Q4 2025 Acorn Energy Inc Earnings Call

March 5, 2026

Good morning, everyone and welcome to Acorn Energy's fourth quarter and full year 2025 conference call.

All participants are currently in a listen only mode. Following management's prepared remarks, we will open the call for questions.

As a reminder, today's event is being recorded.

I'd now like to turn the conference call over to Tracy Clifford CFO of Acorn Energy N C O O of its omni metrics subsidiary.

Tracy Clifford: Thank you, operator. Thank you all for joining our call today. First, I'd like to remind you that today's remarks, including responses to questions, contain forward-looking statements. These statements involve a number of risks and uncertainties that could cause actual results to differ materially from those projected. Factors that may impact our future operating results and financial performance include general risks such as potential disruptions to business operations or changes in consumer or customer demand, as well as specific risks related to our ability to execute our operating plan, maintain strong customer renewal rates, and expand our customer base. Additional risks that may arise from changes in technology, competition, or shifts in the macroeconomic or financial environment.

Thank you operator, and thank you all for joining our call today.

First I'd like to remind you that today's remarks, including responses to questions contain forward looking statements. These statements involve a number of risks and uncertainties that could cause actual results to differ materially from those projected.

Factors that may impact our future operating results and financial performance include general risk such as potential disruptions to business operations or changes in consumer or customer demand as well as specific risks related to our ability to execute our operating plan maintain strong customer renewal rates and expand our customer base additional risks.

That may arise from changes in technology competition or shifts in the macroeconomic or financial environment.

Tracy Clifford: These forward-looking statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 and are based on management's current beliefs, assumptions, and information that is available as of today. There can be no assurances that the company will meet its growth targets or other strategic goals and objectives. The company undertakes no obligation to update or revise such forward-looking statements to reflect future events or specific circumstances that may occur after today. For a more detailed discussion of risks and uncertainties that may affect our business, please refer to the Risk Factors section of our Form 10-K, which is available online at www.sec.gov or on our own website at acornenergy.com. Now I'll turn the call over to Jan Loeb, CEO of Acorn and OmniMetrix, for further comments. Jan.

These forward looking statements are made pursuant to the safe Harbor provisions of the private Securities Litigation Reform Act of 1995 and are based on management's current beliefs assumptions and information that is available as of today.

There can be no assurances that the company will meet its growth targets or other strategic goals and objectives. The company undertakes no obligation to update or revise such forward looking statements to reflect future events or specific circumstances that may occur after today.

For a more detailed discussion of risks and uncertainties that may affect our base. Our business. Please refer to the risk factors section of our Form 10-K, which is available online at www Dot SEC Gov or on our own website at Acorn energy Dotcom.

Now I'll turn the call over to Jan <unk> CEO of Acorn and on the metrics for further comments Dan.

Jan Loeb: Thank you, Tracy. Thank you all for your interest. In 2025, Acorn achieved record revenue, improved operating income, higher cash flow, and our third straight year of profitability. Our performance benefited from a 22% increase in high-margin monitoring revenue, driven by continued growth in our installed base of remote monitoring endpoints. Our year-over-year Q4 and full year comparisons reflect the benefit of a national cell phone provider contract, the largest in our history. The bulk of hardware revenue for this contract was recorded between Q3 of 2024 and Q2 of 2025, contributing to lower year-over-year hardware revenues in the second half of 2025. The contract also includes one year of monitoring services ratably over 12 months following each hardware unit's commissioning.

Thank you Tracy and thank you all for your interest in 2025, Acorn achieved record revenue improved operating income higher cash flow.

And our third straight year of profitability.

Our performance benefited from a 22% increase in high margin monitoring revenue.

And by continued growth in our installed base of remote monitoring endpoints.

Our year over year, Q4, and full year comparisons reflect the benefit of a national cell phone provider contract the largest in our history.

Bulk of hardware revenue for this contract was recorded between Q3 of 'twenty 'twenty, four and Q2 of 2025 contributing to lower year over year hardware revenues in the second half of 2025.

The contract also includes one year of monitoring services Ratably.

Over 12 months following each hardware units commissioning.

Jan Loeb: Importantly, we earned very favorable feedback from this customer regarding our technology, monitoring capabilities and customer service, resulting in what we believe is a solid relationship with future potential. Our 2025 hardware revenue was also tempered by a $885,000 decrease in non-cash deferred revenue amortization from units sold prior to September 2023, when the majority of our hardware sales were deferred and amortized over 3 years. Acorn's 2025 results reflected $956,000 in revenue from amortization of deferred hardware revenue, a 48% decrease from the $1.84 million recorded in 2024, with no impact on cash generation. This revenue impact will end this year, as we expect the balance of deferred hardware revenue of $168,000 to be fully amortized by August 2026.

Importantly, we earn very favorable feedback from this customer regarding our technology monitoring capabilities and customer service.

<unk> and what we believe is a solid relationship with future potential.

2025 hardware revenue was also tempered by an $885000 decrease in noncash deferred revenue amortization from units sold prior to September of 2023, when the majority of our hardware sales were deferred and amortized over three years.

<unk> 2025 results reflected the 956000 in revenue from amortization of deferred hardware revenue a 48% decrease from the 1.84 million recorded in 2024.

But with no impact on cash generation.

This revenue impact will end of this year as we expect the balance of deferred hardware revenue of 168000 to be fully amortized by August of 2026.

