The Digital Energy Company   October 2012We Make Energy Better
Safe Harbor Statement          Certain of the matters discussed in this presentation contains statements that are forward-...
The Digital Energy Company● Why should you own ACFN today?  ●   Strong history of creating shareholder value  ●   Strong b...
Growth Story   Accelerating the digital oilfield revolution                             Enabling a self-healing, self-bala...
Proven Track Record- $20 M raised to create $150M Value September 2005                     2007               August 2011 ...
Evolution Of Oil Well Technology          Confidential   6
History and Future of Seismic Evolution from 2D to 4D Seismic          Confidential   7
The Biggest Problem Facing the O&G Industry Today           Cost to replace each barrel of oil produced is up 350%        ...
Value Proposition         Replace This…                                              With This       Electronic-based Sens...
How It Works                                  Laser LightOptical InterrogationUnit            Downhole FO            Geoph...
Proven Fiber Optic Technology• LWWAA is the largest fiber optic sensor system in production, valued at more than $450mm•US...
USSI Fiber Optic Geophone vs. Conventional Geophone●    Side-by-Side Comparison                                           ...
Competitive Advantage                                       US DOE Lawrence Berkeley National Laboratory (LBNL) Richmond F...
USSI Annual Potential Market (Seismic Equipment)                                                                      1,00...
What is Hydrofrac Monitoring?         Confidential   15
The DOE believes in 100% micro-seismic monitoring                                                         Secretary of Ene...
USSI – Halliburton Joint Field Test: July 2012Multi-day test in New Iberia, Louisiana to compare and contrast data collect...
E&P Companies Need to Improve their NPV               Confidential   18
Stark Difference Between a Good Well and a Poor One                      Confidential   19
Key is Correct Understanding of the Subsurface                     Confidential   20
Small Increase in Well Productivity Yields Huge Returns Upfront Investment: $300,000 to survey before fraccing Estimated s...
Fiber optic geophones for microseismicMarket Drivers                             Highlights                              F...
Sensing technologies to detect and alert                                                                        security t...
Cost-effective sensors for transformers and power                                                                         ...
Transformer Asset WallAnalysis of transformer failures byHartford Steam Boiler Inspection &Insurance Co., 2012:…Not yet se...
Remote monitoring solutions for back-power                                                                         as well...
The Digital Energy Company● Why should you own ACFN today?  ●   Strong history of creating shareholder value  ●   Strong b...
Balance Sheet                                                                                                             ...
Income Statement                                                                                                          ...
Statement of Cash Flows                                                                                                   ...
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MicroCapClub Company Presentation: Acorn Energy (ACFN)

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Acorn Energy, Inc (ACFN), the digital energy company is a holding company focused on making energy better by providing digital solutions for energy infrastructure asset management. The four businesses in which we have controlling interests, improve the world's energy infrastructure by making it: more secure - providing security solutions for underwater energy infrastructure (DSIT); more reliable - providing condition-based monitoring to critical assets on the electric grid (GridSense, OmniMetrix) and more productive and efficient - increasing oil and gas production while lowering costs through use of permanent ultra-high sensitive seismic tools that allow for a more precise picture of reservoirs (US Seismic).

This is the first ever MicroCapClub company presentation featuring Acorn Energy (ACFN). Investors Neil Cataldi and DavidS join me while we listen and provide feedback to John Moore CEO of Acorn Energy. We hope you enjoy this medium, and we look forward to doing more interactive company presentations in the future with companies we find interesting.

Disclosures: ACFN is a sponsor of MicroCapClub. Ian Cassel, Neil Cataldi, and DavidS do not own shares of ACFN.

The MicroCapClub (mc2) is an exclusive micro cap forum focused on micro cap companies (sub $300m market cap). The MicroCapClub was created and founded by Ian Cassel as a way to share ideas and to learn from other seasoned like-minded micro cap investors. Our goal at MicroCapClub.com is quality membership and quality stock ideas. If you are an experienced micro cap investor, feel free to Apply today.

