XML 31 R20.htm IDEA: XBRL DOCUMENT v3.24.2.u1
ACCOUNTING POLICIES (Policies)
 6 Months Ended
Jun. 30, 2024
Accounting Policies [Abstract]  
Use of Estimates in Preparation of Financial Statements

Use of Estimates in Preparation of Financial Statements

 

The preparation of unaudited condensed 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 unaudited condensed consolidated financial statements, and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates.

 

 
Concentrations of Credit Risk

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 $1,463,000 at June 30, 2024. The Company does not believe there is a significant risk of non-performance by its counterparties. For the six- and three-month periods, one customer represented 10% and 12% of the Company’s total invoiced sales, respectively. At June 30, 2024, the Company did not have any customers that represented 10% or greater of our total accounts receivable. Approximately 25% of the accounts receivable at December 31, 2023 was due from one 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

Inventory

 

Inventories are comprised of components (raw materials), work-in-process 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 each reporting period of the Company’s inventory reserve and writes off any inventory items that are deemed obsolete.

 
Revenue Recognition

Revenue Recognition

 

The Company’s revenue recognition policy is consistent with applicable revenue recognition guidance and interpretations. The core principle of Accounting Standards Codification (“ASC”) 606, Revenue from Contracts with Customers, 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 10, Revenue, for further discussion.

 

Revenue from sales of the hardware products that are distinct products are recorded when shipped 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. Revenue from the prepayment of monitoring fees (generally paid twelve months in advance) is recorded as deferred revenue upon receipt of payment from the customer and then amortized to revenue over the monitoring service period. See Notes 9 and 10 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

Income Taxes

 

The Company is subject to U.S. federal income tax and income taxes imposed in the state and local jurisdictions where it operates its businesses. Deferred income taxes are determined using the liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which these temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in the tax rates is recognized in income in the period that includes the enactment date. In addition, a valuation allowance is established to reduce any deferred tax asset for which it is determined that it is more likely than not that some portion of the deferred tax asset will be realized. The income tax expense in the six-month period ended June 30, 2024 represents the estimated state tax of various states on the 2023 income of OmniMetrix.

 
Basic and Diluted Net Income Per Share

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 (as adjusted to account for the September 2023 1-for-16 reverse stock split) 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 combined weighted average number of options excluded from the computation of diluted net income per share was 50,000 (with a weighted average exercise price of $7.20) and 58,000 (with a weighted average exercise price of $6.89) for the six- and three-month periods ended June 30, 2023, respectively.

 

The following table 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 (as adjusted to account for the September 2023 1-for-16 reverse stock split) and is in thousands, except per share data:

 

   2024   2023   2024   2023 
  

Six months ended

June 30,

  

Three months ended

June 30,

 
   2024   2023   2024   2023 
Net income attributable to common stockholders  $336   $11   $271   $96 
                     
Weighted average share outstanding:                    
-Basic   2,487    2,484    2,487    2,485 
Add: Stock options   14    2    20    2 
-Diluted   2,501    2,486    2,507    2,487 
                     
Basic net income per share  $0.14   $0.00   $0.11   $0.04 
Diluted net income per share  $0.13   $0.00   $0.11   $0.04 

 
Recent Accounting Pronouncements

Recent Accounting Pronouncements

 

In November 2023, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, to improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses. ASU 2023-07 is effective for annual periods beginning after December 15, 2023 and interim periods beginning after December 15, 2024, and early application is permitted. The Company is currently assessing the impact the adoption of ASU 2023-07 will have on its segment reporting 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.