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June 2013

The Digital Energy Company. June 2013. Connecting the world of energy. Safe Harbor Statement.

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June 2013

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  1. The Digital Energy Company June 2013 Connecting the world of energy

  2. Safe Harbor Statement Certain of the matters discussed in this presentation contains statements that are forward-looking, such as statements relating to results of operations, financial condition, business development activities and market dynamics. Such forward-looking information involves important risks and uncertainties that could significantly affect anticipated results in the future and, accordingly, such results may differ materially from those expressed in any forward-looking statements made on or behalf of Acorn Energy. All statements other than statements of historical fact in this presentation regarding Acorn Energy’s future performance, revenues, margins, market share and any future events or prospects are forward-looking statements. For more information regarding risks and uncertainties that could affect Acorn Energy’s results of operations or financial condition review Acorn Energy’s filings with the Securities and Exchange Commission (in particular, it’s most recently filed Form 10-K and Form 10-Q). Acorn Energy’s forward-looking statements are not guarantees of future performance and the actual results or developments may differ materially from the expectations expressed in the forward-looking statements. As for the forward-looking statements that relate to future financial results and other projections, actual results will be different due to the inherent uncertainties of estimates, forecasts and projections and may be better or worse than projected and such differences could be material. Acorn Energy undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

  3. The Digital Energy Company Why should you own Acorn Energy? • Leveraging digital technology vastly improves, protects energy infrastructure • Controlling position in four energy tech portfolio companies with TAM 0f >$4 Billion • History of getting macro bets right and generating attractive exits with modest capital • Strong cash position of $20m in cash as of March 31, 2013 and debt-free

  4. Acorn History and Proven Track Record August 2011 September 2005 2007 • April COMV IPO @ $250MM Valuation • December Secondary @ $600MM Valuation • Buy CoaLogix $10 M • Sell CoaLogix $100 M • $10MM Market Cap $16 million net of dividends raised to create $140 million of value

  5. Acorn Energy Portfolio • Huge revenue growth expected • ACFN majority owner • We supply growth capital • 4 strong businesses • Great customer traction • Strong management teams

  6. Sensing technologies to detect and alert security teams to the presence of U-W threats to critical energy infrastructure • Market Drivers • Global insecurity • Secure infrastructure • New tech needed • Highlights • Seven reference clients • Non-dilutive funding • Financial Snapshot • $13.6M Rev 2012 • $9.6M in backlog • 37% Gross Margin • 84% Ownership Stake TAM $3.5 B+ • 3,500 energy facilities on/near water

  7. Remote monitoring solutions for back-power as well as pipelines During Hurricane Sandy 25% of all Cell Towers were without power • Over 1500 American Tower sites monitored by Omnimetrix, all operated with 100% uptime • Unmonitored generators fail 10% of the time called on • FCC is holding hearings to improve power assurance for cell towers • 220,000 cell towers in USA * Pre- management option pool

  8. Remote monitoring solutions for back-power as well as pipelines • Market Drivers • Cell tower power assurance • Dependence on wireless • Aging grid • Highlights • Lowering costs • Increasing features • Recruited sales force • Financial Snapshot • $661k Rev 2012 • $533k Rev Q1 2013 • 96% gross margin on renewals • 100% ownership* TAM $1B+ • Over 2M permanently-installed back-up generators (50:50 residential/C&I) • < 2% generators monitored • < 2% households have generator • 75% growth in connections and >5,000 monitors * Pre- management option pool

  9. Cost-effective sensors for transformers and power lines (easy retrofit) to help utilities improve electric grid • Market Drivers • Demand for reliable power/ 4 challenges • Aging grid • Power theft • Cyber security • Renewables • Highlights • Pilots with 46 utilities • Alain Steven on board • Web-based platform • Financial Snapshot • $3.7M Rev in 2012 • $1.5M Rev in Q1 2013 • 43% Gross Margin • 100% ownership* TAM $1B+ • 30M U.S. transformers (sensor locations) • Less than 2% transformers have sensors • >400 utility customers worldwide * 17% phantom option plan

  10. The 3D Seismic Imaging Revolution for Conventional Oil Predicts the Benefit of a 4D Seismic Revolution

  11. History and Future of Seismic Evolution from 2D to 4D Seismic

  12. Unconventional Oil Frac Jobs Are Not Meeting Producers Expectations - 50% of frac stages produce zero hydrocarbons - 20% of frac stages responsible for 80% of production “

