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Good morning, welcome to Acorn Energy's first quarter 2026 conference call. All participants are currently in listen-only mode. Following management's prepared remarks, we will open the call for questions. As a reminder, today's call is being recorded. I'll now turn the call over to Tracy Clifford, CFO of Acorn Energy and COO of its OmniMetrix subsidiary.

Thank you, Regina, and thank you all for joining us today. First, I'd like to remind everyone that today's remarks, including responses to questions, contain forward-looking statements. These statements involve a number of risks and uncertainties that could cause actual results to differ materially from those projected. Factors that may impact our future operating results and financial performance include general risks such as potential disruptions to business operations or changes in consumer or customer demand, as well as specific risks related to our ability to execute our operating plan, maintain strong customer renewal rates, and expand our customer base. Additional risks may arise from changes in technology, competition, or shifts in the macroeconomic or financial environment.

These forward-looking statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 and are based on management's current beliefs, assumptions, and information that is available as of today. There can be no assurances that the company will meet its growth targets or other strategic goals and objectives. The company undertakes no obligation to update or revise such forward-looking statements to reflect future events or specific circumstances that may occur after today. For a more detailed discussion of risks and uncertainties that may affect our business, please refer to the Risk Factors section of our most recent Form 10-K and our Form 10-Q for the 1st quarter of 2026, which are available online at www.sec.gov or on our own website. Now, I'll turn the call over to Jan Loeb, CEO of Acorn and OmniMetrix. Jan?

Thank you, Tracy, and to everyone for your interest in our company. Our Q1 2026 results reflect continued expansion of our base of monitoring endpoints, offset by an anticipated decrease in year-over-year hardware revenue related to our material cell phone provider contract. We recognized $93,000 of hardware revenue from this customer in Q1 2026 related to our original contract, and now hardware shipments for our initial contract are largely complete. This compares to $876,000 of hardware revenue from this customer in Q1 2025. Our Q1 2026 results also reflected $167,000 of monitoring revenue from this customer, compared to $69,000 in Q1 2025, related to first year monitoring revenues on the original contract.

Based on our ongoing dialogue with this customer, we are optimistic about securing further hardware deployments and related revenue that will build on our initial contract starting in Q2 2026. It has always been our goal to build on this customer opportunity, so this initial follow-on activity is a good indication of the strength of our relationship and the customer satisfaction with our solutions and the services we have been providing for over a year. We currently expect incremental hardware revenue from this customer in the range of $350,000-$500,000 in 2026. Tracy will non-cash management and board compensation in Q1.

Based on our record financial performance in 2025, accomplishing our Nasdaq up-listing and the completion of the AIO partnership agreement on January first, the board approved an increase in our 2026 stock option awards to compensate management and the board in lieu of additional cash compensation or board fees. These options were issued at a market price of $19.02, so their potential value is tied directly to value creation for all shareholders. The 50,000 options issued to management vest over 12 quarters, so higher stock comp expense will have an impact on financial results through the third quarter of 2028.

If you exclude the impact of non-cash compensation, Acorn's consolidated results would have been profitable in Q1, and the company continues to generate cash, as reflected by $53,000 of cash provided by operating activities in the quarter and the stable cash balance of $4.3 million at quarter end. In past communications, including our year-end news announcements, we have reviewed our five complementary growth initiatives, one of which is our ongoing pursuit of accretive M&A opportunities to expand our monitoring product offerings, market reach, and revenue and customer base. Through this process, we identified the AIO opportunity, which we decided to pursue as an acquisition of commercialization and distribution rights through a technology partnership. We are now actively working to bring their industry-leading, multifaceted suite of products for cell towers, data centers, and utility substations to North America for the first time.

These Infrastructure Solutions protect against theft, power issues, environmental and other risks, and maximize energy utilization. We believe the acquisition of these rights is an ideal way to leverage our 20-plus year reputation and established base of customers and substantially expand our capabilities and reach within the North American infrastructure market in a focused and highly capital-efficient way. We are currently working to finalize sales and marketing materials for the OmniMetrix branded solutions. We are initially targeting cell tower operations where we have a good base of existing customer relationships. Utilizing that experience, we will then pursue opportunities in fast-growing markets for data-driven and utility scale infrastructure management. Relative to our focus on backup generators at cell towers, this new suite of solutions provide remote oversight to the full cell tower campus.

Our solutions provide actionable insights through advanced analytics, machine learning, and comprehensive real-time monitoring that significantly reduce downtime, improve maintenance processes, and extend asset lives, lowering costs and delivering measurable ROI. Based on our initial assessments and customer discussions, we view theft as perhaps the most pressing issue facing cell tower operators today. Theft alone can potentially cost cell tower operators hundreds of millions of dollars annually and is a growing and largely unaddressed problem in the United States. As copper, fuel, and assets costs rise, it's widely expected that theft could become an even bigger risk management issue in North America, as it already is on other continents. To combat this risk, we are bringing to market the strongest available solution backed by years of proven performance.

We are still working through final hardware and services pricing models, but given the expanded scope of the AIO solutions, we currently expect our average AIO sale to be 5 to 6 times the average sale of existing OmniMetrix products. Given expected pricing and the scale of the opportunity provides a very meaningful growth potential for our company. We currently have our first 2 AIO-based tower sites live and running for customer demonstrations. For those of you who may or may not be familiar, cell towers are typically managed by independent tower companies who own and operate the physical structure and lease space to multiple wireless carriers. The 2 sites we are running are both in the Atlanta area with an existing telecom customer, where we are monitoring their shelter or hut within the cell tower, as well as the front gate.

Our dashboard shows everything, including stats on power systems, fuel levels, battery voltage, operating equipment, temperature, humidity, HVAC runtime, flood detection, et cetera, along with live feeds from security cameras that monitor physical access. We have secure permission to take prospective customers to these sites and expect to begin these efforts in the coming weeks. As I mentioned, we're in the process of advancing our program to launch these products in the U.S., including fine-tuning features and alerts, the sales approach, installation protocols, customer materials, as well as sales and training collateral that our team will need to scale this offering. The AIO team has been to Atlanta for several weeks to train and work with our engineering, tech support, and sales and marketing teams to set up for success in this product launch.

In terms of our financial reporting, we have set up a separate reporting segment called Infrastructure Solutions or IS to track this line of business, which you will note in our Form 10-Q. We do not expect revenues from this segment in the first half of 2026. We continue to believe that attractive secular tailwinds should support our value propositions and growth potential for years to come. Companies are increasingly focused on ensuring reliable access to the energy infrastructure and the compliance support they need. At the same time, broader demand drivers such as AI, data centers, electrification, EV adoption, reshoring continue to strain an aging U.S. grid, compounded by severe weather trends, all of which underscore the importance of energy resilience. In March, we saw severe storms across the Midwest and Mid-Atlantic, leaving more than 1 million customers without power in the PJM and MISO territories.

Even with significant investment, it will take years, if not decades, to address these challenges, and we believe this positions us well both for the near term and longer term. Given substantial unmet needs in our current markets plus opportunities in adjacent addressable markets, we believe 20% average annual revenue growth over a 3-5-year period remains achievable. Further, our capital-light, cost-efficient, and scalable business model positions us to bring roughly 50% of each incremental revenue dollar from our existing businesses to operating income line. As a small company, large hardware shipments will make our quarterly results vary, but our high margin recurring revenue model, supported by strong secular trends, position us well to continue to deliver growth and value to our shareholders. With that, I'll turn the call over to Tracy for financial and operational insights. Tracy?