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MicroCapClub Company Presentation: Acorn Energy (ACFN)

  1. 1. The Digital Energy Company October 2012We Make Energy Better
  2. 2. Safe Harbor Statement Certain of the matters discussed in this presentation contains statements that are forward-looking, suchas statements relating to results of operations, financial condition, business development activities and marketdynamics. Such forward-looking information involves important risks and uncertainties that could significantly affectanticipated results in the future and, accordingly, such results may differ materially from those expressed in anyforward-looking statements made on or behalf of Acorn Energy. All statements other than statements of historical fact in this presentation regarding Acorn Energy’sfuture performance, revenues, margins, market share and any future events or prospects are forward-lookingstatements. For more information regarding risks and uncertainties that could affect Acorn Energy’s results ofoperations or financial condition review Acorn Energy’s filings with the Securities and Exchange Commission (inparticular, it’s most recently filed Form 10-K and Form 10-Q). Acorn Energy’s forward-looking statements are not guarantees of future performance and the actualresults or developments may differ materially from the expectations expressed in the forward-looking statements.As for the forward-looking statements that relate to future financial results and other projections, actual results willbe different due to the inherent uncertainties of estimates, forecasts and projections and may be better or worsethan projected and such differences could be material. Acorn Energy undertakes no obligation to update or revise any forward-looking statements, whether as aresult of new information, future events or otherwise. Confidential 2
  3. 3. The Digital Energy Company● Why should you own ACFN today? ● Strong history of creating shareholder value ● Strong balance sheet and dividend ● Big vision of transforming the oil and gas industry and electric grid ● Cleaner ● Safer ● More reliable ● Cheaper● We are pioneering the Enercosm….….the coming world of networked energy that resembles biological systems. This new erawill be driven by economies of connection – the benefits provided by vast networks ofinexpensive sensors connected to operations centers via wireless communication butmaking decisions locally. The Enercosm will change our energy systems from batch to real-time and will yield huge productivity gains for our society and outsized returns forinvestors who understand its importance. Confidential 3
  4. 4. Growth Story Accelerating the digital oilfield revolution Enabling a self-healing, self-balancing grid Securing the world’s energy assets 24/7 monitoring of power generation infrastructure• Grow 2011 revenues 5x by 2014 • 4 strong businesses• Majority controlled platform investments (energy, security) • Great customer interest• Growth capital to accelerate organic development of existing businesses •Management we know and feel comfortable with• Opportunistic M&A Confidential 4
  5. 5. Proven Track Record- $20 M raised to create $150M Value September 2005 2007 August 2011 • JAM and other • April COMV IPO @ • Sell CoaLogix for investors initiate 13D $250MM Valuation $101 MM • $10MM Market Cap • December Secondary • 5x Trailing Revenue @ $600MM Valuation • March 2006 JAM ACFN nets $50MM • ACFN nets $61 MM appointed CEO • Buy CoaLogix for $9.7 MM Confidential 5
  6. 6. Evolution Of Oil Well Technology Confidential 6
  7. 7. History and Future of Seismic Evolution from 2D to 4D Seismic Confidential 7
  8. 8. The Biggest Problem Facing the O&G Industry Today Cost to replace each barrel of oil produced is up 350% Confidential 8
  9. 9. Value Proposition Replace This… With This Electronic-based Sensors Optical Fiber Sensor• USSI Replaces Bulky, Expensive, Unreliable Electronic Sensors with Fiber Sensors• No copper wire, electronics, or electrical power at the sensor• Sensors are inherently safe – no sparks or heat generated• Sensor data can be transmitted for miles without any performance degradation Confidential 9
