**UNITED
      STATES**


**SECURITIES
      AND EXCHANGE COMMISSION**


**WASHINGTON,
      D.C. 20549**





**FORM
      10-Q**





QUARTERLY
                REPORT PURSUANT TO SECTION 13 OR 15(d) OF THESECURITIES
                EXCHANGE ACT OF 1934For
                the quarterly period ended March 31,
                2008





Commission
      file number: **0-19771**





**ACORN
      ENERGY, INC.**


(Exact
      name of registrant as specified in its charter)





**Delaware**
            
            **22-2786081**(State
                or other jurisdiction of
            
            (I.R.S.
                Employerincorporation
                or organization)
            
            Identification
                No.)**4
                West Rockland Road**
              **Montchanin,
                Delaware**
            
            **19710**(Address
                of principal executive offices)
            
            (Zip
                Code)





**(302)
      656-1708**


(Registrant’s
      telephone number, including area code)





Indicate
      by check mark whether the registrant (1) has filed all reports required to
      be
      filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
      the
      preceding 12 months (or for such shorter period that the registrant was required
      to file such reports), and (2) has been subject to such filing requirements
      for
      the past 90 days.    Yes x  No  ̈




Indicate
      by check mark whether the registrant is a large accelerated filer, an
      accelerated filer, a non-accelerated filer, or a smaller reporting company.
      See
      the definitions of “large accelerated filer,” “accelerated filer” and “smaller
      reporting company” in Rule 12b-2 of the Exchange Act. (Check one):


Large
                accelerated filer o
            Accelerated
                filer o
            Non-accelerated
                filer o
            Smaller
                reporting company x




Indicate
      by check mark whether the registrant is a shell company (as defined in Rule
      12b-2 of the Exchange Act).  Yes  ̈  No x





Indicate
      the number of shares outstanding of each of the issuer's classes of common
      stock, as of the latest practicable date.





Class
            
            Outstanding
                at May 16, 2008Common
                Stock, $0.01 par value per share
            
            11,222,481
                shares








**ACORN
      ENERGY, INC.**


**Quarterly
      Report on Form 10-Q**


**for
      the Quarterly Period Ended March 31, 2008**





**TABLE
      OF CONTENTS**





**PART
                I. Financial Information**Item
                1.
            Financial
                StatementsUnaudited
                Consolidated Financial Statements:Consolidated
                Balance Sheets as of December 31, 2007 and March 31, 2008
            1Consolidated
                Statements of Operations for the three month periods ended March
                31, 2007
                and 2008
            2Consolidated
                Statement of Changes in Shareholders’ Equity for the three month period
                ended March 31 2008
            3Consolidated
                Statements of Cash Flows for the three month periods ended March
                31, 2007
                and 2008
            4Notes
                to Consolidated Financial Statements
            6Item
                2.
            Management’s
                Discussion and Analysis of Financial Condition and Results of
                Operations
            15Item
                3.
            Quantitative
                and Qualitative Disclosures about Market Risk
            26Item
                4.
            Controls
                and Procedures
            26**PART
                II. Other Information**Item
                6.
            Exhibits
            27**Signatures**
            28




Certain
      statements contained in this report are forward-looking in nature. These
      statements are generally identified by the inclusion of phrases such as “we
      expect”, “we anticipate”, “we believe”, “we estimate” and other phrases of
      similar meaning. Whether such statements ultimately prove to be accurate depends
      upon a variety of factors that may affect our business and operations. Many
      of
      these factors are described in our most recent Annual Report on Form 10-K as
      filed with Securities and Exchange Commission.





**ACORN
      ENERGY, INC. AND SUBSIDIARIES**


**Consolidated
      Balance Sheets**


(in
      thousands, except share and per share data)





**As
                of December**
              **31,
                2007**
            
            **As
                of March**
              **31,
                2008**(unaudited)ASSETSCurrent
                assets:Cash
                and cash equivalents
            
            $
            19,644
            
            $
            10,509Restricted
                cash
            
            
            —
            
            
            1,533Accounts
                receivable, net
            
            
            1,775
            
            
            2,697Unbilled
                work-in-process
            
            
            1,784
            
            
            965Inventory
            
            
            119
            
            
            219Other
                current assets
            
            
            1,391
            
            
            1,759Total
                current assets
            
            
            24,713
            
            
            17,682Property
                and equipment, net
            
            
            1,335
            
            
            1,355Available
                for sale - Investment in Comverge
            
            
            55,538
            
            
            18,219Investment
                in GridSense
            
            
            —
            
            
            1,119Investment
                in Paketeria
            
            
            1,439
            
            
            1,273Other
                investments
            
            
            668
            
            
            668Funds
                in respect of employee termination benefits
            
            
            1,607
            
            
            1,774Restricted
                cash
            
            
            1,517
            
            
            1,372Other
                intangible assets, net
            
            
            5,987
            
            
            5,823Goodwill
            
            
            3,945
            
            
            3,945Other
                assets
            
            
            218
            
            
            1,441Total
                assets
            
            $
            96,967
            
            $
            54,671LIABILITIES
                AND SHAREHOLDERS’ EQUITYCurrent
                liabilities:Short-term
                bank credit
            
            $
            590
            
            $
            754Current
                maturities of long-term debt
            
            
            171
            
            
            116Convertible
                debt, net
            
            
            4,237
            
            
            —Trade
                accounts payable
            
            
            910
            
            
            834Accrued
                payroll, payroll taxes and social benefits
            
            
            1,118
            
            
            909Other
                current liabilities
            
            
            3,844
            
            
            2,302Total
                current liabilities
            
            
            10,870
            
            
            4,915Long-term
                liabilities:Long-term
                debt
            
            
            12
            
            
            11Liability
                for employee termination benefits
            
            
            2,397
            
            
            2,637Deferred
                taxes
            
            
            16,038
            
            
            465Other
                liabilities
            
            
            325
            
            
            247Total
                long-term liabilities
            
            
            18,772
            
            
            3,360Minority
                interests
            
            
            —
            
            
            1,955Shareholders’
                equity:Common
                stock - $0.01 par value per share:Authorized
                  - 20,000,000 shares; Issued -11,134,795 shares and 11,966,762 at
                  December
                  31, 2007 and March 31, 2008
            
            
            111
            
            
            119Additional
                paid-in capital
            
            
            49,306
            
            
            51,280Warrants
            
            
            1,330
            
            
            1,322Accumulated
                deficit
            
            
            (9,692
            )
            
            (12,281
            )Treasury
                stock, at cost –
                777,371
                shares for December 31, 2007 and
              March
                31, 2008, respectively
            
            
            (3,592
            )
            
            (3,592
            )Accumulated
                other comprehensive income
            
            
            29,862
            
            
            7,593Total
                shareholders’ equity
            
            
            67,325
            
            
            44,441Total
                liabilities and shareholders’ equity
            
            $
            96,967
            
            $
            54,671




The
      accompanying notes are an integral part of these consolidated financial
      statements.


1





**ACORN
      ENERGY, INC. AND SUBSIDIARIES**


**Consolidated
      Statements of Operations** (unaudited)


(in
      thousands, except per share data)




**Three
                  months ended**
                **March
                  31,****2007**
              
              **2008**SalesProjects
              
              $
              812
              
              $
              1,908Catalytic
                  regeneration services
              
              
              —
              
              
              2,249Services
              
              
              206
              
              
              119Other
              
              
              21
              
              
              191,039
              
              
              4,295Cost
                  of salesProjects
              
              
              581
              
              
              1,307Catalytic
                  regeneration services
              
              
              —
              
              
              1,491Services
              
              
              173
              
              
              99Other
              
              
              —
              
              
              —754
              
              
              2,897Gross
                  profit
              
              
              285
              
              
              1,398Operating
                  expenses:Research
                  and development expenses
              
              
              130
              
              
              51Selling,
                  marketing, general and administrative expenses
              
              
              810
              
              
              2,553Total
                  operating expenses
              
              
              940
              
              
              2,604Operating
                  loss
              
              
              (655
              )
              
              (1,206
              )Gain
                  on early redemption of convertible debentures
              
              
              —
              
              
              1,259Finance
                  expense, net
              
              
              (26
              )
              
              (2,988
              )Loss
                  before taxes on income
              
              
              (681
              )
              
              (2,935
              )Tax
                  benefit (expense) on income
              
              
              (2
              )
              
              642Loss
                  from operations of the Company and its consolidated
                  subsidiaries
              
              
              (683
              )
              
              (2,293
              )Minority
                  interests
              
              
              —
              
              
              (9
              )Share
                  in losses of Paketeria
              
              
              (187
              )
              
              (287
              )Net
                  loss
              
              $
              (870
              )
              $
              (2,589
              )Basic
                  and diluted loss per share:Net
                  loss per share –
                  basic and
                  diluted
              
              $
              (0.09
              )
              $
              (0.23
              )Weighted
                  average number of shares outstanding - basic and diluted
              
              
              9,507
              
              
              11,050




The
      accompanying notes are an integral part of these consolidated financial
      statements.


