three months ended September 30, 2025: | ||||||||||||
| PG Segment | $ | $ | $ | |||||||||
| CP Segment | ||||||||||||
| Total Revenue | $ | $ | $ | |||||||||
The IS segment had no revenue for the three months ended September 30, 2026 as operations were in the pre-revenue stage.
Deferred revenue activity for the nine months ended September 30, 2026 can be seen in the table below (in thousands):
| Hardware | Monitoring | Total | ||||||||||
| Balance at December 31, 2025 | $ | $ | $ | |||||||||
| Additions during the period | ||||||||||||
| Assumed in the Gen-Tracker Acquisition (see Note 14) | ||||||||||||
| Recognized as revenue | ( | ) | ( | ) | ( | ) | ||||||
| Balance at September 30, 2026 | $ | $ | $ | |||||||||
| Amounts to be recognized as revenue in the twelve-month period ending: | ||||||||||||
| September 30, 2027 | $ | |||||||||||
| September 30, 2028 | ||||||||||||
| September 30, 2029 and thereafter | ||||||||||||
| $ | ||||||||||||
The
amount of hardware revenue recognized during the nine months ended September 30, 2026 that was included in deferred revenue at the beginning
of the fiscal year was $
| 21 |
The following table provides a reconciliation of the Company’s hardware revenue for the nine- and three-month periods ended September 30, 2026 and 2025 (in thousands):
Nine months ended
September 30, | Three months ended
September 30, | |||||||||||||||
| Reconciliation of Hardware Revenue | 2026 | 2025 | 2026 | 2025 | ||||||||||||
| Amortization of deferred revenue | $ | $ | $ | $ | ||||||||||||
| Sales of custom designed units and related accessories | ||||||||||||||||
| Hardware sales | ||||||||||||||||
| Other accessories, services, shipping and miscellaneous charges | ||||||||||||||||
| Total hardware revenue | $ | $ | $ | $ | ||||||||||||
Deferred COGS relate only to the sale of equipment. Deferred COGS activity for the nine-month period ended September 30, 2026 can be seen in the table below (in thousands):
| Balance at December 31, 2025 | $ | |||
| Additions, net of adjustments, during the period | ||||
| Recognized as COGS | ( | ) | ||
| Balance at September 30, 2026 | $ | |||
| Amounts to be recognized as COGS in the twelve-month-period ending: | ||||
| September 30, 2027 | $ |
The following table provides a reconciliation of the Company’s COGS expense for the nine- and three-month periods ended September 30, 2026 and 2025 (in thousands):
Nine months ended
September 30, | Three months ended
September 30, | |||||||||||||||
| Reconciliation of COGS Expense | 2026 | 2025 | 2026 | 2025 | ||||||||||||
| Amortization of deferred COGS | $ | $ | $ | $ | ||||||||||||
| COGS of custom designed units and related accessories | ||||||||||||||||
| COGS of hardware sales | ||||||||||||||||
| Data costs for monitoring | ||||||||||||||||
| Other COGS of accessories, services, shipping and miscellaneous charges | ||||||||||||||||
| Total COGS expense | $ | $ | $ | $ | ||||||||||||
The following table provides a reconciliation of the Company’s sales commissions contract assets for the nine-month period ended September 30, 2026 (in thousands):
| Hardware | Monitoring | Total | ||||||||||
| Balance at December 31, 2025 | $ | $ | $ | |||||||||
| Additions during the period | ||||||||||||
| Amortization of sales commissions | ( | ) | ( | ) | ( | ) | ||||||
| Balance at September 30, 2026 | $ | |||||||||||
The
capitalized sales commissions are included in other current assets ($
| 22 |
Amounts to be recognized as sales commission expense in the twelve-month period ending (in thousands):
| September 30, 2027 | $ | |||
| September 30, 2028 | ||||
| September 30, 2029 and thereafter | ||||
| $ |
NOTE 13—RELATED PARTY BALANCES AND TRANSACTIONS
Officer and Director Fees
The
Company recorded consulting service fees to officers of $
The
Company recorded fees to directors of $
Share Exchange with Former OmniMetrix Chief Executive Officer
On
August 17, 2026, Acorn issued shares of its common stock to Walter Czarnecki, the former Chief Executive Officer of OmniMetrix,
in exchange for his shares of Series A preferred stock of OMX and the accrued dividends of approximately $
NOTE 14—ACQUISITION
On September 9, 2026 (the “Acquisition Date”), OmniMetrix acquired substantially all of the assets, and assumed certain liabilities, of Generator Solutions, Inc. (“Generator Solutions”), a provider of remote monitoring systems for standby generators under the “Gen-Tracker” brand name, pursuant to an asset purchase agreement dated September 9, 2026 (the “Gen-Tracker Acquisition”). The Company assumed operations of the Gen-Tracker business on September 10, 2026. The acquired assets include customer accounts, dealer relationships, trade names, trademarks, technology, accounts receivable and hardware inventory, and the liabilities assumed consist of obligations to provide monitoring services for which Generator Solutions had collected payment before the Acquisition Date. No value was assigned to the acquired Gen-Tracker technology because market participants would be expected to have their own monitoring devices and customer data portals and to migrate the acquired customers to those existing monitoring platforms and, accordingly, would not ascribe value to the Gen-Tracker technology. At the Acquisition Date, Gen-Tracker served approximately 5,000 active monitoring connections. The four full-time employees of Generator Solutions joined OmniMetrix. The Gen-Tracker Acquisition expands OmniMetrix’s standby generator monitoring customer base and dealer network.
