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, 2026

☐ 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.)

4295 Hamilton Mill Road, Suite 100,

Buford, Georgia

30518

(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 4, 2026
Common Stock, $0.01 par value per share		2,509,618

ACORN ENERGY, INC.

Quarterly Report on Form 10-Q

for the Quarterly Period Ended June 30, 2026

TABLE OF CONTENTS

		PAGE
PART I Financial Information

Item 1. Unaudited Condensed Consolidated Financial Statements:		3

Condensed Consolidated Balance Sheets as of June 30, 2026 (unaudited) and December 31, 2025		3

Condensed Consolidated Statements of Operations (unaudited) for the six and three months ended June 30, 2026 and 2025		4

Condensed Consolidated Statements of Changes in Equity (unaudited) for the three and six months ended June 30, 2026 and 2025		5

Condensed Consolidated Statements of Cash Flows (unaudited) for the six months ended June 30, 2026 and 2025		6

Notes to Condensed Consolidated Financial Statements (unaudited)		7

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		21

Item 3. Quantitative and Qualitative Disclosures About Market Risk		28

Item 4. Controls and Procedures		28

PART II Other Information

Item 5. Other Information		29

Item 6. Exhibits		29

Signatures		30

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, 2026			As of December 31, 2025
	(Unaudited)
ASSETS
Current assets:
Cash	$	4,478		$	4,454
Accounts receivable, net		1,068			887
Inventory		1,127			1,254
Other current assets		303			267
State income tax receivable		—			21
Deferred cost of goods sold (COGS)		2			70
Total current assets		6,978			6,953
Property and equipment, net		338			383
Intangibles, net		253			17
Right-of-use assets, net		879			963
Other assets		107			119
Deferred tax assets		4,833			4,899
Total assets	$	13,388		$	13,334
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable	$	198		$	306
Accrued expenses		154			171
Deferred revenue		2,722			3,097
Current operating lease liabilities		168			158
Other current liabilities		45			46
State income tax payable		3			18
Total current liabilities		3,290			3,796
Long-term liabilities:
Deferred revenue		430			312
Noncurrent operating lease liabilities		791			884
Other long-term liabilities		28			26
Total liabilities		4,539			5,018
Commitments and contingencies (Note 8)		-			-
Equity:
Acorn Energy, Inc. stockholders
Common stock - $0.01 par value per share: Authorized - 42,000,000 shares; issued - 2,560,709 at June 30, 2026 and 2,555,717 at December 31, 2025; outstanding - 2,509,618 at June 30, 2026 and 2,504,626 at December 31, 2025		25			25
Additional paid-in capital		103,927			103,621
Accumulated stockholders’ deficit		(92,127	)		(92,344	)
Treasury stock, at cost – 51,091 shares at June 30, 2026 and December 31, 2025		(3,052	)		(3,052	)
Total Acorn Energy, Inc. stockholders’ equity		8,773			8,250
Non-controlling interests		76			66
Total equity		8,849			8,316
Total liabilities and equity	$	13,388		$	13,334

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)

	2026			2025			2026			2025
	Six months ended June 30,						Three months ended June 30,
	2026			2025			2026			2025

Revenue	$	4,716		$	6,623		$	2,489		$	3,525
COGS		881			1,658			439			886
Gross profit		3,835			4,965			2,050			2,639
Operating expenses:
Research and development (R&D) expenses		494			556			239			265
Selling, general and administrative (SG&A) expenses		3,095			2,858			1,436			1,427
Total operating expenses		3,589			3,414			1,675			1,692
Operating income		246			1,551			375			947
Interest income, net		63			51			32			27
Income before income taxes		309			1,602			407			974
Provision for income taxes		80			396			105			242
Net income		229			1,206			302			732
Non-controlling interest share of income		(12	)		(22	)		(8	)		(12	)
Net income attributable to Acorn Energy, Inc. stockholders	$	217		$	1,184		$	294		$	720

Net income per share attributable to Acorn Energy, Inc stockholders – basic and diluted
Basic	$	0.09		$	0.48		$	0.12		$	0.29
Diluted	$	0.09		$	0.47		$	0.12		$	0.28
Weighted average number of shares outstanding attributable to Acorn Energy, Inc. stockholders – basic and diluted
Basic		2,506			2,492			2,508			2,493
Diluted		2,540			2,534			2,540			2,534