Jan Loeb: Lastly, our 2025 revenues were also impacted by an industry-wide slowdown in residential generated deployments, which we and other industry participants attribute to high interest rates, fewer major power outages related to hurricanes and other weather events in 2025, as well as inflation and economic uncertainty that impacted consumers' ability or willingness to invest in backup generator security at a cost of approximately $15,000 per installation. Our belief is that consumer generator demand is likely to return to more historic levels as impending factors moderate. Turning to our strategies for growth, we reviewed five complementary core initiatives in today's press release on which I'd like to provide a little more color. One is larger commercial industrial opportunities, which our internal sales teams continue to pursue across various sectors that include healthcare, telecom, real estate, retail, grocery, hospitality, government, and financial institutions.

Lastly, our 2025 revenues were also impacted by an industry wide slowdown in residential generated deployments, which we and other industry participants attributes of high interest rates fewer major power outages related to hurricanes and other weather events in 2025, as well as inflation and economic uncertainty.

D that impacted consumers' ability or willingness to invest and backup generator security at a cost of approximately $15000 per installation.

Our belief is that consumer generally demand is likely to return to more historic levels.

His impending factors moderate.

Turning to our strategic strategies for growth, we reviewed five complementary core initiatives at today's press release on which I'd like to provide a little more color.

One is larger commercial and industrial opportunities, which our internal sales teams continued to pursue across various sectors that include healthcare telecom real estate REIT.

Grocery hospitality government and financial institutions, we have a range of ongoing discussions however, the most significant opportunities with more large organizations that require a bunch of compliance and also longer more complex sales cycle too.

Jan Loeb: We have a range of ongoing discussions. However, the most significant opportunities are with more large organizations that require budget compliance and also longer, more complex sales cycles. 2 is the pursuit of strategic relationships to integrate our technology with OEMs or other strategic partners, for example, through white labeling our products for the OEMs. We have ongoing dialogues with a few industry OEMs to bundle OmniMetrix solutions with their product offerings. Currently, our monitors are installed by the dealers in the aftermarket. However, our technology, service leadership, and support for all generator brands puts us in a strong position to partner with one or more OEMs. Their core business isn't providing monitoring services, and by working with us, they can offer a superior solution that offers greater value to their customers, while also providing the potential to reduce or eliminate their overhead and investment in an in-house solution.

Two is the pursuit of strategic relationships to integrate our technology with Oems or other strategic partners for example through white labeling our products, where the Oems we have ongoing dialogues with a few industry Oems to bundle on the metrics solutions with their product offerings currently our mantra of errors are installed.

The dealers in the aftermarket however, our technology service leadership and support all generated brands puts us in a strong position to partner with one or more Oems there.

Their core business isn't providing monitoring services and by working with us. They can offer a superior solution that offers greater value to their customers, while also providing the potential to reduce or eliminate their overhead and investment in an in house solution. We believe this is the direction our industry is going and we continue to work to advance only.

Jan Loeb: We believe this is the direction our industry is going, and we continue to work to advance OEM discussions. However, it's difficult to predict the potential or timing of these efforts. 3 is expanding our penetration of the residential and small business markets through our network of 600+ generator dealers. While the retail market was slow in 2025, as I mentioned, we are optimistic for a rebound in 2026, given the potential stimulus to secure backup power provided by recent winter storms as well as moderating interest rates. One of the larger generator manufacturers has publicly stated they expect a 10% increase in residential generator sales in 2026, so we expect to benefit if this does indeed occur. 4 is our ongoing investment in research, development, and engineering to enhance existing OmniMetrix products and develop new products.

Discussions however at.

It's difficult to predict the potential or timing of these efforts three.

It is expanding our penetration of the residential and small business markets, where I know, we're up 600, plus generator dealers, while the retail market was slow in 2025 as I mentioned, we are optimistic for a rebound in 2026, given the potential stimulus to secure backup power.

Provided by recent winter storms as well as moderating interest rates one of the larger generator manufacturers has probably stated they expect a 10% increase in residential generated sales in 2020 six so we expect to benefit if this does indeed occur.

Or is our ongoing investment in research development and engineering to enhance existing RMS VIX products and develop new products. These investments are essential to maintain competitive our competitive position and expand our value proposition and addressable market.

Jan Loeb: These investments are essential to maintain our competitive position and expand our value proposition and addressable market. Tracy will review our recent product launches momentarily. Five is our ongoing pursuit of accretive opportunities to expand our product offerings, market reach, and customer base with a focus on businesses that have a meaningful monitoring component to their businesses. The nature of the M&A process is that it takes a lot of work, research, and negotiation to get to the point where you have a solid opportunity at an acceptable price. We are highly motivated to identify and execute on an acquisition to enhance our growth, operating leverage, and monetization of our NOLs, but balance this with a disciplined approach to managing deal terms and risk for our shareholders. Our recent strategic partnership with AIO, which stands for All In One, emerged through our M&A dialogues.

Tracey will review, our recent product launches momentarily.

Five is the ongoing pursuit of accretive opportunities to expand our product offerings market reach and customer base with a focus on businesses that have a meaningful monitoring components to their businesses. The nature of the M&A process is that it takes a lot of work research in negotiations to get to the point, where you'd have a solid opportunity unacceptable price.

We are highly motivated to identify and execute on our mexicana on an acquisition to enhance our growth operating leverage and monetization of our Nols, but balance this with a disciplined approach to managing deal terms and risk for our shareholders.

Our recent strategic partnership with <unk>, which stands for all in one emerged through our M&A dialogue.

Jan Loeb: AIO is a global leader in remote monitoring and control solutions for critical infrastructure, had no business operations in the US. They provide best-in-class technology and cloud-based business intelligence platforms that are successfully deployed at over 110,000 sites in 15 countries. In this case, we found the best path was to secure exclusive North American rights to their proven product suite for what amounts to a modest commitment to invest in building out the business. AIO solutions target the full cell phone tower campus, as well as solutions for data centers and utility operations. Their monitoring control solutions deliver actionable insights through advanced analytics, machine learning, and comprehensive monitoring of environmental conditions, battery health, security breaches, energy optimization, microgrids, and more.

