| Investment in Dsit Solutions, Ltd. ('DSIT') | NOTE 3—INVESTMENT IN DSIT SOLUTIONS,
LTD. (“DSIT”) On April 21, 2016 (the
“Closing Date”), 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 six and three month periods ended June 30, 2017 can be seen below:
Six months ending June 30, 2017 Three months ending June 30, 2017
Revenue $ 8,062 $ 4,001
Cost of sales 5,315 2,549
Gross profit 2,747 1,452
Research and development expenses, net 564 321
Selling, general and administrative expenses 1,921 968
Operating income 262 163
Finance expense, net (49 ) (57 )
Income before income taxes 213 106
Income tax expense (44 ) (23 )
Net income $ 169 $ 83
Acorn’s share of net income in DSIT $ 69 $ 33 Assets and liabilities
related to the operations of DSIT are as follows:
June 30, 2017 December 31, 2016
Current assets:
Cash and cash equivalents $ 2,215 $ 1,047
Restricted deposits 785 2,648
Accounts receivable, net 3,322 2,825
Unbilled revenue 4,561 4,918
Inventory 424 481
Other current assets 957 795
Total current assets 12,264 12,714
Property and equipment, net 604 569
Severance assets 4,523 3,915
Restricted deposits 45 646
Due from Acorn 1,429 1,171
Other assets 325 339
Total assets $ 19,190 $ 19,354
Current liabilities:
Short-term bank credit and current maturities of long-term bank debt $ — $ 1,239
Accounts payable 1,238 1,461
Accrued payroll, payroll taxes and social benefits 1,345 1,142
Deferred revenue 1,658 431
Other current liabilities 1,561 2,736
Total current liabilities 5,802 7,009
Accrued severance 6,182 5,374
Other non-current liabilities 77 9
Total liabilities $ 12,061 $ 12,392 The Due from Acorn balance
at June 30, 2017 includes a loan of $340 from DSIT and unreimbursed expenses of $827, 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 $262 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 and six month periods ending
June 30, 2016 can be seen below:
January 1, 2016 to the Closing Date April 1, 2016 to the Closing Date
Revenue $ 5,074 $ 1,154
Cost of sales 3,443 729
Gross profit 1,631 425
Research and development expenses, net 469 181
Selling, general and administrative expenses 1,063 206
Operating income 99 38
Finance expense, net (39 ) (13 )
Income before income taxes 60 25
Income tax expense (19 ) (10 )
Net income 41 15
Net income attributable to non-controlling interests (9 ) (3 )
Net income attributable to Acorn Energy Inc. $ 32 $ 12 |
