UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2025

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number: 001-33886

ACORN ENERGY, INC.

(Exact name of registrant as specified in its charter)

Delaware

22-2786081

(State or other jurisdiction

of incorporation or organization)

(I.R.S. Employer

Identification No.)

1000 N West Street, Suite 1200, Wilmington,

Delaware

19801

(Address of principal executive offices)

(Zip Code)

770-209-0012

(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
Common Stock, $0.01 par value per share		ACFN		The Nasdaq Stock Market LLC

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. Yes ☒ No ☐

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). Yes ☒ No ☐

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 ☐
	Non-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 August 5, 2025
Common Stock, $0.01 par value per share		2,501,440

ACORN ENERGY, INC.

Quarterly Report on Form 10-Q

for the Quarterly Period Ended June 30, 2025

TABLE OF CONTENTS

		PAGE
PART I Financial Information

Item 1. Financial Statements:		3

Condensed Consolidated Balance Sheets as of June 30, 2025 (unaudited) and December 31, 2024		3

Condensed Consolidated Statements of Operations (unaudited) for the six and three months ended June 30, 2025 and 2024		4

Condensed Consolidated Statements of Changes in Equity (Deficit) (unaudited) for the three and six months ended June 30, 2025 and 2024		5

Condensed Consolidated Statements of Cash Flows (unaudited) for the six months ended June 30, 2025 and 2024		6

Notes to Condensed Consolidated Financial Statements (unaudited)		7

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		19

Item 3. Quantitative and Qualitative Disclosures About Market Risk		26

Item 4. Controls and Procedures		26

PART II Other Information

Item 5. Other Information		27

Item 6. Exhibits		28

Signatures		29

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.

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 June 30, 2025			As of December 31, 2024
	(Unaudited)
ASSETS
Current assets:
Cash	$	3,253		$	2,326
Accounts receivable, net		2,140			1,933
Inventory		953			436
Other current assets		262			288
State income tax receivable		—			10
Deferred cost of goods sold (COGS)		223			406
Total current assets		6,831			5,399
Property and equipment, net		447			505
Right-of-use assets		1,048			84
Deferred COGS		2			70
Other assets		94			103
Deferred tax assets		4,115			4,435
Total assets	$	12,537		$	10,596
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable	$	424		$	297
Accrued expenses		303			290
Deferred revenue		3,155			3,521
Current operating lease liabilities		90			98
Other current liabilities		84			59
State income tax payable		46			19
Total current liabilities		4,102			4,284
Long-term liabilities:
Deferred revenue		514			712
Noncurrent operating lease liabilities		973			—
Other long-term liabilities		27			24
Total liabilities		5,616			5,020
Commitments and contingencies (Note 7)		-			-
Equity:
Acorn Energy, Inc. stockholders
Common stock - $0.01 par value per share: Authorized - 42,000,000 shares; issued - 2,549,337 at June 30, 2025 and 2,541,308 at December 31, 2024; outstanding - 2,499,159 at June 30, 2025 and 2,491,130 at December 31, 2024		25			25
Additional paid-in capital		103,546			103,405
Accumulated stockholders’ deficit		(93,670	)		(94,854	)
Treasury stock, at cost – 50,178 shares at June 30, 2025 and December 31, 2024		(3,036	)		(3,036	)
Total Acorn Energy, Inc. stockholders’ equity		6,865			5,540
Non-controlling interests		56			36
Total equity		6,921			5,576
Total liabilities and equity	$	12,537		$	10,596

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

ACORN ENERGY, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED) (IN THOUSANDS, EXCEPT PER SHARE DATA)

	2025			2024			2025			2024
	Six months ended June 30,						Three months ended June 30,
	2025			2024			2025			2024