Hey, I O is the global leader in remote monitoring and control solutions for critical infrastructure, but had no business operations in the U S.

They provide best in class technology, and cloud based business intelligence platforms that have successfully deployed at over 110000 sites in 15 countries.

In this case, we found the best path was to secure exclusive North American rights to their proven products week for what amounts to a modest commitment to invest in building out the business.

Aio solutions to target all cell phone tower campus as well as solutions for data centers and utility operations.

We are monitoring and control solutions deliberate actual insights to advanced analytics and machine learning and comprehensive monitoring of environmental conditions Battery health security breaches is energy optimization micro grids and more.

Jan Loeb: The technology reduces downtime, streamlines maintenance, and provides measurable cost savings and ROI, making it the logical choice for smarter, safer, and more profitable operations. The partnership is a perfect fit for Acorn and our OmniMetrix brand, as it substantially expands our product offerings and addressable market by integrating AIO solutions with our industry-leading remote monitoring and control technology. Our 20-plus year reputation and established US customer base. We see exciting growth potential starting with our existing telecommunication customers and then expanding to data center and utilities to strengthen our ability to serve rising demand for data-driven infrastructure management with solutions that protect against power issues, theft, and environmental and other risks while maximizing energy utilization. We anticipate that the average sale of OmniMetrix labeled AIO products will be approximately five to six times the average current OMNI sale.

Technology reduces downtime streamline as maintenance and provides measurable cost savings and ROI, mainly at the logical choice for smarter safer and more profitable operations.

The partnership is a perfect fit for Acorn and our on the metrics brand.

Is it substantially expands our product offerings and addressable market by integrating al solutions with our industry, leading remote monitoring and control technology.

Our 20, plus your reputation and established U S customer base.

We see exciting growth potential starting with our existing telecommunication customers and then expand to datacenter and utilities the strengthen our ability to serve rising demand for data driven infrastructure management with solutions that protect against parish and Steph and environmental and other risks, while maximizing energy utilization.

We anticipate that the average sale of iron metrics labeled aio products would be approximately five to six times the average current omni sale.

Jan Loeb: As we will be sharing SaaS revenue with AIO, it is too early to project what our margins will be. We will be selling AIO technological solutions under the OmniMetrix brand, and from our market research, there are no better existing technologies in the industries they serve. This partnership has the potential to transform our company by expanding the respected OmniMetrix brand into new end markets with a product that would take us many years and significant R&D dollars to develop. We expect to have our first demo unit installed by the end of the month with a large existing telecom client. AIO has been in existence for 18 years.

As we will be sharing SaaS revenue with a I O. It is too early to project, what our margins will be.

We will be selling aio technological solutions under the army metrics brand.

From our market research there no better existing technologies in the industries they serve.

This partnership has the potential to transform our company by expanding the respected R&D metrics brand into new end markets with a product that would take us many years and significant R&D dollars to develop.

Expect to have our first demo unit installed by the end of the month with a large existing telecom client.

<unk> has been in existence for 18 years.

Jan Loeb: As we have stated, we do not expect any revenues from this partnership until the second half of 2026. We see secular tailwinds that should support our growth in coming years as business and consumers take action to ensure uninterrupted access and support for their energy infrastructure management and regulatory compliance needs. Energy demands for AI, data centers, electric vehicles, electrification of buildings, and reshoring of industry are all straining the aging US electrical grid, which is also being disrupted by extreme weather events, forest fires, and other natural disasters.

As we've been as we have stated we do not expect any revenues from this partnership until the second half of 'twenty 'twenty six.

We see secular tailwind that should support our growth in coming years, its business and consumers take action to ensure uninterrupted access and support for their energy infrastructure management and regulatory compliance needs.

Energy demands for AI data centers electric vehicles, the electrification of buildings.

And re shoring of industry are all straining the aging U S electrical grid.

Which is also being disrupted.

By extreme weather events forest fires and other natural disasters. Despite a relatively benign year in 2025, we've already seen a rebound in power outages from winter storm. So far this year, including severe ice storms across 12 states in the south in Appalachian in late January resulting in over 1 million customers without power.

Jan Loeb: Despite a relatively benign year in 2025, we've already seen a rebound in power outages from winter storms so far this year, including severe ice storms across 12 states in the South and Appalachia in late January, resulting in over 1 million customers without power, many of them for days, and some for weeks amidst winter weather. Even if the nation changed course and started massively investing in energy resources and infrastructure today, we are so far behind. It would take many years, if not decades, to meet our rapidly growing energy and reliability needs. Given the substantial unmet needs of the markets we now serve, we continue to believe 20% average annual revenue growth over the coming 3 to 5 years is an achievable target.

Many of them for days and some for weeks amidst winter weather, even if the nation change course and started massively investing in energy resources and infrastructure today, we are so far behind.

It would take many years, if not decades to meet their rapidly growing energy and reliability needs given the substantial unmet needs of the markets. We now serve we will continue to believe 20% average annual revenue growth over the coming three to five years is an achievable target further given the efficiency and scalability of our model we believe.

Jan Loeb: Further, given the efficiency and scalability of our of our model, we believe approximately 50% of each incremental revenue dollar from our existing business should flow through to operating income. As a small company, peaks and valleys in purchasing cycles for major hardware orders will persist, but we believe that our high margin, capital-light business model positions us very well for the future. With that, I'll turn the call over to Tracy for financial and operational insights. Tracy?