Total
contractual consideration is $
The Company accounted for the Gen-Tracker Acquisition as a business combination under Accounting Standards Codification (“ASC”) 805, Business Combinations, using the acquisition method of accounting. The purchase consideration has been allocated on a preliminary basis to the assets acquired and liabilities assumed based on their estimated fair values as of the Acquisition Date as follows:
| Accounts receivable | $ | |||
| Inventory | ||||
| Customer relationships | ||||
| Trade name | ||||
| Non-compete agreement | ||||
| Goodwill | ||||
| Total assets acquired | ||||
| Deferred revenue (contract liabilities) assumed | ( | ) | ||
| Total purchase consideration | $ |
| 23 |
Goodwill
is attributable primarily to the assembled workforce, the elimination of a competitor in the standby generator monitoring market,
and the expected synergies of serving Gen-Tracker’s customers and dealers through OmniMetrix’s existing monitoring
platform and operations. Goodwill has been assigned to the Company’s PG segment and is expected to be deductible for income
tax purposes over
The
results of the acquired Gen-Tracker operations have been included in the Company’s PG segment from September 10, 2026, the
date the Company assumed operations. Revenue and gross profit attributable to the acquired operations from September 10, 2026
through September 30, 2026 were $
The operating results of Gen-Tracker have been included in the Company’s condensed consolidated financial statements from September 10, 2026, the date the Company assumed operations. Because the Gen-Tracker operations were integrated into OmniMetrix upon acquisition, former Generator Solutions personnel also perform services for OmniMetrix’s existing operations, and operating expenses are not separately tracked by product line, any allocation of operating expenses to Gen-Tracker would be arbitrary. Accordingly, it is impracticable to determine the earnings attributable to Gen-Tracker since the Acquisition Date, and only the revenue and gross profit of the acquired operations are disclosed above.
The following unaudited supplemental pro forma information presents the combined results of operations of the Company and Gen-Tracker as if the acquisition had occurred on January 1, 2025 (in thousands, except per share data):
Nine months ended
September 30, | Three months ended
September 30, | |||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Revenue | $ | $ | $ | $ | ||||||||||||
| Net income attributable to Acorn Energy, Inc. stockholders | $ | $ | $ | $ | ||||||||||||
| Net income per share attributable to Acorn Energy, Inc. stockholders: | ||||||||||||||||
| Basic | $ | $ | $ | $ | ||||||||||||
| Diluted | $ | $ | $ | $ | ||||||||||||
The
supplemental pro forma information reflects adjustments for (i) amortization of the acquired intangible assets, (ii) accretion of the
discount on the deferred purchase consideration, (iii) Gen-Tracker’s historical results adjusted to U.S. GAAP and to exclude assets
and costs not acquired or continued, including the replacement of historical personnel and facility costs with the compensation of the
employees retained and the facility lease entered into in connection with the acquisition, and (iv) the reclassification of acquisition-related
costs of $
| 24 |
| ITEM 2. | MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS |
This Form 10-Q contains “forward-looking statements” relating to the Company which represent the Company’s current expectations or beliefs including, but not limited to, statements concerning the Company’s operations, performance, financial condition and growth. For this purpose, any statements contained in this Form 10-Q that are not statements of historical fact are forward-looking statements. Without limiting the generality of the foregoing, words such as “may”, “anticipate”, “intend”, “could”, “estimate” or “continue” or the negative or other comparable terminology are intended to identify forward-looking statements. These statements by their nature involve substantial risks and uncertainties, such as credit losses, dependence on management and key personnel, variability of quarterly results, and the ability of the Company to continue its growth strategy and the Company’s competition, certain of which are beyond the Company’s control. Should one or more of these risks or uncertainties materialize or should the underlying assumptions prove incorrect, or any of the other risks set out under the caption “Risk Factors” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025 occur, actual outcomes and results could differ materially from those indicated in the forward-looking statements.
Any forward-looking statement speaks only as of the date on which such statement is made, and the Company undertakes no obligation to update any forward-looking statement or statements to reflect events or circumstances after the date on which such statement is made or to reflect the occurrence of unanticipated events. New factors emerge from time to time, and it is not possible for management to predict all such factors, nor can it assess the impact of each such factor on the business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements.
All dollar amounts in the tables and discussion below are rounded to the nearest thousand, except per share data; thus, they are approximate.
FINANCIAL RESULTS BY COMPANY
The following table shows, for the periods indicated, the financial results (dollar amounts in thousands) attributable to each of our consolidated companies.
| Nine months ended September 30, 2026 | ||||||||||||
| OmniMetrix | Acorn | Total | ||||||||||
| Revenue | $ | 7,307 | $ | — | $ | 7,307 | ||||||
| COGS | 1,385 | — | 1,385 | |||||||||
| Gross profit | 5,922 | — | 5,922 | |||||||||
| Gross profit margin | 81 | % | 81 | % | ||||||||
| R&D expenses | 742 | — | 742 | |||||||||
| SG&A expenses | 3,510 | 1,234 | 4,744 | |||||||||
| Operating income (loss) | $ | 1,670 | $ | (1,234 | ) | $ | 436 | |||||
| Nine months ended September 30, 2025 | ||||||||||||
| OmniMetrix | Acorn | Total | ||||||||||
| Revenue | $ | 9,101 | $ | — | $ | 9,101 | ||||||
| COGS | 2,191 | — | 2,191 | |||||||||
| Gross profit | 6,910 | — | 6,910 | |||||||||
| Gross profit margin | 76 | % | 76 | % | ||||||||
| R&D expenses | 823 | — | 823 | |||||||||
| SG&A expenses | 3,245 | 1,132 | 4,377 | |||||||||
| Operating income (loss) | $ | 2,842 | $ | (1,132 | ) | $ | 1,710 | |||||
| 25 |
| Three months ended September 30, 2026 | ||||||||||||
| OmniMetrix | Acorn | Total | ||||||||||
| Revenue | $ | 2,591 | $ | — | $ | 2,591 | ||||||
| COGS | 504 | — | 504 | |||||||||
| Gross profit | 2,087 | — | 2,087 | |||||||||
| Gross profit margin | 81 | % | 81 | % | ||||||||
| R&D expenses | 248 | — | 248 | |||||||||
| SG&A expenses | 1,286 | 363 | 1,649 | |||||||||
| Operating income (loss) | $ | 553 | $ | (363 | ) | $ | 190 | |||||
| Three months ended September 30, 2025 | ||||||||||||
| OmniMetrix | Acorn | Total | ||||||||||
| Revenue | $ | 2,478 | $ | — | $ | 2,478 | ||||||
| COGS | 533 | — | 533 | |||||||||
| Gross profit | 1,945 | — | 1,945 | |||||||||
| Gross profit margin | 78 | % | 78 | % | ||||||||
| R&D expenses | 267 | — | 267 | |||||||||
| SG&A expenses | 1,072 | 447 | 1,519 | |||||||||
| Operating income (loss) | $ | 606 | $ | (447 | ) | $ | 159 | |||||
BACKLOG
As of September 30, 2026, OmniMetrix had a backlog of $4,054,000, primarily comprised of deferred revenue, of which $3,643,000 is expected to be recognized as revenue in the next twelve months. This compares to a backlog of $3,575,000 at September 30, 2025.
