00:05 Good day, ladies and gentlemen. Welcome to the Acorn Energy Fourth Quarter Conference Call. At this time, all participants are in a listen-only mode. Later we will conduct a question-and-answer session and instructions will be given at that time. As a reminder, today's conference is being recorded. 00:23 I would now like to turn the call over to Tracy Clifford, CFO of Acorn Energy and COO of its OmniMetrix subsidiary. Ms. Clifford, please go ahead.

00:33 Thank you, and first I’d like to welcome everyone to our conference call today. As a reminder, many of the statements made in today's prepared remarks or in response to your questions may be forward-looking in nature. These statements are subject to various risks and uncertainties. 00:48 For example, the operating and financial performance of the company in 2022 and in future years is subject to risks associated with disruptions to business operations and customer demand resulting from executing the company's operating strategy, maintaining high renewal rates, growing its customer base, changes in technology, changes in the competitive environment, financial and economic risks and any additional impacts from COVID-19 or its variance, as well as having access to sufficient capital for growth. 01:16 Forward-looking statements are based on management's beliefs, as well as the assumptions made using information currently available to management pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. There are no assurances that Acorn or OmniMetrix will be able to achieve their growth goals in 2022 or in future years. 01:35 The company also undertakes no obligation to disclose any revisions to these forward-looking statements to reflect events or circumstances occurring after today. A full discussion of the risks and uncertainties that may affect the company is included in Risk Factors on Acorn's Form 10-K as filed with the Securities and Exchange Commission. 01:53 Now, I'll turn the call over to Jan Loeb, Acorn's CEO, for an overview of our business performance and outlook for 2022. Jan?

02:01 Thank you, Tracy and good morning and thanks to the investors and everyone joining our call today. 2021 was a year of tremendous growth for OmniMetrix and strong operating results reflecting the progress we have made in building our remote monitoring IoT business. This progress was driven by our experience and knowledgeable sales team and supported by our engineering tech support production and back office team. 02:27 We had a goal of 20% sales growth for 2021, which certainly was aggressive, where we demonstrated the strength of or company by exceeding our 20% goal and achieving cash basis revenue growth of 27% for the year. 02:41 For the fourth quarter our cash basis revenue increased 34%. Our team pulled together in the phase of continued challenges, including COVID impacts and supply chain constraints among others. Cash basis revenue is a non-GAAP measure that we used to track invoice sales in the period and therefore it is the metric we use to evaluate our sales performance and growth rate. 03:06 GAAP revenues reflects the amortization of revenue that is differed when invoiced and amortized over a period of three years for equipment and over the prepaid IT monitoring service period, which is typically 12 months. We provide a reconciliation of cash basis to GAAP revenue in today’s press release. 03:26 GAAP revenue increased by 40% for the year and increased by 10% for the fourth quarter. Our GAAP gross profit grew 19% in 2021, due to revenue growth and gross margin improvement. Gross margin continues to benefit from next generation product enhancements and design improvements, sales of customized products and our inroads and increasing market penetration in commercial and industrial or C&I markets, which carry higher margins. 03:56 We believe we have the industry’s most innovative design and engineering team.…

11:21 Thank you, Jan. So, Jan highlighted some key financial information. I'll just add a bit more detail that is also included in our 10-K, which was filed yesterday evening, [accepted] [ph] yesterday evening and available this morning for your review, and then we'll take questions from investors. 11:38 With regard to reported revenue for the full-year, GAAP revenue rose 14% to 6.8 million, reflecting a 31% increase in hardware revenue and a 5.5% increase in monitoring revenue. In Q4, OmniMetrix GAAP revenue grew 10% to 1.8 million for quarter four from 1.6 million in quarter four 2020, including a 25% increase in hardware revenue, while monitoring revenue was essentially flat from the prior year fourth quarter. 12:06 The increase in hardware revenue in both periods was due to a higher percentage of commercial and industrial customers relative to residential customers, which have higher price points, as well as an increase in the number of units sold. As Dan mentioned, the increase in units sold is primarily due to the replacement of sunsetting 3G technology units, as these new units replace the older units, monitoring revenue does not increase in-line within sales because the new equipment assumes the prepaid monitoring plan at the sunsetting unit. 12:33 So, sunsetting benefits hardware sales that does not have the same accretive impact on monitoring revenue. Invariably some customers will choose not to upgrade to newer technology and will drop off the IT monitoring plans. So, these factors explain to strength in hardware revenue in 2021, relative to monitoring revenue. 12:49 Turning to gross profit, which grew 19% to 4.9 million in 2021 and reflects the gross profit margin of 72% versus 70% in 2020. It is notable that gross margin improved despite increases in production and manufacturing costs in 2021. 13:06 During 2021,…

18:28 [Operator Instructions] Our first question will come from Peter Rabover with Artko Capital. You may now go ahead.