Approximately 50% of each incremental revenue dollar from our existing business should flow through to operating income.

As a small company peaks and valleys in purchasing cycles for a major hardware orders will persist, but we believed that our high margin capital light business model positions us very well for the future.

With that I'll turn the call over to Tracy for financial and operational insights.

Tracy Clifford: Thank you, Jan. The key takeaway from our 2025 results is the solid growth we are achieving in our annual recurring monitoring revenue stream, which achieved a 95% gross margin in 2025 and was driven by the ongoing expansion of our installed base of monitored endpoints. We view the steadily growing base of annually recurring high margin revenue as the core value driver for our business, fueled by new hardware deployments, which could continue to be more regular in nature, leading to some variation in year-over-year comparisons. We've provided a fair amount of detail in today's news release, I'll just touch on a few key highlights. Revenue rose 4.5% to $11,478,000, thanks to the diligent efforts of the entire OmniMetrix team. Monitoring revenue grew 22% due to the expansion of monitored endpoints.

Thank you Dan.

The key takeaway from our 2025 adult is the solid growth we are achieving in our annual recurring monitoring revenue stream, which achieved a 95% gross margin in 2025 and was driven by the ongoing management of our installed base of monitors.

We view the steadily growing base of annually recurring high margin revenue, that's a core value driver for our business fueled by new hardware deployment.

They continue to be more regular nature legal variation.

Alright.

We've provided a fair amount of detail in today's earnings release I'll, just touch on a few key highlights.

Revenue was four 5% to $11 million 478000, thanks to the diligent efforts of the entire.

Yeah.

Monitoring revenues grew 22% due to the expansion monitoring.

Tracy Clifford: Total hardware revenue declined 8% due to the timing of deliveries for our large cell phone customer and an $885,000 decrease in the amortization of deferred hardware revenue. Excluding the impact of declining amortization of deferred hardware revenue, new hardware revenues rose approximately 8% in 2025 compared to prior year. Gross margin improved to 76.8% versus 72.8%, an increase of 400 basis points, reflecting the increase in higher margin monitoring fees as a percentage of revenue and hardware margin improvements related to the cost efficiency of the next generation products that deliver more value.

Total hardware revenue declined 8% due to the timing of delivery for our large cell phone customer and an $885000.

Amortization of deferred revenue.

The impact of declining amortization of deferred hardware revenue new hardware revenues.

8% in 2025 compared to prior year.

Margin in previous 76, 8% versus 72.8% an increase of 400 basis points, reflecting an increase in higher margin monitoring fees as a percentage of revenue and hardware margin equation, that's related to the cost efficiency at the next generation products that deliver more value.

Tracy Clifford: Diluted earnings per share was $0.99 in 2025, including an $0.18 per share deferred income tax benefit compared to diluted EPS of $2.51 in 2024, which included a $1.77 per share of deferred income tax benefit. Cash flows from operations more than doubled to $2,090,000 in 2025, or an increase of 131% year-over-year. Consequently, our year-end cash position improved by $2.1 million to $4,454,000, and we've maintained a strong cash position of $4,131,000 as of 03 March 2026, following our investment of $250,000 since December for the AIO OmniMetrix partnership and North American product launch. We also remain debt-free.

Diluted earnings per share with 99% in 2025, including an 18 pence per share deferred income tax benefit compared to diluted EPS of $2 51, six in 2024, which included $1.77 per share a deferred income tax.

Cash flow from operations more than doubled to 2.090 million in 2025, or an increase of 131% year over year.

Consequently, our yearend cash position increased by $2 1 million to 4.454 million and we've maintained a strong cash position of 4.131 million as of March.

2020, following our indefinitely.

<unk> thousand at December the Aio on the metrics partnership North American product launch, we also remained debt free.

Tracy Clifford: I think it's important to note that Acorn was able to release an additional $464,000 of its valuation allowance against our deferred tax assets in 2025 as a result of the Big Beautiful Bill, which allowed us to treat certain R&D expenses in a more favorable way for tax purposes. This compares to $4.4 million released in 2024, both of which were reflected in our bottom line results. We now maintain a $10.3 million or greater than 70% valuation allowance against $14.4 million in NOL and capital loss carryforward. Most of our NOLs expire in 2031 or later, so we still have plenty of time to utilize them through growth in our existing operations via potential M&A initiatives.

I think it's important to note that Acorn was able to lease an additional 400.

Oh, the valuation allowance against our deferred tax asset in 2025 as a result of the big beautiful Bill it's allowed us to treat certain R&D expenses and a more favorable way protect.

This compares to 4.4 million really in 2024, both of which were reflected in our bottom line result.

Now maintained at one point or greater than 70% valuation allowance against $14 4 million, an NOL and capital loss carryforward.

Most of our Nols expire in 'twenty anymore or later, so we've got plenty of time to utilize them through growth in our existing operations yeah potential.

Yeah.

Tracy Clifford: In late 2025, we launched our next generation of generator monitors, the OMNI, for the residential market and the OMNIPRO for commercial and industrial applications. In addition to significant upgrades and new features, design innovations have reduced installation time and service costs while enhancing reliability. We also launched RADex, an enhanced version of our RAD Remote Alternating Current Mitigation Disconnect product for the pipeline segment. These next gen product launches enhance our value proposition, expand our technology leadership, and will contribute to our growth in 2026 and beyond. We're very excited about the potential AIO opportunities ahead as well as the other growth opportunities that Jan discussed in his remarks. We look forward to updating you on our progress. Operator, you may now prepare the lines for questions. Thank you very much.

In late 2025, we launched our next generation of generator managers, the army or the residential market and poly pro for commercial and industrial application.

In addition to significant upgrades and new features.