RECENT DEVELOPMENTS
On January 1, 2026, OmniMetrix entered into an agreement with AIO Systems, Ltd. to expand its infrastructure asset management technology offerings for telecommunications towers, energy sites and in North America. Under the agreement, OmniMetrix 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 Acorn’s product portfolio and addressable market. The partnership leverages AIO’s globally deployed technology and provides for shared equipment and monitoring revenues, with a phased rollout and limited near-term revenue contribution expected as integration and market expansion efforts progress.
On July 31, 2026, OmniMetrix entered into an agreement with Champion Power Equipment, LLC under which Champion will act as a non-exclusive reseller of OmniMetrix’s residential monitoring products and related monitoring services in North America. Pricing under the agreement is based on an assumed purchase volume of 3,000 units per calendar year, but the agreement does not obligate Champion to purchase any minimum quantity. We expect the arrangement to broaden distribution of our residential power generation products.
On September 9, 2026, OmniMetrix acquired substantially all of the assets of Generator Solutions, Inc., a provider of remote monitoring systems for standby generators under the “Gen-Tracker” brand name, for total contractual consideration of $3.5 million, consisting of $1.0 million in cash paid at closing on September 9, 2026 (the “Acquisition Date”) and deferred cash payments of $450,000 per year on each of the first four anniversaries of the Acquisition Date and $700,000 on the fifth anniversary of the Acquisition Date. Gen-Tracker monitors generator readiness through the automatic transfer switch rather than the generator’s engine controller, which allows it to monitor generators of virtually any make, model or age, including older units that predate modern controllers. The acquisition expands our PG customer base and dealer network, and the four full-time Generator Solutions employees have joined OmniMetrix. Based on its unaudited historical records, Generator Solutions invoices approximately $1.1 million in annual recurring monitoring sales and approximately $400,000 in annual hardware sales. See Note 14 to the unaudited condensed consolidated financial statements included in this quarterly report.
| 26 |
On August 17, 2026, Acorn entered into a letter agreement with the former Chief Executive Officer of OmniMetrix under which he exchanged the 100 shares of Series A preferred stock of OMX Holdings, Inc. held by him, together with all of his other rights in the equity of OMX Holdings, Inc., including accrued and unpaid dividends of approximately $28,500, for 25,096 shares of Acorn common stock. No cash was exchanged. OMX holds 100% of the equity interests of OmniMetrix, and, as a result of this transaction, OmniMetrix is now wholly owned by Acorn and the Company no longer has a non-controlling interest. See Note 9 to the unaudited condensed consolidated financial statements included in this quarterly report.
OVERVIEW AND TREND INFORMATION
Acorn Energy, Inc. (“Acorn” or “the Company”) is a holding company focused on technology-driven solutions for energy infrastructure asset management. We provide the following services and products through our OmniMetrixTM, LLC (“OmniMetrix”) subsidiary:
| ● | Power Generation (“PG”). OmniMetrix’s PG services provide wireless remote monitoring and control systems and Internet of Things (“IoT”) applications for commercial/industrial and residential power generation equipment. In 2025, we 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 our legacy TrueGuard and AIRGuard product lines, offering enhanced flexibility, expandability, and improved connectivity with easier installation. Following the Gen-Tracker Acquisition in September 2026, PG also includes the Gen-Tracker product line: the GTU Series, which monitors standby generators of virtually any make, model or age through the automatic transfer switch, and the MBX Series, which connects directly to the generator controller. OmniMetrix also offers the Smart Annunciator product for commercial customers who require a visual representation of generator status via a touchscreen display. | |
| ● | Cathodic Protection (“CP”). OmniMetrix’s CP services provide remote monitoring and control products for cathodic protection systems on gas pipelines serving the gas utilities market and pipeline operators. The CP product lineup includes solutions to remotely monitor and control rectifiers, test stations and bonds. In 2025, we 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. |
| ● | Infrastructure Solutions (“IS”). OmniMetrix’s IS services provide smart infrastructure monitoring hardware, software and solutions for telecommunications, energy and data center infrastructure asset management in the North American market. Under a Technology Partnership Agreement effective January 1, 2026 with AIO Systems Ltd. (“AIO”), an Israel-based technology company, OmniMetrix has the exclusive right to market, distribute, integrate and sell, on a white-label basis, AIO’s IoT monitoring controllers, sensors, power management devices, security products, environmental monitoring equipment, and a cloud-based Management-of-Management (MOM) platform that provides centralized monitoring, alerting, ticketing and workflow orchestration for telecommunications towers, energy sites and data centers. Revenue in the IS segment is expected to be derived from hardware product sales, recurring monitoring service contracts and other bundled arrangements. The IS segment had no revenue for the nine months ended September 30, 2026 as operations were in the pre-revenue stage. |
Each of our PG, CP and IS activities represents a reportable segment. The following analysis should be read together with the segment and revenue information provided in Notes 11 and 12 to the unaudited condensed consolidated financial statements included in this quarterly report.
OmniMetrix
OmniMetrix is a Georgia limited liability company based in Buford, Georgia that develops and markets wireless remote monitoring and control systems and services for multiple markets in the IoT ecosystem: critical assets (including stand-by power generators, pumps, pumpjacks, light towers, turbines, compressors, and other industrial equipment) as well as cathodic protection for the pipeline industry (gas utilities and pipeline companies). OmniMetrix now also markets an infrastructure solutions product line that provides smart infrastructure monitoring hardware, software and solutions for telecommunications, energy and data center infrastructure asset management in the North American market as described above.
| 27 |
Since August 17, 2026, OmniMetrix has been wholly owned by Acorn. Prior to that date, Acorn owned 99% of OmniMetrix, with 1% owned by the former CEO of OmniMetrix.