2


**ACORN
      ENERGY, INC. AND SUBSIDIARIES**


**Consolidated
      Statement of Changes in Shareholders’ Equity** (unaudited)


(in
      thousands)





Number
              of
              Shares
            
            Common
              Stock
            
            Additional
              Paid-In
              Capital
            
            Warrants
            
            Accumulated
                Deficit
            
            Treasury
                Stock
            
            Accumulated
                Other Comprehensive Income
            
            TotalBalances
                as ofDecember
                31, 2007
            
            
            11,135
            
            $
            111
            
            $
            49,306
            
            $
            1,330
            
            $
            (9,692
            )
            $
            (3,592
            )
            $
            29,862
            
            $
            67,325Net
                loss
            
            
            —
            
            
            —
            
            
            —
            
            
            —
            
            
            (2,589
            )
            
            —
            
            
            —
            
            
            (2,589
            )FAS
                115 adjustment on Comverge shares, net of deferred taxes
            
            
            —
            
            
            —
            
            
            —
            
            
            —
            
            
            —
            
            
            —
            
            
            (22,392
            )
            
            (22,392
            )Differences
                from translation of financial statements of subsidiaries
            
            
            —
            
            
            —
            
            
            —
            
            
            —
            
            
            —
            
            
            —
            
            
            123
            
            
            123Comprehensive
                loss
            
            
            —
            
            
            —
            
            
            —
            
            
            —
            
            
            —
            
            
            —
            
            
            —
            
            
            (24,858
            )Intrinsic
                value of beneficial conversion feature of convertible debentures
                at
                extinguishment
            
            
            —
            
            
            —
            
            
            (1,259
            )
            
            —
            
            
            —
            
            
            —
            
            
            —
            
            
            (1,259
            )Exercise
                of options and warrants
            
            
            52
            
            
            —
            
            
            129
            
            
            (8
            )
            
            —
            
            
            —
            
            
            —
            
            
            121Conversion
                of Debentures
            
            
            780
            
            
            8
            
            
            2,955
            
            
            —
            
            
            —
            
            
            —
            
            
            —
            
            
            2,963Stock
                option compensation
            
            
            —
            
            
            —
            
            
            149
            
            
            —
            
            
            —
            
            
            —
            
            
            —
            
            
            149Balances
                as ofMarch
                31, 2008
            
            
            11,967
            
            $
            119
            
            $
            51,280
            
            $
            1,322
            
            $
            (12,281
            )
            $
            (3,592
            )
            $
            7,593
            
            $
            44,441





The
      accompanying notes are an integral part of these consolidated financial
      statements.


3


**ACORN
      ENERGY, INC. AND SUBSIDIARIES**


**Consolidated
      Statements of Cash Flows** (unaudited)


(dollars
      in thousands)





**Three
                months ended**
              **March
                31,****2007**
            
            **2008**Cash
                flows provided by (used in) operating activities:Net
                loss
            
            $
            (870
            )
            $
            (2,589
            )Adjustments
                to reconcile net income (loss) to net cashused
                in operating activities:Depreciation
                and amortization
            
            
            32
            
            
            290Share
                in losses of Paketeria
            
            
            168
            
            
            287Increase
                (decrease) in liability for employee termination benefits
            
            
            (252
            )
            
            240Deferred
                income taxes
            
            
            —
            
            
            (646
            )Amortization
                of stock-based deferred compensation
            
            
            289
            
            
            149Amortization
                of beneficial conversion feature, debt origination costs and value
                of
                warrants in private placement of Debentures
            
            
            —
            
            
            3,064Gain
                on early redemption of Debentures
            
            
            —
            
            
            (1,259
            )Provision
                of loan and accrued interest to investee company
            
            
            —
            
            
            248Minority
                interests
            
            
            —
            
            
            9Other
            
            
            1
            
            
            9Change
                in operating assets and liabilities:Decrease
                (increase) in accounts receivable, unbilled work-in process and other
                current and other assets
            
            
            (172
            )
            
            40Increase
                in inventory
            
            
            —
            
            
            (100
            )Increase
                (decrease) in accounts payable and other liabilities
            
            
            38
            
            
            (978
            )Net
                cash used in operating activities
            
            
            (766
            )
            
            (1,236
            )Cash
                flows provided by (used in) investing activities:Investment
                in GridSense
            
            
            —
            
            
            (1,153
            )Restricted
                cash
            
            
            —
            
            
            (1,388
            )Loans
                to investee and potential investee companies
            
            
            —
            
            
            (2,877
            )Transaction
                costs in 2007 acquisition of SCR Tech
            
            
            —
            
            
            (927
            )Amounts
                funded for employee termination benefits
            
            
            73
            
            
            (167
            )Utilization
                of employee termination benefits
            
            
            (46
            )
            
            —Acquisitions
                of property and equipment
            
            
            (76
            )
            
            (110
            )Net
                cash used in investing activities
            
            
            (49
            )
            
            (6,622
            )Cash
                flows provided by (used in) financing activities:Short-term
                debt borrowings (repayments), net
            
            
            (302
            )
            
            164Proceeds
                from long-term debt
            
            
            107
            
            
            —Proceeds
                from convertible debentures with warrants net of transaction
                costs
            
            
            3,685
            
            
            —Redemption
                of convertible debentures
            
            
            —
            
            
            (3,443
            )Repayments
                of long-term debt
            
            
            (35
            )
            
            (67
            )Issuance
                of shares to minority shareholders in consolidated
                subsidiary
            
            
            —
            
            
            1,948Proceeds
                from employee stock option and warrant exercises
            
            
            114
            
            
            121Net
                cash provided (used in) by financing activities
            
            
            3,569
            
            
            (1,277
            )Net
                increase (decrease) in cash and cash equivalents
            
            
            2,754
            
            
            (9,135
            )Cash
                and cash equivalents at beginning of period
            
            
            1,521
            
            
            19,644Cash
                and cash equivalents at end of period
            
            
            4,275
            
            
            10,509





The
      accompanying notes are an integral part of these consolidated financial
      statements.


4


**ACORN
      ENERGY, INC. AND SUBSIDIARIES**


**Consolidated
      Statements of Cash Flows** (unaudited)


(dollars
      in thousands)


Non-cash
                  items:Unrealized
                  loss from Comverge shares
              
              
              
              
              
              37,319Reduction
                  of deferred tax liability with respect to unrealized loss from
                  Comverge
                  shares
              
              
              
              
              
              14,927Non-cash
                  financing and investing itemsConversion
                  of Debentures to common stock and additional
                  paid-in-capital
              
              
              
              
              
              2,963Value
                  of beneficial conversion feature upon issuance of convertible
                  debentures
              
              
              2,125Adjustment
                  of retained earnings and other current liabilities with respect
                  to the
                  adoption of FIN 48
              
              
              305





The
      accompanying notes are an integral part of these consolidated financial
      statements.


5


**ACORN
      ENERGY, INC. AND SUBSIDIARIES**


**Notes
      to Consolidated Financial Statements** (unaudited)


(dollars
      in thousands)




**Note
      1: Basis of Presentation**




The
      accompanying unaudited consolidated financial statements of Acorn Energy, Inc.
      (“AEI”) and subsidiaries (the “Company”) have been prepared in accordance with
      accounting principles generally accepted in the United States of America for
      interim financial information and with the instructions to Article 10 of
      Regulation S-X. Accordingly, they do not include all of the information and
      footnotes required by accounting principles generally accepted in the United
      States of America for complete consolidated financial statements. In the opinion
      of management, all adjustments considered necessary for a fair presentation
      have
      been included. Operating results for the three-month period ended March 31,
      2008
      are not necessarily indicative of the results that may be expected for the
      year
      ending December 31, 2008. These unaudited consolidated financial statements
      should be read in conjunction with the consolidated financial statements and
      footnotes thereto included in the Company’s Annual Report on Form 10-K for the
      year ended December 31, 2007. ****




**Note
      2: New Accounting Standards**





In
      December 2007, the FASB issued SFAS No. 141(R), “Business Combinations” (“SFAS
      141(R)”) and SFAS No. 160, “Non-controlling Interests in Consolidated Financial
      Statements” (“SFAS 160”). SFAS 141(R) requires the acquiring entity in a
      business combination to record all assets acquired and liabilities assumed
      at
      their respective acquisition-date fair values and changes other practices under
      SFAS 141. SFAS 141(R) also requires additional disclosure of information
      surrounding a business combination, such that users of the entity’s financial
      statements can fully understand the nature and financial impact of the business
      combination. SFAS 160 requires entities to report non-controlling (minority)
      interests in subsidiaries as equity in the consolidated financial statements.
      The Company is required to adopt SFAS 141(R) and SFAS 160 simultaneously in
      its
      fiscal year beginning January 1, 2009. The provisions of SFAS 141(R) will only
      impact the Company if it is party to a business combination after the
      pronouncement has been adopted. The Company is currently evaluating the effects,
      if any, that SFAS 160 may have on its financial position, results of operations
      and cash flows.




In
      June
      2006, the Emerging Issues Task Force (EITF), reached a consensus on Issue No.
      06-01, “Accounting for Consideration Given by a Service Provider to
      Manufacturers or Resellers of Equipment Necessary for an End-Customer to Receive
      Service from the Service Provider” (EITF No. 06-01). EITF 06-01 provides
      guidance on the accounting for consideration given to third party manufacturers
      or resellers of equipment which is required by the end-customer in order to
      utilize the service from the service provider. EITF 06-01 is effective January
      1, 2008 for the Company. The adoption of EITF 06-01 did not have a material
      impact on the Company’s results of operations and financial
      position.