Patients have reduced installation time and service costs, while enhancing reliability.

We also launched ready acts an enhanced version of our Brad will note alternating current mitigation disconnect product for the pipeline segment. These next gen product launches enhanced our value proposition expand our technology leadership and will contribute to our growth in 2026.

And beyond.

So very excited about the potential aio opportunities ahead as well.

Can you eat that Dan discussed.

In his remarks, and we look forward to updating you on our progress operator, you may now prepare the lines for questions. Thank you very much.

Jan Loeb: Ladies and gentlemen, at this time, we'll begin that question and answer session. To ask a question, you may press star and then one using a touch-tone telephone. To withdraw your questions, you may press star and two. If you are using a speakerphone, we do ask that you please pick up the handset prior to pressing the keys to ensure the best sound quality. Once again, that is star and then one to join the question queue. We'll pause momentarily to assemble the roster.

Operator: Ladies and gentlemen, at this time, we'll begin that question and answer session. To ask a question, you may press star and then one using a touch-tone telephone. To withdraw your questions, you may press star and two. If you are using a speakerphone, we do ask that you please pick up the handset prior to pressing the keys to ensure the best sound quality. Once again, that is star and then one to join the question queue. We'll pause momentarily to assemble the roster.

Ladies and gentlemen at this time, we'll begin the question and answer session to ask a question you May Press Star and then one using a touchtone telephone to withdraw your question you May Press Star two.

If you are using a speaker phone we do ask you. Please pick up the handset prior to pressing the keys to ensure the best sound quality.

Once again that is star and then one to join the question queue.

We will pause momentarily to assemble the roster.

Yeah.

Rachel Smith: Our first question today comes from Jason Molenkamp. Please go ahead with your question.

And our first question today comes from.

Operator: Our first question today comes from Jason Molenkamp. Please go ahead with your question.

Jason Mullen Kim. Please go ahead with your question.

Jason Molenkamp: Good morning, Jan, Tracy. I have a few questions. I wanted to follow up a few things from the AGM, if you don't mind. The first one I wanted to hit was you guys had mentioned that you're talking to three OEMs, and you don't think you'll get three OEMs. It's a very long sales cycle, and you kinda mentioned that you certainly would get one. Is that kinda still the status on that front?

Good morning, Jan Tracy.

I have a few questions.

I wanted to follow up a few things from the AGM, if you don't mind.

The first one I wanted to hear what you guys had mentioned that you were talking to three OEM.

You Didnt think you Wouldnt think youll get three Oems, it's very long sales cycle and you kind of mentioned that you certainly would get one is that still the status on that front.

Jan Loeb: I believe that is still true.

I believe that is still true.

Jan Loeb: I believe that is still true.

Jason Molenkamp: Okay. The next follow-up from the AGM would be in terms of acquisitions. You had said that you had 3 acquisitions in mind and 3 term sheets out. It seems like the AIO is one of those. Can you give an update? Is there still 2 outstanding, or where does that stand today?

Okay and then the next follow up from the AGM would be.

In terms of acquisitions, you had said that you had three acquisitions in mind and three term sheets sheets out.

It seems like be a the aio is one of those can you give an update there still.

Still two outstanding or where does that stand today.

Jan Loeb: We've had discussions with the other two. Firstly, you're right, AIO is one of them. We've had discussions with the two others. As of right now, they're still available, but the price, we have not come to any agreement on price. Too far apart on price.

We've had discussions with the other two <unk> firstly, you're right aio is one of them.

We've had discussions with the two others as of right now.

They are still available, but the price we have not come to any agreement on price.

Too far apart on price.

Jason Molenkamp: Okay. Thanks for that. My final question is a bit more open-ended. I'm curious if you could kinda discuss the bottlenecks for each of the growers, so each of the growth drivers. You know, for instance, is there, you know, lack of personnel, or is it sales? You know, what's kinda like the bottlenecks and what are you guys doing to try to relieve those bottlenecks?

Okay. Thanks for that and then my final question is a bit more open ended I am curious if you could kind of discuss the.

Bottlenecks for each of the growers.

Each of the growth drivers so.

For instance, if for instance is there you know.

The lack of personnel or is it sales.

What's kind of like the bottlenecks and what are you guys doing to try to relieve those bottlenecks.

Jan Loeb: I think the number one bottleneck is the customer base that we are trying to bring in-house. You know, on the residential side and small commercial side, you know, usually it's one decision-maker is making the decision to get monitoring or not monitoring, the head of the household or the owner of the small business, the doctor's office, et cetera. You know, going after bigger customers, you know, we're just finding that the sales cycle, you know, is much longer. There are other extraneous factors that come into play, the economy, tariffs, layoffs, et cetera, that impact bigger customers. To me, our internal team is excellent. And I don't think adding more personnel is an answer.

So I think the number one bottleneck is.

The <unk>.

Customer base that we are trying to bring in house. So.

Yeah.

On the residential side and more commercial side you usually it's one decision maker is making the decision to get monitoring and not monitoring the head of the household or the owner of the small business the doctor's office etcetera.

You know in in going after bigger customers.

You know, we're just finding that the sales cycle.

As much longer and and there are other extraneous factors that come into play the economy tariffs.

Lay offs et cetera that impact bigger customers. So to me our internal team is excellent.

And I don't think adding more personnel isn't an answer it's just staying on top of these customers.

Jan Loeb: It's just staying on top of these customers, and, you know, hopefully we reel them in because, you know, we feel very confident about our product and how we can help them. I'd say that to me is the number one bottleneck that we have.

And hopefully we reel them in because you know we feel very confident about our product and how we can help them.

So I'd say that to me is the number one bottleneck.