Following the emergence of machine-to-machine (M2M) and IoT applications, whereby companies aggregate multiple sensors and monitors into a simplified dashboard for customers, OmniMetrix believes it plays a key role in this economic ecosystem. In addition, OmniMetrix continues to see a rapidly growing need for backup power infrastructure to secure critical military, government, and private sector assets against emergency events including terrorist attacks, natural disasters, cybersecurity threats, and other issues related to the reliability of the electric power grid. As residential and industrial standby generators, turbines, compressors, pumps, pumpjacks, light towers and other industrial equipment are part of the critical infrastructure increasingly monitored in IoT applications and given that OmniMetrix monitors all major brands of critical equipment, OmniMetrix believes it is well-positioned as a competitive participant in this market.
OmniMetrix sells monitoring hardware devices and data monitoring services. Revenue from hardware sales is recognized upon shipment or upon acceptance (specific to the Material Contract). Revenues from the payment of monitoring fees (generally paid in advance) are initially recorded as deferred revenue upon receipt of payment from the customer and then amortized to revenue over the monitoring service period (typically twelve-month, renewable periods).
Critical Accounting Estimates
In preparing the financial statements, management is required to make estimates and assumptions that have an impact on the asset, liability, revenue and expense amounts reported. These estimates can also affect our supplemental information disclosures, including information about contingencies, risk and financial condition. We believe, given current facts and circumstances, that our estimates and assumptions are reasonable, adhere to U.S. GAAP, and are consistently applied. Inherent in the nature of an estimate or assumption is the fact that actual results may differ from estimates and estimates may vary as new facts and circumstances arise. We make routine estimates and judgments in determining net realizable value of accounts receivable, inventories, property and equipment, prepaid expenses, product warranties and other reserves as well as the amortization period for deferred commissions payable. Management believes our most critical accounting estimates and assumptions are in the areas of the valuation allowance and the purchase price allocation for the Gen-Tracker Acquisition.
Valuation Allowance
We regularly review our deferred tax assets for recoverability considering historical profitability, projected future taxable income, the expected timing of the reversals of existing temporary differences and tax planning strategies. In assessing the need for a valuation allowance, we consider both positive and negative evidence related to the likelihood of realization of the deferred tax assets. The weight given to the positive and negative evidence is commensurate with the extent to which the evidence may be objectively verified.
We record a valuation allowance to reduce our deferred tax assets to the net amount that we believe is more likely than not to be realized. The net carrying amount of the Company’s deferred tax assets is based on the Company’s belief that it is more likely than not that the Company will generate sufficient future taxable income in certain jurisdictions to realize these deferred tax assets. The ultimate realization of the deferred tax assets depends upon our ability to generate sufficient taxable income in the future. 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. In evaluating our ability to recover our deferred tax assets, we consider and weigh all available positive and negative evidence, including our past operating results, the existence of cumulative losses in the most recent years and our forecast of future taxable income. When the likelihood of the realization of existing deferred tax assets changes, adjustments to the valuation allowance are charged in the period in which the determination is made. If our estimates and assumptions change in the future, the Company may be required to record additional valuation allowances against its deferred tax assets, resulting in additional income tax expense in the Company’s Consolidated Statements of Operations, or conversely to reduce the existing valuation allowance resulting in less income tax expense.
| 28 |
The Company currently has a three-year cumulative income position which is positive evidence that it is more likely than not the deferred tax assets will be realized. During the three months ended September 30, 2026, we recorded a discrete reduction in the valuation allowance of $780,000 associated with the realizability of deferred tax assets due to the tax treatment of capitalized research and development costs and changes to the forecast. As of September 30, 2026, we believe, based on our projections, that a partial valuation allowance of $9,546,000 continues to be necessary against our deferred tax assets. Uncertainty exists related to the generation of future hardware and monitoring revenue, nonetheless the Company believes sufficient positive evidence exists which supports the partial reversal of the valuation allowance. At this time, however, we cannot assure you that we will be successful in doing so. Accordingly, our management will continue to assess the need for this valuation allowance and will make adjustments when appropriate.
Future changes in the Company’s stock ownership, which may be outside of the Company’s control or future equity offerings or acquisitions that have equity as a component of the purchase price consideration may trigger an “ownership change” and the utilization of the Company’s federal and state net operating losses may be subject to a limitation under the Internal Revenue Code, as well as similar state provisions. Such limitations may result in the expiration of net operating loss (NOL) carryforwards before their utilization.
Purchase Price Allocation
We accounted for the Gen-Tracker Acquisition as a business combination under ASC 805, which requires us to allocate the purchase consideration to the assets acquired and liabilities assumed based on their estimated fair values at the Acquisition Date, with any excess recorded as goodwill. With the assistance of an independent valuation firm, we estimated the fair values of the acquired intangible assets using income-based approaches. Customer relationships ($1,730,000) were valued based on the present value of the projected cash flows attributable to the acquired customer base, after charges for the contributory assets used to generate those cash flows. The trade name ($67,000) was valued using the relief-from-royalty method, and the non-compete agreement ($50,000) was valued based on the estimated cash flows that would be lost if the sellers were to compete, weighted by the probability that they would compete and succeed in doing so. The deferred purchase consideration was recorded at its present value of $2,059,000, using a discount rate of 6.38% that reflects our estimated borrowing rate.
The most significant assumptions used in these valuations include projected revenue and operating margins of the acquired business, an annual customer attrition rate of 2%, a royalty rate of 1.0% for the trade name, the estimated probabilities of competition by the sellers, a discount rate of 12.6% applied to the intangible assets, and the estimated useful lives of the acquired intangible assets. These assumptions are inherently uncertain. Different assumptions, particularly about customer attrition, projected cash flows or the discount rate, could have materially changed the amounts allocated to identifiable intangible assets and goodwill ($1,443,000), as well as future amortization expense.