Revenue	$	6,623		$	4,407		$	3,525		$	2,275
COGS		1,658			1,151			886			610
Gross profit		4,965			3,256			2,639			1,665
Operating expenses:
Research and development (R&D) expenses		556			464			265			226
Selling, general and administrative (SG&A) expenses		2,858			2,456			1,427			1,181
Total operating expenses		3,414			2,920			1,692			1,407
Operating income		1,551			336			947			258
Interest income, net		51			33			27			18
Income before income taxes		1,602			369			974			276
Provision for income taxes		396			25			242			—
Net income		1,206			344			732			276
Non-controlling interest share of income		(22	)		(8	)		(12	)		(5	)
Net income attributable to Acorn Energy, Inc. stockholders	$	1,184		$	336		$	720		$	271

Net income per share attributable to Acorn Energy, Inc stockholders – basic and diluted
Basic	$	0.48		$	0.14		$	0.29		$	0.11
Diluted	$	0.47		$	0.13		$	0.28		$	0.11
Weighted average number of shares outstanding attributable to Acorn Energy, Inc. stockholders – basic and diluted
Basic		2,492			2,487			2,493			2,487
Diluted		2,534			2,501			2,534			2,507

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

ACORN ENERGY, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (DEFICIT)

(UNAUDITED) (IN THOUSANDS)

	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
	Three and Six Months Ended June 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		2,491	$	25	$	103,405	$	(94,854	)		50	$	(3,036	)	$	5,540	$	36		$	5,576
Net income		—		—		—		464			—		—			464		10			474
Accrued dividend in OmniMetrix preferred shares		—		—		—		—			—		—			—		(1	)		(1	)
Stock-based compensation		—		—		61		—			—		—			61		—			61
Balances as of March 31, 2025		2,491	$	25	$	103,466	$	(94,390	)		50	$	(3,036	)	$	6,065	$	45		$	6,110
Net income		—		—		—		720			—		—			720		12			732
Proceeds from stock option exercises		8		-*		48		—			—		—			48		—			48
Accrued dividend in OmniMetrix preferred shares		—		—		—		—			—		—			—		(1	)		(1	)
Stock-based compensation		—		—		32		—			—		—			32		—			32
Balances as of June 30, 2025		2,499	$	25	$	103,546	$	(93,670	)		50	$	(3,036	)	$	6,865	$	56		$	6,921

	Three and Six Months Ended June 30, 2024
	Number of Shares Outstanding		Common Stock		Additional Paid-In Capital		Accumulated Deficit			Number of Treasury Shares		Treasury Stock			Total Acorn Energy, Inc. Stockholders’ Deficit			Non- controlling interests			Total Deficit
Balances as of December 31, 2023		2,484	$	25	$	103,321	$	(101,148	)		50	$	(3,036	)	$	(838	)	$	12		$	(826	)
Net income		—		—		—		65			—		—			65			3			68
Proceeds from stock option exercise		3		-*		13		—			—		—			13			—			13
Proceeds from stock option exercises		3		-*		13		—			—		—			13			—			13
Accrued dividend in OmniMetrix preferred shares		—		—		—		—			—		—			—			(1	)		(1	)
Stock-based compensation		—		—		27		—			—		—			27			—			27
Balances as of March 31, 2024		2,487	$	25	$	103,361	$	(101,083	)		50	$	(3,036	)	$	(733	)	$	14		$	(719	)
Balances		2,487	$	25	$	103,361	$	(101,083	)		50	$	(3,036	)	$	(733	)	$	14		$	(719	)
Net income		—		—		—		271			—		—			271			5			276
Accrued dividend in OmniMetrix preferred shares		—		—		—		—			—		—			—			(1	)		(1	)
Stock-based compensation		—		—		11		—			—		—			11			—			11
Balances as of June 30, 2024		2,487	$	25	$	103,372	$	(100,812	)		50	$	(3,036	)	$	(451	)	$	18		$	(433	)
Balances		2,487	$	25	$	103,372	$	(100,812	)		50	$	(3,036	)	$	(451	)	$	18		$	(433	)

*	less than $1

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

ACORN ENERGY, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED) (IN THOUSANDS)