That we have.

Jason Molenkamp: Great. Thank you for the answers, and thank you for your guys' stewardship of the business.

Great. Thank you for the answers and thank you for your you guys. His stewardship of the business.

Jan Loeb: Thank you for your continued interest, Jason.

Thank you for your continued interest Jason.

Rachel Smith: Once again, if you would like to ask a question, please press star and one. To withdraw your questions, you may press star and two. Our next question comes from Richard Sosa. Please go ahead with your question.

Operator: Once again, if you would like to ask a question, please press star and one. To withdraw your questions, you may press star and two. Our next question comes from Richard Sosa. Please go ahead with your question.

Once again, if he would like to ask a question. Please press star and one to withdraw your question you May press star into.

Our next question comes from.

Richard Please go ahead with your question.

Operator: Hi, Jan and Tracy. Good morning. Great to see the results this year. I'm excited about the AIO partnership, and looking forward to hearing more about it. Just had a really quick question. I joined late, so you might have addressed it on the call. Just in terms of the monitoring revenue in Q4, I mean, I saw it was, like, slightly below what it was in Q3. Was it a timing issue, or was it something else?

Richard Sosa: Hi, Jan and Tracy. Good morning. Great to see the results this year. I'm excited about the AIO partnership, and looking forward to hearing more about it. Just had a really quick question. I joined late, so you might have addressed it on the call. Just in terms of the monitoring revenue in Q4, I mean, I saw it was, like, slightly below what it was in Q3. Was it a timing issue, or was it something else?

Hi, Gavin and Tracey and good morning.

Great to see the results this year I'm excited about the I O partnership.

Looking forward to hear more about it.

But is that just a really quick.

Question I joined late so you might have addressed it on the call but.

The the monitoring revenue in the fourth quarter I saw was that slightly below what it was in the third quarter was it was it was it a timing issue or was it something else.

Tracy Clifford: Hey, Richard. Thanks for the question. No, the decrease in monitoring revenue in Q4 2025 compared to Q3 2025 was actually due to the positive impact of the non-recurring revenue recognition related to a policy that was made effective in Q3 2025, of recognizing first year monitoring revenue on any units that had been shipped and for which the first year monitoring had already been paid, but the unit had been outstanding for 24 months or longer and had not yet been installed. That there was an impact that would be non-recurring in Q3 2025.

Hey, Richard Thanks for the question.

The decrease in monitoring revenue ing in <unk> 25, compared to <unk> 25 was actually due to the positive impact of the nonrecurring revenue recognition related to the policy that was made effective in braking twenty-five recognizing first year monitoring revenue on any unit that had been shipped and for which the first year monitor.

<unk> had already been paid but the unit had been outstanding for 2024 months or longer and had not yet been installed. So that there was an impact that would be nonrecurring in the third quarter of 2025.

Operator: Okay.

Richard Sosa: Okay.

Okay.

Jan Loeb: The actual ongoing.

The actual.

Operator: That makes sense. The Q3 was much higher than it should have been, really, I guess. I guess it was a one-time benefit in the Q3.

Richard Sosa: That makes sense. The Q3 was much higher than it should have been, really, I guess. I guess it was a one-time benefit in the Q3.

The third quarter was much higher than it should have been really I guess I guess it was a one time benefit in the third quarter correct. That's correct.

Tracy Clifford: Correct. That's correct.

Operator: Okay, that makes sense. Thank you so much.

Richard Sosa: Okay, that makes sense. Thank you so much.

Okay that makes sense. Thank you so much.

Jan Loeb: On an ongoing basis, Richard, Q4 was above Q3 in monitoring revenue.

And then on an ongoing basis, Richard the fourth quarter was above the third quarter in monitoring revenue.

Operator: That's perfect. That's great to know. Thank you. That helps a lot.

Richard Sosa: That's perfect. That's great to know. Thank you. That helps a lot.

That's perfect that's great to know that they think that that helps a lot.

Yeah.

Rachel Smith: Our next question comes from Joel Sklar. Please go ahead with your question.

And our next question comes from Joel Sklar. Please go ahead with your question.

Operator: Our next question comes from Joel Sklar. Please go ahead with your question.

Joel Sklar: Yes. Hi, good morning, Jan, good morning, Tracy. Excited about the future for Acorn. Couple of questions. One, Jan, can you give us a little bit more flavor for the market receptivity to AIO, you know, obviously, you're, you know, you have one telecom customer who is the least interested in getting a, you know, a model in there and seeing how it works out. Can you give us a more, you know, I know it's still in the very early stages, but a more general flavor for the market receptivity to the product. The second one was anything new on demand response?

Yes, hi, good morning Jan.

Tracy.

Cited about the future corn couple of questions one.

So a little bit more flavor for the.

Market receptivity to our Oh why.

Obviously your you know you have one telecom customer who has the least interested in and getting a model.

Model and they're seeing how it works out but can you give us some more you know I I know, it's still in the very early stages, but are more general flavor for the market receptivity to that.

Product and then the second one was anything new on demand response.

Jan Loeb: Good morning, Joel. On AIO, it's just too early to tell about market receptivity because we haven't really gone out and shopped it or sold it. Obviously, you're right. One of our telecom customers has agreed to put up everything on their demos in the demo site, we've obviously talked to them about it. They're certainly interested in. I would think, and this goes kind of beyond, a little bit beyond your question. I would think any telecom tower company would be interested in the product. I'm not saying that they would buy it or, they would certainly be very interested in it. You have to recognize...

Okay.

Joe So I'm on.

A I O.

It's just too early to tell about market.

Receptivity, because we haven't really gone out and.