The purchase price allocation is preliminary because the independent valuation of the acquired intangible assets had not been finalized as of the date of this report. During the measurement period, which will not exceed one year from the Acquisition Date, we may adjust the provisional amounts if we obtain new information about facts and circumstances that existed at the Acquisition Date. Any such adjustments would change the amounts recorded for intangible assets and goodwill and could affect future amortization expense. See Note 14 to the condensed consolidated financial statements.
Results of Operations
The following tables set forth certain information with respect to the unaudited condensed consolidated results of operations of the Company for the nine- and three-month periods ended September 30, 2026 and 2025, including the percentage of total revenues during each period attributable to selected components of the operations statements data and for the period-to-period percentage changes in such components. For segment data, see Notes 11 and 12 to the unaudited condensed consolidated financial statements included in this quarterly report.
| 29 |
| Nine months ended September 30, | ||||||||||||||||||||
| 2026 | 2025 | Change | ||||||||||||||||||
| ($,000) | % of revenues | ($,000) | % of revenues | From 2025 to 2026 | ||||||||||||||||
| Revenue | $ | 7,307 | 100 | % | $ | 9,101 | 100 | % | (20 | )% | ||||||||||
| COGS | 1,385 | 19 | % | 2,191 | 24 | % | (37 | )% | ||||||||||||
| Gross profit | 5,922 | 81 | % | 6,910 | 76 | % | (14 | )% | ||||||||||||
| R&D expenses | 742 | 10 | % | 823 | 9 | % | (10 | )% | ||||||||||||
| SG&A expenses | 4,744 | 65 | % | 4,377 | 48 | % | 8 | % | ||||||||||||
| Operating income | 436 | 6 | % | 1,710 | 19 | % | (75 | )% | ||||||||||||
| Interest income, net | 87 | 1 | % | 85 | 1 | % | 2 | % | ||||||||||||
| Income before income taxes | 523 | 7 | % | 1,795 | 20 | % | (71 | )% | ||||||||||||
| Income tax (benefit) expense | (650 | ) | (9 | )% | 331 | 4 | % | (296 | )% | |||||||||||
| Net income | 1,173 | 16 | % | 1,464 | 16 | % | (20 | )% | ||||||||||||
| Non-controlling interest share of net income | (16 | ) | * | % | (28 | ) | * | % | (43 | )% | ||||||||||
| Net income attributable to Acorn Energy, Inc. | $ | 1,157 | 16 | % | $ | 1,436 | 16 | % | (19 | )% | ||||||||||
*Result is less than 1% or not meaningful.
| Three months ended September 30, | ||||||||||||||||||||
| 2026 | 2025 | Change | ||||||||||||||||||
| ($,000) | % of revenues | ($,000) | % of revenues | from 2025 to 2026 | ||||||||||||||||
| Revenue | $ | 2,591 | 100 | % | $ | 2,478 | 100 | % | 5 | % | ||||||||||
| COGS | 504 | 19 | % | 533 | 22 | % | (5 | )% | ||||||||||||
| Gross profit | 2,087 | 81 | % | 1,945 | 78 | % | 7 | % | ||||||||||||
| R&D expenses | 248 | 10 | % | 267 | 11 | % | (7 | )% | ||||||||||||
| SG&A expense | 1,649 | 64 | % | 1,519 | 61 | % | 9 | % | ||||||||||||
| Operating income | 190 | 7 | % | 159 | 6 | % | 19 | % | ||||||||||||
| Interest income, net | 24 | 1 | % | 34 | 1 | % | (29 | )% | ||||||||||||
| Income before income taxes | 214 | 8 | % | 193 | 8 | % | 11 | % | ||||||||||||
| Income tax (benefit) expense | (730 | ) | (28 | )% | (65 | ) | (3 | )% | 1,023 | % | ||||||||||
| Net income | 944 | 36 | % | 258 | 10 | % | 266 | % | ||||||||||||
| Non-controlling interest share of net income | (4 | ) | * | % | (6 | ) | * | % | (33 | )% | ||||||||||
| Net income attributable to Acorn Energy, Inc. | $ | 940 | 36 | % | $ | 252 | 10 | % | 273 | % | ||||||||||
*Result is less than 1% or not meaningful.
Revenue for the nine- and three-month periods ended September 30, 2026 and 2025
Revenue decreased by $1,794,000, or 19.7%, from $9,101,000 in the nine-month period ended September 30, 2025 to $7,307,000 in the nine-month period ended September 30, 2026. Hardware revenue decreased by $2,037,000, or 41.1%, from $4,952,000 in the nine-month period ended September 30, 2025 to $2,915,000 in the nine-month period ended September 30, 2026. The decrease was primarily due to a $1,779,000 decrease in sales under the Material Contract and a $632,000 decrease in amortization of deferred hardware revenue, from $800,000 to $168,000, as the remaining balance of hardware revenue deferred on legacy product versions was fully recognized during the period. These decreases were partially offset by increases of $199,000 in other hardware sales, $139,000 in accessories, services, shipping and miscellaneous charges, and $36,000 in sales of custom designed units and related accessories. Monitoring revenue increased by $243,000, or 5.9%, from $4,149,000 in the nine-month period ended September 30, 2025 to $4,392,000 in the nine-month period ended September 30, 2026. The increase in monitoring revenue was due to an increase in the number of connections being monitored and growth in our customer base, including the customers acquired in the Gen-Tracker Acquisition. Revenue for the nine- and three-month periods ended September 30, 2026 includes $78,000 attributable to the Gen-Tracker operations from the September 10, 2026 acquisition date, consisting of $68,000 of monitoring revenue and $10,000 of hardware revenue, with related gross profit of $62,000.
| 30 |
As discussed above, OmniMetrix has three reportable segments, PG, CP and IS. Of the $7,307,000 in revenue recognized in the nine-month period ended September 30, 2026, $6,892,000 was generated by PG activities and $415,000 was generated by CP activities. This represents a decrease in revenue from PG activities of $1,615,000, or 19%, from $8,507,000 in the nine-month period ended September 30, 2025, and a decrease in revenue from CP activities of $179,000, or 30%, from $594,000 in the nine-month period ended September 30, 2025. The IS segment remained in a pre-revenue stage and generated no revenue in either period. The decrease in PG revenue was primarily due to the sales under our Material Contract in the prior year period and the decrease in revenue recognized from amortization of deferred hardware, as we recognized the remaining balance of revenue that was previously deferred of $5,000 and $168,000, during the three and nine-month periods ended September 30, 2026, respectively. The decrease in CP revenue was due to fewer CP hardware sales in the current-year period as compared to the prior-year period.
