|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
|
SECURITIES EXCHANGE ACT OF 1934
|
For the quarterly period ended June 30, 2014
|
Delaware
(State or other jurisdiction of incorporation or organization)
|
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22-2786081
(I.R.S. Employer Identification No.)
|
|
|
|
3903 Centerville Road, Wilmington, Delaware
(Address of principal executive offices)
|
|
19807
(Zip Code)
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Class
|
|
Outstanding at August 4, 2014
|
Common Stock, $0.01 par value per share
|
|
22,189,877
|
|
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PAGE
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Item 1
.
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Other Information
|
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||
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As of December 31, 2013
|
|
As of June 30, 2014
|
||||
ASSETS
|
|
|
|
|
||||
Current assets:
|
|
|
|
|
||||
Cash and cash equivalents
|
|
$
|
17,279
|
|
|
$
|
8,268
|
|
Restricted deposit
|
|
306
|
|
|
322
|
|
||
Accounts receivable, net
|
|
5,710
|
|
|
2,994
|
|
||
Unbilled revenue
|
|
6,421
|
|
|
7,021
|
|
||
Inventory, net
|
|
4,540
|
|
|
6,461
|
|
||
Other current assets
|
|
1,695
|
|
|
1,993
|
|
||
Total current assets
|
|
35,951
|
|
|
27,059
|
|
||
Property and equipment, net
|
|
2,432
|
|
|
2,443
|
|
||
Severance assets
|
|
3,539
|
|
|
3,565
|
|
||
Restricted deposit
|
|
—
|
|
|
540
|
|
||
Intangible assets, net
|
|
3,735
|
|
|
3,549
|
|
||
Goodwill
|
|
4,429
|
|
|
4,537
|
|
||
Other assets
|
|
870
|
|
|
730
|
|
||
Total assets
|
|
$
|
50,956
|
|
|
$
|
42,423
|
|
LIABILITIES AND EQUITY
|
|
|
|
|
|
|
||
Current liabilities:
|
|
|
|
|
|
|
||
Short-term bank credit
|
|
$
|
2,303
|
|
|
$
|
3,441
|
|
Accounts payable
|
|
3,086
|
|
|
3,616
|
|
||
Accrued payroll, payroll taxes and social benefits
|
|
2,527
|
|
|
2,274
|
|
||
Deferred revenue
|
|
2,764
|
|
|
2,528
|
|
||
Other current liabilities
|
|
3,191
|
|
|
2,977
|
|
||
Total current liabilities
|
|
13,871
|
|
|
14,836
|
|
||
Long-term liabilities:
|
|
|
|
|
|
|
||
Accrued severance
|
|
4,973
|
|
|
5,029
|
|
||
Other long-term liabilities
|
|
600
|
|
|
756
|
|
||
Total long-term liabilities
|
|
5,573
|
|
|
5,785
|
|
||
Commitments and contingencies
|
|
|
|
|
||||
Equity:
|
|
|
|
|
|
|
||
Acorn Energy, Inc. shareholders
|
|
|
|
|
|
|
||
Common stock - $0.01 par value per share:
|
|
|
|
|
|
|
||
Authorized – 30,000,000 shares; Issued –22,957,859 and 22,991,797 shares at December 31, 2013 and June 30, 2014, respectively
|
|
229
|
|
|
229
|
|
||
Additional paid-in capital
|
|
93,943
|
|
|
94,499
|
|
||
Warrants
|
|
526
|
|
|
526
|
|
||
Accumulated deficit
|
|
(59,447
|
)
|
|
(69,278
|
)
|
||
Treasury stock, at cost – 801,920 shares at December 31, 2013 and June 30, 2014
|
|
(3,036
|
)
|
|
(3,036
|
)
|
||
Accumulated other comprehensive income
|
|
184
|
|
|
350
|
|
||
Total Acorn Energy, Inc. shareholders’ equity
|
|
32,399
|
|
|
23,290
|
|
||
Non-controlling interests
|
|
(887
|
)
|
|
(1,488
|
)
|
||
Total equity
|
|
31,512
|
|
|
21,802
|
|
||
Total liabilities and equity
|
|
$
|
50,956
|
|
|
$
|
42,423
|
|
|
|
Six months ended June 30,
|
|
Three months ended June 30,
|
||||||||||||
|
|
2013
|
|
2014
|
|
2013
|
|
2014
|
||||||||
Revenues:
|
|
|
|
|
|
|
|
|
||||||||
Projects
|
|
$
|
7,241
|
|
|
$
|
5,446
|
|
|
$
|
3,659
|
|
|
$
|
2,654
|
|
Products
|
|
2,875
|
|
|
2,766
|
|
|
1,168
|
|
|
1,563
|
|
||||
Services
|
|
833
|
|