	2025			2024
	Six months ended June 30,
	2025			2024
Cash flows provided by operating activities:
Net income	$	1,206		$	344
Depreciation and amortization		56			58
Deferred tax expense		320			—
Decrease in the provision for credit loss		—			(7	)
Impairment of inventory		4			19
Non-cash lease expense		66			64
Stock-based compensation		93			38
Change in operating assets and liabilities:
(Increase) decrease in accounts receivable		(207	)		3
(Increase) decrease in inventory		(521	)		212
Decrease in deferred COGS		251			451
Decrease (increase) in other current assets and other assets		35			(56	)
Decrease in state income tax receivable		10			—
Decrease in deferred revenue		(564	)		(1,004	)
Decrease in operating lease liability		(65	)		(71	)
Increase in state income tax payable		27			—
Increase (decrease) in accounts payable, accrued expenses, other current liabilities and non-current liabilities		189			(10	)
Net cash provided by operating activities		900			41

Cash flows used in investing activities:
Investments in technology		(9	)		(36	)
Leasehold improvements		(4	)		—
Patents		(1	)		—
Purchases of furniture and equipment		(7	)		(4	)
Net cash used in investing activities		(21	)		(40	)

Cash flows provided by financing activities:
Stock option exercise proceeds		48			13
Net cash provided by financing activities		48			13

Net increase in cash		927			14
Cash at the beginning of the period		2,326			1,449
Cash at the end of the period	$	3,253		$	1,463

Supplemental cash flow information:
Cash paid during the year for:
Interest	$	—		$	1
Income Taxes	$	34		$	2
Non-cash investing and financing activities:
Right-of-use assets	$	1,025			—
Operating lease liability		1,025			—
Accrued preferred dividends to former CEO of OmniMetrix	$	2		$	2

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

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, 2024 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 six- and three-month periods ended June 30, 2025 and 2024 are not necessarily indicative of the results that may be expected for the year ending December 31, 2025.

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, 2024, filed with the Securities and Exchange Commission on March 6, 2025.

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 $3,253,000 at June 30, 2025. The Company does not believe there is a significant risk of non-performance by its counterparties. For the six- and three-month periods ended June 30, 2025, there was one customer that represented 42% and 47%, respectively, of the Company’s total invoiced revenue. At June 30, 2025, the Company had one customer that represented 76% of our total accounts receivable due at various dates but all no later than September 25, 2025 based on the customer’s payment terms. The customer with this concentration of both invoiced revenue and accounts receivable is the customer under a material contract that was executed in June 2024. Approximately 61% of the accounts receivable at December 31, 2024 was due from this customer which was subsequently collected in full. Credit risk with respect to the balance of trade receivables is typically diversified due to the number of entities comprising the Company’s customer base. Although we do not believe there is significant risk of non-performance by this counterparty, any failures or defaults on their part could negatively impact the value of our financial instruments and could have a material adverse effect on our business, operations or financial condition.

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 $4,000 in the six- and three-month periods ended June 30, 2025. Management wrote off inventory valued at $19,000 and $10,000, respectively, during the six- and three-month periods ended June 30, 2024.

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 11, Revenue, for further discussion.

Revenue from sales of the hardware products that are distinct products are recorded when shipped (with the exception of the hardware products under a material contract with one customer for which revenue is recognized when the unit is accepted) while the revenue from sales of the hardware products (product versions sold prior to September 1, 2023) that were not separable from the Company’s monitoring services was deferred and amortized over the estimated unit life. Product revenues are recognized at the point in time when control of the product is transferred to the customer, which typically occurs upon shipment or delivery to the one customer under a material contract. To determine when control has transferred, the Company considers if there is a present right to payment and if legal title, physical possession, and the significant risks and rewards of ownership of the asset has transferred to the customer. Revenue from the prepayment of monitoring fees (generally paid twelve months in advance) are recorded as deferred revenue upon receipt of payment from the customer and then amortized to revenue over the monitoring service period. This method provides a faithful depiction of the transfer of services as it aligns the recognition of revenue with the period in which the monitoring services are provided. By deferring the revenue and recognizing it over the service period, the financial statements accurately reflect the company’s performance and obligations to its customers. See Notes 10 and 11 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, include 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 incomes taxes. During the year ended December 31, 2024, the Company recorded a reduction in the valuation allowance of $4,686,000 that was previously recorded against our deferred tax assets. During the six and three months ended June 30, 2025, there was no change in the valuation allowance. As of December 31, 2024 and June 30, 2025, we believe, based on our projections, that a partial valuation allowance of $11,400,000 is necessary against our deferred tax assets. Management will continue to assess the need for the valuation allowance and will make adjustments when appropriate. Management’s projections and beliefs are based upon a variety of estimates and numerous assumptions made by our management with respect to, among other things, interest rates, forecasted revenue of the hardware sales and monitoring revenue or revenue streams that could generate sufficient income so that the Company can utilize our net operating loss (NOL) carryforwards and other matters, many of which are difficult to predict, are subject to significant uncertainties and are beyond our control. As a result, there is inherently uncertainty that the estimates and assumptions upon which these projections and beliefs are based will prove to be accurate, that the anticipated results will be realized or that the actual results will not be substantially higher or lower than the Company projected.