Revenue increased by $113,000, or 4.6%, from $2,478,000 in the three-month period ended September 30, 2025 to $2,591,000 in the three-month period ended September 30, 2026. As compared to the three-month period ended September 30, 2025, hardware revenue increased $123,000, or 13.4%, while monitoring revenue decreased $10,000, or 0.6%. These amounts include $10,000 of hardware revenue and $68,000 of monitoring revenue from the acquired Gen-Tracker operations. Excluding the acquired operations and the impact of the policy we implemented in 2025 of recognizing the deferred monitoring revenue of units sold more than 24 months earlier that had not been installed, monitoring revenue increased $70,000, or 5.1%, from $1,382,000 in the three-month period ended September 30, 2025 to $1,452,000 in the three-month period ended September 30, 2026, primarily due to an increase in the number of connections being monitored. Under our policy, deferred monitoring revenue for units sold more than 24 months earlier that have not yet been installed is recognized into revenue at that point. Revenue recognized for these units was $30,000 in the three- and nine-month periods ended September 30, 2026, compared to $178,000 in the three- and nine-month periods ended September 30, 2025. Hardware revenue increased $323,000, or 45.9%, from $703,000 in the three-month period ended September 30, 2025 to $1,026,000 in the three-month period ended September 30, 2026, excluding the acquired operations and amortization of deferred hardware revenue of $5,000 and $215,000 in the three-month periods ended September 30, 2026 and 2025, respectively. The increase was due to an increase of $129,000 in general hardware sales, $98,000 in accessories, services, shipping and miscellaneous charges, $79,000 from sales under the Material Contract, and $17,000 from custom designed units and related accessories. The decrease in amortization of deferred hardware revenue reflects the September 1, 2023 launch of updated product versions whose hardware functions independently of our monitoring services and is therefore recognized as revenue upon shipment. Revenue from the prior product versions, which could not function independently of our monitoring services, was deferred and recognized over the estimated three-year life of the units. The remaining balance of deferred hardware revenue was fully recognized as of September 30, 2026. Despite the return to year-over-year growth in the third quarter, revenue for the nine-month period was below the prior-year period, primarily due to $2,214,000 in sales under the Material Contract and the impact of the decreasing amortization of deferred hardware revenue in the current year period as reflected in the table below. Of the $2,591,000 in revenue recognized in the three-month period ended September 30, 2026, $2,442,000 was generated by PG activities and $149,000 was generated by CP activities. In the three-month period ended September 30, 2026, as compared to the three-month period ended September 30, 2025, revenue from PG activities increased $182,000, or 8%, from $2,260,000, and revenue from CP activities decreased $69,000, or 32%, from $218,000.
Hardware revenue during the nine- and three-month periods ended September 30, 2026 and 2025 is further detailed in the table below (in thousands):
Nine months ended
September 30, | Three months ended
September 30, | |||||||||||||||
| Reconciliation of Hardware Revenue | 2026 | 2025 | 2026 | 2025 | ||||||||||||
| Amortization of deferred revenue | $ | 168 | $ | 800 | $ | 5 | $ | 215 | ||||||||
| Sales of custom designed units and related accessories | 94 | 58 | 17 | — | ||||||||||||
| Hardware sales | 2,128 | 3,708 | 766 | 548 | ||||||||||||
| Other accessories, services, shipping and miscellaneous charges | 525 | 386 | 253 | 155 | ||||||||||||
| Total hardware revenue | $ | 2,915 | $ | 4,952 | $ | 1,041 | $ | 918 | ||||||||
| 31 |
Gross profit for the nine- and three-month periods ended September 30, 2026 and 2025
Gross profit for the nine-month period ended September 30, 2026 was $5,922,000, reflecting a gross margin of 81.0%, compared with a gross profit of $6,910,000, reflecting a gross margin of 75.9%, for the nine-month period ended September 30, 2025.
Gross margin on hardware revenue for the nine-month period ended September 30, 2026 was 60.0% compared to 60.2% for the nine-month period ended September 30, 2025. Gross margin on monitoring revenue for the nine-month periods ended September 30, 2026 and 2025 was 95.0% and 94.7%, respectively.
Gross profit for the three-month period ended September 30, 2026 was $2,087,000, reflecting a gross margin of 80.5%, compared with a gross profit for the three-month period ended September 30, 2025 of $1,945,000, reflecting a gross margin of 78.5%. Gross margin on hardware revenue for the three-month period ended September 30, 2026 was 58.6% compared to 50.0% for the three-month period ended September 30, 2025. Gross margin on monitoring revenue was 95.3% for both of the three-month periods ended September 30, 2026 and 2025.
Operating expenses for the nine- and three-month periods ended September 30, 2026 and 2025
R&D expense. During the nine-month periods ended September 30, 2026 and 2025, R&D expense was $742,000 and $823,000, respectively. During the three-month period ended September 30, 2026, OmniMetrix recorded $248,000 of R&D expense as compared to $267,000 in the three-month period ended September 30, 2025. The decrease in R&D expense in the nine-month period ended September 30, 2026 of approximately $81,000 is related to a decrease in expenses and materials paid to third-party consultants offset by salary increases granted to our engineering personnel effective January 1, 2026.