|
965
|
|
|
406
|
|
|
506
|
|
||||
Total revenues
|
|
10,949
|
|
|
9,177
|
|
|
5,233
|
|
|
4,723
|
|
||||
Cost of sales:
|
|
|
|
|
|
|
|
|
||||||||
Projects
|
|
5,563
|
|
|
4,556
|
|
|
3,114
|
|
|
2,408
|
|
||||
Products
|
|
1,770
|
|
|
2,114
|
|
|
731
|
|
|
1,163
|
|
||||
Services
|
|
219
|
|
|
231
|
|
|
116
|
|
|
118
|
|
||||
Total cost of sales
|
|
7,552
|
|
|
6,901
|
|
|
3,961
|
|
|
3,689
|
|
||||
Gross profit
|
|
3,397
|
|
|
2,276
|
|
|
1,272
|
|
|
1,034
|
|
||||
Operating expenses:
|
|
|
|
|
|
|
|
|
||||||||
Research and development expenses, net of credits
|
|
4,117
|
|
|
3,385
|
|
|
2,116
|
|
|
1,735
|
|
||||
Selling, general and administrative expenses
|
|
10,226
|
|
|
8,236
|
|
|
4,970
|
|
|
4,094
|
|
||||
Impairment of intangibles
|
|
1,116
|
|
|
—
|
|
|
1,116
|
|
|
—
|
|
||||
Provision for loss - channel partner
|
|
—
|
|
|
649
|
|
|
—
|
|
|
649
|
|
||||
Restructuring and related charges
|
|
594
|
|
|
198
|
|
|
594
|
|
|
198
|
|
||||
Total operating expenses
|
|
16,053
|
|
|
12,468
|
|
|
8,796
|
|
|
6,676
|
|
||||
Operating loss
|
|
(12,656
|
)
|
|
(10,192
|
)
|
|
(7,524
|
)
|
|
(5,642
|
)
|
||||
Finance income (expense), net
|
|
89
|
|
|
(191
|
)
|
|
75
|
|
|
(111
|
)
|
||||
Loss before income taxes
|
|
(12,567
|
)
|
|
(10,383
|
)
|
|
(7,449
|
)
|
|
(5,753
|
)
|
||||
Income tax benefit (expense), net
|
|
(85
|
)
|
|
(113
|
)
|
|
(16
|
)
|
|
(168
|
)
|
||||
Net loss
|
|
(12,652
|
)
|
|
(10,496
|
)
|
|
(7,465
|
)
|
|
(5,921
|
)
|
||||
Net loss attributable to non-controlling interests
|
|
503
|
|
|
665
|
|
|
291
|
|
|
394
|
|
||||
Net loss attributable to Acorn Energy, Inc. shareholders
|
|
$
|
(12,149
|
)
|
|
$
|
(9,831
|
)
|
|
$
|
(7,174
|
)
|
|
$
|
(5,527
|
)
|
|
|
|
|
|
|
|
|
|
||||||||
Basic and diluted net loss per share attributable to Acorn Energy, Inc. shareholders
|
|
$
|
(0.67
|
)
|
|
$
|
(0.44
|
)
|
|
$
|
(0.40
|
)
|
|
$
|
(0.25
|
)
|
Weighted average number of shares outstanding attributable to Acorn Energy, Inc. shareholders – basic and diluted
|
|
18,084
|
|
|
22,180
|
|
|
18,091
|
|
|
22,190
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Dividends declared per common share
|
|
$
|
0.035
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
Six months ended June 30,
|
|
Three months ended June 30,
|
||||||||||||
|
|
2013
|
|
2014
|
|
2013
|
|
2014
|
||||||||
|
|
|
|
|
|
|
|
|
||||||||
Net loss attributable to Acorn Energy, Inc. shareholders
|
|
$
|
(12,149
|
)
|
|
$
|
(9,831
|
)
|
|
$
|
(7,174
|
)
|
|
$
|
(5,527
|
)
|
Other comprehensive income (loss):
|
|
|
|
|
|
|
|
|
||||||||
Foreign currency translation adjustments
|
|
(392
|
)
|
|
166
|
|
|
(344
|
)
|
|
88
|
|
||||
Comprehensive loss
|
|
(12,541
|
)
|
|
(9,665
|
)
|
|
(7,518
|
)
|
|
(5,439
|
)
|
||||
Comprehensive income attributable to non-controlling interests
|
|
(5
|
)
|
|
—
|
|
|
(15
|
)
|
|
(2
|
)
|
||||
Comprehensive loss attributable to Acorn Energy, Inc. shareholders
|
|
$
|
(12,546
|
)
|
|
$
|
(9,665
|
)
|
|
$
|
(7,533
|
)
|
|
$
|
(5,441
|
)
|
|
|
Acorn Energy, Inc. Shareholders
|
|
|
|
|
|||||||||||||||||||||||||||||||||
|
|
Number of Shares
|
|
Common Stock
|
|
Additional Paid-In Capital
|
|
Warrants
|
|
Accumulated Deficit
|
|
Treasury Stock
|
|
Accumulated Other Comprehensive Income (Loss)
|
|
Total Acorn Energy, Inc. Shareholders’ Equity
|
|
Non-controlling interests
|
|
Total Equity
|
|||||||||||||||||||
As of December 31, 2013
|
|
22,958
|
|
|
$
|
229
|
|
|
$
|
93,943
|
|
|
$
|
526
|
|
|
$
|
(59,447
|
)
|
|
$
|
(3,036
|
)
|
|
$
|
184
|