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 that 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 June 30, 2025 and in the consolidated balance sheet as of December 31, 2024.

Basic and Diluted Net Income Per Share

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 and warrants 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 7,000 (which have a weighted average exercise price of $17.51) for both the six- and three-month periods ended June 30, 2025. 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 26,000 (with a weighted average exercise price of $8.13) and 15,000 (with a weighted average exercise price of $9.17) for the six- and three-month periods ended June 30, 2024, respectively.

The following data represents the amounts used in computing earnings per share and the effect on net income and the weighted average number of shares of dilutive potential common stock (in thousands, except per share data):

	2025		2024		2025		2024
	Six months ended June 30,				Three months ended June 30,
	2025		2024		2025		2024
Net income attributable to common stockholders	$	1,184	$	336	$	720	$	271

Weighted average share outstanding:
-Basic		2,492		2,487		2,493		2,487
Add: Stock options		42		14		41		20
-Diluted		2,534		2,501		2,534		2,507

Basic net income per share	$	0.48	$	0.14	$	0.29	$	0.11
Diluted net income per share	$	0.47	$	0.13	$	0.28	$	0.11

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 December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which requires disaggregated information about a reporting entity’s effective tax rate reconciliation, as well as information related to income taxes paid to enhance the transparency and decision usefulness of income tax disclosures. This ASU will be effective for the annual period ending December 31, 2025. The Company is currently evaluating the timing and impacts of adoption of this ASU.

NOTE 3—LIQUIDITY

As of June 30, 2025, the Company had $3,253,000 of consolidated cash.

At June 30, 2025, the Company had working capital of $2,709,000. Its working capital includes $3,253,000 of cash and deferred revenue of $3,155,000. Such deferred revenue does not require a significant cash outlay for the revenue to be recognized. Total deferred revenue decreased by $564,000, from $4,233,000 at December 31, 2024 to $3,669,000 at June 30, 2025, as a result of the sales mix of products sold. Based on the current products being sold, the Company expects continued decreases in the deferred revenue balance in the foreseeable future (see Note 11, Revenue). The balance of deferred hardware revenue at June 30, 2025 will continue to be amortized over the months remaining in the three-year period since the hardware’s original date of shipment. Net cash increased during the six-month period ended June 30, 2025 by $927,000, with $900,000 provided by operating activities, $21,000 used in investing activities, and $48,000 cash provided by financing activities.

As of August 5, 2025, the Company had cash of $3,428,000. The Company believes that such cash, plus the cash expected to be generated from operations, will provide sufficient liquidity to finance the corporate activities of Acorn and operating activities of OmniMetrix at their current level of operations for at least the twelve-month period from the issuance of these unaudited condensed consolidated financial statements. The Company may, at some point, elect to obtain a new line of credit or other source of financing to fund additional investments in the business. If the Company decides to pursue additional financing in the future, it may be in the form of a bank line, a new loan or investment by others, an equity raise by Acorn which could then facilitate a loan by Acorn to OmniMetrix, or any combination thereof. Whether alternative funds, such as third-party loans or investments, will be available at the time and on terms acceptable to Acorn and OmniMetrix cannot be determined at this time.

