ACORN ENERGY, INC. Leases Disclosure

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 and provides for conditional rent abatement for October and November 2025, as well as a tenant improvement allowance of up to $14,000 for qualifying alterations if completed by September 30, 2026. The Company concluded the amendment constitutes a modification event under ASC 842 and the Company reassessed and remeasured the lease. The Company remeasured the lease payments based on the updated lease term, incremental borrowing rate and adjusted the right of use asset and lease liability accordingly. The lease was determined to still represent an operating lease. The 6.0% discount rate used is the estimated incremental borrowing rate when the lease was entered into, which, as defined in ASC 842: Leases, is the rate of interest that a lessee would have had to pay to borrow, on a collateralized basis, over a similar term and in a similar economic environment, an amount equal to the lease payments. Operating lease cost, net of sublease, for the year ended December 31, 2025 and 2024 were $184,000 and $115,000, respectively.

 

 

Supplemental cash flow information related to leases consisted of the following (in thousands):

 

SCHEDULE OF SUPPLEMENTAL CASH FLOW INFORMATION RELATED TO LEASES

		For the year ended December 31,
		2025				2024
Cash paid for operating lease liabilities			118				129

 

Supplemental balance sheet information related to leases consisted of the following:

 

SCHEDULE OF SUPPLEMENTAL BALANCE SHEET INFORMATION RELATED TO LEASES

		As of December 31, 2025
Weighted average remaining lease terms for operating leases			4.92

 

The table below reconciles the undiscounted future minimum lease payments under non-cancelable lease agreements having initial terms of more than one year to the total operating lease liabilities recognized on the unaudited condensed consolidated balance sheet as of December 31, 2025 (in thousands):

 

SCHEDULE OF FUTURE MINIMUM LEASE PAYMENTS

		Year Ended December 31, 2025
2026		$	216
2027			239
2028			249
2029			258
2030			246
Total undiscounted cash flows			1,208
Less: Imputed interest			(166	)
Present value of operating lease liabilities(a)		$	1,042

 

(a)

Includes current portion of $158,000 for operating leases.

 

On July 6, 2021, the Company entered into an agreement with King Industrial Realty, Inc. to sublease from the Company 1,900 square feet of the Company’s 21,000 square feet office and production space in the Hamilton Mill Business Park located in Buford, Georgia. This sublease was amended on August 15, 2025 to extend the term through September 30, 2028 and to provide a monthly sublease payment of $3,374 (plus an annual escalator each year of 4%) which includes the base rent plus a pro-rata share of utilities, property taxes and insurance. Fifty percent of any excess rent received above the per square foot amount that the Company pays will be remitted to the Company’s landlord less the allocation of any shared expenses and leasehold improvements specific to the sublease. For the year ended December 31, 2025, after the offset of the investment in leasehold improvements and other expenses related to the sublease, the total amount paid to our landlord under the sublease was $8,295.

 

Below are the future gross payments expected to be received by the Company under the sublease:

 

SCHEDULE OF SUBLEASES

		Year ended December 31, 2025
2026			41
2027			42
2028			33
Total undiscounted cash flows		$	116