|
|
$
|
32,399
|
|
|
$
|
(887
|
)
|
|
$
|
31,512
|
|
Net loss
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(9,831
|
)
|
|
—
|
|
|
—
|
|
|
(9,831
|
)
|
|
(665
|
)
|
|
(10,496
|
)
|
|||||||||
Differences from translation of subsidiaries’ financial statements
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
166
|
|
|
166
|
|
|
—
|
|
|
166
|
|
|||||||||
Stock option compensation
|
|
—
|
|
|
—
|
|
|
556
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
556
|
|
|
—
|
|
|
556
|
|
|||||||||
Stock option compensation of subsidiaries
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
64
|
|
|
64
|
|
|||||||||
Exercise of options
|
|
34
|
|
|
—
|
|
*
|
—
|
|
*
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||||
Balances as of June 30, 2014
|
|
22,992
|
|
|
$
|
229
|
|
|
$
|
94,499
|
|
|
$
|
526
|
|
|
$
|
(69,278
|
)
|
|
$
|
(3,036
|
)
|
|
$
|
350
|
|
|
$
|
23,290
|
|
|
$
|
(1,488
|
)
|
|
$
|
21,802
|
|
|
|
Six months ended June 30,
|
||||||
|
|
2013
|
|
2014
|
||||
Cash flows used in operating activities:
|
|
|
|
|
||||
Net loss
|
|
$
|
(12,652
|
)
|
|
$
|
(10,496
|
)
|
Adjustments to reconcile net loss to net cash provided by operating activities (see Schedule A)
|
|
1,665
|
|
|
1,997
|
|
||
Net cash used in operating activities
|
|
(10,987
|
)
|
|
(8,499
|
)
|
||
Cash flows provided by (used in) investing activities:
|
|
|
|
|
|
|||
Acquisitions of property and equipment
|
|
(1,419
|
)
|
|
(416
|
)
|
||
Loan to channel partner
|
|
—
|
|
|
(640
|
)
|
||
Restricted deposits
|
|
(23
|
)
|
|
(650
|
)
|
||
Release of restricted deposits
|
|
240
|
|
|
96
|
|
||
Amounts funded for severance assets
|
|
(100
|
)
|
|
(66
|
)
|
||
Net cash used in investing activities
|
|
(1,302
|
)
|
|
(1,676
|
)
|
||
Cash flows provided by (used in) financing activities:
|
|
|
|
|
|
|||
Short-term bank credit, net
|
|
171
|
|
|
1,138
|
|
||
Repayments of long-term debt
|
|
(77
|
)
|
|
—
|
|
||
Dividends paid
|
|
(517
|
)
|
|
—
|
|
||
Net cash provided by (used in) financing activities
|
|
(423
|
)
|
|
1,138
|
|
||
|
|
|
|
|
||||
Effect of exchange rate changes on cash and cash equivalents
|
|
(86
|
)
|
|
26
|
|
||
|
|
|
|
|
||||
Net decrease in cash and cash equivalents
|
|
(12,798
|
)
|
|
(9,011
|
)
|
||
Cash and cash equivalents at the beginning of the period
|
|
26,147
|
|
|
17,279
|
|
||
Cash and cash equivalents at the end of the period
|
|
$
|
13,349
|
|
|
$
|
8,268
|
|
|
|
|
|
Six months ended June 30,
|
||||||
|
|
|
|
2013
|
|
2014
|
||||
A.
|
|
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
|
|
|
|
|
||||
|
|
Depreciation and amortization
|
|
$
|
773
|
|
|
$
|
627
|
|
|
|
Impairment of intangible assets
|
|
1,116
|
|
|
—
|
|
||
|
|
Abandonment of fixed assets
|
|
39
|
|
|
—
|
|
||
|
|
Inventory write-off
|
|
455
|
|
|
506
|
|
||
|
|
Provision for loss - channel partner
|
|
—
|
|
|
649
|
|
||
|
|
Increase in accrued severance
|
|
135
|
|
|
84
|
|
||
|
|
Stock-based compensation
|
|
599
|
|
|
620
|
|
||
|
|
Deferred taxes
|
|
(104
|
)
|
|
103
|
|
||
|
|
Other
|
|
39
|
|
|
10
|
|
||
|
|
Change in operating assets and liabilities:
|
|
|
|
|
||||
|
|
Decrease in accounts receivable, unbilled revenue, other current and other assets
|
|
802
|
|
|
1,862
|
|
||
|
|
Increase in inventory
|
|
(1,530
|
)
|
|
(2,417
|
)
|
||
|
|
Decrease in accounts payable, accrued payroll, payroll taxes and social benefits, deferred revenues, other current liabilities and other liabilities
|
|
(659
|
)
|
|
(47
|
)
|
||
|
|
|
|
$
|
1,665
|
|
|
$
|
1,997
|
|
B.