Thank you, Jan Loeb. The headline takeaway from our Q1 2026 results is the continued strength of our recurring monitoring revenue stream and the improved gross margin profile of the business set against a challenging year-over-year hardware comparison driven by the timing of our largest contract. I'll also point out that our OmniMetrix operating subsidiary remained solidly profitable in the quarter, delivering operating income of $395,000. We provided a fair amount of detail in today's news release and in our Form 10-Q, so I'll just touch on a few of the key highlights. Focusing on Q1 2026 versus Q1 2025. Total revenue was $2,227,000, down 28.1% from $3,098,000 in Q1 2025. The decrease was driven by a $1,019,000 or 55.7% decline in hardware revenue.

Partially offset by a $148,000 or 11.7% increase in monitoring revenue. Monitoring revenue grew $1,417,000, reflecting continued expansion of our installed base of monitored endpoints. Hardware revenue was $810,000, which included $556,000 of new hardware sales and $110,000 from the amortization of deferred hardware revenue. The latter compared to $315,000 in the prior year period as we approach the final recognition of the remaining deferred hardware balance later this year. Gross margin improved 510 basis points to 80.2% from 75.1% in Q1 2025, reflecting both the higher mix of monitoring revenue, which carried a 94% gross margin in the quarter, and a lower contribution from material contract hardware.

Operating expenses rose 11.2% to $1,914,000, driven by a $228,000 increase in SG&A, partially offset by a $36,000 reduction in R&D following completion of the new OMNI and OMNIPRO development programs. The SG&A increase was primarily due to a $136,000 increase in non-cash stock-based compensation expense related to stock option grants to officers and directors, plus $111,000 in higher OmniMetrix SG&A, reflecting incremental personnel and technology investments, partially offset by lower commissions.

OmniMetrix segment operating income, the combined operating results of our PG, CP, and IS segments was $395,000, demonstrating the continued profitability of our core operating subsidiary, even in our seasonally lowest revenue quarter and even after absorbing approximately $50,000 of operating expense in our pre-revenue Infrastructure Solutions segment, which included the hiring of a new sales manager in February for the IS segment. On a consolidated basis, including unallocated corporate headquarters costs, we reported a net loss of $77,000 or $0.03 per basic and diluted share, compared to net income of $464,000 or $0.19 per basic and diluted share in Q1 2025. The Q1 2026 results include $197,000 of non-cash-based stock compensation expense versus $61,000 in the prior year period.

We recognized an income tax benefit of $25,000 in Q1 2026 compared to income tax expense of $154,000 in Q1 2025. We did not record any change to our deferred tax asset valuation allowance in the quarter. We continue to maintain a partial valuation allowance of $10.3 million, leaving a meaningful base of NOL and capital loss carryforwards to support future growth and potential M&A initiatives. Turning to the balance sheet and cash flow, we ended the quarter with cash of $4,257,000 compared to $4,454,000 at year-end 2025. Excluding deferred revenue and deferred cost of goods sold, net working capital was $6,024,000 at March 31, 2026 versus $6,184,000 at year-end. I remind you all, we remain debt-free.

Q1 cash flow from operations was $53,000. We also used $260,000 in investing activities, of which $250,000 represented the upfront payment for the acquisition of the exclusive commercialization and distribution rights under the AIO technology partnership agreement executed January 1st with the remainder of the other capital items. Stock option exercises generated $10,000 of financing cash inflow. OmniMetrix's deferred revenue, or what we refer to as our backlog, was $3,269,000 at quarter end, of which $2,934,000 is expected to be recognized as revenue in the next 12 months. Operationally, our next generation OMNI and OMNIPRO generator monitors and our RadEX cathodic protection product are all built on our new OCOM proprietary communications core now being deployed in the field.

These platforms reduce installation time, lower service costs, and enhance reliability, which strengthens our value proposition on our competitive position as we move further into 2026. Within the Infrastructure Solutions segment, as Jan Loeb mentioned, we now have two telecommunications tower sites live for customer demonstrations. We're really excited about this opportunity to bring AIO Systems solutions to North America under the OMNI brand and the broader set of growth opportunities ahead of us. I very much look forward to updating you as we progress in the coming quarters. Operator, at this time, please prepare the lines for questions. Thank you very much.

We will now begin the question-and-answer session. To ask a question, simply press star then the number one on your telephone keypad. To withdraw your question, press star one again. Please pick up your handset and ensure that your phone is not on mute when asking your question. Again, that is star one for questions. We'll pause for a moment to compile the Q&A roster. We'll take our first question from the line of Joel Sklar. Please go ahead with your question.

Good morning, Jan Loeb and Tracy. Let me start off by saying I'm suffering with a bad head cold. If I at any point I'm inaudible or cough, please let me know and bear with me. First, just a comment in that your option package, you know, I'm an investor in a lot of other public companies, and I don't think it's in any way unreasonable given the success that OmniMetrix and Acorn has had. I think it's wonderful that the, your leadership is gonna participate in the future success of the company, and I don't think the number of options is in any way out of line. That's my opinion. Question. We've seen very long sales cycles for the OmniMetrix generator monitoring equipment.

Given that the, your new Infrastructure Solutions, partnering with AIO are gonna maybe, you know, be even greater outlays.

Is there a chance that we're also gonna see a very long sales cycle there? Or do you feel that the solutions that you're offering in this Infrastructure segment are so compelling and urgent that we'll see a shorter sales cycle?

Joel Sklar, thank you very much for your comments and I hope you feel better. The answer is we're not 100% sure yet. Yes. Typically, I would say that the cell tower solution will have as long a sales cycle as our generating monitoring solution. It's just because we're dealing with, you know, large corporations, and so there's just a lot of tape to get through with large corporations. All saying that is that theft is really a very big problem that they are now beginning to address. It could be that because of the need, the sales cycle will be quicker. I just don't know yet because we haven't really started to get into the weeds with our customers.

You know, certainly the technicians that we've spoken to in the field as we were putting up these units, they certainly feel that there's a strong and very present need for the product.

Okay. Thank you. Good answer.

Again, for any questions, please press star followed by 1 on your telephone keypad. Our next question will come from the line of James Kahn. Please go ahead.

Hi. Okay. Well, you've got a lot of new initiatives that are interesting. I just wanted to ask about, you know, you had that big sale, about a year ago to the large customer, and then they didn't renew in September. Can you just give us some background on what happened there? Was it the product that didn't really work or, why that one did not get renewed?

Hi, James. Your basic assumptions are, need to be corrected. You know, the contract was for approximately between 5 and 10,000 monitoring units. They wanted us to ship it to them within a year. Initially, when we were negotiating with them, it was 2 years, but then they changed it. They wanted to have it all within a year. We did that. Q3, Q4 of 2024 and Q1 and Q2 of 2025, we basically shipped all the product to them. Which doesn't actually mean that that's when all the total revenue of that was recognized, because needs to go into their system, whatever. We finished that major contract, and that's that.

