Michael Barth - Chief Financial Officer Jan Loeb - President and Chief Executive Officer Walter Czarnecki - President and Chief Executive Officer, OmniMetrix

Good day, everyone. Thank you for holding and welcome to the Acorn Energy First Quarter 2017 Financial Results Conference Call. [Operator Instructions] Please also note today’s event is being recorded. At this time, I would like to hand the conference over to Michael Barth, CFO of Acorn Energy. Please go ahead.

Thank you. Welcome everyone to Acorn Energy’s first quarter 2017 conference call. Joining me to discuss the results today are Jan Loeb, Acorn’s President and CEO and Walter Czarnecki, President and CEO of OmniMetrix. Following our remarks, we will open up the call for your questions. As a reminder, many of the statements made in today’s prepared remarks or in response to your questions are forward-looking. These statements are subject to various risks and uncertainties. For example, the performance of our businesses in 2017 and future years is subject to factors such as access to sufficient working capital, risks associated with executing our operating strategy, meeting performance milestones, risks associated with conducting business with government customers, possible cost overruns on fixed-price projects, and success in driving growth in the company’s core business. Such forward-looking statements are based on management’s beliefs as well as assumptions based upon information currently available to management, pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. There is no assurance that Acorn, or its operating companies, will be able to achieve their goals for growth in 2017 and future years. The company also undertakes no obligation to disclose any revision to these forward-looking statements to reflect events or circumstances after the date made. A complete discussion of the risks and uncertainties, which may affect Acorn Energy and their businesses, is included in the risk factors and the company’s Form 10-K filed by the company with the Securities and Exchange Commission. And with that, I will hand the call over to Jan Loeb. Jan?

Thank you, Michael and thank you all for joining today’s call. This is an exciting time for us at Acorn and we are pleased to share with you some important highlights of the first quarter of 2017 and how we see the company moving forward. Mike will then review our first quarter financial results and we will hear a few words from Walter Czarnecki before opening the call to your questions. During the first quarter, we continued to focus on scaling our remote monitoring and control business, OmniMetrix and taking strategic steps to provide needed funding. We are excited to see OmniMetrix achieve significant growth and improved bottom line performance in the first quarter with 30% revenue growth and gross margin increasing to 56% in the first quarter of this year versus 51% in the year ago period. Acorn also made noteworthy progress in reducing operating cost at the corporate level and we expect to see stabilized cost levels in the following quarters. Our strategic initiatives have enabled us to deliver improved cash flow from operations at OmniMetrix and at the corporate level and improved overall bottom line performance versus the same period in 2016. Moving forward, we will remain focused on scaling our monitoring business, which ties into core trends, seeking to leverage Internet of Things technology to manage and protect high-value industrial assets while also lowering maintenance costs. OmniMetrix is beta-testing a new product design for power generation monitoring, which is expected to be more effective and efficient and support continued revenue and gross profit growth. We will continue our efforts to grow this business organically as well as seeking and evaluating potential acquisition targets to accelerate growth in monitoring or other areas where we can identify similar strong business models with the potential to enhance shareholder value. We are proud of the accomplishments we have made to-date and are focused on extending this success in the following quarters. We still own 41.2% of DSIT after selling nearly half of our holdings last year. And we are seeking to monetize our remaining interest in order to enhance our financial position. Ongoing dialogues are in the early stages. DSIT’s first quarter 2017 revenue growth was 4% over the first quarter of 2016 to $4.1 million. The increase was primarily due to revenue related to DSIT’s $7.1 million order for Blackfish Hull Mounted Sonar systems received in June of 2016. In addition to growth of DSIT and OmniMetrix, Acorn was successful in securing $1.9 million in loan commitments from our Board of Directors, of which Michael will provide some details. With that, I will hand the call back to Michael to review our first quarter financials. Michael?

Thank you, Jan. In April 2016, Acorn sold nearly 50% of its interest in DSIT Solutions to Rafael Advanced Defense Systems. Following the sale, Acorn no longer consolidates the results of DSIT but reports its investment in proportionate share of income using the equity method. As such, Acorn’s consolidated financial results are not directly comparable to prior year periods, but business unit discussions do provide meaningful year-over-year comparisons. Reflecting these factors, Acorn’s 2017 first quarter revenue decreased to $1.1 million compared to $4.8 million reported in the first quarter of 2016, when DSIT had contributed $3.9 million to our consolidated revenue. Selling, general and administrative expenses declined to $859,000 in the first quarter of 2017 from $2.6 million in the first quarter of 2016. These reductions reflect the impact of the deconsolidation of DSIT as well as corporate cost deductions. Corporate general and administrative expenses declined 88% to $141,000 in the first quarter of 2017 from $1.2 million in the first quarter of 2016. The decrease relates to approximately $460,000 of severance and related cost associated with the resignation of our former CEO recorded in the first quarter of 2016 as well as reduced professional fees and salaries. In addition, in the first quarter of 2017, we reached a settlement with professional service provider on an outstanding invoice resulting in a benefit of $167,000. Non-cash stock compensation also decreased from $220,000 in the first quarter of 2016 to $13,000 in the first quarter of 2017. We continue to seek ways to achieve greater operating efficiencies and expect our future quarter’s corporate, general and administrative expense to approximate first quarter 2017 expense without the benefit of the previously mentioned settlement. For the first quarter of 2017, Acorn reported a net loss attributable to shareholders of $220,000 or $0.01 per share compared…

Thank you, Michael. OmniMetrix continued to see growth in both of our divisions in the first quarter, which our customers tell us, is a function of the superior customer experience we provide to them. We are particularly excited about the opportunities we see in our corrosion protection division and we are seeing positive results of the strategy we put in place 2 years ago. In 2017, we continued to develop new products and new product designs that add and improve features and functionality relevant to our customers. We continue to explore and add new product applications as we have done over the past 3 years. We remain enthusiastic about the emerging Internet of Things macro trend as both our power generation and corrosion protection divisions play important roles in connecting critical assets in the industrial and oil and gas sectors. Thank you as always for your continued interest in OmniMetrix. And with that, operator, let’s please open the call to questions.

Thank you all for your interest in Acorn. I continue to believe that Acorn is an attractive platform for building shareholder value. Clearly, there is more work ahead. I am grateful for the support of our shareholders. To that end, I am happy to speak with shareholders and potential investors that would like to get to know the company, our management and our goals. Please contact our Investor Relations team listed on today’s press release with any questions you may have or to coordinate a call. Thank you again for your time today. And with that, operator, we can end today’s call. Thank you.

Ladies and gentlemen, that does conclude today’s conference call. We do thank you for attending. You may now disconnect your lines.