  13. Oil Producers Need to Improve Productivity and NPV of Wells

  14. Solution: Revolutionary 4D Microseismic Monitoring

  15. Optical Fibers: The Neurons For Future Intelligent Wells Replace This… With This Electronic-based Sensors Optical Fiber Sensor • “..the industry is on the verge of a step change in well and reservoir monitoring capability” • -Jorge Lopez et al, Shell Oil

  16. Forbes: Big Data And Microseismic Imaging Will Accelerate The Smart Drilling Oil And Gas Revolution* This (USSI) imaging technology does for seismic the equivalent of going from 20th century x-rays to 21st century MRI. Microseismic brings radically enhanced navigation and, critically, the opportunity for a new era of dynamically controlled subsurface operations …getting the stages to be productive can only come from far more precision and far higher resolution of the underground domain… Operators need to move from today’s static and episodic geophysics maps to dynamic models of how rocks and fluids change. You need to see the micro-fractures from the real-time results of the fracking itself. Hearing the millimeter-scale cracks forming complex arrays in shale a mile away, then separating out the signals from confounding environmental noise is like hearing a whisper from the other side of a noisy auditorium. All of these “micro” events are not detectable with standard seismic. …today’s best-in-class geophones cannot fully unlock the potential of microseismic. The sensors need to see (hear) signals at 100 times the bandwidth, and be at least 100 times more sensitive (quieter). And, in an ideal world - which eventually becomes the standard operating procedure - imaging has to move from snap-shots to continuous real-time monitoring…This will require a new class of sensors both cheap and robust enough to survive for long periods, even permanently in the hot underground. Conventional electronics cannot deliver that combination. Making practical fiber optic geophones has been devilishly difficult. The issue isn’t in the physics ... The challenge has been to come up with a design that is simple, easy to manufacture, yielding a highly reliable and reproducible product. …the revolution really takes hold as the full power of U.S. Seismic’s richer data streams enable the emergence of better algorithms and…models that accommodate the complex mix of both plastic and brittle behavior of rocks in the subsurface…where correlations become possible now across the entire suite of hydrocarbon information - surface survey maps, drill-bit sensors, flow rates, pressures, temperatures, chemical analyses, etc. There is no chicken-egg uncertainty in which comes first; better and richer data flows will drive the emergence of new big data analytics. Microseismic capabilities are not only economically exciting, they promise collateral opportunity for greater safety and environmental monitoring * Mark Mills for Forbes. May 2013

  17. Laser How Our Technology Works Optical Interrogator Downhole Fiber Optic Geophone Array -High performance -Lower cost -More reliable

  18. How Microseismic Monitoring Works

  19. USSI Gaining Critical Field Experience USSI Geophone • Seven pilot trials two years • First commercial trial, big system December 25, 2012 • Soon to announce major customer trial results Electronic Geophone Well Head Devine - TX New Iberia - LO Fayetteville - ARK

  20. Microseismic Needs a Higher Performance Sensor10x Better at Low Frequency-100x at High Frequency • highest sensitivity (improved signal to noise ratio) - lowest noise floor (detects quieter signals) • widest bandwidth (detects all signals of interest) - highest temperature capable US DOE Lawrence Berkeley National Laboratory (LBNL) Richmond Field test site

  21. Small Increase in Well Productivity Yields Huge ReturnsTwo different services for unconventional oil producers • Economics of 3D Vertical Seismic Profiling • Current Situation • Vertical well cost $1 million • 30 fracs cost $9 million • The Problem • 20% of frac spend is effective= $2.8 million • Upfront Investment: • $500,000 to survey before fraccing • Estimated savings by eliminating 50% • unproductive frac stages= $3.1 million • ROIC +600% • Microseismic while fracking • To Improve Yields: • $400,000 per well x 8 = $3,200,000 • Results: • $33M @ 10% improvement • $65M @ 20% improvement • $100M @30% improvement

  22. Proven Fiber Optic Technology and TeamImproves Odds of Success • Revolutionary fiber sensor emerged from DOD • -USSI CEO started and led team • -Built, installed world’s largest fiber sensor system • -Key members of team now at USSI • USSI commercialized technology • USSI expanded IP • 7 issued and 17 patents filed • USSI licensed DOD technology • 4 issued patents

  23. Acorn Energy Directors and Management Team • - Chris Clouser, Chairman • - John Moore, CEO • - Richard Rimer, Executive Vice President • - Rob McKee, Director • - Mannie Jackson, Director • - Ed Woolard, Advisor

  24. Income Statement (Q1 2013)

  25. Income Statement

  26. Balance Sheet

  27. Cash Flows

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