What I've said in my prepared remarks here is that they have come back to us in 2026, and that I anticipate that we'll have another $350,000-$500,000 worth of equipment sales. This is not monitoring because we continue to monitor everything. You know, that's approximately, you know, call it 7%-10% of the original order, they now come back for additional stuff. I mean, they have installed the original number of units that we've sold to them, and now as they're putting it into new cell towers, they're ordering new stuff for us. We have a very good relationship with them. The product works very well.

They're very happy with it, and they continue to be a very big and happy customer of ours.

Okay. Well, thank you. That clears things up. I appreciate that.

Once again, to ask a question, simply press star 1 on your telephone keypad. We will pause for a moment to compile the Q&A roster. We will take a question from the line of Richard Sosa. Please go ahead.

Hey, Jan, Tracy. Good morning. Another great quarter. Love seeing the monitoring re-revenue continue to trend upward. Sorry I did get on the call really late. Just on the AIO, did you guys discuss, and I can go back to the notes afterward, but did you discuss the go-to-market strategy for the product?

We mentioned it briefly. Firstly, good morning, Richard. We mentioned it briefly that our main focus is gonna be telecom- customers because we already have them as customers, so we don't have to sell the OmniMetrix name to those customers. That's gonna be our first target. You know, we have these two demo sites up and live that we take people to. That's gonna be our first strategy. Data centers is gonna be our second strategy. AIO has a very good data center product, and that will be, you know, after telecom, we're gonna focus on data centers. Third is utility substations. That's kind of how we see it. You know, we've already put out some initial phone calls to our customers. We're working on the pricing models, CapEx model and an OpEx model that we're gonna roll out in the next few weeks.

That's kind of our game plan.

All right. Very exciting. You know, I noticed from the 10-Q that you did break out, you are breaking out an IS division going forward. Is that something you had to do, or did you just feel strongly enough that it was worth doing?

Um, we thought-

I'll take that, Jan Loeb.

Oh, thanks. Thank you.

I mean, our expectation, Richard, is, you know, that this will be a material contributor moving forward. We felt like in an abundance of transparency, it was important to, you know, to carve that out from the initiation point to monitor this segment and give our shareholders the opportunity to see that, you know, from the beginning.

Okay, that's great. You didn't have to do it. You just felt strongly enough that, you know, it was worth doing for transparency.

Well, from the standpoint of GAAP, you know, you evaluate whether something is material, and certainly it's not material today because, you know, the expenses we've spent so far wouldn't be material from the context of looking at it as a percentage of the total. We just felt like it will be material. That's our plan, that's our hope, that's our focus. We felt like doing that from the beginning was the right thing to do.

Yeah, it definitely makes things easier. Perfect. All right. Well, you know, continue the good work. I look forward to future updates.

We have a follow-up from the line. Joel Sklar, please go ahead.

Hello again, Jan Loeb and Tracy Clifford. Just a couple of quick follow-ups. One is sort of leveraging off of Richard Sosa's question. See, I was curious, this may be a little nitpicky, but your partnership with AIO Systems, is that with Acorn, the parent, or with OmniMetrix? In other words, I know the branding is gonna be OmniMetrix. I don't know whether that means it falls under OmniMetrix, and we own 99% of what we wind up getting from that partnership, or whether it's under Acorn and we get 100%. That's the first question.

I mean, everything's gonna be done under OmniMetrix. I'll put it that way. Meaning the sales, the sales manager that we hired for AIO is under OmniMetrix and is resident in Atlanta. It's gonna be, have an OmniMetrix brand name. We view it as an OmniMetrix product.

Your former CEO of OmniMetrix will be happy about that, I guess. The other question is, can you tell us whether I expect the answer is yes, but whether the existing AIO sales model is also a subscription model where their customers overseas, they make money from both, certainly from hardware sales, but then they also get continuing revenue from monitoring and maintenance, and whatnot.

Their model is that they mainly sell the equipment, and then they have a what they call SLA. They have this an ongoing revenue stream as well. We don't think it's gonna be as big as our monitoring revenue, 'cause we're gonna be offering you know, more services. We also, as I said, might have a OpEx model where we'll roll in the complete package, meaning equipment monitoring, et cetera, for one price, one monthly price. Our model is gonna be a little bit different than their model, because we think our market's a little bit different than the markets that they address.

Okay, great. Thank you. At the risk of getting greedy here, just one more question. If an existing cell tower or other customer who would potentially be a customer for your generator monitoring came to you, and they wanted generator monitoring as well as your full Infrastructure Solutions, through the AIO partnership, will you be then Will you need to integrate the OmniMetrix generator monitoring? My impression is that the Infrastructure Solutions will, is, as the name of the company applies all at once, will encompass that. Can you comment on that?

Yeah. They have their own generator monitoring solution, and we have our own generator monitoring solution. Ours is a little bit more comprehensive than theirs. We will be integrated in the software. For example, the 2 cell towers that we are on as the demo models happen to have our generator monitors in them, and so they are integrated into the software system of AIO.

Right. Your customers will get the best of both worlds then. They'll get the maybe slightly more advanced and or the feature-driven, current OmniMetrix generator monitoring together with the new Infrastructure Solutions provided by AIO, if I understand correctly.

Yeah. Yeah. We hope our customers believe the same thing.

Okay. Thank you once again, Jan.

Again, to ask a question, press star one on your telephone keypad. While we compile the roster, I will hand the call over to William Jones for any pre-submitted questions.

Thank you, operator. We do have a pre-submitted question from a private investor, and the question is: Over the past two quarters, companies like Generac and Caterpillar have both reported greater than 20% year-over-year growth in their power generation segments, along with increasing backlogs, primarily selling into C&I customers in the data center market. Are you seeing any opportunity whatsoever in OmniMetrix's ability to attach itself to this opportunity? I understand that there is the AIO partnership, which in theory helps to address this market, but would be great to hear any further thoughts on this.

Sure. As I said in previous calls, we and OmniMetrix have not been focused on the data center market because our product is a remote monitor, and most of the data centers have 24/7 people on-site monitoring their equipment, their servers, etc. We only had 1 product, a generator monitor. That was not a focus of ours. With the AIO product, AIO has a full suite of products for a data center, and one of the other things we are getting with the AIO partnership is a NOC. We think that the data center market is a market that we can address, and we hope to address it shortly.

Again, as I said before, we want to first tackle the cell tower market, then we would go after the data center market.

Excellent. Thank you.

By the way, I'm sorry I said NOC. I said NOC. That is a network operations center.

Excellent. The second question is regarding potential OEM white labeling and bundling progress that you've mentioned in the past. Could you provide an update on any ongoing dialogues for bundling OmniMetrix solutions with new OEM equipment?

Yeah, I have no update. We continue to have discussions with 2 OEMs, but no update to report.

This concludes our question and answer session. I'll now hand the call back over to Jan for any closing comments.

Thank you all for joining today's call. We appreciate the continued support from all of our shareholders. If you have any follow-up questions, please reach out to myself or to our IR team, whose contact information is in today's press release. We hope to meet some of you next month at the Planet MicroCap Showcase that we're planning to attend on June 17th and 18th in Las Vegas. As always, we look forward to updating you on our next conference call. All the best.

This concludes today's call. Thank you all for joining. You may now disconnect.

Good morning, everyone, and welcome to Acorn Energy's Fourth Quarter and Full Year 2025 Conference Call. [Operator Instructions] As a reminder, today's event is being recorded. I'd now like to turn the conference call over to Tracy Clifford, CFO of Acorn Energy and COO of its OmniMetrix subsidiary.