Selling, general and administrative expense. SG&A expense of the consolidated entities in the nine-month period ended September 30, 2026 reflected an increase of $367,000, or 8.4%, as compared to the nine-month period ended September 30, 2025. OmniMetrix’s SG&A expense increased $265,000, or 8.2%, from $3,245,000 in the nine-month period ended September 30, 2025 to $3,510,000 in the nine-month period ended September 30, 2026. This increase was primarily due to an increase of (i) $188,000 in personnel expenses due to compensation increases and staff additions, (ii) $57,000 in facility expenses due to the rate increase in our office space lease which was amended June 20, 2025 and the addition of the short-term lease for the Gen-Tracker office in Minnesota, (iii) $54,000 in travel and trade show expenses, (iv) $14,000 in expenses related to our pursuit of ISO 27001 certification, (v) $71,000 in acquisition-related costs for the Gen-Tracker Acquisition and (vi) $67,000 in other expenses in the aggregate, offset by decreases of (vii) $176,000 in commission expenses as the prior year period was significantly higher due to the commissions earned related to the Material Contract and (viii) $10,000 in technology expenses. Corporate SG&A expense increased $102,000, or 9.0%, from $1,132,000 in the nine-month period ended September 30, 2025 to $1,234,000 in the nine-month period ended September 30, 2026. This increase was due to an increase of $272,000 in stock compensation expense due to a higher number of options being issued to our officers and directors in January 2026 than in historical periods and the higher stock price and related volatility offset by a net decrease of $170,000 in other public company expenses due to the 2025 period having higher legal fees related to our NASDAQ listing and higher tax professional fees related to our 382 study.
SG&A expense of the consolidated entities in the three-month period ended September 30, 2026 reflected an increase of $130,000, or 8.6%, as compared to the three-month period ended September 30, 2025. OmniMetrix’s SG&A expense increased $214,000, or 20.0%, from $1,072,000 in the three-month period ended September 30, 2025 to $1,286,000 in the three-month period ended September 30, 2026. This increase was primarily due to increases of (i) $71,000 in acquisition-related costs for the Gen-Tracker Acquisition, (ii) $62,000 in personnel expenses, (iii) $30,000 in travel and trade show expenses, (iv) $14,000 in expenses related to our pursuit of ISO 27001 certification, (v) $10,000 in facility expenses, (vi) $8,000 in commission expenses and (vii) $54,000 in other expenses in the aggregate, offset by a decrease of (viii) $35,000 in technology expenses. Corporate SG&A expense decreased $84,000, or 18.8%, from $447,000 in the three-month period ended September 30, 2025 to $363,000 in the three-month period ended September 30, 2026. This decrease was due to a decrease of $153,000 in other corporate overhead expenses, primarily because the 2025 period included higher legal fees related to our NASDAQ listing and higher tax professional fees related to our Section 382 Study, offset by an increase of $69,000 in stock compensation expense.
| 32 |
Net income attributable to Acorn Energy. We recognized net income attributable to Acorn stockholders of $1,157,000 in the nine-month period ended September 30, 2026, compared to net income attributable to Acorn stockholders of $1,436,000 in the nine-month period ended September 30, 2025. Our net income during the nine-month period ended September 30, 2026 is comprised of pre-tax net income at OmniMetrix of $1,756,000 plus a federal income tax benefit of $671,000, less state income taxes of $21,000 offset by corporate expenses, net of interest income, of $1,233,000, and the non-controlling interest share of our income from OmniMetrix of $16,000. Our net income during the nine-month period ended September 30, 2025 is comprised of pre-tax net income at OmniMetrix of $2,924,000 less federal income taxes of $253,000 and state income taxes of $78,000 offset by corporate expenses, net of interest income, of $1,129,000, and the non-controlling interest share of our income from OmniMetrix of $28,000. Income before income taxes decreased $1,272,000, from $1,795,000 in the nine-month period ended September 30, 2025 to $523,000 in the nine-month period ended September 30, 2026, primarily due to lower pre-tax income at OmniMetrix and higher corporate expenses. This decrease was largely offset by a $981,000 favorable change in income taxes, from net income tax expense of $331,000 in the 2025 period to a net income tax benefit of $650,000 in the 2026 period, primarily as a result of the discrete valuation allowance release described below. As a result, net income decreased by only $291,000 (and net income attributable to Acorn stockholders by $279,000).
For the three-month period ended September 30, 2026, we recognized net income attributable to Acorn stockholders of $940,000, compared to a net income attributable to Acorn stockholders of $252,000 for the three-month period ended September 30, 2025. Our net income during the three-month period ended September 30, 2026 is comprised of pre-tax net income at OmniMetrix of $577,000 plus a federal income tax benefit of $736,000, less state income taxes of $6,000 offset by corporate expenses, net of interest income, of $363,000, and the non-controlling interest share of our income from OmniMetrix of $4,000. Our net income during the three-month period ended September 30, 2025 is comprised of pre-tax net income at OmniMetrix of $639,000 plus a federal income tax benefit of $84,000, less state income taxes of $19,000 offset by corporate expenses, net of interest income, of $446,000, and the non-controlling interest share of income from OmniMetrix of $6,000. Net income attributable to Acorn stockholders for the three-month period ended September 30, 2026 increased $688,000, from $252,000 to $940,000, compared to the three-month period ended September 30, 2025, while income before income taxes increased only $21,000, from $193,000 to $214,000. The majority of the increase in net income resulted from the increase in the income tax benefit from $65,000 in the 2025 period to $730,000 in the 2026 period. Accordingly, the significant increase in net income for the quarter was primarily driven by income taxes, principally the discrete valuation allowance release described below.
The income tax benefits recognized in the nine- and three-month periods ended September 30, 2026 were primarily due to a discrete tax benefit of approximately $780,000 from a partial release of the valuation allowance on our deferred tax assets. Excluding this discrete item, we would have recognized income tax expense of approximately $130,000 and $50,000 in the nine- and three-month periods ended September 30, 2026, respectively. It is our current position to elect under Section 59(e) of the Internal Revenue Code to amortize our domestic research and experimental expenditures over a longer recovery period. This lowers our annual tax amortization of these costs and increases our projected taxable income in the near term. In addition, our updated forecasts reflect higher expected future earnings due to the recent acquisition. As a result, we now expect to use certain federal net operating loss carryforwards that were previously expected to expire unused. Based on this positive evidence, we concluded that it is more likely than not that approximately $780,000 of the related net operating loss deferred tax assets will be realized, and we therefore released the corresponding valuation allowance as a discrete item in the period. We continue to maintain a valuation allowance of $9,546,000 against deferred tax assets whose realization remains uncertain.