|
|
Non-cash investing and financing activities:
|
|
|
|
|
|
|||
|
|
Value of shares issued under dividend reinvestment plan
|
|
$
|
117
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Employee severance and termination benefits
|
|
Other costs
|
|
Total
|
||||||
Balance at December 31, 2013
|
|
$
|
63
|
|
|
$
|
—
|
|
|
$
|
63
|
|
Provision
|
|
50
|
|
|
52
|
|
|
102
|
|
|||
Cash payments
|
|
(2
|
)
|
|
—
|
|
|
(2
|
)
|
|||
Balance at June 30, 2014
|
|
$
|
111
|
|
|
$
|
52
|
|
|
$
|
163
|
|
|
|
Employee severance and termination benefits
|
|
Facilities
|
|
Total
|
||||||
Balance at December 31, 2013
|
|
$
|
45
|
|
|
$
|
194
|
|
|
$
|
239
|
|
Adjustments
|
|
—
|
|
|
96
|
|
|
96
|
|
|||
Cash payments
|
|
(45
|
)
|
|
(18
|
)
|
|
(63
|
)
|
|||
Balance at June 30, 2014
|
|
$
|
—
|
|
|
$
|
272
|
|
|
$
|
272
|
|
|
|
Six months ended June 30,
|
|
Three months ended June 30,
|
||||||||||||
|
|
2013
|
|
2014
|
|
2013
|
|
2014
|
||||||||
Net income (loss) attributable to NCI in DSIT
|
|
$
|
22
|
|
|
$
|
(138
|
)
|
|
$
|
1
|
|
|
$
|
(113
|
)
|
Net loss attributable to NCI in USSI
|
|
(525
|
)
|
|
(527
|
)
|
|
(292
|
)
|
|
(281
|
)
|
||||
Net loss attributable to NCI
|
|
$
|
(503
|
)
|
|
$
|
(665
|
)
|
|
$
|
(291
|
)
|
|
$
|
(394
|
)
|
|
|
As of December 31, 2013
|
|
As of June 30, 2014
|
||||
Raw materials
|
|
$
|
2,771
|
|
|
$
|
4,453
|
|
Work-in-process
|
|
506
|
|
|
1,075
|
|
||
Finished goods
|
|
1,263
|
|
|
933
|
|
||
|
|
$
|
4,540
|
|
|
$
|
6,461
|
|
|
|
Energy & Security Sonar Solutions segment
|
|
GridSense segment
|
|
Oil & Gas Sensor systems segment
|
|
Total
|
||||||||
Balance as of December 31, 2013
|
|
$
|
581
|
|
|
$
|
2,446
|
|
|
$
|
1,402
|
|
|
$
|
4,429
|
|
Translation adjustment
|
|
5
|
|
|
103
|
|
|
—
|
|
|
108
|
|
||||
Balance as of June 30, 2014
|
|
$
|
586
|
|
|
$
|
2,549
|
|
|
$
|
1,402
|
|
|
$
|
4,537
|
|
|
|
Energy &
Security Sonar
Solutions
segment
|
|
GridSense segment
|
|
Oil & Gas Sensor systems segment
|
|
|
||||||||||||||||||||
|
|
Cost
|
|
A.A.*
|
|
Cost
|
|
A.A.*
|
|
Cost
|
|
A.A.*
|
|
Total
|
||||||||||||||
Balance as of December 31, 2013
|
|
$
|
572
|
|
|
$
|
(482
|
)
|
|
$
|
2,271
|
|
|
$
|
(811
|
)
|
|
$
|
2,715
|
|
|
$
|
(530
|
)
|
|
$
|
3,735
|
|
Amortization
|
|
—
|
|
|
(41
|
)
|
|
—
|
|
|
(101
|
)
|
|
—
|
|
|
(76
|
)
|
|
(218
|
)
|
|||||||
Translation adjustment
|
|
6
|
|
|
(9
|
)
|
|
61
|
|
|
(26
|
)
|
|
—
|
|
|
—
|
|
|
32
|
|
|||||||
Balance as of June 30, 2014
|
|
$
|
578
|
|
|
$
|
(532
|
)
|
|
$
|
2,332
|
|
|
$
|
(938
|
)
|
|
$
|
2,715
|
|
|
$
|
(606
|
)
|
|
$
|
3,549
|
|
Weighted average estimated useful lives in years
|
|
6.0
|
|
11.1
|
|
20.0
|
|
|
Segment
|
|
Type of Intangible
|
Energy & Security Sonar Solutions
|
|
Naval technologies
|
GridSense
|
|
Software, customer relationships and trade name
|
USSI
|
|
Sensor technologies and license
|
(a)
|
Acorn Stock Options
|
|
|
Number
of Options
(in shares)
|
|
Weighted
Average
Exercise
Price Per Share
|
|
Weighted Average Remaining Contractual Life
|
|
Aggregate Intrinsic Value
|
|||||
Outstanding at December 31, 2013
|
|
1,401,658
|
|
|
$
|
5.49
|
|
|
|
|
|
||
Granted
|
|
180,988
|
|
|
$
|
3.77
|
|
|
|
|
|
||
Exercised
|
|
(33,938
|
)
|
|
$
|
2.51
|
|
|
|
|
|
||
Forfeited or expired
|
|
(76,062
|
)
|
|
$
|
2.51
|
|
|
|
|
|
||
Outstanding at June 30, 2014
|
|
1,472,646
|
|
|
$
|
5.50
|
|
|
4.4 years
|
|
$
|
5
|
|
Exercisable at June 30, 2014
|
|
1,047,213
|
|
|
$
|
5.44
|
|
|
3.6 years
|
|
$
|
5
|
|
Risk-free interest rate
|
|
2.6
|
%
|
Expected term of options
|
|
8.0 years
|
|
Expected annual volatility
|
|
62
|
%
|
Expected dividend yield
|
|
—
|
%
|
(b)
|
Stock-based Compensation Expense
|
|
|
Six months ended June 30,
|
|
Three months ended June 30,
|
||||||||
|
|
2013
|
|
2014
|
|
2013
|
|
2014
|
||||
Research and development expenses, net of credits
|
|
21
|
|
|
26
|
|
|
11
|
|
|
16
|
|
Selling, general and administrative expenses
|
|
578
|
|
|
594
|
|
|
307
|
|
|
262
|
|
Total stock-based compensation expense
|
|
599
|
|
|
620
|
|
|
318
|
|
|
278
|
|
(c)
|
Warrants
|
|
|
Number
of Warrants
(in shares)
|
|
Weighted
Average
Exercise
Price Per Share
|
|
Weighted Average Remaining Contractual Life
|
|||
Outstanding at December 31, 2013
|
|
285,281
|
|
|
$
|
3.18
|
|
|
|
Granted
|
|
—
|
|
|
|
|
|
||
Exercised
|
|
—
|
|
|
—
|
|
|
|
|
Forfeited or expired
|
|
—
|
|
|
—
|
|
|
|
|
Outstanding at June 30, 2014
|
|
285,281
|
|
|
$
|
3.18
|
|
|
4.1 years
|
|
|
As at June 30, 2014
|
||||||||||||||
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||
Restricted deposits – current and non-current
|
|
$
|
862
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
862
|
|
Total
|
|
$
|
862
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
862
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
|
As at December 31, 2013
|
||||||||||||||
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||
Restricted deposits – current and non-current
|
|
$
|
306
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
306
|
|
Total
|
|
$
|
306
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
306
|
|
(1)
|
The Company's Energy & Security Sonar Solutions segment is focused on sonar and acoustic related solutions for energy, defense and commercial markets and includes other real-time and embedded hardware & software development and production. Energy & Security Sonar Solutions activities are provided through the Company’s DSIT Solutions Ltd. subsidiary.