In
      June
      2007, the Emerging Issues Task Force (EITF) reached Issue No. 07-03, "Accounting
      for Nonrefundable Advance Payments for Goods or Services Received to Be Used
      in
      Future Research and Development Activities" (EITF No. 07-03). EITF No. 07-03
      requires that nonrefundable advance payments for goods or services that will
      be
      used or rendered for future research and development activities be deferred
      and
      amortized over the period that the goods are delivered or the related services
      are performed, subject to an assessment of recoverability. The provisions of
      EITF 07-03 are effective January 1, 2008 for the Company. The adoption of EITF
      07-03 had no material impact on the Company’s results of operations and
      financial position.


6





In
      December 2007, the FASB ratified EITF Issue No. 07-01, "Accounting for
      Collaborative Arrangements" ("EITF 07-01"). EITF 07-01 defines collaborative
      arrangements and establishes reporting requirements for transactions between
      participants in a collaborative arrangement and between participants in the
      arrangement and third parties. EITF 07-01 also establishes the appropriate
      income statement presentation and classification for joint operating activities
      and payments between participants, as well as the sufficiency of the disclosures
      related to these arrangements. EITF 07-01 is effective for fiscal years
      beginning after December 15, 2008 (January 1, 2009, for the Company). EITF
      07-01
      shall be applied using modified version of retrospective transition for those
      arrangements in place at the effective date. An entity should report the effects
      of applying this Issue as a change in accounting principle through retrospective
      application to all prior periods presented for all arrangements existing as
      of
      the effective date, unless it is impracticable to apply the effects the change
      retrospectively. The Company does not expect the adoption of EITF 07-01 to
      have
      a material impact on its results of operations and financial
      position.




**Note
      3: Investment in Comverge Inc. (Comverge)**




As
      of
      March 31, 2008, all of the Company’s 1,763,665 Comverge shares are accounted for
      as “available-for-sale” under SFAS 115 “Accounting for Certain Investments in
      Debt and Equity Securities”. Accordingly the Company recorded its investment in
      Comverge based on Comverge’s share price of $10.33 at March 31, 2008 and
      reflected a decrease of $37,319 to its investment balance by recording those
      shares at fair market value (to $18,219). In addition, the Company reduced
      the
      previously recorded deferred tax liability associated with the recording of
      those shares at fair market value by $14,927. The net reduction of $22,392
      was
      recorded to Accumulated Other Comprehensive Income.




**Note
      4: Investment in GridSense Systems Inc. (GridSense)**




On
      January 2, 2008, the Company participated in a private placement financing
      for
      gross proceeds of C$1,700 (approximately $1,700) for GridSense Systems Inc.
      (CDNX: GSN.V )
      (“GridSense”). The placement consisted of 24,285,714 units at $0.07 per unit,
      each unit being comprised of one common share and one share purchase warrant.
      Each warrant entitles the holder to acquire an additional common share at $0.10
      per share until July 2, 2008. The shares, and any shares acquired on exercise
      of
      the warrants, are subject to a four month hold period expiring May 3, 2008.




The
      Company was the lead investor in the placement acquiring 15,714,285 shares
      and
      15,714,285 warrants for C$1,100 (approximately $1,100) plus transaction costs
      of
      approximately $53. The 15,714,285 shares acquired by the Company in the
      placement represent 24.52% of GridSense's issued and outstanding shares. If
      the
      Company exercises all of the 15,714,285 warrants acquired in the placement,
      it
      will own 31,428,570 GridSense common shares, representing 39.37% of GridSense's
      issued and outstanding shares.




The
      Company’s investment in GridSense is accounted for using the equity method in
      accordance with APB Opinion No. 18, “The Equity Method of Accounting for
      Investments in Common Stock”. The Company has not recorded its share of
      income/losses in GridSense for the period from January 2, 2008 to March 31,
      2008
      of as the Company has not been able to receive timely financial information.
      This will result in a lag period of three months in the reporting of the
      Company's share of income or losses in GridSense. The Company has not yet
      allocated the purchase price of its investment in GridSense to identifiable
      intangibles as it is awaiting finalization of its preliminary independent
      appraisal for the allocation of its purchase price. The Company will begin
      to
      amortize any acquired intangibles identified in the independent appraisal
      beginning in the second quarter of 2008.


7




**Note
      5—Investment in Paketeria AG (Paketeria)**




The
      Company currently owns approximately 31% of Paketeria’s outstanding shares and
      accordingly, records 31% of Paketeria’s losses as equity loss in Paketeria.




The
      Company’s Share of losses in Paketeria is comprised of the
      following:





Three
                months
              ended
                March
              31,
                2007
            
            Three
                months
              ended
                March
              31,
                2008Equity
                loss in Paketeria
            
            $
            (133
            )
            $
            (258
            )Amortization
                expense associated with acquired non-compete and franchise
                agreements
            
            
            (35
            )
            
            (29
            )Stock
                compensation expense
            
            
            (19
            )
            
            —Share
                of losses in Paketeria
            
            $
            (187
            )
            $
            (287
            )




During
      the three months ended March 31, 2008, the Company lent Paketeria €503
      ($762, based upon the then current exchange rates) on a series of promissory
      notes. The promissory notes bear interest at the rate of 8.0%. The promissory
      notes are due on the earlier of December 31, 2008 or upon the completion of
      any
      transaction in which Paketeria raises funds through the any equity and/or debt
      financing. The promissory note balances are included in Other Current Assets
      in
      the Consolidated Balance Sheets. The Company is to receive additional warrants
      as a result of its loans to Paketeria. The number of warrants and their terms
      have not yet been determined.




**Note
      6: Goodwill and Other Intangible Assets**




There
      were no acquisitions or impairments of goodwill recorded during the three-month
      period ended March 31, 2008. The Company’s goodwill is related to both its SCR
      segment ($3,714) and its RT Solutions segment ($ 231).




The
      Company’s amortizable intangible assets consisted of SCR technologies and RT
      Solutions intangibles (see below). The changes in the carrying amounts and
      accumulated amortization of intangible assets from December 31, 2007 to
      March 31, 2008 were as follows:




SCR
                Technologies
            
            RT
                Solutions IntangiblesCost
            
            Accumulated
                amortization
            
            Cost
            
            Accumulated
                amortization
            
            NetBalance
                at December 31, 2007
            
            $
            5,511
            
            $
            (81
            )
            $
            557
            
            
            —
            
            $
            5,987Amortization
            
            
            —
            
            
            (137
            )
            
            —
            
            
            (27
            )
            
            (164
            )Balance
                at March 31, 2008
            
            $
            5,511
            
            $
            (218
            )
            $
            557
            
            $
            (27
            )
            $
            5,823




All
      intangible assets are being amortized over their estimated useful lives, which
      were estimated to be ten years for SCR Technologies and seven
      years for RT Solutions intangibles. A mortization
      expense for each of the three months ended March 31, 2007 and 2008 amounted
      to
      $6 and $164, respectively. Amortization
      expense with respect to intangible assets is estimated to be $631 per year
      for
      each of the years ending March 31, 2009 through 2013.




**Note
      7: Other Assets**




At
      March 31, 2008, Other Assets includes a $1,000 secured promissory note from
      Software Innovation, Inc., a Canadian company with whom the Company has entered
      into a letter of intent to acquire. The promissory note bears interest at a
      rate
      of 12% per year and is due on December 31, 2010. Software Innovation is the
      developer of CoreworxTM a world-leading software tool for capital project
      collaboration. CoreworxTM is currently utilized to manage the construction of
      hundreds of major capital projects, including offshore oil wells, refineries,
      mining operations and power plants around the world. Completion of the
      transaction remains subject to due diligence and execution of definitive
      documentation. During the three month period ended March 31, 2008, the Company
      recorded interest income of $5 with respect to the promissory note.


8




At
      March 31, 2008, Other Assets also includes a $200 on a convertible promissory
      note from Environmental Energy Services, Inc. (EES) in contemplation of the
      Company’s CoaLogix subsidiary’s acquisition of substantially all the assets of
      EES. As CoaLogix did not enter into a definitive agreement with EES by the
      defined target date in the convertible promissory note, the initial interest
      rate on the convertible promissory note was increased from 8% per year to 11%
      per year and the due date was fixed at February 28, 2011. CoaLogix may convert
      the $200 into 2.0% of the common stock of EES until May 31, 2008.




During
      the first quarter of 2008,
      the Company lent an affiliated company $245 on a promissory note that was to
      bear interest at a rate of 8% per year and was due on January 30, 2010. At
      the
      end of the first quarter of 2008, the Company took a provision against the
      loan
      due to questionable collectibility and included the expense in selling,
      marketing and general administrative expense in the first quarter.




**Note
      8: Redemption of Convertible Redeemable Subordinated Debentures**




On
      January 29, 2008 the Company completed the redemption of all of its outstanding
      10% Convertible Redeemable Subordinated Debentures due March 2011. Subsequent
      to
      the Company’s announcement of redemption, the holders of the debentures elected
      to convert approximately $2,963 into approximately 780,000 shares of the
      Company’s common stock, at a conversion price of $3.80 per share. The remaining
      $3,443 principal amount of Debentures was redeemed in accordance with the notice
      of redemption. As a result of the early redemption of the Debentures, the
      remaining balance of unamortized beneficial conversion features, warrants and
      debt origination costs of $3,064 was written off to interest expense in the
      first quarter of 2008. In
      accordance with applicable accounting standards, the Company recorded a non-cash
      gain of $1,259 on the redemption of the Debentures from the reacquisition of
      the
      beneficial conversion feature.




