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Loans from Directors and Other Commitments

9 Months Ended

Sep. 30, 2018

Loans From Directors And Other Commitments

Loans from Directors and Other Commitments

NOTE 5—Loans from Directors AND OTHER COMMITMENTS

(a) Director Loans to Acorn

On February 16, 2017, the Company secured commitments for $1,900 in funding in the form of loans from members of the Company’s Board of Directors, of which $900 was immediately funded and an additional $400 was funded in the third quarter of 2017. On February 22, 2018, following the receipt of the proceeds from the 2018 DSIT Transaction (see Note 3), the Company repaid in full $1,300 of principal and $128 accrued interest due through that date with respect to these loans.

Prior to the repayment of these loans on February 22, 2018, the Company accrued $21 of interest expense in the nine months ended September 30, 2018 compared to $72 of interest expense accrued in the nine months ended September 30, 2017 relating to these director loans.

(b) Director Investment and Loans to OmniMetrix Holdings

In 2015, one of the Company’s then-current directors (the “Investor”) acquired a 20% interest in the Company’s OmniMetrix Holdings, Inc. subsidiary (“Holdings”) through the purchase of $1,000 of OmniMetrix Preferred Stock (“Preferred Stock”). Holdings is the holder of 100% of the membership interests OmniMetrix, LLC through which the Company operates its Power Generation and Cathodic Protection monitoring activities. The $1,000 investment by the Investor was recorded as an increase in non-controlling interests.

A dividend of 10% per annum accrued on the Preferred Stock. The dividend was payable on the first anniversary of the funding of the investment and quarterly thereafter for so long as the Preferred Stock is outstanding and has not been converted to Common Stock. Through December 31, 2016, a dividend payable of $115 was recorded with respect to the Preferred Stock. On December 31, 2016, the Investor agreed to treat the $115 of accrued dividends and all subsequent accrued and unpaid dividends as a loan to Holdings which bears interest at 8% per year. In December 2016, the Investor provided Holdings with an additional $50 loan under the same terms as the abovementioned accrued dividends.

On May 14, 2018, Holdings and the Investor entered into an agreement whereby effective May 1, 2018, the dividend on the Preferred Stock was reduced to 8%. In addition, all the amounts due to the Investor (accrued dividends, loan and accrued interest) and all future dividends that shall accrue on the Preferred Stock through June 30, 2020 will be paid by Holdings to the Investor as follows:

In the year ending September 30, 2019		$	220
In the year ending September 30, 2020		$	243

During the nine months ended September 30, 2018, the Company made a payment of $40, against the balance due, pursuant to the agreed upon payment schedule and a quarterly dividend of $20 was accrued. At September 30, 2018, the obligation to the Investor was $323 including accrued interest through May 1, 2018 on unpaid balances of $22.

The Investor resigned from the Company’s Board of Directors on August 6, 2018.

As of September 30, 2018, OmniMetrix owes Acorn approximately $3,739 for loans, accrued interest and expenses advanced to it by Acorn since its acquisition in 2012. Such amounts are eliminated in consolidation and will only be repaid to Acorn when OmniMetrix is generating sufficient cash to allow such repayment.