And and shopped. It is sold it obviously, you're right one of our telecom com customer.

Bruce.

<unk> has agreed to put up.

Oh everything out on their demos on AR and the demo site and so we've absolutely talk to them about it.

And so they're certainly interested in but I would think.

And this goes to kind of be out in a little bit beyond your question, but.

I would think.

The.

Any telecom tower company would be interested in the in the product I'm, not saying that they would buy it or.

But they would certainly be very interested in it.

You have to recognize and then that's it.

Jan Loeb: Then this also kind of goes to why we were interested in AIO and where we see the future going. Remember, AIO has put in over 110,000 sites with their equipment. They know what they're doing and their equipment really works. What's interesting about the equipment is, besides monitoring everything in a cell tower site, for example, whether it be locks, cameras, battery, HVAC, lots of stuff that are monitored that we don't monitor, we just monitor the generator. Obviously it's a very good fit for us. Their products, because it's so AI based, for example, depending on which is the cheapest form of energy at a any particular time, whether it's solar, battery, fuel, they can switch.

It's also kind of goes to why.

We were interested in a I O and where we see the future.

Going.

And remember I O has put in over 110000 sites.

With their equipment so and.

They know what they're doing and the and their equipment really works, but what's interesting about the equipment is.

Besides monitoring everything in a cell.

Our site for example, whether it'd be locks cameras.

Battery H back a lots of stuff that are monitored that we do monitor we just monitor the generator.

So obviously, it's a very good fit for us, but their products because its so AI based.

And for example.

Depending on which is the cheapest form of energy at any particular time, whether it's solar battery if you will.

They can switch they have the technology to switch the use is depending on the cheapest.

Jan Loeb: They have the technology to switch the uses depending on the cheapest source of power at that particular time. We think it's a big cost savings for the tower operators. Another thing we know is that security of a cell phone tower is pretty lackadaisical. I mean, they're in remote sites. With the price of copper where it is today, we think that security has to be hardened at cell tower sites. They have the number 1, at least what we believe to be the number 1 security system in place. Just if you think about it, because this is the way we think about it, you know, the industry is spending billions and hundreds of billions of dollars on AI.

The source of power at that particular time.

So we think it's a big it could turn into a big cost savings for the.

Tower operators another thing we know is that.

The security of it self cellphone tower is pretty lackadaisical I mean, they are in remote sites.

With the price of copper, where it is today, we think that.

Security has to be hardened that so at cell tower sites.

And so they have the number one at least what we believe to be the number one security system.

In place and then and then just if you think about it because it's the way we think about it.

No.

The industry is spending billions hundreds of billions of dollars on AI.

Jan Loeb: Based on reports that we've seen today, roughly 40% of AI is delivered through mobile apparatuses, which obviously need cell towers. You know, we think cell towers are going to be an important site and will continue to be a growing part of the infrastructure that's needed. We think we have, with AIO product, the best solutions for towers, we think there will be great receptivity once we have a proof of concept. We have one up and showing. We have the software that we can show people. We think it will be a very big item. Again, we're saying nothing for right now. Let's see what happens towards the second half of the year. Have I answered your question, Joel?

Based on reports that we've seen.

Today, roughly 40% of AI is delivered.

Through mobile apparatuses, which obviously need cell towers so.

We think cell towers.

Are going to be and are an important site and we will continue to be a growing.

Part of the infrastructure that's needed and we think we have with a io product the best solutions.

Solutions for towers, and so we think there'll be great receptivity. Once we have a proof of concept we have one up and showing we have the software that we can show people. So.

We think it'll be a very big item.

But again, we're saying nothing for right now.

Let's see what happens towards the second half of the year.

Have I answered your question Joe.

Joel Sklar: Yes. Thank you. I remember I also had on demand-

Yes. Thank you.

Joel Sklar: Yes. Thank you. I remember I also had on demand-

Okay.

Jan Loeb: Okay. On demand response, there's nothing new. We continue to have discussions with utilities that. As a matter of fact, we have one coming up in a week on their interest in demand response. The issue is how it gets structured. For example, this particular utility can only give demand response payments to their end customer by law. How do we work that Acorn gets the money that they deserve? The concept continues to be an important concept. The actual operations, you know, is unclear yet because it's too new as to how the money all flows. There's certainly a lot of interest, and we are in the midst of it.

Okay and on demand or on demand response, Theres nothing new we continue to have discussions with utilities that has been in fact, we have one coming up in a week.

On their interest in demand response, the issue is how.

It gets structured for example, this particular utility.

I can only give demand response payments to their end customer by law. So how do we work.

That.

Acorn.

It gets the money that they deserve so the the concept continues to be an important concept.

The actual operations.

Yeah. It was unclear yet because it's too new as to how the money all flows, but there's certainly a lot of interest and we are in the midst of it.

Joel Sklar: Okay, great. Can I have one quick follow-up on AIO, Jan?

Okay, Great can I have one quick follow up on Oh why Jan.

Jan Loeb: Sure.

Sure.

Joel Sklar: Okay, thanks. You have terms to share the monitoring revenue, and of course, we value that a lot more. It's ongoing. You know, recurring revenue is a great thing, like the razor blade model. From my understanding, and please correct me if I'm wrong, we're not gonna get any revenue from the hardware sales, even though it's gonna be branded OmniMetrix. I assume there are gonna be some costs associated with selling the hardware, including maybe commissions. Can you tell us a little bit more what went behind the thought that we would be sharing in the monitoring, but not directly in the hardware sales?

Okay. Thanks, Yeah. So the decision to you're going to beat you have terms to share.

The monitoring revenue and of course, we value that a lot more it's ongoing recurring revenue is a great thing.