Thank you, operator, and thank you all for joining our call today. First, I'd like to remind you that today's remarks, including responses to questions contain forward-looking statements. These statements involve a number of risks and uncertainties that could cause actual results to differ materially from those projected. Factors that may impact our future operating results and financial performance include general risk such as potential disruptions to business operations or changes in consumer or customer demand as well as specific risks related to our ability to execute our operating plan, maintain strong customer renewal rates and expand our customer base. Additional risks that may arise from changes in technology, competition or shifts in the macroeconomic or financial environment. These forward-looking statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 and are based on management's current beliefs, assumptions and information that is available as of today. There can be no assurances that the company will meet its growth targets or other strategic goals and objectives. The company undertakes no obligation to update or revise such forward-looking statements to reflect future events or specific circumstances that may occur after today. For a more detailed discussion of risks and uncertainties that may affect our base -- our business, please refer to the Risk Factors section of our Form 10-K, which is available online at www.sec.gov or on our own website at acornenergy.com. Now I'll turn the call over to Jan Loeb, CEO of Acorn and OmniMetrix for further comments. Jan?

Thank you, Tracy, and thank you all for your interest. In 2025, Acorn achieved record revenue, improved operating income, higher cash flow and our third straight year of profitability. Our performance benefited from a 22% increase in high-margin monitoring revenue, driven by continued growth in our installed base of remote monitoring endpoints. Our year-over-year Q4 and full year comparisons reflect the benefit of a national cellphone provider contract, the largest in our history. The bulk of hardware revenue for this contract was recorded between Q3 of 2024 and Q2 of 2025, contributing to lower year-over-year hardware revenues in the second half of 2025. The contract also includes one year of monitoring services ratably over 12 months, following each hardware units commissioning. Importantly, we earned very favorable feedback from this customer regarding our technology, managing capabilities and customer service, resulting in what we believe is a solid relationship with future potential. Our 2025 hardware revenue was also tempered by an $885,000 decrease in noncash deferred revenue amortization from units sold prior to September of 2023 when the majority of our hardware sales were deferred and amortized over 3 years. Acorn's 2025 results reflected $956,000 in revenue from amortization of deferred hardware revenue, a 48% decrease from the $1.84 million recorded in 2024, but with no impact on cash generation. This revenue impact will end this year as we expect the balance of deferred hardware revenue of $168,000 to be fully amortized by August of 2026. Lastly, our 2025 revenues were also impacted by an industry-wide slowdown in residential generated deployments, which we and other industry participants attribute to high interest rates, fewer major power outages related to hurricanes and other weather events in 2025 as well as inflation and economic uncertainty that impacted consumers' ability or willingness to invest and backup generator security at a cost of approximately $15,000 per installation. Our belief is that consumer generated demand is likely to return to more historic levels as impending factors moderate. Turning to our strategies for growth. We reviewed five complementary core initiatives in today's press release on which I'd like to provide a little more color. One is larger commercial industrial opportunities, which our internal sales teams continue to pursue across various sectors that include health care, telecom, real estate, retail grocery, hospitality, government and financial institutions. We have a range of ongoing discussions. However, the most significant opportunities with more large organizations that require budget compliance and also longer, more complex sales cycle. Two is the pursuit of strategic relationships to integrate our technology with OEMs or other strategic partners, for example, through white labeling our products for the OEMs. We have ongoing dialogues with a few industry OEMs to bundle OmniMetrix Solutions with their product offerings. Currently, our monitors are installed by the dealers in the aftermarket. However, our technology, service leadership and support for all generated brands puts us in a strong position to partner with one or more OEMs. Their core business isn't providing monitoring services and by working with us, they can offer a superior solution that offers greater value to their customers, while also providing the potential to reduce or eliminate their overhead and investment in an in-house solution. We believe this is the direction our industry is going, and we continue to work to advance OEM discussions. However, it's difficult to predict the potential or timing of these efforts. Three is expanding our penetration of the residential and small business markets through our network of 600-plus generator dealers. While the retail market was slow in 2025, as I mentioned, we are optimistic for a rebound in 2026, given the potential stimulus to secure backup power provided by recent winter storms as well as moderating interest rates. One of the larger generator manufacturers has publicly stated they expect a 10% increase in residential generated sales in 2026, so we expect to benefit if this does indeed occur. Four is our ongoing investment in research, development and engineering to enhance existing OmniMetrix products and develop new products. These investments are essential to maintain competitive -- our competitive position and expand our value proposition and addressable market. Tracy will review our recent product launches momentarily. Five is our ongoing pursuit of accretive opportunities to expand our product offerings, market reach and customer base with a focus on businesses that have a meaningful monitoring components to their businesses. The nature of the M&A process is that it takes a lot of work, research and negotiations to get to the point where you have a solid opportunity and acceptable price. We are highly motivated to identify and execute on an acquisition to enhance our growth, operating leverage and monetization of our NOLs, but balance this with a disciplined approach to managing deal terms and risk for our shareholders. Our recent strategic partnership with AIO, which stands for all in one, emerged through our M&A dialogues. AIO is the global leader in remote monitoring and control solutions for critical infrastructure but had no business operations in the U.S. They provide best-in-class technology and cloud-based business intelligence platforms that have successfully deployed at over 110,000 sites in 15 countries. In this case, we found the best path was to secure exclusive North American rights to their proven product suite for what amounts to a modest commitment to invest in building out the business. AIO solutions target the full cell phone tower campus as well as solutions for data centers and utility operations. Their monitoring control solutions deliver actionable insights to advanced analytics, machine learning and comprehensive monitoring of environmental conditions, battery health, security breaches, energy optimization, microgrids and more. The technology reduces downtime, streamlines maintenance and provides measurable cost savings and ROI, made the logical choice for smarter, safer and more profitable operations. The partnership is a perfect fit for Acorn and our OmniMetrix brand, as it substantially expands our product offerings and addressable market by integrating AIO Solutions with our industry-leading remote monitoring and control technology, our 20-plus year reputation and established U.S. customer base. We see exciting growth potential starting with our existing telecommunication customers and then expanding to data center and utilities to strengthen our ability to serve rising demand for data-driven infrastructure management with solutions that protect against power issuance, theft and environmental and other risks while maximizing energy utilization. We anticipate that the average sale of OmniMetrix labeled AIO products will be approximately 5 to 6x the average current omni sale. As we will be sharing SaaS revenue with AIO, it is too early to project what our margins will be. We will be selling AIO technology solutions under the OmniMetrix brand and from our market research, there are no better existing technologies in the industries they serve. This partnership has the potential to transform our company by expanding the respective OmniMetrix brand into new end markets with a product that would take us many years and significant R&D dollars to develop. We expect to have our first demo unit installed by the end of the month with a large existing telecom client. AIO has been in existence for 18 years. As we have stated, we do not expect any revenues from this partnership until the second half of 2026. We see secular tailwinds that should support our growth in the coming years as business and consumers take action to ensure uninterrupted access and support for their energy infrastructure management and regulatory compliance needs. Energy demands for AI, data centers, electric vehicles, electrification of buildings and reshoring of industry are all strain the aging U.S. electrical grid, which is also being disrupted by extreme weather events, forest fires and other natural disasters. Despite the relatively benign year in 2025, we've already seen a rebound in power outages from winter storms so far this year, including severe ice storms across 12 states in the Southern Appalachian in early January, resulting in over 1 million customers without power, many of them for days and some for weeks amidst winter weather. Even if the nation changed course and started massively investing in energy resources and infrastructure today, we are so far behind. It would take many years if not decades to meet our rapidly growing energy and reliability needs. Given the substantial unmet needs of the markets we now serve, we continue to believe 20% average annual revenue growth over the coming 3 to 5 years is an achievable target. Further, given the efficiency and scalability of our model, we believe approximately 50% of each incremental revenue dollar from our existing business should flow through to operating income. As a small company peaks and valleys in purchasing cycles for major hardware orders will persist, but we believe that our high-margin capital-light business model positions us very well for the future. With that, I'll turn the call over to Tracy for financial and operational insights. Tracy?