|
(2)
|
The Company’s GridSense segment provides Smart Grid Distribution Automation products and services through its GridSense subsidiaries.
|
(3)
|
The Company’s Oil and Gas Sensor Systems segment's focus is to develop and produce fiber optic sensing systems for the energy and security markets. These activities are performed through the Company's USSI subsidiary.
|
(4)
|
The Company's Power Generation Monitoring segment provides products and services which deliver critical, real-time machine information to customers, while its Smart Service™ software provides remote diagnostics that give users real control over their equipment. These activities are performed through the Company's OmniMetrix subsidiary.
|
|
|
Energy &
Security
Sonar
Solutions
|
|
GridSense
|
|
Oil & Gas Sensor Systems
|
|
Power Generation Monitoring
|
|
Other
|
|
Total
|
||||||||||||
Six months ended June 30, 2014
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Revenues from external customers
|
|
$
|
5,037
|
|
|
$
|
2,209
|
|
|
$
|
—
|
|
|
$
|
1,056
|
|
|
$
|
875
|
|
|
$
|
9,177
|
|
Intersegment revenues
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Segment gross profit (loss)
|
|
1,145
|
|
|
551
|
|
|
(430
|
)
|
|
564
|
|
|
446
|
|
|
2,276
|
|
||||||
Restructuring and related charges
|
|
—
|
|
|
102
|
|
|
—
|
|
|
77
|
|
|
19
|
|
|
198
|
|
||||||
Depreciation and amortization
|
|
145
|
|
|
131
|
|
|
290
|
|
|
35
|
|
|
24
|
|
|
625
|
|
||||||
Stock compensation expense
|
|
—
|
|
|
—
|
|
|
64
|
|
|
—
|
|
|
—
|
|
|
64
|
|
||||||
Segment net loss before income taxes
|
|
(778
|
)
|
|
(1,778
|
)
|
|
(4,194
|
)
|
|
(851
|
)
|
|
(60
|
)
|
|
(7,661
|
)
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Six months ended June 30, 2013
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Revenues from external customers
|
|
$
|
6,186
|
|
|
$
|
2,474
|
|
|
$
|
635
|
|
|
$
|
804
|
|
|
$
|
850
|
|
|
$
|
10,949
|
|
Intersegment revenues
|
|
—
|
|
|
—
|
|
|
39
|
|
|
—
|
|
|
—
|
|
|
39
|
|
||||||
Segment gross profit (loss)
|
|
2,335
|
|
|
1,050
|
|
|
(850
|
)
|
|
439
|
|
|
423
|
|
|
3,397
|
|
||||||
Impairment of intangibles
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,116
|
|
|
—
|
|
|
1,116
|
|
||||||
Restructuring and related charges
|
|
—
|
|
|
594
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
594
|
|
||||||
Depreciation and amortization
|
|
117
|
|
|
189
|
|
|
169
|
|
|
206
|
|
|
89
|
|
|
770
|
|
||||||
Stock compensation expense
|
|
—
|
|
|
—
|
|
|
68
|
|
|
—
|
|
|
—
|
|
|
68
|
|
||||||
Segment net income (loss) before income taxes
|
|
314
|
|
|
(2,737
|
)
|
|
(4,170
|
)
|
|
(2,876
|
)
|
|
(323
|
)
|
|
(9,792
|
)
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Three months ended June 30, 2014
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Revenues from external customers
|
|
$
|
2,522
|
|
|
$
|
1,246
|
|
|
$
|
—
|
|
|
$
|
548
|
|
|
$
|
407
|
|
|
$
|
4,723
|
|
Intersegment revenues
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Segment gross profit (loss)
|
|
459
|
|
|
366
|
|
|
(242
|
)
|
|
252
|
|
|
199
|
|
|
1,034
|
|
||||||
Restructuring and related charges
|
|
—
|
|
|
102
|
|
|
—
|
|
|
77
|
|
|
19
|
|
|
198
|
|
||||||
Depreciation and amortization
|
|
74
|
|
|
66
|
|
|
182
|
|
|
18
|
|
|
10
|
|
|
350
|
|
||||||
Stock compensation expense
|
|
—
|
|
|
—
|
|
|
32
|
|
|
—
|
|
|
—
|
|
|
32
|
|
||||||
Segment net loss before income taxes
|
|
(570
|
)
|
|
(805
|
)
|
|
(2,238
|
)
|
|
(448
|
)
|
|
(39
|
)
|
|
(4,100
|
)
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Three months ended June 30, 2013
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Revenues from external customers
