BASIS OF PRESENTATION

The accompanying unaudited condensed consolidated financial statements of Acorn Energy, Inc. and its subsidiaries (the “Company”) have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and with the instructions to Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete consolidated financial statements. In the opinion of management, all adjustments considered necessary for a fair presentation have been included. Operating results for the three month period ended March 31, 2013 are not necessarily indicative of the results that may be expected for the year ending December 31, 2013.

All dollar amounts in the notes to the condensed consolidated financial statements are in thousands except for per share data.

Certain reclassifications have been made to the Company's condensed consolidated financial statements for the three month period ended March 31, 2012 to conform to the current period's condensed consolidated financial statement presentation. These unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and footnotes thereto included in the Company's Annual Report on Form 10-K for the year ended December 31, 2012.

As reported in the Company's Form 10-K report for the year ended December 31, 2012, results have been corrected for those previously reported for the first, second and third quarters of 2012 following further analysis of the recognition of certain revenues and costs of OmniMetrix. Revenues and costs of sales have been restated for each of those quarters, as noted below, to recognize such hardware revenues and cost of sales in accordance with the accounting for multiple elements and recognizing those revenues and costs over expected customer life rather than at the delivery of the monitoring unit.

The effect of the restatement on the Company's net loss and basic and diluted loss per share for the three-month periods ended on each of March 31, June 30, and September 30, 2012, the six month period ended June 30, 2012 and the nine month period ended September 30, 2012 are shown below:



	Three months ended			Six months ended			Three months ended			Nine months ended			Three months ended
	March 31, 2012			June 30, 2012						September 30, 2012
Net loss attributable to Acorn Energy, Inc. shareholders - as reported	$	(4,178	)	$	(7,290	)	$	(3,112	)	$	(11,040	)	$	(3,750	)
Net effect of restatement	(11		)	(103		)	(92		)	(288		)	(185		)
Net loss attributable to Acorn Energy, Inc. shareholders - restated	$	(4,189	)	$	(7,393	)	$	(3,204	)	$	(11,328	)	$	(3,935	)

Basic and diluted net loss per share attributable to Acorn Energy, Inc. shareholders - as reported	$	(0.24	)	$	(0.41	)	$	(0.17	)	$	(0.62	)	$	(0.21	)
Net effect of restatement	—			(0.01		)	(0.01		)	(0.01		)	(0.01		)
Basic and diluted net loss per share attributable to Acorn Energy, Inc. shareholders - restated	$	(0.24	)	$	(0.42	)	$	(0.18	)	$	(0.63	)	$	(0.22	)