SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
SCHEDULE
14A
(RULE
14a-101)
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EXPLANATORY
NOTE
The
following definitive materials are filed herewith related to the Registrant’s
Annual Meeting to be held on June 10, 2010:
·
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Notice
and Access Card (mailed to beneficial owners by
Broadridge)
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·
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CEO’s
Letter to Stockholders and Corporate Information Page (included in “10-K
Wrap” Annual Report provided or made available to stockholders entitled to
notice of the Annual Meeting)
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4 West
Rockland Road, 1st Floor, Montchanin, Delaware 19710
Phone: (302)
656-1708 Fax: (302) 656-1703
Dear
Friends and Fellow Shareholders:
To date,
Information Technology has transformed every aspect of American life except our
two biggest expenditures--health care and energy. We communicate
differently than we did twenty years ago, we learn differently, we access
entertainment differently -- we even socialize differently. Yet,
while technology itself has impacted the energy and health fields, Information
Technology specifically has barely dented them. These two sectors of
the economy suffer from tremendous inefficiencies. When Information
Technology collides with the healthcare and energy industries, we predict this
will unleash tremendous prosperity both for our society and for those investors
who have positioned themselves for the coming change.
This
isn’t the place to discuss health care, but the realm of energy is our
bailiwick, so I’ll share a few thoughts.
The
Enercosm is the coming world of networked energy. Surprisingly, the
number one use of energy is not our end use as consumers
but the extraction, refining, and distribution of energy itself. The
production of energy is incredibly inefficient. In the past hundred
years, those who produce and distribute most of our energy – oil companies, coal
companies and utilities – have relied on and benefitted from economies of
scale. That era, however, is drawing to a close. What’s
next? An era where Information Technology unleashes economies of
connection, causing
continuing deflation in the real cost of energy even as we factor in the cost of
externalities like emissions controls and security.
Acorn
Energy has positioned itself to promulgate and benefit from the coming
transformation of the Enercosm. In 2009, as the energy industry just
began to tip into the new economy, our unique focus enabled us to ride out 2009,
the Great Recession year, with 50% sales growth -- a feat we expect to repeat in
Fiscal 2010.
And we’re
just getting started.
Here are
some highlights for 2009 at our constituent companies:
CoaLogix, our award winning
cleaner coal technology provider, grew its sales by almost 80% to $18.1 million,
while gross profit increased by 156% to $6.3 million. On January 1,
2009, the Clean Air Interstate Rule (CAIR) became effective, substantially
increasing demand for CoaLogix services. We and our co-investor,
EnerTech Capital III L.P. and senior members of CoaLogix management, pledged
$11.5 million in investment to build a second plant in Charlotte to meet rising
customer demands. We anticipate the Steele Creek plant will be
operational in the third quarter of 2010. CoaLogix is transforming
the Enercosm by lowering the costs of emissions controls for coal-fired power
plants. CoaLogix sits at the center of the web of air pollution
controls systems and is helping our customers optimize and lower the cost of NOx
removal. A recently announced collaboration with FLSmidth, a €3.5
billion market capitalization supplier of material handling equipment, will
expand our portfolio of solutions to SO3 and mercury remediation.
Coreworx revenue for 2009, the
first full year of ownership by Acorn, totaled $4.0 million. In 2010 Coreworx
will introduce four new products that will expand the appeal of its main product
and substantially lower customer cost. This transition and the
acquisition of Decision Dynamics (DDY-TSX.V) are expected to greatly accelerate
revenue growth; however, we expect the sales acceleration will be heavily
weighted to the last six months of the year. Coreworx is transforming
the Enercosm by developing software tools to improve the productivity of
construction management and the global supplier networks required to build major
capital projects. We are helping move the industry from islanded data
collected in Excel spreadsheets to networked, web based systems that provide
actionable business intelligence and enable collaboration across the global
supply chain. The addition of Decision Dynamics will enable Coreworx
to offer cost management in real-time that solves one of the industry's biggest
headaches: poor tracking of contractor labor costs and earned
value.
DSIT revenue in 2009 rose 10%
from $8.3 million to $9.2 million. Gross margins increased from 34% in 2008 to
44% in 2009. Recently announced orders and a robust pipeline of sales leads are
expected to increase revenue more dramatically in 2010. DSIT is
transforming the Enercosm by developing intelligent systems for lowering the
cost of protecting existing energy infrastructure. Energy companies
are in the business of investing vast amounts of capital in energy
infrastructure and then extracting cash flows over long periods of
time. Our customers are becoming increasingly aware that those assets
can disappear overnight in a terrorist attack. Like clean air, the
security of energy assets has been taken for granted. Public policy
is requiring these externalities to be included in the cost of
energy. Acorn is anticipating these changes and is creating a market
before others recognize the opportunity.