NOTE 4—ALLOWANCE FOR CREDIT LOSSES

For the Company, ASC 326, “Financial Instruments – Credit Losses (Topic 326)” applies to its contract assets (deferred COGS and deferred sales commissions), lease receivables (sublease, see Note 6) and trade receivables. There are no expected or estimated credit losses on the Company’s contract assets or its lease receivable based on the Company’s analysis of ASC 326.

The Company’s trade receivables primarily arise from the sale of our products to independent residential dealers, industrial distributors and dealers, national and regional retailers, equipment distributors, and certain end users with payment terms generally ranging from 30 to 90 days. The Company evaluates the credit risk of a customer when extending credit based on a combination of various financial and qualitative factors that may affect the customer’s ability to pay. These factors include the customer’s financial condition and past payment experience.

The Company maintains an allowance for credit losses, which represents an estimate of expected losses over the remaining contractual life of its receivables considering current market conditions and estimates for supportable forecasts when appropriate. The Company measures expected credit losses on its trade receivables on an entity-by-entity basis. The estimate of expected credit losses considers a historical loss experience rate that is adjusted for delinquency trends, collection experience, and/or economic risk where appropriate. Additionally, management develops a specific allowance for trade receivables known to have a high risk of expected future credit loss.

The Company has historically experienced immaterial write-offs given the nature of the customers that receive credit. As of June 30, 2025, the Company had gross receivables of $2,144,000 and an allowance for credit losses of $4,000.

SCHEDULE OF ACCOUNTS RECEIVABLE

	June 30, 2025		December 31, 2024
	As of
	June 30, 2025		December 31, 2024
	(in thousands)
Accounts Receivable, net, beginning of period	$	1,933	$	536
Accounts Receivable, net, end of period	$	2,140	$	1,933

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

	June 30, 2025		December 31, 2024
	As of
	June 30, 2025		December 31, 2024
	(in thousands)
Balance at beginning of period	$	4	$	10
Decrease in provision for credit losses		—		(6	)
Net charge-offs		—		—
Balance at end of period	$	4	$	4

NOTE 5—INVENTORY

SCHEDULE OF INVENTORY

	June 30, 2025		December 31, 2024
	As of
	June 30, 2025		December 31, 2024
	(in thousands)
Raw materials	$	916	$	405
Finished goods		37		31
Inventory net	$	953	$	436

At both June 30, 2025 and December 31, 2024, the Company’s inventory reserve for obsolescence was $6,000.

NOTE 6—LEASES

OmniMetrix leases office space and office equipment under operating lease agreements. The office lease, originally set to expire on September 30, 2025, was amended on June 20, 2025, to extend the lease term through November 30, 2030. The amendment also includes scheduled increases in monthly base rent and provides for conditional rent abatement for October and November 2025, as well as a tenant improvement allowance of up to $14,000 for qualifying alterations completed by September 30, 2026. The Company concluded the amendment constitutes a modification event under ASC 842 and the Company reassessed and remeasured the lease. The Company remeasured the lease payments based on the updated lease term, incremental borrowing rate and adjusted the right of use asset and lease liability accordingly. The lease was determined to still represent an operating lease. The present value of future minimum lease payments on non-cancelable operating leases as of June 30, 2025 using a discount rate of 6.0% is $1,063,000. The 6.0% discount rate used is the estimated incremental borrowing rate when the lease was entered into, which, as defined in ASC 842: Leases, is the rate of interest that a lessee would have had to pay to borrow, on a collateralized basis, over a similar term and in a similar economic environment, an amount equal to the lease payments. Operating lease cost for the six-month periods ended June 30, 2025 and 2024 were $68,000 and $64,000, respectively. Operating lease cost for the three-month periods ended June 30, 2025 and 2024 were $36,000 and $32,000, respectively.