**Note
      9: Minority Interests**




On
      February 29, 2008, the Company entered into a Common Stock Purchase Agreement
      (the “Stock Purchase Agreement”) with the Company’s wholly-owned CoaLogix Inc.
      subsidiary (“CoaLogix”) and EnerTech Capital Partners III L.P. (“EnerTech”)
      pursuant to which EnerTech purchased from CoaLogix a 15% interest in CoaLogix
      for $1,948. Such interest was reflected in the Company’s Consolidated Balance
      Sheets as Minority Interests. The Company owns 85% of CoaLogix following the
      transaction. The Company recorded a gain of $3 as a result of the investment
      by
      EnerTech. Such gain is included in Selling, Marketing, General and
      Administrative expenses. The minority interests’ share of CoaLogix’s first
      quarter 2008 net income was $9.




In
      connection with completing the transaction under the Stock Purchase Agreement,
      the Company, CoaLogix, EnerTech and the senior management of CoaLogix entered
      into a Stockholders’ Agreement dated as of February 29, 2008 (the “Stockholders’
Agreement”). Under the Stockholders’ Agreement, EnerTech is entitled to a
      designate a member of the Board of Directors of CoaLogix. In addition, the
      Stockholders’ Agreement provides the Company and EnerTech with reciprocal rights
      of first refusal and co-sale in connection with proposed transfers of their
      CoaLogix stock.




Pursuant
      to the Stockholders’ Agreement, EnerTech also has a right to purchase additional
      stock to maintain its percentage interest in CoaLogix in the event of dilutive
      transactions. The right may be exercised until such time as the Company’s
      ownership in CoaLogix is reduced to 75% or CoaLogix completes an initial public
      offering.


9




**Note
      10: Stock Options and Warrants**




(a)
      Acorn
      Stock Options





A
      summary
      of stock option activity for the three months ended March 31, 2008 is as
      follows:





Number
                of
              Options
                (in
              shares)
            
            Weighted
              Average
              Exercise
              Price
            
            Weighted
              Average
              Remaining
              Contractual
              Life
            
            Aggregate
              Intrinsic
              ValueOutstanding
                at December 31, 2007
            
            
            1,684,000
            
            
            3.09
            
            
            3.1
                yearsGranted
                at market price
            
            
            285,000
            
            
            5.21Exercised
            
            
            (47,500
            )
            
            2.28
            
            
            
            
            $
            125Forfeited
                or expired
            
            
            —
            
            
            —Outstanding
                at March 31, 2008
            
            
            1,921,500
            
            
            3.42
            
            
            3.4
                years
            
            $
            2,821Exercisable
                at March 31, 2008
            
            
            1,349,498
            
            
            2.99
            
            
            2.8
                years
            
            $
            2,526





The
      weighted average grant date fair value of the 285,000 stock options granted
      during the first three months of 2008 was $3.35 per share. The fair value of
      the
      options granted was estimated on the grant date using the Black-Scholes
      option-pricing model with the following weighted average
      assumptions:





Volatility
            
            
            74
            %Expected
                term (years)
            
            
            5.7
                yearsRisk
                free interest rate
            
            
            2.5
            %Expected
                dividend yield
            
            
            0.0
            %




Total
      stock-based compensation expense included in the Company’s statements of
      operations for the three months ended March 31, 2007 and 2008, respectively,
      was:





Three
              months
              ended
              March
                31,
              2007
            
            Three
              months
              ended
              March
                31,
              2008Cost
                of sales
            
            $
            21
            
            $
            —Selling,
                marketing, general and administrative expenses
            
            
            249
            
            
            149Share
                of losses in Paketeria
            
            
            19
            
            
            —Total
                stock based compensation expense
            
            $
            289
            
            $
            149




10




(b)
      Warrants





A
      summary
      of stock warrants activity for the three months ended March 31, 2008 is as
      follows:





Number
                of
              Warrants
                (in
              shares)
            
            WeightedAverageExercisePrice
            
            WeightedAverageRemainingContractualLifeOutstanding
                at December 31, 2007
            
            
            986,506
            
            
            3.89
            
            
            4.01Granted
            
            
            —Exercised
            
            
            (4,717
            )
            
            2.78Forfeited
                or expired
            
            
            —Outstanding
                and exercisable at March 31, 2008
            
            
            981,789
            
            
            3.89
            
            
            3.76




**Note
      11: Warranty Provision**





The
      following table summarizes the changes in accrued warranty liability from the
      period from December 31, 2007 to March 31, 2008:





GrossCarryingAmountBalance
                at December 31, 2007
            
            $
            107Warranties
                issued and adjustment of provision
            
            
            —Warranty
                claims
            
            
            —Balance
                at March 31, 2008
            
            $
            107




11




**Note
      12: Fair Value Measurement**




In
      September 2006, the FASB issued SFAS 157 which defines fair value, establishes
      a
      framework for measuring fair value in generally accepted accounting principles
      and expands disclosures about fair-value measurements. The Company adopted
      SFAS
      157 effective January 1, 2008 for all financial assets and liabilities and
      any
      other assets and liabilities that are recognized or disclosed at fair value
      on a
      recurring basis. Although the adoption of SFAS 157 did not materially impact
      the
      Company’s financial condition, results of operations or cash flows, the company
      is required to provide additional disclosures within its condensed consolidated
      financial statements.




SFAS
      157 defines fair value as the price that would be received to sell an asset
      or
      paid to transfer the liability (an exit price) in an orderly transaction between
      market participants and also establishes a fair value hierarchy which requires
      an entity to maximize the use of observable inputs and minimize the use of
      unobservable inputs when measuring fair value. The fair value hierarchy within
      SFAS 157 distinguishes between three levels of inputs that may be utilized
      when
      measuring fair value including level 1 inputs (using quoted prices in active
      markets for identical assets or liabilities), level 2 inputs (using inputs
      other
      than level 1 prices such as quoted prices for similar assets and liabilities
      in
      active markets or inputs that are observable for the asset or liability) and
      level 3 inputs (unobservable inputs supported by little or no market activity
      based on the company’s own assumptions used to measure assets and liabilities).
      A financial asset’s or liability’s classification within the above hierarchy is
      determined based on the lowest level input that is significant to the fair
      value
      measurement.




The
      Company also adopted FAS 159, “The Fair Value Option for Financial Assets and
      Financial Liabilities” (“SFAS 159”). This standard permits entities to choose to
      measure many financial assets and financial liabilities at fair value.
      Unrealized gains and losses on items for which the fair value option has been
      elected are reported in earnings. SFAS 159 is effective for fiscal years after
      November 15, 2007. The Company did not elect to apply the fair value option
      available under SFAS 159 for any of its eligible instruments.




Financial
      assets and liabilities measured at fair value on a recurring basis as at March
      31, 2008 consisted of the following:




Level
                1
            
            Level
                2
            
            TotalAvailable
                for sale securities
            
            
            18,219
            
            
            —
            
            
            18,219




Marketable
      securities that are classified in level 1 consist of available-for-sale
      securities for which market prices are readily available. Unrealized gains
      or
      losses from available-for-sale securities are recorded in accumulated other
      comprehensive (loss) income.




**Note
      13: Segment Information**




The
      Company’s current operations are based upon two operating segments:




·
            RT
                Solutions whose activities are focused on two areas - naval solutions
                and
                other real-time and embedded hardware & software development. RT
                Solutions activities are provided through the Company’s DSIT Solutions
                Ltd. subsidiary.




12




·
            SCR
                (Selective Catalytic Reduction) Catalyst and Management Services
                conducted
                through the Company’s recently created CoaLogix subsidiary which provides
                catalyst regeneration technologies and management services for selective
                catalytic reduction (SCR) systems used by coal-fired power plants
                to
                reduce nitrogen oxides (NOx) emissions. As these activities were
                acquired
                in November 2007, there are no comparative results reported for these
                activities for the three months ended March 31,
                2007.




Other
      operations include various operations in Israel that do not meet the
      quantitative thresholds of SFAS No. 131.




**RT Solutions**
            
            **SCR**
            
            **Other**
            
            **Total**Three
                months ended March 31, 2008:Revenues
                from external customers
            
            $
            1,682
            
            $
            2,249
            
            $
            364
            
            $
            4,295Intersegment
                revenues
            
            
            —
            
            
            —
            
            
            —
            
            
            —Segment
                gross profit
            
            
            564
            
            
            758
            
            
            76
            
            
            1,398Segment
                income (loss)
            
            
            83
            
            
            183
            
            
            (35
            )
            
            231Three
                months ended March 31, 2007:Revenues
                from external customers
            
            $
            700
            
            
            —
            
            $
            339
            
            
            1,039Intersegment
                revenues
            
            
            —
            
            
            —
            
            
            —
            
            
            —Segment
                gross profit
            
            
            196
            
            
            —
            
            
            89
            
            
            285Segment
                income (loss)
            
            
            57
            
            
            —
            
            
            (83
            )
            
            (26
            )




**Reconciliation
      of Segment Income (Loss) to Consolidated Net Loss**





Three months endedMarch 31,2007
            
            2008Total
                income for reportable segments
            
            $
            57
            
            $
            266Other
                operational segment loss
            
            
            (83
            )
            
            (35
            )Total
                operating income (loss)
            
            
            (26
            )
            
            231Share
                of losses in Paketeria
            
            
            (187
            )
            
            (287
            )Minority
                interests
            
            
            —
            
            
            (9
            )Gain
                on early redemption of Debentures
            
            
            —
            
            
            1,259Net
                loss of corporate headquarters and other unallocated
                costs*
            
            
            (657
            )
            
            (3,783
            )Total
                consolidated net loss
            
            $
            (870
            )
            $
            (2,589
            )




*
      In
      2008, includes $3,064
      of
      interest expense recorded associated with the early redemption of the Company’s
      Convertible Debentures (see Note 8) and $646 of tax benefits.