|
|
$
|
3,140
|
|
|
$
|
931
|
|
|
$
|
310
|
|
|
$
|
408
|
|
|
$
|
444
|
|
|
$
|
5,233
|
|
Intersegment revenues
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Segment gross profit (loss)
|
|
1,113
|
|
|
389
|
|
|
(682
|
)
|
|
203
|
|
|
249
|
|
|
1,272
|
|
||||||
Impairment of intangibles
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,116
|
|
|
—
|
|
|
1,116
|
|
||||||
Restructuring and related charges
|
|
—
|
|
|
594
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
594
|
|
||||||
Depreciation and amortization
|
|
60
|
|
|
85
|
|
|
85
|
|
|
115
|
|
|
48
|
|
|
393
|
|
||||||
Stock compensation expense
|
|
—
|
|
|
—
|
|
|
34
|
|
|
—
|
|
|
—
|
|
|
34
|
|
||||||
Segment net income (loss) before income taxes
|
|
62
|
|
|
(1,590
|
)
|
|
(2,319
|
)
|
|
(2,047
|
)
|
|
(172
|
)
|
|
(6,066
|
)
|
|
|
Six months ended June 30,
|
|
Three months ended June 30,
|
||||||||||||
|
|
2013
|
|
2014
|
|
2013
|
|
2014
|
||||||||
Total net loss before income taxes for reportable segments
|
|
$
|
(9,469
|
)
|
|
$
|
(7,601
|
)
|
|
$
|
(5,894
|
)
|
|
$
|
(4,061
|
)
|
Other operational segment net income (loss) before income taxes
|
|
(323
|
)
|
|
(60
|
)
|
|
(172
|
)
|
|
(39
|
)
|
||||
Total segment net loss before income taxes
|
|
(9,792
|
)
|
|
(7,661
|
)
|
|
(6,066
|
)
|
|
(4,100
|
)
|
||||
Unallocated cost of corporate headquarters*
|
|
(2,755
|
)
|
|
(1,985
|
)
|
|
(1,363
|
)
|
|
(942
|
)
|
||||
Provision for loss - channel partner
|
|
—
|
|
|
(649
|
)
|
|
—
|
|
|
(649
|
)
|
||||
Unallocated cost of DSIT headquarters
|
|
(20
|
)
|
|
(88
|
)
|
|
(20
|
)
|
|
(62
|
)
|
||||
Consolidated loss before income taxes
|
|
$
|
(12,567
|
)
|
|
$
|
(10,383
|
)
|
|
$
|
(7,449
|
)
|
|
$
|
(5,753
|
)
|
ITEM 2.
|
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|
|
|
Six months ended June 30, 2014
|
||||||||||||||||
|
|
DSIT
|
|
OmniMetrix
|
|
GridSense
|
|
USSI
|
|
Acorn
|
|
Total
|
||||||
Revenues
|
|
5,645
|
|
|
1,323
|
|
|
2,209
|
|
|
—
|
|
|
—
|
|
|
9,177
|
|
Cost of Sales
|
|
4,243
|
|
|
570
|
|
|
1,658
|
|
|
430
|
|
|
—
|
|
|
6,901
|
|
Gross profit
|
|
1,402
|
|
|
753
|
|
|
551
|
|
|
(430
|
)
|
|
—
|
|
|
2,276
|
|
Gross profit margin
|
|
25
|
%
|
|
57%
|
|
25
|
%
|
|
|
|
|
|
|
25
|
%
|
||
R& D expenses, net of credits
|
|
555
|
|
|
252
|
|
|
651
|
|
|
1,927
|
|
|
—
|
|
|
3,385
|
|
Selling, general and administrative expenses
|
|
1,641
|
|
|
1,343
|
|
|
1,475
|
|
|
1,792
|
|
|
1,985
|
|
|
8,236
|
|
Restructuring and related charges
|
|
—
|
|
|
96
|
|
|
102
|
|
|
—
|
|
|
—
|
|
|
198
|
|
Provision for loss - channel partner
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
649
|
|
|
649
|
|
Operating loss
|
|
(794
|
)
|
|
(938
|
)
|
|
(1,677
|
)
|
|
(4,149
|
)
|
|
(2,634
|
)
|
|
(10,192
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
|
Six months ended June 30, 2013
|
||||||||||||||||
|
|
DSIT
|
|
OmniMetrix
|
|
GridSense
|
|
USSI
|
|
Acorn
|
|
Total
|
||||||
Revenues
|
|
6,779
|
|
|
1,061
|
|
|
2,474
|
|
|
635
|
|
|
—
|
|
|
10,949
|
|
Cost of Sales
|
|
4,183
|
|
|
460
|
|
|
1,424
|
|
|
1,485
|
|
|
—
|
|
|
7,552
|
|
Gross profit
|
|
2,596
|
|
|
601
|
|
|
1,050
|
|
|
(850
|
)
|
|
—
|
|
|
3,397
|
|
Gross profit margin
|
|
38
|
%
|
|
57%
|
|
42
|
%
|
|
(134
|
)%
|
|
|
|
31
|
%
|
||
R& D expenses, net of credits
|
|
723
|
|
|
268
|
|
|
1,426
|
|
|
1,700
|
|
|
|
|
4,117
|
|
|
Selling, general and administrative expenses
|
|
1,647
|
|
|
2,367
|
|
|
1,847
|
|
|
1,610
|
|
|
2,755
|
|
|
10,226
|
|
Impairment of intangibles
|
|
—
|
|
|
1,116
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,116
|
|
Restructuring and related charges
|
|
—
|
|
|
—
|
|
|
594
|
|
|
—
|
|
|
—
|
|
|
594
|