Liquidity and Capital Resources
At September 30, 2026, we had working capital of $2,449,000. Our working capital includes $4,458,000 of cash and deferred revenue of $3,643,000. Such deferred revenue does not require a significant cash outlay for the revenue to be recognized. Deferred revenue at September 30, 2026 includes $522,000 related to the Gen-Tracker Acquisition, representing the $590,000 of deferred revenue assumed at the Acquisition Date less $68,000 recognized as monitoring revenue through September 30, 2026. Generator Solutions collected the cash for these services before the Acquisition Date, so the Company will incur the cost of providing them without receiving the related cash.
Net cash increased by $4,000 during the nine-month period ended September 30, 2026, compared to an increase of $1,841,000 during the nine-month period ended September 30, 2025. Net cash provided by operating activities was $1,276,000 in the nine-month period ended September 30, 2026, compared to $1,795,000 in the nine-month period ended September 30, 2025. Net cash used in investing activities was $1,282,000 in the nine-month period ended September 30, 2026, which included $1,000,000 of cash paid at closing for the Gen-Tracker Acquisition and $250,000 paid pursuant to the technology partnership agreement with AIO executed January 1, 2026, compared to $25,000 in the nine-month period ended September 30, 2025. Net cash provided by financing activities was $10,000 in the nine-month period ended September 30, 2026, consisting of stock option exercise proceeds, compared to $71,000 in the nine-month period ended September 30, 2025.
Liquidity
The Company expects that its existing cash as of September 30, 2026 of $4,458,000 will be sufficient to fund our planned operating expenses and capital expenditure requirements for at least the next 12 months from the issuance date of these financial statements.
Contractual Obligations and Commitments
In connection with the Gen-Tracker Acquisition described in Note 14 to the unaudited condensed consolidated financial statements included in this quarterly report, OmniMetrix paid $1.0 million in cash at closing on September 9, 2026 (the “Acquisition Date”), which is included in cash used in investing activities for the nine-month period ended September 30, 2026, and is obligated to make deferred cash payments totaling $2.5 million, consisting of $450,000 per year on each of the first four anniversaries of the Acquisition Date and $700,000 on the fifth anniversary of the Acquisition Date. These deferred payments are guaranteed by Acorn and are subject to acceleration upon certain events, including a sale of OmniMetrix or the acquired business, in which case the remaining payments would become due earlier than scheduled. We expect to fund these payments from existing cash and cash generated from operations. These deferred payments are included in the table below.
| 33 |
The table below provides information concerning obligations under certain categories of our contractual obligations as of September 30, 2026.
CASH PAYMENTS DUE TO CONTRACTUAL OBLIGATIONS
| Twelve-Month Periods Ending September 30, (in thousands) | ||||||||||||||||||||
| Total | 2027 | 2028-2029 | 2030-2031 | 2032 and thereafter | ||||||||||||||||
| Software agreements | $ | 5 | $ | 5 | $ | — | $ | — | $ | — | ||||||||||
| Operating leases* | 1,153 | 339 | 502 | 312 | — | |||||||||||||||
| Contractual services | 175 | 175 | — | — | — | |||||||||||||||
| Purchase commitments** | 1,007 | 1,007 | — | — | — | |||||||||||||||
| Deferred acquisition consideration*** | 2,500 | 450 | 900 | 1,150 | — | |||||||||||||||
| Total contractual cash obligations | $ | 4,840 | $ | 1,976 | $ | 1,402 | $ | 1,462 | $ | — | ||||||||||
*Reflects the gross (undiscounted) payments due under the Company’s operating leases, including a short-term lease that is not recognized as an operating lease liability on the condensed consolidated balance sheet. Excludes rent to be received under the sublease.
**Reflects open purchase orders for components/parts to be delivered over the next twelve months as sales forecast requires.
***Represents undiscounted deferred cash payments due to Generator Solutions, Inc. under the asset purchase agreement for the Gen-Tracker Acquisition (see Note 14 to the unaudited condensed consolidated financial statements included in this quarterly report). The present value of these payments, $2,067,000, is recorded as deferred consideration on the condensed consolidated balance sheet at September 30, 2026.
| ITEM 3. | QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK |
Not applicable.
| ITEM 4. | CONTROLS AND PROCEDURES |
Evaluation of Disclosure Controls and Procedures
Our management, with the participation of our CEO and CFO, has evaluated the effectiveness of the design and operation of our disclosure controls and procedures as of the end of the period covered by this quarterly report on Form 10-Q. Based on this evaluation, our CEO and CFO concluded that our disclosure controls and procedures were effective as of September 30, 2026.
As noted in our Annual Report on Form 10-K for the year ended December 31, 2025, we employ a decentralized internal control methodology, coupled with management’s oversight, whereby our subsidiary is responsible for mitigating its risks to financial reporting by implementing and maintaining effective control policies and procedures and subsequently translating that respective risk mitigation up and through to the parent level and to the Company’s external consolidated financial statements.
Changes in Internal Control Over Financial Reporting
There were no changes in our internal control over financial reporting (as such term is defined in Rule 13a-15(f) under the Exchange Act) during the quarter ended September 30, 2026 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
| 34 |
PART II
| ITEM 5. | OTHER INFORMATION |
During
the third quarter of fiscal year 2026, none of our directors or officers
| ITEM 6. | EXHIBITS |
| # | This exhibit is filed or furnished herewith. |
| 35 |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by its principal financial officer thereunto duly authorized.
| ACORN ENERGY, INC. | ||
| Dated: November 5, 2026 | ||
| By: | /s/ TRACY S. CLIFFORD | |
| Tracy S. Clifford | ||
| Chief Financial Officer | ||
| 36 |