**Note
      14: Subsequent Events**




**Strategic
      Alliance and License Agreement with Solucorp Industries,
      Ltd.**





On
      May 9,
      2008, the Company’s CoaLogix subsidiary signed an agreement to pay an upfront
      $2,000 license fee and subsequent royalties on net sales (as defined) to obtain
      the exclusive worldwide commercialization and marketing rights to Solucorp
      Industries, Ltd. (SLUP.PK) IFS-2C technology for the fixation of heavy metals,
      such as mercury, for the electric power generation industry. The agreement
      grants CoaLogix exclusive worldwide marketing rights for the technology for
      a
      period of ten years with on option to extend for an additional five years.
      The
      Company had paid a $650 deposit for the license fee in the first quarter of
      2008
      which is included in other current assets.




13




**Value
      of the Company’s Investment in Comverge**





As
      of May
      9, 2008, the total market value of the Company’s 1,763,665 Comverge shares was
      approximately $24.5 million based on a May 9, 2008 closing market price of
      $13.89 per share.




**Income
      Taxes**




In
      April
      2008, the Company received a notification confirming the Company’s exemption
      from corporate income tax from the State of Delaware. The Company is therefore
      only subject to Federal income taxes at rate of 34%. In future periods, the
      Company will determine the value of all deferred tax assets and liabilities
      at
      that rate. In addition, as a result of the notification, the Company will
      eliminate a $225 tax provision previously recorded with respect to the corporate
      income tax from the State of Delaware in the second quarter of
      2008.




14




**ACORN
      ENERGY, INC.**


**Management’s
      Discussion and Analysis of**


**Financial
      Condition and Results of Operations**





**Item
      2.**  **Management’s
      Discussion and Analysis of Financial Condition and Results of
      Operations**




The
      following discussion includes statements that are forward-looking in nature.
      Whether such statements ultimately prove to be accurate depends upon a variety
      of factors that may affect our business and operations. Certain of these factors
      are discussed in this report and in our Annual Report on Form 10-K for the
      year
      ended December 31, 2007.





**Recent
      Developments**




***Strategic
      Alliance and License Agreement with Solucorp Industries,
      Ltd.***





On
      May 9,
      2008, our CoaLogix subsidiary signed an agreement to pay an upfront $2 million
      license fee and subsequent royalties on net sales (as defined) to obtain the
      exclusive worldwide commercialization and marketing rights to Solucorp
      Industries, Ltd. (SLUP.PK) IFS-2C technology for the fixation of heavy metals,
      such as mercury, for the electric power generation industry. The agreement
      grants CoaLogix exclusive worldwide marketing rights for the technology for
      a
      period of ten years with on option to extend for an additional five years.




***Redemption
      of Convertible Debentures***




In
      January 2008, we completed our previously announced redemption of our
      outstanding 10% Convertible Redeemable Subordinated Debentures due March 2011.
      Prior to the redemption, the debenture holders converted the $3.44 million
      convertible portion of the debentures into approximately 900,000 shares of
      our
      common stock and the remaining $3.44 million of debentures were redeemed in
      accordance with the notice of redemption. In accordance with applicable
      accounting standards, we recorded a non-cash gain of approximately $1.3 million
      on the redemption of our debentures.




***Sale
      of 15% of CoaLogix to EnerTech***




On
      February 29, 2008, we entered into a Common Stock Purchase Agreement (the
“Agreement”) with CoaLogix and EnerTech Capital Partners III L.P. (“EnerTech”)
      pursuant to which EnerTech purchased from CoaLogix a 15% interest in CoaLogix
      for $1.95 million. Following the transaction, we own 85% of CoaLogix.




In
      connection with the transaction under the Agreement, the Company, CoaLogix,
      EnerTech and the senior management of CoaLogix entered into a Stockholders’
Agreement dated as of February 29, 2008 (the “Stockholders’ Agreement”). Under
      the Stockholders’ Agreement, EnerTech is entitled to designate a member of the
      Board of Directors of CoaLogix. In addition, the Stockholders’ Agreement
      provides the Company and EnerTech with reciprocal rights of first refusal and
      co-sale in connection with proposed transfers of their CoaLogix stock.




Pursuant
      to the Stockholders’ Agreement, EnerTech also has a right to purchase additional
      stock to maintain its percentage interest in CoaLogix in the event of dilutive
      transactions. The right may be exercised until such time as the Company’s
      ownership in CoaLogix is reduced to 75% or CoaLogix completes an initial public
      offering.




15




***Comverge***




The
      market value of our 1,763,665 common shares of Comverge on March 31, 2008 was
      approximately $18.2 million based on a market share price of $10.33 on that
      date. Since March 31, 2008, the share price of Comverge’s shares have risen and
      currently (as of May 9, 2008) our shares in Comverge have a value of $24.5
      million based on a market share price of $13.89 per share.




***Paketeria***




In
      April
      2008, Paketeria announced that it would shortly open five new branches in a
      trial project together with the Association of the German Volksbanken and
      Raiffeisenbanken (BVR) to compete with the Deutsche Post. The purpose of this
      project is to fill the gap left by Deutsche Post when it closed their branches.
      If the project is successful, the concept will be extended to over one-thousand
      Volksbanks.




Thus
      far
      in 2008, we have provided Paketeria with approximately $1 million of loans
      in
      order to provide it with additional temporary financing to help it support
      its
      operations until it is able to raise funds through the sale by existing
      shareholders of shares through the escrow arrangement from Paketeria’s listing
      on the Frankfurt Stock Exchange (see our Annual Report on Form 10K) or other
      sources.




***GridSense***




On
      January 2, 2008, we participated in a transaction where we were the lead
      investor in a private placement by GridSense Systems Inc. (“GridSense”),
      acquiring 15,714,285 shares and 15,714,285 warrants for C$1.1 million
      (approximately $1.1 million). The 15,714,285 shares acquired by us in the
      placement represent 24.52% of GridSense's issued and outstanding shares. If
      we
      exercise all of the 15,714,285 warrants acquired in the placement, we will
      own
      31,428,570 GridSense common shares, representing 39.37% of GridSense's issued
      and outstanding shares.




***Restricted
      Cash***




In
      January 2008, we transferred $1 million (in addition to the $1.5 million
      transferred in 2007) to a bank in Israel as security for a guarantee the bank
      has provided to the Israel Ministry of Defense in connection with a $7.5 million
      naval project being performed by our DSIT subsidiary. The cash is restricted
      and
      is expected to be unavailable to us until early 2009 at which time we expect
      a
      significant portion to be released.





***Corporate***





Under
      the
      Investment Company Act of 1940, as amended (the “Investment Company Act”), and
      the rules thereunder, we would be deemed to be an investment company if the
      “value” of “investment securities” we own accounts for more than 40% of the
      total “value” of our assets, exclusive of “government securities,” cash and
      certain cash items. The shares of Comverge common stock we own are “investment
      securities” under the Act and account for significantly more than 40% of the
      value of our total assets.




Pursuant
      to a “safe harbor” provision under the Investment Company Act rules, we would be
      exempt from regulation as an investment company, if, among other things, we
      were
      deemed to primarily control Comverge. In order to primarily control Comverge,
      we
      would need to own more than 25% of its voting securities and be Comverge’s
      single largest shareholder. As a result of (1) the Comverge IPO in April 2007
      which resulted in the substantial dilution of our equity position, and (2)
      the
      resulting termination of our voting agreements with other shareholders, we
      are
      likely to be deemed to no longer have primary control of Comverge. As a result,
      as of the end of our fiscal quarter ending June 30, 2007, we may have fallen
      within the definition of an investment company, without any applicable
      exemption.




16




We
      have
      availed ourselves of the provision under Rule 3a-2 under the Investment Company
      Act that exempts an issuer from investment company status for up to one year,
      so
      long as it has a bona fide intent to be engaged primarily, as soon as is
      reasonably possible (and in any event by the termination of the one-year
      period), in a business other than that of investing, reinvesting, owning,
      holding or trading in securities.





Our
      management and Board of Directors has formulated plans and is implementing
      plans
      for returning the Company to compliance with the numerical tests for exemption
      from investment company status as soon as possible and no later than June 30,
      2008. These plans include the acquisition of one or more wholly-owned,
      majority-owned, or primarily-controlled operating businesses and the sale of
      a
      substantial portion of our Comverge shares. Our 2007 purchase of SCR-Tech,
      our
      sale of Comverge shares and our additional investment in our majority-owned
      and
      primarily-controlled subsidiary has significantly reduced the percentage of
      the
      total value of our assets represented by investment securities. The Board has
      not yet performed a valuation of our assets after giving effect to such
      transactions.





We
      remain
      committed to coming into compliance with the numerical tests for exemption
      from
      investment company status as soon as possible and no later than June 30, 2008.
      We may need to sell and/or distribute additional Comverge shares, acquire a
      suitable operating business or businesses and take other actions to come into
      compliance with the Investment Company Act. There is no assurance that we will
      be able to successfully complete those steps by June 30, 2008. While we could
      request an order from the SEC to give us additional time beyond the one year
      period allowed by Rule 3a-2 to take the actions necessary to come into
      compliance with the Investment Company Act, the Board of Directors has not
      yet
      determined the need to request such an order and there is no assurance that
      such
      an order would be granted.