Thank you, Jan. The key takeaway from our 2025 results is the solid growth we are achieving in our annual recurring monitoring revenue stream, which achieved a 95% gross margin in 2025 and was driven by the ongoing expansion of our installed base of monitored endpoint. We view a steadily growing base of annually recurring high-margin revenue as the core value driver for our business, fueled by new hardware deployment, which could continue to be more regular in nature leading to some variation in year-over-year comparisons. We've provided a fair amount of detail in today's news release, so I'll just touch on a few key highlights. Revenue rose 4.5% to $11,478,000, thanks to the diligent efforts of the entire OmniMetrix team. Monitoring revenue grew 22% due to the expansion of monitored endpoint. Total hardware revenue declined 8% due to the timing of deliveries for our large cell phone customer and an $885,000 decrease in the amortization of deferred hardware revenue. Excluding the impact of declining amortization of deferred hardware revenue, new hardware revenues rose approximately 8% in 2025 compared to prior year. Gross margin improved to 76.8% versus 72.8%, an increase of 400 basis points, reflecting the increase in higher-margin monitoring fees as a percentage of revenue and hardware margin improvements related to the cost efficiency of the next-generation products that deliver more value. Diluted earnings per share was $0.99 in 2025, including an $0.18 per share deferred income tax benefit compared to diluted EPS of $2.51 in 2024, which included $1.77 per share of deferred income tax benefit. Cash flow from operations more than doubled to $2.090 million in 2025 or an increase of 131% year-over-year. Consequently, our year-end cash position improved by $2.1 million to $4,450,000, and we've maintained a strong cash position of $4,131,000 as of March 3, 2026, following our investment of $250,000 since December for the AIO OmniMetrix partnership in North American product launch. We also remain debt free. I think it's important to note that Acorn was able to release an additional $464,000 of its valuation allowance against our deferred tax assets in 2025 as a result of the big beautiful bill, which allowed us to treat certain R&D expenses in a more favorable way for tax purposes. This compares to $4.4 million released in 2024, both of which were reflected in our bottom line results. We now maintain a $10.3 million or greater than 70% valuation allowance, against $14.4 million in NOL and capital loss carryforwards. Most of our NOLs expire in 2031 or later. So we still have plenty of time to utilize them through growth in our existing operations via potential M&A initiatives. In late 2025, we launched our next generation and generator monitors to omni for the residential market and OmniPro for commercial and industrial applications. In addition to significant upgrades and new features, design innovation have reduced installation time and service costs while enhancing the liability. We also launched RADEX, an enhanced version of our RAD, remote alternating current mitigation disconnect, product for the Pipeline segment. These next-gen product launches enhance our value proposition, expand our technology leadership and will contribute to our growth in 2026 and beyond. We're very excited about the potential AIO opportunities ahead as well as the other growth opportunities that Jan discussed in his remarks, and we look forward to updating you on our progress. Operator, you may now prepare the lines for questions. Thank you very much.

[Operator Instructions] And our first question today comes from Jason [indiscernible].

I have a few questions. I want to follow up a few things from the AGM, if you don't mind. The first one I wanted to hit was you guys had mentioned that you're talking to three OEMs, and you don't think you'll get three OEMs. It's a very long sales cycle, and you kind of mentioned that you certainly would get one. Is that kind of still the status on that front?

I believe that is still true.

Okay. And then the next follow-up from AGM would be, in terms of acquisitions, you had said that you had three acquisitions in mind and three term sheets out. It seems like the AIO is one of those. Can you give an update? Is there still two outstanding, or where does that stand today?

We've had discussions with the other two. Firstly, you're right, AIO is one of them. We've had discussions with two others. As of right now, they're still available, but the price, we have not come to any agreement on price, too far apart on price.

Okay. And then my final question is a bit more open ended. I'm curious if you could kind of discuss the bottlenecks for each of the growers -- each of the growth drivers. So for instance, is the lack of personnel, or is it sales? What's kind of like the bottlenecks, and what are you guys doing to try to relieve those bottlenecks?

So I think the #1 bottleneck is the customer base that we are trying to bring in-house. So on the residential side, and small commercial side, usually, it's one decision maker is making the decision to get monitoring and not monitoring, the head of the household or the owner of the small business, the doctor's office, et cetera. And going after bigger customers, we're just finding that the sales cycle is much longer. And there are other extraneous factors that come into play, the economy, tariffs, layoffs, et cetera, that impact bigger customers. So to me, our internal team is excellent. And I don't think adding more personnel is an answer. It's just staying on top of these customers, and hopefully, we reel them in because we feel very confident about our product, and how we can help them. So I think that to me is the #1 bottleneck that we have.

Our next question comes from Richard Sosa.

Great to see the results this year. I'm excited about the AIO partnership and looking forward to hearing more about it. But just a really quick question. I joined late, so you might have addressed it on the call. But in terms of the monitoring revenue in the fourth quarter, I thought it was like slightly below what it was in the third quarter. Is it -- was it a timing issue, or was it something else?

Hi, Richard, thanks for the question. No, the decrease in monitoring revenue in 4Q '25 compared to 3Q '25 was actually due to the positive impact of the nonrecurring revenue recognition related to a policy that was made effective in 3Q '25 of recognizing first year of monitoring revenue on any units that have been shipped into which the first year monitoring had already been paid, but the unit had been outstanding for 24 months or longer and had not yet been installed. So that there was an impact that would be nonrecurring in the third quarter of 2025.

Okay. But the actual ongoing --

The third quarter was much higher than it should have been, really, I guess it was a onetime benefit in the third quarter.

Correct. That's correct.

And then on an ongoing basis, Richard, the fourth quarter was above the third quarter in monitoring revenue.

And our next question comes from Joel Sklar.

Excited about the future for Acorn. A couple of questions. One, Jan, can you give us a little bit more flavor for the market receptivity to AOI. Obviously, you have one telecom customer who is least interested in getting a model in there and seeing how it works out. But can you give us some more -- I know it's still in the very early stages, but a more general flavor for the market receptivity to the product. And then the second one was anything new on demand response.