|
Operating income (loss)
|
|
226
|
|
|
(3,150
|
)
|
|
(2,817
|
)
|
|
(4,160
|
)
|
|
(2,755
|
)
|
|
(12,656
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
|
Three months ended June 30, 2014
|
||||||||||||||||
|
|
DSIT
|
|
OmniMetrix
|
|
GridSense
|
|
USSI
|
|
Acorn
|
|
Total
|
||||||
Revenues
|
|
2,795
|
|
|
682
|
|
|
1,246
|
|
|
—
|
|
|
—
|
|
|
4,723
|
|
Cost of Sales
|
|
2,229
|
|
|
338
|
|
|
880
|
|
|
242
|
|
|
—
|
|
|
3,689
|
|
Gross profit
|
|
566
|
|
|
344
|
|
|
366
|
|
|
(242
|
)
|
|
—
|
|
|
1,034
|
|
Gross profit margin
|
|
20
|
%
|
|
50%
|
|
29
|
%
|
|
|
|
|
|
|
22
|
%
|
||
R& D expenses, net of credits
|
|
295
|
|
|
121
|
|
|
315
|
|
|
1,004
|
|
|
—
|
|
|
1,735
|
|
Selling, general and administrative expenses
|
|
858
|
|
|
639
|
|
|
687
|
|
|
968
|
|
|
942
|
|
|
4,094
|
|
Impairment of intangibles
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Restructuring and related charges
|
|
—
|
|
|
96
|
|
|
102
|
|
|
—
|
|
|
—
|
|
|
198
|
|
Provision for loss - channel partner
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
649
|
|
|
649
|
|
Operating loss
|
|
(587
|
)
|
|
(512
|
)
|
|
(738
|
)
|
|
(2,214
|
)
|
|
(1,591
|
)
|
|
(5,642
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
|
Three months ended June 30, 2013
|
||||||||||||||||
|
|
DSIT
|
|
OmniMetrix
|
|
GridSense
|
|
USSI
|
|
Acorn
|
|
Total
|
||||||
Revenues
|
|
3,464
|
|
|
528
|
|
|
931
|
|
|
310
|
|
|
|
|
5,233
|
|
|
Cost of Sales
|
|
2,172
|
|
|
255
|
|
|
542
|
|
|
992
|
|
|
|
|
3,961
|
|
|
Gross profit
|
|
1,292
|
|
|
273
|
|
|
389
|
|
|
(682
|
)
|
|
|
|
1,272
|
|
|
Gross profit margin
|
|
37
|
%
|
|
52
|
%
|
|
42
|
%
|
|
(220
|
)%
|
|
|
|
24
|
%
|
|
R& D expenses, net of credits
|
|
452
|
|
|
148
|
|
|
714
|
|
|
802
|
|
|
—
|
|
|
2,116
|
|
Selling, general and administrative expenses
|
|
811
|
|
|
1,216
|
|
|
751
|
|
|
829
|
|
|
1,363
|
|
|
4,970
|
|
Impairment of intangibles
|
|
—
|
|
|
1,116
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,116
|
|
Restructuring and related charges
|
|
—
|
|
|
—
|
|
|
594
|
|
|
—
|
|
|
—
|
|
|
594
|
|
Operating income (loss)
|
|
29
|
|
|
(2,207
|
)
|
|
(1,670
|
)
|
|
(2,313
|
)
|
|
(1,363
|
)
|
|
(7,524
|
)
|
DSIT Solutions
|
$
|
12.0
|
|
|
GridSense
|
2.4
|
|
|
|
OmniMetrix
|
1.6
|
|
|
|
USSI
|
2.5
|
|
|
|
Total
|
$
|
18.5
|
|
|
•
|
Prove that our tool works. Customer feedback from the trials to date tell us that our data is excellent and that we meet or exceed our own published specs, i.e., the tool works. We are now in the process of proving that our systems can be reliably deployed and used in deep, hot wells in order to position ourselves to fulfill commercial-level sales;
|
•
|
Confirm through further testing that the data we collect has economic value to our target customers. We are doing this via field trials with producers and the oilfield services companies that support them. To date, these customers have informed us that our systems provide them with data that is superior to what they are currently using. We believe that superior data will provide them with an economic advantage;
|
•
|
Increase opportunities to attract early adopters of our technology by considering building, as capital permits, a “fleet” of rental arrays to reduce the economic hurdle to their evaluation of our products. We have built such a system for lease and have recently deployed it in a deep-well frac job; and
|
•
|
Reach a level of industry adoption and sales where we can either operate USSI profitably on our own, attract a partner with the financial and other resources necessary to scale the business, or monetize our investment through a sale or other strategic event.