  10. 10. How It Works Laser LightOptical InterrogationUnit Downhole FO Geophone Array Confidential 10
  11. 11. Proven Fiber Optic Technology• LWWAA is the largest fiber optic sensor system in production, valued at more than $450mm•USSI CEO (Jim Andersen) started and led Litton’s (now NG) fiber optic strategic business unit• Key members of the LWWAA team have migrated over to USSI• USSI has commercialized the technology which has resulted in improved reliability and lower cost•USSI has its own IP•USSI licensed NG technology Confidential 11
  12. 12. USSI Fiber Optic Geophone vs. Conventional Geophone● Side-by-Side Comparison USSI Geophone • USSI’s 3-Axis Fiber Optic Geophone vs. Conventional 3- Electronic Axis Geophone Geophone • Both at approximately 300 ft well depth Well Head • USSI’s product demonstrated superior performance under actual oilfield conditions New Iberia - LO Fayetteville - AK Devine - TX Confidential 12
  13. 13. Competitive Advantage US DOE Lawrence Berkeley National Laboratory (LBNL) Richmond Field test site USSI fiber optic accelerometer frequency response is more than 300x standard seismic geophone10,000.0 1,000.0Scale factor (Volts/g) 100.0 Fiber optic accelerometer Geospace OMNI- 2400 geophone 10.0 1.0 0.1 1 10 100 1,000 Frequency (Hz) Confidential 13
  14. 14. USSI Annual Potential Market (Seismic Equipment) 1,000 1,000 In Million USD 800 600 400 300 200 200 150 0 VSP Ocean Bottom Seismic Streamers Microseismic Cables Confidential 14
  15. 15. What is Hydrofrac Monitoring? Confidential 15
  16. 16. The DOE believes in 100% micro-seismic monitoring Secretary of Energy Advisory Board Natural Gas Subcommittee Shale Gas Production Second Ninety Day Report November 18, 2011Annex C – Subcommittee Recommendations10. Adopt best practices in well development and construction, especially casing,cementing, and pressure management. Pressure testing of cemented casing and state-of-the-art cement bond logs should be used to confirm formation isolation.Microseismic surveys should be carried out to assure that hydraulic fracture growth islimited to the gas producing formations. Regulations and inspections are needed toconfirm that operators have taken prompt action to repair defective cementing jobs.The regulation of shale gas development should include inspections at safety-criticalstages of well construction and hydraulic fracturing.11. Additional field studies on possible methane leakage from shale gas wells to waterreservoirs. Confidential 16
  17. 17. USSI – Halliburton Joint Field Test: July 2012Multi-day test in New Iberia, Louisiana to compare and contrast data collected from USSI’s fiber optic sensorsystem with Halliburton’s proprietary DAS system and conventional down-hole geophone system. Dataanalysis in process with final results pending. Confidential 17
  18. 18. E&P Companies Need to Improve their NPV Confidential 18
  19. 19. Stark Difference Between a Good Well and a Poor One Confidential 19
  20. 20. Key is Correct Understanding of the Subsurface Confidential 20
  21. 21. Small Increase in Well Productivity Yields Huge Returns Upfront Investment: $300,000 to survey before fraccing Estimated savings by eliminating 30% unproductive frac stages= $7,000,000 To Improve Yields: $400,000 per well x 8 = $3,200,000 Results: - $33M @ 10% improvement - $65M @ 20% improvement - $100M @30% improvement Confidential 21
  22. 22. Fiber optic geophones for microseismicMarket Drivers Highlights Financial Snapshot• 4-D mapping • Congressional Subcommittee • $1.3M Rev in 2011• Need for more sensitive, • Shipped world’s largest more rugged, cheaper sensors down-hole optical array • $1.9M in backlog• STEP-change (June ’12) • Implementing efficiency • Shipped all optical marine improvements• Address environmental concerns and productivity seismic array (June ‘12) • 85% ownership* needs of the fracking industry • NG license for interrogator • 7 demos to date $1Bn+ TAM • 20,000 wells fractured in 2010 (less than 3% use micro-seismic) • $700K per well* Fully-diluted stake Confidential 22