Okay. Good morning, Joel. So on AIO, it's just too early to tell about market receptivity because we haven't really gone out and shopped it or sold it. Obviously, you're right. One of our telecom customers has agreed to put up everything on their demo -- in the demo site. And so we've obviously talked to them about it. And so they're certainly interested in. But I would think -- and this goes kind of beyond a little bit beyond your question, but I would think the -- any telecom tower company would be interested in the product. I'm not saying that they would buy it or -- but they would certainly be very interested in it. You have to recognize and then this also kind of goes to why we were interested in AIO, and where we see the future going. And remember, AIO has put in over 110,000 sites with their equipment. So -- and they know what they're doing and their equipment really works. But what's interesting about the equipment is, besides monitoring everything in a cell tower site, for example, whether it be locks, cameras, battery, HVAC, lots of stuff that are monitored that we don't monitor, we just monitor the generator. So obviously, it's a very good fit for us. But their products, because it's so AI-based, for example, depending on which is the cheapest form of energy at any particular time, whether it's solar, battery, fuel, they can switch. They have the technology to switch the uses depending on the cheapest source of power at that particular time. So we think it's a big -- it could turn into a big cost savings for the tower operators. Another thing we know is that security of cell phone tower is pretty lack of physical. I mean they're in remote sites. With the price of copper where it is today, we think that security has to be hardened at cell tower sites. And so they have the #1, at least what we believe to be the #1, security system in place. And then just if you think about it because it's the way we think about it, the industry is spending billions and hundreds of billions of dollars on AI based on reports that we've seen today, roughly 40% of AI is delivered through mobile apparatuses, which obviously needs cell towers. So we think sub towers are going to be -- are an important site, and we'll continue to be a growing part of the infrastructure that's needed. And we think we have, with AIO product, the best solutions for towers. And so we think there'll be great receptivity once we have a proof of concept. We have one up and showing. We have the software that we can show people. So we think it will be a very big item. But again, we're saying nothing for right now. Let's see what happens towards the second half of the year. Have I answered your question, Joel?

Yes. I remember I also had on demand...

Okay. On demand response, there's nothing new. We continue to have discussions with utilities that, as a matter of fact, we have one coming up in a week on their interest in demand response. The issue is how it gets structured. For example, this particular utility can only give demand response payments to their end customer by law. So how do we work that Acorn gets the money that they deserve. So the concept continues to be an important concept, the actual operations is unclear yet because it's too new as to how the money will flow. But there's certainly a lot of interest, and we are in the midst of it.

Okay. Great. Can I have one quick follow-up on AOI, Jan?

Sure.

Okay. So the decision to -- you're going to be -- you have terms to share the monitoring revenue, and of course, we value that a lot more, it's ongoing. Recurring revenue is a great thing, like the razor-blade model. But the -- but from my understanding, and please correct me if I'm wrong, we're not going to get any revenue from the hardware sales even though it's going to be branded OmniMetrix. And I assume there are going to be some costs associated with selling the hardware, including maybe commissions. So could you tell us a little bit more what went behind the thought that we would be sharing in the monitoring, but not directly in the hardware sales.

So let me correct you on that. No, we are definitely getting the hardware sale. So we are getting a hardware sale. And what we're doing is we're sharing in the monitoring. So the way I look at it, it's like a semi acquisition of the North American rights for AIOs product line. So we have given a relatively small upfront fee, which requires them to do a bunch of things, for example, putting up a demo site and providing personnel, et cetera. And then we're sharing in the ongoing monitoring. So I view that as kind of like an earn-out. So a small upfront acquisition fee and then an earn-out in terms of the ongoing monitoring fee is how I look at it, and why I think it's such an interesting structure, and again, it takes out a significant amount of risk for shareholders and leaves us with a significant amount of upside. We're going to go to market with a product in two different ways. We'll have a CapEx model. We have an OpEx model. But in all situations, we are getting paid for hardware. We're not in the 3B business.

Okay. Great. Wonderful. And then at the risk of being greedy, I'm going to pose one more question. So I saw a part of the announcement with AIO is the right to forget what technically is called not right of first refusal or something to their South America, Central America to business there. And you may wonder why am I asking about that when you're just getting your toe in the door with North America, but the reason I asked there is I saw that AOI has some important existing customers. I think maybe in a SouthTower company that has expansive operations in South America. And if you could -- so that may be some low-hanging fruit if that was something that you could execute and get the rights to their South America business. So I was just curious about that.

Yes. So we built that into our contract because, as you say, there's some interesting opportunities in South America. But also, we wanted so to speak. We didn't want to have our flank with somebody else. So growing up, I played a lot of risk. So I figured if we're having North America, I want to have South America as well. It's a growing area, and it's easier for us to service South America than AIO from where they're located. So it made sense, and we negotiated for it, and we got it. So we'll see -- we see what happens. But again, as you said, first, let's get North America going the way we expect it to happen and then we can see what happens with South and Latin America.

And at this time, I'm showing no additional questions. I'd like to turn the floor back over to Jan Loeb for closing remarks.

Thank you all for joining today's call. We appreciate the continued support from our shareholders. If you have any follow-up questions, please feel free to reach out to myself or our IR team, whose contact information is provided in today's press release. We look forward to updating you again on our Q1 call upcoming. All the best.

And with that, everyone, we'll be concluding today's conference call and presentation. We do thank you for joining. You may now disconnect your lines.

Good morning, and welcome to Acorn Energy's Third Quarter 2025 Earnings Conference Call. [Operator Instructions] As a reminder, today's call is being recorded. I'll now turn the call over to Tracy Clifford, CFO of Acorn Energy and CEO of its OmniMetrix subsidiary.

Thank you, operator, and thank you all for joining our call today. Before we begin, I'd like to remind everyone that today's remarks, including responses to questions contain forward-looking statements. Such statements involve a number of risks and uncertainties that could cause actual results to differ materially from those projected. Factors that may impact our future operating results and financial performance include general risks such as potential disruptions to business operations or changes in consumer or customer demand as well as specific risks related to our ability to execute our operating plan, maintain strong customer renewal rates and expand our customer base. Additional risks may arise from changes in technology, competition or shifts in the macroeconomic and financial environment. These forward-looking statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 and are based on management's current beliefs, assumptions and information available as of today. There can be no assurances that the company will meet its growth targets or other strategic goals or objectives. The company undertakes no obligation to update or revise forward-looking statements to reflect future events or circumstances that occur after today's call. For a more detailed discussion of the risks and uncertainties that may affect our business, please refer to the Risk Factors section of our most recently filed Form 10-K available online at www.sec.gov or on our own website. Now I'll turn the call over to Jan Loeb, CEO of Acorn and OmniMetrix for further remarks. Jan?