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

For the Six Months

Ending June 30,

2025

2024

Cash paid for operating lease liabilities

Supplemental balance sheet information related to leases consisted of the following:

		As of June 30, 2025
Weighted average remaining lease terms for operating leases			5.42

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 June 30, 2025 (in thousands):

	Year ended June 30,
2026	$	152
2027		234
2028		244
2029		254
2030		264
Thereafter		113
Total undiscounted cash flows		1,261
Less: Imputed interest		(198	)
Present value of operating lease liabilities (a)	$	1,063

(a)

Includes current portion of $90,000 for operating leases.

On July 6, 2021, the Company entered into an agreement with King Industrial Realty, Inc., to sublease from the Company 1,900 square feet of office space of the Company’s 21,000 square feet of office and production space in the Hamilton Mill Business Park located in Buford, Georgia, for a monthly sublease payment of $2,375 (plus an annual escalator each year of 3%) which includes the base rent plus a pro-rata share of utilities, property taxes and insurance. Fifty percent of any excess rent received above the per square foot amount that the Company pays is remitted to the Company’s landlord less the allocation of any shared expenses and leasehold improvements specific to the sublease. As of June 30, 2025, after the offset of the investment in leasehold improvements and other expenses related to the sublease, the landlord’s allocation of Company’s sublease receipts is $22,000 since the inception of the lease. The Company has paid a total of $16,000 for its share of the sublease profit since the lease commencement. The sublease commenced on October 1, 2021 and will run through September 30, 2025 which is the end of the Company’s original lease term with its landlord. The Company is currently negotiating the extension of the sublease with the tenant. Below are the future payments expected under the sublease, net of the estimated service cost of $2,000 through September 30, 2025, which is the end of the current term of the sublease (gross of the estimated amount expected to be remitted to our landlord) (in thousands):

SCHEDULE OF SUBLEASES

		Year ended June 30,
2026		$	7

NOTE 7—COMMITMENTS AND CONTINGENCIES

The Company has $1,063,000 in operating lease obligations payable through 2030 and $342,000 in other contractual obligations, which includes contractual services and software license agreements. The contractual services include $223,000 payable through June 30, 2026 and $109,000 payable through June 30, 2027. The software license agreements of $10,000 are all payable through June 30, 2026. The Company also has $994,000 in open purchase order commitments payable through June 30, 2026 of which $804,000 (81%) is to one electronics vendor.

NOTE 8— STOCKHOLDERS’ EQUITY

(a) General

At June 30, 2025, Acorn had 2,549,337 shares issued and 2,499,159 shares outstanding of its common stock, par value $0.01 per share. Holders of outstanding common stock are entitled to receive dividends when and if declared by the Board and to share rateably 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 not authorized to issue preferred stock. Accordingly, no preferred stock is issued or outstanding.

(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.

At June 30, 2025, 63,177 options were available for grant under the Amended and Restated 2006 Stock Incentive Plan (the “Plan”) and no options were available for grant under the 2006 Stock Option Plan for Non-Employee Directors. The Plan was amended effective January 1, 2025 to extend the duration of the Plan until December 31, 2034 unless sooner terminated. During the six-month period ended June 30, 2025, 6,900 options were issued. The options were issued as follows: an aggregate of 2,500 to directors (excluding the CEO), 2,200 to the CEO and 2,200 to the CFO. In the six- and three-month periods ended June 30, 2025, there were no grants to non-employees (other than the directors, CEO and CFO). There were no options issued in the three-month period ended June 30 2025.

During the six- and three-month periods ended June 30, 2025, 8,436 options were exercised of which all were exercised in the three-month period ended June 30, 2025. 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, 2024		70,149		$	6.52	3.3 years	$	806,000
Granted		6,900			17.77
Exercised		(7,707	)		7.02
Outstanding at June 30, 2025		69,342		$	7.64	3.5 years	$	654,000
Exercisable at June 30, 2025		62,939		$	7.12	3.2 years	$	624,000

The fair value of the options granted of $119,000 during the six-month period ended June 30, 2025 was estimated on the grant date using the Black-Scholes option-pricing model with the following weighted average assumptions:

Risk-free interest rate	4.41	%
Expected term of options	5.6 years
Expected annual volatility	181.8	%
Expected dividend yield

SEC Form 10-Q filed by Acorn Energy Inc.