  23. 23. Sensing technologies to detect and alert security teams to the presence of U-W threats to critical energy infrastructureMarket Drivers Highlights Financial Snapshot• Emerging market economy • 70% Global Market Share; 5 • $10.5M Rev in 2011 heavily reliant on port and Reference Clients energy infrastructure • $9.5M in backlog as @ Q2’12 • BIRD funding for world’s first• Global insecurity on the passive/active sonar system • 35% Gross Margin in 2011 rise/growing awareness of • Selected for strategic tunnel • 84% Ownership Stake underwater threats• Credibility of Israeli detection project technology $3.5 B+ TAM • 3,500 water-based energy terminals at $1M per terminal Confidential 23
  24. 24. Cost-effective sensors for transformers and power lines (easy retrofit) to help utilities improve electric gridMarket Drivers Highlights Financial Snapshot• Aging transformer fleet • Partnership with CA utility to • $7.1M Rev in 2011• Need for digital age reliability measure PV’s effect on grid • 2 utilities use LineIQ to • 47% Gross Margin in 2011• Power quality issues related monitor substations to renewable power and • 100% ownership* electric cars • Recruited Alain Steven to the• Availability of communication board and sensor technology for • Testing web-based platform real-time condition for 24/7 access to sensors monitoring $1B+ TAM • 1M large and medium transformers • Less than 2% of transformers being monitored (1-2 000 per unit)* 16% phantom option plan Confidential 24
  25. 25. Transformer Asset WallAnalysis of transformer failures byHartford Steam Boiler Inspection &Insurance Co., 2012:…Not yet seen an alarming increasein end of life failures, such a risemust be expected eventually……Most difficult task for the utilityengineer is predict future reliabilityof transformer fleet, and replaceeach one the day before it fails……Meeting growing demand of gridand at same time maintain systemreliability with aging fleet willrequire significant changes in theway utility operates and cares for itstransformers… Peak estimated: next 5-10 years Confidential 25
  26. 26. Remote monitoring solutions for back-power as well as pipelinesMarket Drivers Highlights Financial Snapshot• Aging grid • Business model innovation • $3.0M Rev in 2011• Need for uninterrupted • 4G radio implementation power • 70% gross margin • Recruited sales force• Regulatory requirements • Converting consignment • 100% ownership*• Availability of communication units to subscription and sensor technology for real-time condition monitoring $1B+ TAM • Over 2M permanently-installed generators (50% residential, 50% C&I) • Less than 2% of generators being monitored • Less than 2% of households have generator* Pre- management option pool Confidential 26
  27. 27. The Digital Energy Company● Why should you own ACFN today? ● Strong history of creating shareholder value ● Strong balance sheet and dividend ● Big vision of transforming the oil and gas industry and electric grid ● Cleaner ● Safer ● More reliable ● Cheaper Confidential 27
  28. 28. Balance Sheet As of LIABILITIES AND EQUITY As of December 31, ASSETS As of December 31, As of December 31, December 31, 2011 2010 2011 2010 Current liabilities:Current assets: Short-term bank credit and current maturities of 677 1,308Cash and cash equivalents 34,280 6,549 long-term bank debtShort-term deposits 18,000 Accounts payable 2,052 2,578Restricted deposit 2,223 1,317 Accrued payroll, payroll taxes and social benefits 1,907 1,531Funds held in escrow 5,961 - Other current liabilities 7,420 3,428Accounts receivable 4,965 5,273 Current liabilities of discontinued operations - 4,372Unbilled revenue 3,778 3,806 Total current liabilities 12,056 13,217Inventory 2,144 1,114 Long-term liabilities:Other current assets 922 333 Accrued severance 3,837 3,715Discontinued operations - 9,424 Long-term debt 141 302 Total current assets 72,273 27,816 Other long-term liabilities 204 240Property and equipment, net 635 490 Discontinued operations - 434Severance assets 2,620 2,498 Total long-term liabilities 4,182 4,691Restricted deposit 271 85 Equity:Intangible assets, net 4,780 5,339 Common stock - $0.01 par value per share:Goodwill 4,637 4,679 Authorized – 30,000,000 shares; Issued – 183 180Deferred taxes 440 302 18,067,925 and 18,318,863 shares at December 31, 2010 and September 30, 2011Other assets 149 378 Additional paid-in capital 84,614 83,596Discontinued Operations - 18,198 Warrants 427 427 Accumulated deficit -13,022 -48,431Total assets $85,805 $59,785 Treasury stock, at cost – 801,920 shares at -3,036 -3,036 December 31, 2010 and September 30, 2011 Accumulated other comprehensive income 485 637 Total Acorn Energy shareholders’ equity 69,651 33,373 Non-controlling interests -84 8,504 Total equity 69,567 41,877 Total liabilities and equity $85,805 $59,785 Confidential 28