|
|
|
Six months ended June 30,
|
|
|
|
Three months ended June 30,
|
|
|
||||||||||||||||||||
|
|
2013
|
|
2014
|
|
Change from 2013 to 2014
|
|
2013
|
|
2014
|
|
Change from 2013 to 2014
|
||||||||||||||||
|
|
($,000)
|
|
|
% of revenues
|
|
($,000)
|
|
% of revenues
|
|
|
($,000)
|
|
% of revenues
|
|
($,000)
|
|
% of revenues
|
|
|||||||||
Revenues
|
|
$
|
10,949
|
|
|
100%
|
|
$
|
9,177
|
|
|
100%
|
|
(16)%
|
|
$
|
5,233
|
|
|
100%
|
|
$
|
4,723
|
|
|
100%
|
|
(10)%
|
Cost of sales
|
|
7,552
|
|
|
69%
|
|
6,901
|
|
|
75%
|
|
(9)%
|
|
3,961
|
|
|
76%
|
|
3,689
|
|
|
78%
|
|
(7)%
|
||||
Gross profit
|
|
3,397
|
|
|
31%
|
|
2,276
|
|
|
25%
|
|
(33)%
|
|
1,272
|
|
|
24%
|
|
1,034
|
|
|
22%
|
|
(19)%
|
||||
R&D expenses, net
|
|
4,117
|
|
|
38%
|
|
3,385
|
|
|
37%
|
|
(18)%
|
|
2,116
|
|
|
40%
|
|
1,735
|
|
|
37%
|
|
(18)%
|
||||
SG&A expenses
|
|
10,226
|
|
|
93%
|
|
8,236
|
|
|
90%
|
|
(19)%
|
|
4,970
|
|
|
95%
|
|
4,094
|
|
|
87%
|
|
(18)%
|
||||
Impairment of intangibles
|
|
1,116
|
|
|
10%
|
|
—
|
|
|
—%
|
|
(100)%
|
|
1,116
|
|
|
21%
|
|
—
|
|
|
—%
|
|
(100)%
|
||||
Provision for loss - channel partner
|
|
—
|
|
|
—%
|
|
649
|
|
|
9%
|
|
|
|
—
|
|
|
—%
|
|
649
|
|
|
18%
|
|
|
||||
Restructuring and related charges
|
|
594
|
|
|
5%
|
|
198
|
|
|
2%
|
|
(67)%
|
|
594
|
|
|
11%
|
|
198
|
|
|
4%
|
|
(67)%
|
||||
Operating loss
|
|
(12,656
|
)
|
|
(116)%
|
|
(10,192
|
)
|
|
(111)%
|
|
(19)%
|
|
(7,524
|
)
|
|
(144)%
|
|
(5,642
|
)
|
|
(119)%
|
|
(25)%
|
||||
Finance income (expense), net
|
|
89
|
|
|
1%
|
|
(191
|
)
|
|
(2)%
|
|
(315)%
|
|
75
|
|
|
1%
|
|
(111
|
)
|
|
(2)%
|
|
(248)%
|
||||
Loss before taxes on income
|
|
(12,567
|
)
|
|
(115)%
|
|
(10,383
|
)
|
|
(113)%
|
|
(17)%
|
|
(7,449
|
)
|
|
(142)%
|
|
(5,753
|
)
|
|
(122)%
|
|
(23)%
|
||||
Income tax benefit (expense)
|
|
(85
|
)
|
|
(1)%
|
|
(113
|
)
|
|
(1)%
|
|
33%
|
|
(16
|
)
|
|
—%
|
|
(168
|
)
|
|
(4)%
|
|
950%
|
||||
Net loss
|
|
(12,652
|
)
|
|
(116)%
|
|
(10,496
|
)
|
|
(114)%
|
|
(17)%
|
|
(7,465
|
)
|
|
(143)%
|
|
(5,921
|
)
|
|
(125)%
|
|
(21)%
|
||||
Net loss attributable to non-controlling interests
|
|
503
|
|
|
5%
|
|
665
|
|
|
7%
|
|
32%
|
|
291
|
|
|
6%
|
|
394
|
|
|
8%
|
|
35%
|
||||
Net loss attributable to Acorn Energy, Inc.
|
|
$
|
(12,149
|
)
|
|
(111)%
|
|
$
|
(9,831
|
)
|
|
(107)%
|
|
(19)%
|
|
$
|
(7,174
|
)
|
|
(137)%
|
|
$
|
(5,527
|
)
|
|
(117)%
|
|
(23)%
|
|
|
Years Ending June 30,
(in thousands) |
||||||||||||||||||
|
|
Total
|
|
2015
|
|
2016 - 2017
|
|
2018 - 2019
|
|
2020 and
thereafter
|
||||||||||
Bank and other debt, utilized lines-of-credit and capital leases
|
|
$
|
3,441
|
|
|
$
|
3,441
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Operating leases
|
|
2,178
|
|
|
913
|
|
|
968
|
|
|
215
|
|
|
82
|
|
|||||
Potential severance obligations (1)
|
|
5,299
|
|
|
270
|
|
|
1,360
|
|
|
144
|
|
|
3,525
|
|
|||||
Minimum royalty payments (2) (3) (4)
|
|
400
|
|
|
50
|
|
|
100
|
|
|
100
|
|
|
150
|
|
|||||
Total contractual cash obligations
|
|
$
|
11,318
|
|
|
$
|
4,674
|
|
|
$
|
2,428
|
|
|
$
|
459
|
|
|
$
|
3,757
|
|
ITEM 3.
|
QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
|
ITEM 4.
|
CONTROLS AND PROCEDURES
|
ITEM 6.
|
EXHIBITS.
|
By: /s/ MICHAEL BARTH
|
Michael Barth
|
Chief Financial Officer
|
1.
|
Restoration of Prior Reduction in Contribution from the Corporation
. The Corporation reimburses DSIT for 75% of Barth’s salary (the “Acorn Component”) and related costs. Effective January 1, 2014, the Acorn Component (and accordingly Barth’s salary) was reduced by $10,000 per annum (the “Reduction”). The parties now wish to restore the Reduction and hereby agree that effective June 1, 2014, the Acorn Component (as in effect following the Reduction) shall be increased by $10,000 per annum (thereby increasing Barth’s salary by such amount).
|
2.
|
Ratification
. The parties hereby ratify and confirm the terms of the Agreement as amended hereinabove.
|
1.
|
I have reviewed this report on Form 10-Q of Acorn Energy, Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c)
|
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
(d)
|
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
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5.
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The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
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(a)
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All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
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(a)
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Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
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1.
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I have reviewed this report on Form 10-Q of Acorn Energy, Inc.;
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2.
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Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
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3.
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Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
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4.
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The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
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(a)
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Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
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(b)
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Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
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(c)
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Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
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(d)
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Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
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5.
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The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
(a)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
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(1)
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The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
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(2)
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The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.
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(1)
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The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
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(2)
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The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.
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