If
      we are
      unable to come into compliance with the Investment Company Act before June
      30,
      2008 (or any later date to which that may be extended by the SEC), we may be
      in
      violation of the Investment Company Act. If we were deemed to be operating
      as an
      illegally unregistered investment company, the consequences could potentially
      be
      severe. Among other things, the Company would be prohibited from engaging in
      business in the United States (including non-investment company business) and
      all of its contracts would become voidable at the election of the
      counterparty.




**Overview
      and Trend Information**





Acorn
      Energy is a holding company that specializes in acquiring and accelerating
      the
      growth of emerging ventures that promise improvement in the economic and
      environmental efficiency of the energy sector. We aim to acquire primarily
      controlling positions in companies led by promising entrepreneurs and we add
      value by supporting those companies with financing, branding, positioning,
      and
      strategy and business development.




Through
      our majority-owned operating subsidiaries we provide the following
      services:




·
            **RT
                Solutions**.
                Real time software consulting and development services provided through
                the Company’s DSIT subsidiary, with a focus on port security for strategic
                energy installations.





·
            **SCR
                Catalyst and Management Services**for coal-fired power plants that use selective catalytic reduction
                (“SCR”)
                systems to reduce nitrogen oxide (“NOx”) emissions, provided through
                CoaLogix and its subsidiary SCR-Tech LLC. These services include
                SCR
                catalyst management, cleaning and regeneration as well as consulting
                services to help power plant operators to optimize efficiency and
                reduce
                overall NOx compliance costs.




17




Our
      equity affiliates and entities in which we own significant equity interests
      are
      engaged in the following activities:





·
            **Comverge
                Inc.**Energy intelligence solutions for utilities and energy companies
                through
                demand response.





·
            **Paketeria
                AG**.
                Owner and franchiser of a full-service franchise chain in Germany
                that
                combines eight services (post and parcels, electricity, eBay dropshop,
                mobile telephones, copying, printing, photo processing and printer
                cartridge refilling) in one store.





·
            **GridSense
                Systems Inc.**Provides remote monitoring and control systems to electric utilities
                and
                industrial facilities worldwide.





·
            **Local
                Power, Inc**.
                Consultation services for Community Choice
                Aggregation.




During
      the periods included in this report, we had operations in two reportable
      segments: providing
      catalyst regeneration technologies and management services for SCR systems and
      RT
      Solutions which is conducted through our DSIT subsidiary. The
      following analysis should be read together with the segment information provided
      in Note 12 to the interim unaudited consolidated financial statements included
      in this quarterly report, which information is hereby incorporated by reference
      into this Item 2.





*RT
      Solutions*




Segment
      revenues increased by $1.1 million or 140% in the first quarter of 2008 as
      compared to the first quarter of 2007. The increase in sales was the result
      of
      the acquisition of two significant projects in mid-2007.




·
            A
                NIS 30 million (approximately $7.9 million at March 31, 2008) order
                for a
                sonar and underwater acoustic system for the Israeli Ministry of
                Defense,
                and




·
            An
                order to supply what we believe to be the world’s first underwater
                surveillance system to protect a strategic coastal energy installation.




Our
      increased sales are a direct result of our progress in those projects. Segment
      revenues for the first quarter of 2008 were also approximately $0.6 million
      higher than those of the fourth quarter of 2007. The increased sales compared
      in
      the fourth quarter of 2007 were due to increased sales in both our
      abovementioned naval projects and increases in our embedded hardware and
      software development projects. Our gross profits also increased (from $0.2
      million in the first quarter of 2007 and $0.4 million in the fourth quarter
      of
      2007 to $0.6 million in the first quarter of 2008) as a result of the increased
      sales from our two significant projects. Our gross margins increased from the
      first quarter of 2007 from 28% to 34% in the first quarter of 2008, but
      decreased slightly from 36% in the fourth quarter of 2007. The increase in
      gross
      margin from the first quarter of 2007 was due the previously mentioned naval
      projects.




Our
      projected growth in sales in 2008 is expected to come primarily from our naval
      solutions projects with sales from our embedded hardware and software
      development projects expected to be at least at the level of 2007 sales. In
      the
      first quarter of 2008, we received new orders for embedded hardware and software
      development projects of over $2 million. We anticipate our 2008 sales to
      increase based on our abovementioned contract with the Israeli MOD for which
      we
      currently have a backlog of approximately $5.8 million. In addition, we
      anticipate receiving in the second half of 2008 a number of significant naval
      solutions contracts for additional underwater surveillance systems to protect
      strategic coastal energy installations.




18




*CoaLogix/SCR*




CoaLogix
      is focused on providing cutting edge services to coal-fired generating
      facilities to reduce their environmental footprint through technology,
      optimization and efficiency improvements. CoaLogix currently owns SCR-Tech
      which
      provides SCR (selective catalyst reduction) services to power plants, including
      a proprietary technology to regenerate catalyst. We acquired SCR-Tech and began
      consolidating its results in November 2007. As such, we have not presented
      comparative data for SCR-Tech’s results. In the first quarter of 2008, SCR-Tech
      secured new contracts from major U.S. companies representing more than double
      its entire 2007 sales. Included in these contracts are a three year and a five
      year contract bundling selective catalytic reduction (SCR) management services
      and time sensitive regeneration during planned outages. The contracts represent
      three new and five repeat customers. SCR-Tech’s sales of $2.2 million during the
      first quarter of 2008 were their highest quarterly sales ever. At the end of
      the
      first quarter, SCR-Tech had a backlog of approximately $9.3 million which we
      expect to realize over the next two years.




In
      March
      2008, CoaLogix announced its CoalVision 360o strategy and the addition of a
      strategic partner, EnerTech Capital III, which acquired a 15% interest in
      CoaLogix. We currently own 85% of CoaLogix following EnerTech’s investment.
      CoalVision 360o is CoaLogix’s strategy for creating value for its customers and
      shareholders while fulfilling our industry’s obligations to our ever tightening
      clean air laws. CoaLogix’s recent agreement with Solucorp Industries, Ltd. to
      obtain the exclusive worldwide marketing rights to their IFS-2C technology
      for
      the fixation of heavy metals is another step in fulfilling the CoalVision 360o
strategy.




*Comverge*




In
      January 2008, Comverge’s Enerwise subsidiary entered into a strategic alliance
      with Eaton Corporation to bring demand response and managed energy service
      offerings to Eaton and its customers. The offerings include a combination of
      strategic consulting and energy efficiency solutions. The relationship
      establishes Eaton's Electrical Group as a recognized channel which will offer
      Comverge solutions to their customers. Eaton's Electrical Group had sales of
      $4.2 billion in 2006 and is a recognized leader in electrical control, power
      distribution, uninterruptible power systems and industrial automation products
      and services.




In
      February 2008, Comverge’s subsidiary, Public Energy Solutions, was awarded a
      demand side management energy efficiency contract with Con Edison aimed at
      reducing base load energy requirements of commercial customers of Con Edison
      in
      Lower Manhattan.




The
      limited program build out will begin in the third quarter of 2008 followed
      by a
      full scale roll out of the program in 2009 through 2012. If the contract is
      performed as contemplated, Comverge is expected to recognize revenues of
      approximately $67 million over the installation and build out phase as customers
      sign up and equipment is installed. Public Energy Solutions, a Comverge company,
      is responsible for customer solicitation, assessment of energy reduction
      potential, and equipment and its installation.




In
      April
      2008, Comverge entered into a Virtual Peaking Capacity(R) (VPC) contract with
      Southern Maryland Electric Cooperative (SMECO) to provide up to 75 megawatts
      of
      clean electricity capacity. With a demand response program in place, SMECO
      will
      be able to use the program to reduce its peak capacity needs and better control
      the energy costs that it charges to its retail customers. This contract brings
      the total contracted revenues for Comverge to $357 million and total megawatts
      to 1,880.




19




*Paketeria*





We
      own a
      31% equity interest in Paketeria AG, a company registered in Germany and
      headquartered in Berlin that innovated the “Super Services Market”, a retail
      concept that promotes savings in logistics and transport, two of the largest
      consumers of fuel worldwide. Paketeria’s stores and franchises are located
      throughout Germany with a concentration in the area in and around Berlin.





Paketeria’s
      network of owned and franchised stores has doubled since our initial investment
      in August 2006. Paketeria provides green services by delivering mail by bicycle
      and offering recycling services such as eBay merchandising and toner cartridge
      refilling. The stores also provide office supplies, photo processing, photocopy,
      and Internet pharmacy services in Germany. Paketeria was established to take
      advantage of the privatization and subsequent substantial reduction in retail
      outlets of the German post office, which has stranded many communities without
      convenient access to postal services.




In
      December 2007, Paketeria’s shares were listed under the symbol “AOSTYL” on the
      Open Market (Freiverkehr) of the Frankfurt Stock Exchange and became eligible
      for trading. In connection with the listing and the escrow arrangements the
      Paketeria shareholders agreed to lock up certain of their shares for up to
      one
      year from the listing date. Under the lock-up agreement, shareholders may not
      offer, pledge, allot, sell or otherwise transfer or dispose of directly or
      indirectly any shares of Paketeria.