Thanks, Tracy, and thank you, everyone, for joining this call. First, let me start by acknowledging that although monitoring and hardware revenue each grew over 20% for the first 9 months driving a 35% increase in net income, our Q3 '25 revenue was significantly lower than in Q3 2024 due to lower hardware revenue. The Q3 2025 revenue variance is largely due to the timing of hardware revenue from our large cell phone provider contract. Given the size and nature of our business, a contract of this magnitude, while highly beneficial to both our short-term and long-term cash generation and create variability in our quarterly reporting primarily due to the timing of hardware revenue. This contract was originally expected to roll out over 2 years, but the customer desire faster deliveries, which were largely fulfilled over the first 12 months. Final deliveries that we had expected to record in Q3 2025 have been pushed into Q4 2025 and possibly Q1 2026, resulting in no hardware revenue from this contract in Q3 2025 versus revenue of $724,000 from initial hardware deliveries in Q3 2024. Additionally, we recognized $215,000 of deferred hardware revenue in Q3 2025 versus $436,000 in Q3 2024, a difference of $221,000. Deferred hardware revenue reflects the noncash amortization of hardware sales prior to September of 2023, which were deferred and amortized over 3 years. The amount of revenue recognized from the amortization of deferred revenue will continue to decrease as we have not deferred revenue from hardware sales since September 1, 2023. We when we began selling hardware units that can be sold independently from our monitoring services. Hardware sales are recognized to revenue upon shipment or transfer of title. We expect all deferred hardware revenues to be fully amortized by August of 2026. Adding the $221,000 difference in Q3 hardware amortization plus the $724,000 of hardware revenue results in the delta of $945,000 or approximately 95% of the hardware revenue variance between Q3 '25 and Q3 '24. An additional factor is the reality that new hardware sales have been soft on the residential side of the business, but stronger in the commercial and industrial segment. Echoing this residential trend, last week, a leading generator OEM reported Q3 revenue below expectations in the home market which they attributed to reduced incidence of power outages, one of the lowest rates in 10 years due in part to fewer U.S. hurricane impact this season. As you can imagine, power outages from any source are a major driver of backup generator demand. We also believe ongoing economic conditions, including high interest rates, slowing job growth and other financial uncertainties have slowed deployment of backup generators, which range between $7,000 and $24,000 to purchase and install depending on the home sizes. It is our sense that these economic challenges have tempered residential demand for several quarters. Longer term, we expect residential demand will rebound as economic conditions moderate, root uncertainty builds and power outage incidents grow in frequency and duration. In terms of our large cell phone contract, since inception, we have realized $3.9 million of hardware revenue and $343,000 in monitoring revenue totaling roughly $4.2 million. We are told that there will be additional purchase orders under this contract, but as of right now, we have shipped all the initial hardware order. We will continue to recognize monitoring revenue under this contract that was deferred at the point of sale over the 12-month period commencing on the installed date. Total deferred monitoring revenue at September 30, 2025, under this contract was $290,000. Of course, we fully expect this customer to renew our monitoring services given the customers over $4 million hardware investment. We expect them to be a long-term and happy customer. This is supported by the value and cost savings of our service and cost prohibitive nature of switching to a competing offering, all of which are reflected in our history of greater than 90% annual renewal rates. Looking forward, the big question for shareholders is what is our strategy to build on our scalable, high-margin, cash-generating business to achieve our long-term growth goals. The answer is that we are pursuing a number of initiatives across commercial, industrial and residential markets that fall into 5 distinct buckets. One large commercial and industrial opportunities being pursued by our direct sales team; two, strategic OEM relationships in which we partner to provide our industry-leading technology and services; three, expanding our penetration of the residential market through our over 600 generator dealers; four developing new products and expanding the capabilities and value of existing products; and five, through accretive M&A transactions. I'll briefly touch on each of these growth initiatives. Larger commercial and industrial opportunities are being pursued via our internal sales team across sectors, including health care, telecom, real estate management retail and the military. We have a range of ongoing discussions with many of the organizations are larger and more complex, resulting in sales cycles that are longer and the timing outcome is hard to predict. We see meaningful long-term growth potential from C&I customers because of their regional and national scale and our proven ability to deliver a compelling return on investment in terms of cost savings, improved data and analytics as well as reduced operational risk. Strategic OEM relationships in which we to provide our industry-leading technology and services. We continue to advance discussions with OEMs regarding potential strategic relationships where monitors would be bundled and installed by the manufacturer rather than in the aftermarket. We believe OmniMetrix technology and service leadership, combined with our ability to support all generator brands puts us in a very strong position to partner with OEMs. This will allow an OEM to focus on their core business while delivering a superior total solution across their customer universe. Of course, these initiatives require discussion, research, testing and planning yet there's no guarantee of success, but we believe the concept makes good sense for both sides, and we'll continue to pursue this avenue, which could be an important growth driver for us. Expanding our penetration on the residential market through our over 600 generated dealers, while retail adoption of generators has been slow due to a number of factors, we expect the pace to pick up moving forward. We go to market in the residential space through our network of over 600 generator dealers, and so our primary drivers are working to support them in their outreach. New product development is another area of long-term importance that Tracy will touch on in her remarks. M&A transactions remain a priority in our growth efforts. We are evaluating several complementary M&A prospects with monitoring components to their business. Negotiations with 2 of these are progressing, though it's too early to predict if or when they might happen. We are very motivated to execute on one or more transactions to accelerate our growth and drive further operating leverage. But we remain disciplined on managing risk and the price we relate to pay to ensure we are building value for our shareholders. As we have new investors on today's call, I'll just touch on some of the long-term secular trends supporting our growth. First, remote asset monitoring is projected to grow approximately 23% annually through 2032 and driven by the increasing adoption of IoT connected devices, real-time data collection, demand for predictive maintenance and data analysis as well as compliance and reporting obligations. Given some of you on today's call are probably monitoring things you probably didn't or couldn't just 5 years ago, like home thermostat, lighting, door bell, HVAC systems, appliances, et cetera. Newer cars allow you to monitor the car's location, fuel efficiency, fluid levels and other measures or you may use your remote start, remote climate control or door locks. The same thing is happening within businesses. Remote monitoring is increasingly being seen as a necessary and cost-effective tool to enhance operational performance and reduce the risk of disruption, providing reliability, cost savings and convenience and OmniMetrix is ideally positioned to meet this growing demand. We all read a growing energy demand from AI and data centers, which is taxing the U.S. energy grid and reducing the reliability of electricity access. Though the hurricane season has spared in the U.S., the prevailing trend has been more frequent and severe weather and other natural disasters increasingly disrupting the grid. Electrification demands across the economy are compounding a fragile grid and creating a supply and demand imbalance for electricity. The point is CMI customers and residential customers increasingly need reliable backup power, and that's the key driver of our business. We expect as these major secular trends will continue to support our long-term growth. Based on the trends in our growth initiatives, we continue to believe 20% average annual revenue growth is an achievable target over the next 3 to 5 years. It won't be straight line, and it will require that we execute on one or more of our larger growth initiatives in coming periods, but we feel the scope of opportunity and the strength of our position makes this very achievable. With that, I'll turn the call back to Tracy to go over our financials and for her perspectives on our operations. Tracy?