19:03 Hey guys, thanks for all the color and the results. I just wanted to kind of touch based about your comment on price increases, are those going to be in hardware or software, or I guess or the subscription service, how are you guys thinking about that?

19:23 Hi, Peter. It's going to be an equipment or let me say this, the September increase has been in equipment. That's where we are finding our cost serve going up. As Tracy mentioned, on the data side, our costs have gone down, we have a new contract with our data supplier. So, our costs have gone down in data. 19:53 So, we didn't feel it was appropriate to have a price increase on the data side, but on the equipment side and things that are related such as transportation, etcetera, is where the price increases have been.

20:11 Okay. So, you're just looking to match costs, I guess, is it to maintain margin in percent or dollars?

20:21 Well, I'd like to say that we would like to always be a little bit in advance of where things are going. So, it would be in dollars versus percentage.

20:36 Okay. Fair enough. And then maybe, on the expense side, I know you've done a pretty good job of managing the fixed cost base and while still investing for growth and it looks like it's – the run rate is about 4 million, with – about 900,000 in the corporate cost, have you finished making those investments or should we expect that run rate to trend out that base trend up? How much should we think about that?

21:13 Tracy, would you like to handle that?

21:16 Sure. I believe you could expect the corporate overhead to remain essentially the same. As it relates to OmniMetrix operating costs with our expansion efforts, we are looking to potentially add additional positions in our sales team to expand our reach there. It will probably have a little bit later on in the year. Later part of second quarter, beginning of third quarter perhaps. 21:40 So, we may see some additional personnel costs, ramp up slightly ahead of the revenue catch up. We would expect, of course, those positions to pay for themselves, but of course, it could take essentially four months to six months for a new sales rep to ramp up. So, that's where I'd see the increases. As far as other infrastructure costs, there at [OmniMetrix] [ph], I think they should remain fairly constant. 22:04 We will, once we launch our technology projects, the [tube technology projects] [ph], you will see a bump in the amortization cost. Those projects are in development phase, so they're currently being capitalized, but once we are able to launch those when they're completed, there will be additional amortization costs.

22:24 Okay. Just to make sure those sales guys are going to go through the SG&A and not gross profit or gross [Multiple Speakers]?

22:32 That's correct. That's correct. They go through SG&A.

22:36 Okay. I think I'm pretty good here. I ask somebody else to ask a few questions. Thank you.

22:44 Thank you.

22:49 [Operator Instructions] Our next question will come from Michael Zuk, a Private Investor. You may now go ahead.

22:58 Good morning to you. My question basically is, what industries are you going to be concentrating on to expand your sales efforts? Will it be like pipelines or utility companies or stationary monitoring of systems?

23:18 So, our main business is generators – is monitoring of generators. So, I think that will remain the – by far the biggest piece of our business and therefore also have the greatest amount of growth and the area that we're looking at for growth just because we have some great market position in that arena. 23:43 We mentioned on the call the RAD, the remote AC disconnect, that is a corrosion protection pipeline type product. So, we are certainly coming with some new products, innovative new products in the corrosion protection side, but the corrosion [indiscernible] side is really roughly only 15% of our total sales. 24:09 So, although both are going to grow, just by virtue of the size of our PG side, the PG side is going to grow faster. But there's a lot of opportunity on the gas pipeline side. Certainly everybody has read about LNG, and the push to supply Europe with LNG that will certainly help our customers, the gas pipeline operators. So, we look at all our markets, we have some innovative products going in both sides, but the power generation side still going to be the largest by far.

24:47 And then as a follow-up, is there any potential in monitoring like water purification or sewage treatment systems?

24:55 There is. We do we do monitor a few, but it's not a focus of ours and there are companies that are well established in that area that certainly have good market share and it'd be tough to go up against them, unless we have some super innovator product, and it's not our focus because we have – in our existing business, we have some great growth opportunities and so viewing off right now is just not a strategy of ours.