Two other
exciting companies in our portfolio are well positioned for the transformation
of the Enercosm. GridSense, the results of
which we will fully consolidate after our acquisition at the end of April 2010,
continues to gain market penetration with its revolutionary smart grid
technologies. U.S.
Sensor Systems Inc. (USSI), in which we have options to buy a majority
stake, will enable us to expand our energy security offering to pipelines,
perimeter fencing, and solar farms. In addition, USSI’s sensor
technology is poised to be an enabling technology for 4D seismic that may help
solve near-term concerns over hydrocarbon depletion.
The
economic history of the world is punctuated by “jump points” - changes in the
business environment so startling that we have no choice but to rethink the
future. The tricky part has been identifying them at the right
time. Very often investors and the media mistake the arrival of a
stunning new invention for the jump point. Acorn recognizes that
technology revolution is a fitful process. New technologies,
particularly in the energy business, take time to be absorbed and
diffused.
Most jump
points occur well after the enthusiasm settles and the parade has
passed. This is why we think our strategy of acquiring businesses at
big discounts to previously invested capital, and only after the technology has been
proven with reference customers, makes so much sense. In fact, we believe the
most compelling opportunities of the developing cleantech industry are a
continuation of the Internet and telecom technology aspects of the Information
Technology revolution. The profound implication of this is that rather than
making bets on traditional cleantech businesses that benefit from economies of
scale (such as ethanol, solar, and wind), we are investing in businesses that
benefit from economies of connection. These
businesses benefit by both being capital-light and offering accelerating returns
as their network scales. We believe our dual management/shareholder's
perspective and corresponding patience with our opportunity is a big off-balance
sheet asset.
In last
year’s letter to you I asserted that the stock market had undervalued our
shares. Although it soon rebounded substantially, I continue to
believe that the share price does not yet fairly reflect the full value of our
business. In 2009 I acquired 75,000 shares, and as of this writing I have
personally acquired another 75,000 shares in 2010.
Thank
you, as always, for your continued faith in Acorn Energy.
Sincerely,
John A.
Moore
Chief
Executive Officer
COMPANY
DIRECTORY
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ANNUAL
REPORT 2009
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HEADQUARTERS
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COMPANIES
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INVESTOR
RELATIONS
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For
additional information regarding
Acorn
Energy, Inc.
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Acorn
Energy, Inc.
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CoaLogix
Inc.
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please
contact:
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4
West Rockland Road
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11707
Steele Creek Road
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Rod
O’Connor
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P.O.
Box 9
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Charlotte,
NC 28273
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Cameron
Associates
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Montchanin,
DE 19710
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www.coalogix.com
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302-656-1707 |
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www.acornenergy.com
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INDEPENDENT
AUDITOR |
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DIRECTORS
& OFFICERS
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Coreworx
Inc. |
Friedman
LLP |
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22
Frederick Street, Suite 800
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Certified
Public Accountants
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John
A. Moore |
Kitchener,
Ontario, Canada |
100
Eagle Rock Avenue |
Director,
President, CEO and |
www.coreworxinc.com
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East
Hanover, NJ 07936
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Chairman
of the Board
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George
Morgenstern
Director,
Founder and
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LEGAL
COUNSEL |
Chairman
Emeritus of the Board
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Eilenberg
& Krause LLP |
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Givat
Shmuel, 54017 Israel
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11
East 44th
Street, 19th
Floor
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Richard
J. Giacco |
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Joe
Musanti Director and
Chairman
of
Audit Committee
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GridSense™
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REGISTRAR
AND
TRANSFER
AGENT
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GridSense
Inc.
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American
Stock Transfer & Trust Co. |
Richard
Rimer
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2568
Industrial Blvd, Suite 100
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Director
and Member
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West
Sacramento, CA 95691
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of
Audit Committee
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www.gridsense.net
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Samuel
M. Zentman
Director
and Member
of
Audit Committee
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US
Sensor Systems Inc.
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19835
Nordhoff Street, Suite B
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Northridge,
CA 91324
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Joe B. Cogdell, Jr.
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www.ussensorsystems.com
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Vice
President, General Counsel
and
Secretary
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David
T. Beatson
Chief
Technology Officer
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