| Investment in Dsit Solutions, Ltd. ('DSIT') | NOTE 3—INVESTMENT IN DSIT SOLUTIONS,
LTD. (“DSIT”) On April 21, 2016, the
Company closed on a transaction (the “DSIT Transaction”) for the sale of a portion of its interests DSIT Solutions,
Ltd. business to Rafael Advanced Defense Systems Ltd., a major Israeli defense company. As a result of the DSIT Transaction, the
Company’s holdings in DSIT were reduced from 78.7% to 41.2%, and subsequent to the DSIT Transaction, the Company has limited
representation on the DSIT Board of directors. Accordingly, the Company no longer consolidates the results of DSIT, but rather
accounts for its investment in DSIT under the equity method. DSIT’s results and the Company’s share of its net income
for the three months ended March 31, 2017 can be seen below:
Three months ending March 31, 2017
Revenue $ 4,061
Cost of sales 2,766
Gross profit 1,295
Research and development expenses, net 243
Selling, general and administrative expenses 953
Operating income 99
Finance income, net 8
Income before income taxes 107
Income tax expense (21 )
Net income $ 86
Acorn’s share of net income in DSIT $ 36 Assets and liabilities
related to the operations of DSIT are as follows:
March 31, 2017 December 31, 2016
Current assets:
Cash and cash equivalents $ 3,484 $ 1,047
Restricted deposits 984 2,648
Accounts receivable, net 2,172 2,825
Unbilled revenue 4,043 4,918
Inventory 386 481
Other current assets 938 795
Total current assets 12,007 12,714
Property and equipment, net 609 569
Severance assets 4,256 3,915
Restricted deposits 65 646
Due from Acorn 1,241 1,171
Other assets 287 339
Total assets $ 18,465 $ 19,354
Current liabilities:
Short-term bank credit and current maturities of long-term bank debt $ 546 $ 1,239
Accounts payable 1,201 1,461
Accrued payroll, payroll taxes and social benefits 1,261 1,142
Deferred revenue 361 431
Other current liabilities 2,223 2,736
Total current liabilities 5,592 7,009
Accrued severance 5,810 5,374
Other non-current liabilities 16 9
Total liabilities $ 11,418 $ 12,392 The Due from Acorn balance
at March 31, 2017 is comprised of a loan of $340 from DSIT and unreimbursed expenses of $672, both of which accrue interest at
3.15% per annum. Such balances are due the earlier of April 30, 2018 or the sale of Acorn’s remaining shares in DSIT. In
addition to the above balances, the Due from Acorn balance also includes $229 with respect to provisions for severance and vacation
for the Company’s CFO who is an employee of DSIT. DSIT’s results that
were included in the Company’s Condensed Consolidated Statements of Operations in the three month period ending March 31,
2016 can be seen below:
Three months ending March 31, 2016
Revenue $ 3,920
Cost of sales 2,714
Gross profit 1,206
Research and development expenses, net 288
Selling, general and administrative expenses 857
Operating income 61
Finance expense, net (14 )
Income before income taxes 47
Income tax expense (8 )
Net income 39
Net income attributable to non-controlling interests (6 )
Net income attributable to Acorn Energy Inc. $ 33 |