Thanks, Jan. As Jan noted, the primary driver of our year-over-year performance in Q3 and through September relates to the timing of orders under our sell-in provider contract. Focusing on third quarter performance, for '25 versus '24. We realized $148,000 in monitoring revenue related to the contract in Q3 '25 and 0 hardware revenue versus $724,000 of hardware revenue and no monitoring revenue in Q3 '24, an aggregate difference of $576,000. Q3 '25 total revenue was $2,478 million versus $3.050 million, a difference of $572,000. High-margin recurring monitoring revenue grew $422,000 to a record $1.560 million in Q3 2025. Our Q3 '25 gross margin expanding to 78.5% from 71.7%, driven by a significantly higher proportion of monitoring revenue relative to hardware revenue. Operating expenses increased 24.8% to $1.786 million from $1.431 million in Q3 '24 due to higher SG&A and R&D expenses. Increases included $110,000 in nonrecurring corporate expenses related to our NASDAQ uplisting a $60,000 increase in tax professional fees, of which approximately 50% is not recurring as it related to our 382 study that was completed in October, a $40,000 increase in our other public company expenses and stock compensation and $33,000 of higher R&D investments. Q3 '25 net income to stockholders fell to $252,000 or $0.10 per diluted share versus $725,000 or $0.29 per diluted share in Q3 '24. A function of lower revenue and higher operating costs. The year-to-date highlights include revenue of $9,101 billion, which is a 22% year-over-year increase. The first 9 months gross margin improved to 75.9% versus 73%, reflecting the benefit of adding revenue on a largely fixed cost structure and progress we are making in our hardware product margins. EPS of $0.57, an increase of 36% year-over-year even after consideration of income tax expense of $331,000 in the current year period, compared to $67,000 of income tax expense in the prior year-to-date period. Cash flow from operations was $1,795 million, which is 143% year-over-year increase. Quarter end available cash of $4.167 million which increased to $4.372 million as of November 4, 2025, and we continue to be debt free. As a leader in remote generator and pipeline monitoring, we maintain our competitive edge through ongoing investment in product development. Q3 was the beta launch of our next-generation monitors, Omni for residential and on the OmniPro for commercial and industrial use. These next-generation monitor offer smaller size and quicker processing speed, other new features that reduce installation time and service costs and enhanced reliability, such as over-the-air updates, and they offer remote exercise programming and enhanced compliance reporting. These features and upgrades increase the value of our offering relative to our competition. Also in Q3, we began testing a redesigned version of our remote AC mitigation disconnect or RAD for our pipeline segment. Without getting too technical, the RAD product allows remote disconnection and reconnection of alternating current or AC mitigation tools for enhanced employee safety and lower cost versus manual field disconnections, which are required for maintenance. The new RAD EX design adds pipeline measurement capability in addition to the disconnect feature combining 2 important pipeline maintenance requirements into a single product. We also continued to improve our OmniView 2, our OV2-user interface in response to customer requests and suggestions, and we routinely review and update our cybersecurity protocols to mitigate constantly changing risks. Many of our ideas for improvements come from listening to our customers and being proactive in addressing customer concerns and needs in our future offerings and updates. This requires close relationships and partnerships with our customers, which we are very proud of it on the metrics. Our customers sincerely value that our products improve reliability, reduce costs and assist in their compliance and operational reporting. Based on feedback, we're excited about the opportunities ahead, and we look forward to updating you in the coming quarters. Operator, you may now prepare the line for questions.

[Operator Instructions] The first question comes from Kris Tuttle with Blue Caterpillar.

Actually, I have a couple. Let's start with the positives. Your recurring revenue on the software monitoring side was up nicely. And I'm curious is -- is that something you see as being sustainable? Are we going to experience kind of ongoing some level of sequential growth in category?

It is sustainable. It is recurring. So we expect consistent growth in that number. I'm not saying you're going to see 37% every quarter. But systems, we amortized first years. So it comes in over time. And you should see consistent growth. And we view that as the core value builder of our business.

Okay. I mean, unless something unusual happens like a customer cancels or something, there should be some as more units come online, the number will go up at least a little bit over time. In other words, this quarter should be at least marginally higher than last quarter.

At 100% and hopefully better than that.

Yes. Got it. Perfect. Now my other question is just turning to hardware for a moment. Obviously, a little bit weaker than maybe people were expecting. And I just want to make sure I understand what you said. It sounds like there's still a few more deliveries on these long term, the big contract that kind of propelled you guys in Q -- in this quarter and in Q1. Do I have that right?

So the -- basically, we finished the majority of our deliveries to this customer in Q2 of 2025. So we started Q3 of 2024. We ended Q2 of 2025, so over a 1-year period. However, there's we'll call it other stuff that they have told us that we're going to be getting, they haven't given us a date yet. So there's still, I'll call it, the tail end of the contract is still to come. And hopefully, it will be Q4 or maybe it will be Q1 of 2026. And that's -- again, that's not equipment.

Right. That's on the hardware line, right, additional deployments. And so with the last question kind of with respect to this contract. And obviously, customer is a large customer, they move to their own beef. They own the football. Do you still believe that there is a possibility you might get? Do they have additional coverage that they want to implement? And could that mean additional purchase orders for you at some point in the future along the same lines of what you had with them?

The answer to that is yes, but they have given us no indication that that's forthcoming.

Okay. And then the last question. Tracy talked about some things on the new product side and you guys got to show me the -- at least the new box that you were putting out. And it looks like a real step forward. And this time, you talked a little bit more about AC power and just -- I mean maybe you could help me understand. I mean, I get it at a high level, but is there a specific kind of market use case customer type that you think about when you look at the AC-based some of the things that Tracy talked about.

So I believe what you're referring to was AC mitigation, which is in our corrosion protection side of our business. So as I'm sure you know, about 90% of our revenue comes from power generation and about 10% comes from corrosion protection. So this is a product that we've been beta testing in corrosion protection and has seemed to have gotten some industry attention. And so we're hopefully going to roll that out in the fourth quarter, and we'll see what happens. So that's in our corrosion protection side of our business versus our power generation side of our business.

[Operator Instructions] The next question comes from [ Jason Mollin Camp ], Private Investor.

I have a more timeless question here, perhaps. So I'm a bit curious if you could discuss -- you guys have always been good about reinvesting in the business and moving the product forward. What I don't have a sense for -- would love to hear from you is when you launch a new product, what -- kind of what percentage of those are to existing customers. I'd imagine some customers' upgrades don't. Can you just discuss that a little bit for folks?

Sure. So in the case of the Omni and OmniPro, those are products that are replacing existing products. So we have TrueGuard and TrueGuard PRO as existing products, and we're now replacing them with Omni and OmniPro. And as Tracy discussed, all the benefits ties all the benefits, but some of the benefits of the new product versus the old product. In the case of the RAD EX, that would be a totally brand-new product. We don't have an existing product like that in the marketplace. Our product corrosion protection is the hero. So that would be a brand-new line for us. Does that answer your question?

Actually, I think, Jason, let me add to that for you. So when we introduced the new generation of TG and TG PRO, our existing customers would not typically replace the units that they currently have. Certainly, moving forward, as you know, we have customers that order on a repetitive basis, and dealers that order on a competitive basis. So their orders -- their new orders would then be fulfilled with the new generation of products. So we will essentially as our inventory depletes on our existing older generation that will be entirely replaced with the new generation inventory. So anyone who orders from that point forward will receive the new generation of products. But it would not -- it's not our expectation that anyone would replace an existing unit that is functioning properly to replace it with our new generation product. I think that was more what you were asking, correct?

Yes, correct. That's very helpful. And so the growth there is generally tied to your existing customers or dealers having growth in their business essentially? Is that true?

Yes or consistency in their business, yes. Consistent demand.

[Operator Instructions] The next question comes from Joe Stein with Oppenheimer.

Let's move on, operator.

No problem. We can move on.

Can you hear me? It's the machine. It's Joe Stein. I'm sorry. I got on a little late, but I was -- my question was, was the problem not having the inventory in a receiving product or a lack of demand, where you got no revenue in this quarter on the telephone side. Did I misread that?

No, it's -- we did not have the order. And we did not have a PO to ship anything. And we don't have an inventory. We have whatever our customers need, we're very good about that.

This concludes our question-and-answer session. I would like to turn the conference back over to Mr. Jan Loeb for any closing remarks.

Thank you all for joining today's call. We appreciate your continued support. If you have any follow-up questions, please reach out to our IR team listed on today's press release or to Tracy or myself, we look forward to updating you again on our next conference call. Take care.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.