  29. 29. Income Statement Year End December 31, 2011 2010Revenues: Projects 11,368 11,235 Smart grid distribution products and services 7,119 2,382 Other 441 441 Total revenues 18,928 14,244Cost of sales: Projects 7,886 6,646 Smart grid distribution products and services 3,792 1,210 Other 337 344 Total cost of sales 12,015 8,200Gross profit 6,913 6,044Operating expenses: Research and development expenses, net of credits 2,995 965 Selling, general and administrative expenses 11,952 10,440 Total operating expenses 14,947 12,571Operating loss -8,034 -6,527Finance expense, net -26 -224Gain on investment in GridSense - 1,327Distribution from EnerTech - 135Gain on sale of HangXing 492 -Loss before taxes on income -7,568 -7,110 Income tax benefit (expense) 12,767 -671Net income (loss) from continuing operations 5,199 -7,781Loss from discontinued operations -1,948 -17,969Gain on the sale of discontinued operations, net of income taxes 31,069 -Non-controlling interest share of loss from discontinued operations 540 67Net income (loss) attributable to Acorn Energy 34,860 -25,683 Net loss attributable to non-controlling interests 549 595Net loss attributable to Acorn Energy Inc. 35,409 -25,088 Diluted loss per share attributable to Acorn Energy, Inc. shareholders: From continuing operations 0.33 -0.48 From discontinued operations 1.70 -1.20Net income (loss) per share attributable to Acorn Energy, Inc. shareholders 1.99 -1.68Weighted average number of shares outstanding attributable to Acorn Energy Inc. – basic and diluted 17,743 14,910 Confidential 29
  30. 30. Statement of Cash Flows Year Ended December 31, 2011 2010Cash flows used in operating activities: Net income (loss) before non-controlling interests 34,320 -25,750 Less net loss from discontinued operations -29,121 17,969 Net income (loss) from continuing operations 5,199 -7,781 Adjustments to reconcile net loss to net cash used in operating activities (see Schedule A) --13,038 -1,527 Net cash used in operating activities – continuing operations -7,839 -6,254Cash flows provided by (used in) investing activities: Investment in Enertech - -900 Restricted Deposits -1,930 -1,301 Release of restricted deposits 839 1,029 Loan to GridSense prior to acquisition - -200 Advances from CoaLogix prior to sale -278 - Proceeds from the sale of CoaLogix net of CoaLogix cash 62,117 - Escrow deposits from CoaLogix sale -6,308 - Proceeds from the sale of HangXing 492 - Amounts funded for severance assets -315 -281 Acquisitions of property and equipment -502 -237 Acquisition of USSI, net of cash acquired - 7 Acquisition of GridSense, net of cash acquired - (1,352) Acquisition of OMI - - Net cash provided by (used in) investing activities- continuing operations 36,562 -2,336Cash flows provided by (used in) financing activities: Proceeds from capital raises, net of transaction costs - 15,176 Issuance of shares to non-controlling interests in consolidated subsidiary - 3,010 Exercise of options and warrants 194 Short-term debt borrowings (repayments), net -557 962 Proceeds from borrowings of long-term debt 68 - Repayments of long-term debt -342 127 Other 31 -140 Net cash provided by financing activities – continuing operations -1,203 19,419Discontinued operations: Operating cash flows -2,020 -8,536 Investing cash flows -187 -7,051 Finance Cash Flows 1,683 479 Net cash used in discontinued operations -524 -15,108Effect of exchange rate changes on cash and cash equivalents -72 273Effect of exchange rate changes on cash and cash equivalents of discontinued operations - 154 Net increase (decrease) in cash and cash equivalents 26,924 -3,852Cash and cash equivalents at beginning of period 6,549 8,033Cash and cash equivalents at held by continuing operations at end of year 34,280 6,549 Confidential 30

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