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

(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, 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		2,505	$	25	$	103,621	$	(92,344	)		51	$	(3,052	)	$	8,250		$	66		$	8,316
Net loss		—		—		—		(77	)		—		—			(77	)		4			(73	)
Stock option exercises		2		-*		10		—			—		—			10			—			10
Accrued dividend in OmniMetrix preferred shares		—		—		—		—			—		—			—			(1	)		(1	)
Stock-based compensation		—		—		197		—			—		—			197			—			197
Balances as of March 31, 2026		2,507	$	25	$	103,828	$	(92,421	)		51	$	(3,052	)	$	8,380		$	69		$	8,449
Net income		—		—		—		294			—		—			294			8			302
Stock option exercises		3		-*		-*		—			—		—			—			—			—
Accrued dividend in OmniMetrix preferred shares		—		—		—		—			—		—			—			(1	)		(1	)
Stock-based compensation		—		—		99		—			—		—			99			—			99
Balances as of June 30, 2026		2,510	$	25	$	103,927	$	(92,127	)		51	$	(3,052	)	$	8,773		$	76		$	8,849

	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
Balances		2,491	$	25	$	103,466	$	(94,390	)		50	$	(3,036	)	$	6,065	$	45		$	6,110

Net income		—		—		—		720			—		—			720		12			732
Net income (loss)		—		—		—		720			—		—			720		12			732
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
Balances		2,499	$	25	$	103,546	$	(93,670	)		50	$	(3,036	)	$	6,865	$	56		$	6,921

*	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)

	2026			2025
	Six months ended June 30,
	2026			2025
Cash flows provided by operating activities:
Net income	$	229		$	1,206
Depreciation and amortization		72			56
Deferred income tax expense		66			320
Decrease in the provision for credit losses		(1	)		—
Impairment of inventory		2			4
Non-cash lease expense		115			66
Stock-based compensation		296			93
Change in operating assets and liabilities:
Increase in accounts receivable		(180	)		(207	)
Decrease (increase) in inventory		125			(521	)
Decrease in deferred COGS		68			251
(Increase) decrease in other current assets and other assets		(24	)		35
Decrease in state income tax receivable		21			10
Decrease in deferred revenue		(257	)		(564	)
Decrease in operating lease liability		(114	)		(65	)
(Decrease) increase in state income tax payable		(15	)		27
(Decrease) increase in accounts payable, accrued expenses, other current liabilities and non-current liabilities		(126	)		189
Net cash provided by operating activities		277			900

Cash flows used in investing activities:
Equipment, furniture and trade show booth purchases		(5	)		(7	)
Payment for exclusive distribution and commercialization rights		(250	)		—
Patents		—			(1	)
Investments in technology		(8	)		(9	)
Leasehold improvements		—			(4	)
Net cash used in investing activities		(263	)		(21	)

Cash flows provided by financing activities:
Stock option exercise proceeds		10			48
Net cash provided by financing activities		10			48

Net increase in cash		24			927
Cash at the beginning of the period		4,454			2,326
Cash at the end of the period	$	4,478		$	3,253

Supplemental cash flow information:
Cash paid during the year for:
Income taxes	$	13		$	34
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, 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 six- and three-month periods ended June 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 $4,478,000 at June 30, 2026. 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, 2026, there was one customer that represented 13% and 16%, respectively, of the Company’s total invoiced revenue. At June 30, 2026, the Company had one customer that represented 39% of our total accounts receivable due at various dates but all no later than September 30, 2026 based on the customer’s payment terms. The customer with this concentration of both invoiced revenue and accounts receivable is the customer under the material contract that was executed in June 2024 (the “Material Contract”). Approximately 42% of the accounts receivable at December 31, 2025 was due from this customer which was subsequently collected in full. Credit risk with respect to the balance of trade receivables is generally 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 these counterparties, 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 $2,000 in the six- and three-month periods ended June 30, 2026. Management wrote off inventory valued at $4,000 in the six- and three-month periods ended June 30, 2025.

Intangibles

The Company’s intangible assets are subject to amortization and are amortized over the estimated useful life in proportion to the economic benefits received. The Company evaluates the recoverability of intangible assets periodically by considering events or circumstances that may warrant revised estimates of useful lives or that indicate the asset may be impaired.