25:30 And then one final question, are there any geographies that have greater promise than other geographies?

25:38 Yes. The California, you've heard me talk about that in the past. In the past, it is a separate climate and generally has not been a big market for generators and power systems. And so, we haven't really been in that market. And today, it is a very, it is becoming a strong market and we have put some sales effort behind California. So, I'll say the west is an area of geography that has some excellent growth potential.

26:15 Well, thank you for all of your efforts last year. It was a great year and look forward to 2022.

26:21 Thank you, very much Michael.

26:27 [Operator Instructions] Our next question will come from Richard Sosa, a Private Investor. You may now go ahead.

26:48 Hey Jan, Tracy. Good morning. Just had two questions. First, just looking back at cash sales, it looks like, correct me if I'm wrong, it looks like 2021 was one year better, if not the best year in terms of cash sales of growth in I mean the last four or five years. So, it was definitely a good year and you mentioned a lot of that was attributable or some of that was attributable to the sunsetting of the monitors and the other is just strength in all your end markets. 27:23 I was in and off of this call, I don't know if you gave any kind of forward looking guidance, but do you expect that continued growth? Two questions on that front. One is, the growth in the sunsetting, could we – do we still see that or is anyone needed to replace the monitor already done so? And if you can give kind of just any other comments on how things are going currently?

27:49 Richard, hi, good morning. Yes, we expect that we will have benefit from sunsetting added to the future. Both in 2022 and then Verizon, which is really not most of our product, but a lot of our competitors sunsets December of 2022. So, we do see and hope for some replacements in each of the years. But besides replacement just to growth in our regular business, remains very strong. 28:30 As commercial and industrial customers are coming onboard, they want to make sure that their units are working when they need them, they can't afford, it's a small insurance policy to have to make sure your stores or your operation doesn't go down. 28:53 And so, people really want to have the data. And so, we see a lot of bigger C&I customers entering the market and wanting monitoring of their critical assets.

29:08 And my next question was just on the pipeline side. Just looking back, this looks like the first year you've – you had struggled to have growth in the last few years and looks like you had growth this year for first time in a few years, which is nice to see, but now that the – a lot of the oil companies and pipeline companies in theory should have a much more capital to invest in the business, do you think there's a possibility for the historical growth to come back in terms of a 20% to 30% grower do you kind of see it still lagging the PG side?

29:43 I do see growth coming back. Remember that in the CP side, COVID had a much stronger impact. Our customers on the CP side are the large pipeline and utility companies, which had much more stringent COVID rules in place about meeting with customer – with vendors, etcetera. So, I would hope that CP would have returned to some stronger growth. We have some new product in CP. It's just a little too early to see, as I said in the remarks, we're putting our trial, first trial in for the RAD in next month. 30:25 Let's see how it all goes. And, but I certainly expect stronger growth out of CP. Whether it's going to, it clips the growth of PG. I doubt just because of the strengths of PG growth.

30:42 Perfect. Thanks Jan. Thanks, Tracy.

30:44 Thank you.

30:49 [Operator Instructions] Our next question will come from Keith Goodman with Maxim Group. You may now go ahead.

30:59 Hi, guys. Jan, just a quick question about, right now you're trading on the Bulletin Board, and I was wondering if there's anything that could be done to get you guys up-listed on to the NASDAQ, trying to increase your audience?

31:14 Yes. There's obviously, it's something that we've said in the past that we would like to do. And hopefully in 2022 the stock will more reflect what we believe the true value of the company is and that will help us move up to NASDAQ and become more tradeable. So, we'll see, but it's certainly, I hope happens sometime in 2022.

31:48 Okay. Thank you very much.

31:54 [Operator Instructions] At this time, I'll turn the conference back over to Mr. Jan Loeb for closing comments.

32:10 Thank you again for your interest in Acorn. We are very pleased with the strong performance of our business in 2021 and we are excited not only for 2022, but also for the long-term prospects for the business. We truly appreciate your support. We'll have to speak with investors or prospective investors about the company. Please reach out to our Investor Relations, whose contact information’s include in today's press release, to set up a call or to ask any questions. Thank you, again. I believe that concludes today's call.

32:50 The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.