There
      is
      currently a limited market for Paketeria’s shares on this market. From the
      listing date to May 9, 2008, 930 shares of Paketeria were sold by the German
      investment bank responsible for the initial listing.





Thus
      far
      in 2008, we have provided Paketeria with approximately $1 million of loans
      in
      order to provide it with additional temporary financing to help it support
      its
      operations until it is able to raise funds through the sale by existing
      shareholders of shares through the escrow arrangement from Paketeria’s listing
      on the Frankfurt Stock Exchange (see our 10K filing) or other sources. These
      advances are to be repaid by December 31, 2008.




In
      April
      2008, Paketeria announced that it would shortly open five new branches in a
      trial project together with the Association of the German Volksbanken and
      Raiffeisenbanken (BVR) to compete with the Deutsche Post. The purpose of this
      project is to fill the gap left by Deutsche Post when it closed their branches.
      If the project is successful, the concept will be extended to over one-thousand
      Volksbanks.





Paketeria
      continues to look for additional outside equity or debt financing to assist
      it
      in its expansion.




*GridSense*




GridSense
      Systems Inc. is an industry leader in providing remote monitoring and control
      systems to electric utilities and industrial facilities worldwide. The company's
      offerings, developed in collaboration with utilities, provide superior power
      quality/reliability monitoring and demand-side management capabilities. Electric
      companies deploy these systems primarily in metropolitan, suburban, and rural
      electricity grids for the detection, prevention, and mitigation of disturbances
      and irregularities in the supply of electricity. Through its wholly owned
      subsidiaries in Australia, CHK GridSense Pty Ltd. and GridSense Inc in USA,
      GridSense has been serving a growing base of customers for over 25 years, and
      currently in Australasia, North America, and Western Europe. GridSense is a
      reporting issuer in British Columbia and Alberta and trades on the TSX Venture
      Exchange under the symbol "GSN."




In
      January 2008, GridSense closed on a non-brokered private placement financing
      for
      gross proceeds of C$1.7 (approximately $1.7 million) originally announced on
      October 15, 2007. The placement consisted of 24,285,714 units at $0.07 per
      unit,
      each unit being comprised of one common share and one share purchase warrant.
      Each warrant entitles the holder to acquire an additional common share at $0.10
      per share until July 2, 2008. The shares, and any shares acquired on exercise
      of
      the warrants, are subject to a four month hold period which expires May 3,
      2008.




20




Net
      proceeds of the private placement will be applied towards accelerating product
      enhancements, completing commercialization of new products in the development
      pipeline, buttressing the sales and support organization to meet increasing
      demand especially in the North American market, expansion into the China
      marketplace, and general working capital.




In
      January 2008, GridSense also announced that it entered into an asset purchase
      agreement, subject to regulatory approval, to acquire 100% of Transformer
      Contracting, Inc., a California corporation specializing in transformer and
      substation monitoring. As consideration for this transaction, Gridsense agreed
      to deliver cash and a promissory note for a combined total of approximately
      $325,000 and to issue 3,000,000 shares of GridSense common stock.




The
      acquisition combines GridSense's proven transmission and distribution offerings
      and its global utility distribution channels with the commercial-ready, advanced
      monitoring systems developed by Transformer Contracting, Inc for transformers
      and substations.




We
      account for our GridSense investment the equity method and, as such, we will
      record approximately 25% of its income/loss in our consolidated results. We
      have
      not recorded our share of GridSense results for the first quarter of 2008 as
      we
      have not yet received their results. We will record GirdSense’s first quarter
      results in the second quarter of 2008.




*Local
      Power*





Over
      the
      past months, Local Power has developed several previously identified business
      opportunities.  In Sonoma County Local Power has recently been retained by
      the Sonoma Climate Action Campaign (SCAC) to procure for a CCA a data request
      from PG&E.  Local Power has proposed another contract with the Sonoma
      County Water Agency. Local Power also has a number of significant contract
      proposals outstanding in San Francisco for which they expect to be retained
      for
      either monitoring or implementation contracts the coming quarters.




*Corporate*




In
      January 2008, we completed the redemption of our outstanding 10% Convertible
      Redeemable Subordinated Debentures due March 2011. Prior to the redemption,
      the
      debenture holders converted the entire $3.44 million convertible portion of
      the
      debentures into approximately 900,000 shares of Acorn common stock and the
      remaining $3.44 million of debentures were redeemed in accordance with the
      notice of redemption. In accordance with applicable accounting standards, we
      recorded a non-cash gain of approximately $1.3 million on the redemption of
      our
      debentures. Following the debenture redemption, we have no corporate debt and
      approximately $8.7 million in unrestricted cash (at the end of April 2008).
      We
      continue to have significant corporate cash expenses and will continue to expend
      in the future, significant amounts of funds on professional fees and other
      costs
      in connection with our strategy to seek out and invest in companies that fit
      our
      target business model.




In
      February 2008, we entered into a letter of intent to acquire Software
      Innovation, Inc. of Waterloo, Ontario. Software Innovation is the developer
      of
      Coreworx (TM) a
      world-leading software tool for capital project collaboration
      Coreworx (TM) is
      currently utilized to manage the construction of hundreds of major capital
      projects, including offshore oil wells, refineries, mining operations and power
      plants around the world. In connection with the letter of intent, we lent
      Software Innovation $1 million. The contemplated acquisition is part of Acorn's
      goal of improving the productivity of global energy infrastructure. Completion
      of the transaction remains subject to our due diligence and execution of
      definitive documentation.




21




**Results
      of Operations**




The
      following table sets forth certain information with respect to the consolidated
      results of operations of the Company for the three months ended March 31, 2007
      and 2008, including the percentage of total revenues during each period
      attributable to selected components of the operations statement data and for
      the
      period to period percentage changes in such components. Our results for the
      three months ended March 31, 2008 include the results of our newly acquired
      SCR-Tech subsidiary. As such, results for the three months ended March 31,
      2008
      may not be comparable to the results for the three months ended March 31, 2007
      without negating the effect of SCR-Tech’s results.


Three months ended March 31,
              
              Change
                from
                2007 to2007
              
              2008
              
              2008($,000)
              
              % of sales
              
              ($,000)
              
              %
                  of sales
              
              %Sales
              
              $
              1,039
              
              
              *100*
              *%*
              $
              4,295
              
              
              *100*
              *%*
              
              *313*Cost
                  of sales
              
              
              754
              
              
              *73*
              
              
              2,897
              
              
              *67*
              
              
              *284*Gross
                  profit
              
              
              285
              
              
              *27*
              
              
              1,398
              
              
              *33*
              
              
              *391*R&D
                  expenses
              
              
              130
              
              
              *13*
              
              
              51
              
              
              *1*
              
              
              *(61*
              *)*SMG&A
                  expenses
              
              
              810
              
              
              *78*
              
              
              2,553
              
              
              *59*
              
              
              *215*Operating
                  loss
              
              
              (655
              )
              
              *(63*
              *)*
              
              (1,206
              )
              
              *(28*
              *)*
              
              *84*Gain
                  on early redemption of Debentures
              
              
              —
              
              
              *—*
              
              
              1,259
              
              
              *29*Finance
                  expense, net
              
              
              (26
              )
              
              *(3*
              *)*
              
              (2,988
              )
              
              *(70*
              *)*Loss
                  before taxes on income
              
              
              (681
              )
              
              *(66*
              *)*
              
              (2,935
              )
              
              *(68*
              *)*
              
              *331*Tax
                  benefit (expense) on income
              
              
              (2
              )
              
              *0*
              
              
              642
              
              
              *15*Loss
                  from operations of the Company and its consolidated
                  subsidiaries
              
              
              (683
              )
              
              *(66*
              *)*
              
              (2,293
              )
              
              *(53*
              *)*
              
              *236*Minority
                  interests
              
              
              —
              
              
              *—*
              
              
              (9
              )
              
              *0*Share
                  in losses of Paketeria
              
              
              (187
              )
              
              *(18*
              *)*
              
              (287
              )
              
              *(7*
              *)*
              
              *53*Net
                  loss
              
              $
              (870
              )
              
              *(84*
              *)*
              $
              (2,589
              )
              
              *(60*
              *)*
              
              *198*




*Sales.* Sales in
      the first quarter of 2008 increased by $3.3 million or 313% from $1.0 million
      in
      the first quarter of 2007 to $4.3 million in the first quarter of 2008. The
      increase in sales is attributable to SCR-Tech sales in the first quarter of
      2008
      of $2.3 million and an increase in DSIT sales of 97% or $1.0 million. The
      increase in DSIT sales was wholly attributable to an increase in RT Solutions
      segment sales which was the primarily due to two naval projects being performed
      by our DSIT subsidiary which began in the third quarter of 2007.





*Gross
      profit.* Gross
      profits in the first quarter of 2008 increased by $1.1 million or 391% as
      compared to the first quarter of 2007. The increase in gross profits is
      attributable to SCR-Tech gross profits in the first quarter of 2008 of $0.8
      million and an increase in DSIT gross profits of 128% or approximately $0.3
      million. The increase in DSIT gross profits was wholly attributable to the
      abovementioned increase in RT Solutions segment sales. Gross margin also
      increased from 27% in the first quarter of 2007 to 33% in the first quarter
      of
      2008. The increased gross margin is attributable to SCR-Tech’s gross margin of
      34% as well as DSIT’s increased gross margin of 31%. DSIT’s increased gross
      margin in the first quarter of 2008 is due to the increased gross margin in
      its
      RT Solutions segment (34% in the first quarter of 2008 as opposed to 28% in
      the
      first quarter of 2007) and to the increased margins in its naval solutions
      projects in particular.