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 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 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 incomes taxes. During the year ended December 31, 2025, the Company recorded a reduction in the valuation allowance of $1,074,000 that was previously recorded against our deferred tax assets. During the six and three months ended June 30, 2026, there was no change in the valuation allowance. As of June 30, 2026 and December 31, 2025, we have a partial valuation allowance of $10,326,000 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, 2026 and in the consolidated balance sheet as of December 31, 2025

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 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 57,000 (which have a weighted average exercise price of $18.97) for the six-month period ended June 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 70,000 (which have a weighted average exercise price of $18.86) for the three-month period ended June 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 7,000 (with a weighted average exercise price of $17.51) for both the six- and three-month periods ended June 30, 2025.

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):

	2026		2025		2026		2025
	Six months ended June 30,				Three months ended June 30,
	2026		2025		2026		2025
Net income attributable to common stockholders	$	217	$	1,184	$	294	$	720

Weighted average shares outstanding:
-Basic		2,506		2,492		2,508		2,493
Add: Stock options		34		42		32		41
-Diluted		2,540		2,534		2,540		2,534

Basic net income per share	$	0.09	$	0.48	$	0.12	$	0.29
Diluted net income per share	$	0.09	$	0.47	$	0.12	$	0.28

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.

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 June 30, 2026 of $4,478,000 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.

At June 30, 2026, the Company had working capital of $3,688,000. Its working capital includes $4,478,000 of cash and deferred revenue of $2,722,000. Such deferred revenue does not require a significant cash outlay for the revenue to be recognized. Total deferred revenue decreased by $257,000, from $3,409,000 at December 31, 2025 to $3,152,000 at June 30, 2026, 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 12, Revenue). The balance of deferred hardware revenue at June 30, 2026 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, 2026 by $24,000, with $277,000 provided by operating activities, $263,000 used in investing activities of which $250,000 was the payment pursuant to the technology partnership agreement executed January 1, 2026, and $10,000 provided by financing activities.

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 June 30, 2026, the Company had gross receivables of $1,072,000 and an allowance for credit losses of $4,000.

SCHEDULE OF ACCOUNTS RECEIVABLE

	For the six months ended June 30, 2026		For the year ended December 31, 2025
	(in thousands)
Accounts Receivable, net, beginning of period	$	887	$	1,933
Accounts Receivable, net, end of period	$	1,068	$	887

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


	For the six months ended June 30, 2026			For the year ended December 31, 2025
	(in thousands)
Balance at beginning of period	$	5		$	4
(Decrease) increase in provision for credit losses		(1	)		1
Balance at end of period	$	4		$	5

NOTE 5—INVENTORY

SCHEDULE OF INVENTORY

	June 30, 2026		December 31, 2025
	As of
	June 30, 2026		December 31, 2025
	(in thousands)
Raw materials	$	1,044	$	702
Finished goods		83		552
Inventory net	$	1,127	$	1,254

At both June 30, 2026 and December 31, 2025, the Company’s inventory reserve for obsolescence was $6,000.

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 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 will be amortized on a straight-line basis over its estimated useful life of five (5) years, which corresponds to the minimum contractual performance period of the AIO Agreement. Amortization commenced when the asset became available for its intended use, which the Company determined to have occurred on April 24, 2026, the date AIO completed installation of the operational demonstration unit. This is the date on which OmniMetrix became able to commence its commercialization activities under the AIO Agreement. Amortization expense during the six- and three-month periods ended June 30, 2026 was $13,000.

Patents are amortized over the patent term, which on average is twenty years.

SCHEDULE OF INTANGIBLES, NET

	Useful Life (in years)	June 30, 2026		December 31, 2025
	Estimated	As of
	Useful Life (in years)	June 30, 2026		December 31, 2025
		(in thousands)
Cost:
Exclusive distribution and commercialization rights	5	$	250	$	—
Patents	Patent term		22		22
Cost			272		22
Accumulated depreciation and amortization
Exclusive distribution and commercialization rights			13
Patents			6		5
			19		5
Intangibles, net		$	253	$	17

Estimated future amortization expense will be presented in the table below in subsequent periodic reports following the placed-in-service date:

	Year ended June 30,
2027		51
2028		51
2029		51
2030		51
2031		38
Thereafter		11
Total	$	253

NOTE 7—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, as well as a tenant improvement allowance of up to $