Like the razorblade model, but the but from my understanding and please correct me, if I'm wrong, where we're not going to get any.

Revenue from the hardware sales, even though it's gonna be branded metrics.

And I assume youre going to be some costs associated with the hardware and maybe commissions.

So could you.

Tell us a little bit more what went behind the thought that we would be sharing in the monitoring but not directly in the hardware sales.

Jan Loeb: Let me correct you on that. No, we are definitely getting the hardware sale. We are getting the hardware sale. What we're doing is we're sharing in the monitoring. The way I look at it, you know, it's like a semi acquisition of the North American rights for AIO's product line. You know, we've given a relatively small upfront fee which requires them to do a bunch of things. For example, putting up a demo site and providing personnel, et cetera. We're sharing in the ongoing monitoring. I view that as kind of like an earnout.

So let me correct you on that no we are definitely getting the hardware sale.

We are getting the hardware sale.

And what we're doing is we're sharing in the monitoring so the way I look at it.

It's like.

Our semi acquisition.

Of the North American rights.

For a <unk> product line.

So.

You know we were given a relatively small upfront fee.

It requires them to do a bunch of things for example, putting up a demo site in providing personnel et cetera.

And then.

We are sharing in.

The ongoing monitoring so I view that as kind of like an earn out so small upfront acquisition fee and then an earn out in it.

Jan Loeb: A small upfront acquisition fee and then an earnout in terms of the ongoing monitoring fee is how I look at it and why I think it's such an interesting structure, and again, takes out a significant amount of risk for shareholders and leaves us with a significant amount of upside. You know, we're gonna go to market with a product in two different ways. You know, we'll have a CapEx model, we'll have an OpEx model. In all situations, we are getting paid for hardware. We're not in the freebie business.

In terms of the ongoing monitoring fee is how I look at it and why I think it's such an interesting structure.

And again it takes out a significant amount of risk for shareholders and leaves us with a significant amount of upside.

We're gonna go to market with a product in two different ways.

Hum.

You know, we will have a capex model with an Opex model.

But in all situations, we are getting paid for hardware.

We're not in the free business.

Joel Sklar: Okay, great. Wonderful. At the risk of being greedy, I'm gonna pose one more question. I saw a part of the announcement with AIO is the, you know, the right to get, I forget what technically is called, right of first refusal or something like... to their South America, Central America, you know, to business there. You know, you may wonder why am I asking about that when you're just getting your toe in the door with North America. The reason I ask, Sara, is I saw that AIO has some important existing customers, I think maybe even a cell tower company that has expansive operations in South America.

Great Wonderful and then at the risk of being greedy.

Probably just one more question.

So I thought part of the announcement with a L Y is the right too.

Forget what what technically is call not a writer first refusal some.

Cause their South America Central America, you know the business there.

And you know you may wonder why am I asking about that when you're just getting your your toe in the door with North America, because the reason I asked there as I sort of got a L. Y has some important existing customers I think maybe on the South tower company you've had has.

Expansive operations in South America.

Joel Sklar: If you could, so that may be some low-hanging fruit if that was something that you could execute and, you know, and get the rights to their South America business. I was just curious about that.

And if you could share.

So that may be some low hanging fruit.

If that was something that you could execute and you know and get the rights to their South South America business.

So I was just curious about that.

Jan Loeb: Yes. We built that into our contract because, as you say, there's some interesting opportunities in South America, but also we wanted. You know, we, so to speak, we didn't wanna have our flank with somebody else. You know, growing up, I played a lot of risk. I figured if we're having North America, I wanna have South America as well. It's a growing area, and it's easier for us to service South America than AIO from where they're located. It made sense and, you know, we negotiated for it, and we got it. We'll see what happens. Again, as you said, first let's get North America going the way we expect it to happen, and then we can see what happens with South and Latin America.

Yes, so we built that into our contract because.

As you say there are some interesting opportunities in South America, but also we wanted.

Yeah, so to speak.

Peak.

We didn't want to have our flank with somebody else. So.

You know growing up I played a lot of risk. So I figured if we're having north America I want to have South America.

As well, it's a growing area.

And it's easier for Us to service South America, then aio from where they are located.

So it made sense and.

We negotiated for it and we got it.

So we'll see what we'll see what happens, but again as you said first of all let's get North America going the way, we expect it to happen and then we can.

Let's see what happens with sat South and Latin America.

Joel Sklar: Okay. Great. Thank you, Jan.

Okay, great. Thank you Jan.

Rachel Smith: At this time, and showing no additional questions, I'd like to turn the floor back over to Jan Loeb for closing remarks.

And at this time in showing no additional questions I'd like to turn the floor back over to Jen Lowe for closing remarks.

Rachel Smith: At this time, and showing no additional questions, I'd like to turn the floor back over to Jan Loeb for closing remarks.

Jan Loeb: Thank you all for joining today's call. We appreciate the continued support from our shareholders. If you have any follow-up questions, please feel free to reach out to myself or our IR team, whose contact information is provided in today's press release. We look forward to updating you again on our Q1 call, upcoming. All the best.

Thank you all for joining today's call. We appreciate the continued support from our shareholders. If you have any follow up questions. Please feel free to reach out to myself or our IR team, whose contact information is provided in today's press release, we look forward to updating you again.

On our Q1 call upcoming.

All the best.

Rachel Smith: With that, everyone, we'll be concluding today's conference call and presentation. We do thank you for joining. You may now disconnect your lines.

And with that everyone will be concluding today's conference call and presentation. We do thank you for joining you may now disconnect your lines.

Rachel Smith: With that, everyone, we'll be concluding today's conference call and presentation. We do thank you for joining. You may now disconnect your lines.

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