22




*Selling,
      marketing, general and administrative expenses (“SMG&A”).* SMG&A
      in the first quarter of
      2008
      increased by $1.7 million as compared to the first quarter of 2007. A portion
      of
      the increase is attributable to SCR-Tech’s SMG&A costs of $0.6 million. In
      addition, in 2007, senior management in our DSIT subsidiary waived approximately
      $0.2 million of liabilities DSIT had to them in order to shore up its results
      and maintain its working relationship with its banks. The remaining increase
      in
      our SMG&A costs is due to increased professional fees reflecting a higher
      level of corporate activity in connection with our strategy to seek out and
      invest in companies that fit our target business model combined with the
      provision of $0.2 million against a loan to an affiliated company




*Gain
      on early redemption of Debenture* .
      In
      accordance with applicable accounting standards, we recorded a non-cash gain
      of
      approximately $1.3 million in connection with the January 2008 redemption of
      our
      Convertible Debentures.




*Finance
      expense, net.* The
      increase in finance expense in the first quarter of 2008 compared with the
      first
      quarter of 2007 is due to the interest expense of $3.1 million recorded with
      respect to the write-off of the remaining balances of debt origination costs,
      warrants value and beneficial conversion features in the early redemption of
      our
      convertible debentures.




*Taxes
      on income.* In
      the
      first quarter of 2008, we had an income tax benefit of $0.6 million due to
      the
      recording of a deferred tax assets.




*Share
      of losses in Paketeria.* In
      the
      first quarter of 2008, we recorded a loss of $258,000 representing our
      approximately 31% share of Paketeria’s losses for the period. In addition, we
      also recognized additional losses totaling $29,000 with respect to amortization
      related to the acquired value of a non-compete agreement and franchises.




**Liquidity
      and Capital Resources** ****




As
      of
      March 31, 2008, we had working capital of $12.8 million, including $10.5 million
      of cash and cash equivalents not including restricted cash of $2.9 million
      (of
      which approximately $0.4 million has already been released and of which we
      expect to an additional $1.1 million to be released in the first quarter of
      2009). Net cash used in the three months ended March 31, 2008 was $9.1 million.
      Net cash of $1.2 million was used in operating activities during the first
      three
      months of 2008. The primary use of cash in operating activities during the
      first
      three months of 2008 was our corporate cash operating expenditures of
      approximately $1.0 million. Net cash of $6.6 million was used in investing
      activities, primarily due to our $2.9 million of loans made to Paketeria,
      Software Innovations and other parties, $1.2 million with respect to our
      investment in GridSense, $1.0 million with respect to an additional deposit
      in
      an Israeli bank as a guarantee for a project being performed by our DSIT
      subsidiary, approximately $0.4 million of additional restricted cash deposits
      (which have already been released) and $0.9 million of costs related to our
      November 2007 acquisition of SCR Tech. Net cash of $1.3 million was used in
      financing activities, primarily from the redemption of our debentures ($3.4
      million). This use of cash was partially offset by the $1.9 million investment
      made by Enertech in CoaLogix.




As
      of May
      12, 2008 the Company’s corporate operations had an aggregate of approximately
      $7.4 million in cash and cash equivalents (not including the $2.5 million
      deposited in an account as a security for a guarantee for DSIT), reflecting
      a
      $3.1 million decrease from the balance as of March 31, 2008.




We
      believe that the cash available and the cash potentially available from any
      sales of our holdings in Comverge will provide more than sufficient liquidity
      to
      finance Acorn’s activities for the foreseeable future and for the next 12 months
      in particular.




23




At
      March
      31, 2008, DSIT had approximately $265,000 in Israeli credit lines available
      to
      DSIT by an Israeli bank, all of which was then being used. In addition, the
      bank
      has allowed DSIT to utilize an additional $114,000 of credit which is secured
      by
      deposits made by the Acorn.




At
      March
      31, 2008, DSIT was in technical violation of covenants under its line of credit.
      This bank is continuing to provide funding to DSIT despite the technical
      violation and has not formally notified DSIT of any violation or any
      contemplated action. Acorn has agreed to be supportive of DSIT’s liquidity
      requirements over the next 12 months.




**Contractual
      Obligations and Commitments**




Our
      contractual obligations and commitments at March 31, 2008 principally include
      obligations associated with our outstanding indebtedness, future minimum
      operating lease obligations and potential severance obligations to Israeli
      employees and are set forth in the table below.


Cash Payments Due During Year Ending March 31,(amounts in thousands)Contractual Obligations
              
              Total
              
              2009
              
              2010-
                2011
              
              2012-
                2013
              
              2014 and
                thereafterLong-term
                  debt
              
              $
              127
              
              $
              116
              
              $
              8
              
              $
              3
              
              $
              —Operating
                  leases (1)
              
              
              1,281
              
              
              636
              
              
              472
              
              
              173
              
              
              —Potential
                  severance obligations to Israeli employees (2)
              
              
              2,637
              
              
              —
              
              
              —
              
              
              —
              
              
              2,637Investment
                  in EnerTech Capital Partners III L.P. (3)
              
              
              4,600
              
              
              4,600
              
              
              —
              
              
              —
              
              
              —Total
                  contractual cash obligations
              
              $
              8,645
              
              $
              5,352
              
              $
              480
              
              $
              176
              
              $
              2,637


We
      expect
      to finance these contractual commitments from cash on hand and cash generated
      from operations.




(1)
      As
      part of the sale of our Databit computer hardware subsidiary in 2006, we
      assigned all of the US leases to Databit and no longer have rental expense
      for
      facilities in the US. However, the landlords of the properties have not
      consented to the assignments and we therefore continue to be contingently liable
      on these leases, which have an annual cost of approximately $120,000 until
      November 2008. Such costs are included in the table above. Databit has agreed
      to
      indemnify us for any liability in connection with these leases.




(2)
      Under
      Israeli law and labor agreements, DSIT is required to make severance payments
      to
      dismissed employees and to employees leaving employment under certain other
      circumstances. The obligation for severance pay benefits, as determined by
      the
      Israeli Severance Pay Law, is based upon length of service and ending salary.
      These obligations are substantially covered by regular deposits with recognized
      severance pay and pension funds and by the purchase of insurance policies.
      As of
      March 31, 2008, we accrued a total of $2.6 million for potential severance
      obligations of which approximately $1.8 million was funded with cash to
      insurance companies.




(3)
      In
      August 2007, we committed to invest up to $5 million over a ten-year period
      in
      EnerTech Capital Partners III L.P. (“EnerTech III”), a proposed $250 million
      venture capital fund targeting early and expansion stage energy and clean energy
      technology companies that can enhance the profits of the producers and consumers
      of energy.




24




Our
      obligation under this commitment is presented as a current liability, though
      it
      is uncertain as to when actual payments may be made. To date, we have received
      and funded a capital call of $400,000 to EnerTech III.




25




**Item
      3.**  **Quantitative and Qualitative Disclosures About Market Risk**




In
      the
      normal course of business, we are exposed to fluctuations in interest rates
      on
      lines-of-credit incurred to finance our operations in Israel, whose utilization
      at March 31, 2008 stood at approximately $379,000. Additionally, our non-US
      dollar monetary assets and liabilities (net liability of approximately $1.2
      million) in Israel are exposed to fluctuations in exchange rates. In addition,
      $3.0 million, $0.1 million and $0.2 million of our backlog of projects are
      contracts and orders that are linked to an Israeli Ministry of Defense Index,
      denominated in Euros and denominated in NIS, respectively. We do not employ
      specific strategies, such as the use of derivative instruments or hedging,
      to
      manage our interest rate or foreign currency exchange rate exposures. Our DSIT
      subsidiary is examining ways to reduce its foreign currency exposure
      risks.




**Item
      4. Controls and Procedures**




**Evaluation
      of Disclosure Controls and Procedures**




As
      of the
      end of the period covered by this report, we carried out an evaluation, under
      the supervision and with the participation of our management, including the
      Chief Executive Officer and the Chief Financial Officer, of the design and
      operation of our disclosure controls and procedures (as such term is defined
      in
      Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended (the
“Exchange Act’)). Based on this evaluation, our Chief Executive Officer and
      Chief Financial Officer concluded that our disclosure controls and procedures
      were effective at the reasonable assurance level at end of the period covered
      by
      this report to ensure that the information required to be disclosed by us in
      the
      reports we file or submit under the Exchange Act is (i) accumulated and
      communicated to our management (including our Chief Executive Officer and Chief
      Financial Officer) in a timely manner, and (ii) recorded, processed, summarized
      and reported within the time periods specified in the SEC’s rules and
      forms.




**Changes
      in Internal Control Over Financial Reporting**




There
      was
      no change in our internal control over financial reporting (as such term is
      defined in Rule 13a-15(f) under the Exchange Act) during the period covered
      by
      this report that has materially affected, or is reasonably likely to materially
      affect, our internal control over financial reporting.




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PART
      II - OTHER INFORMATION




**Item
      6.**  **Exhibits.**




3.1
            
            Certificate
                of Ownership and Merger dated December 21, 2007 effecting the name
                change
                to Acorn Energy, Inc. (incorporated by reference to Exhibit 3.1 to
                the
                Acorn Energy, Inc. Current Report on Form 8-K filed on January 3,
                2008).10.1
            
            Employment
                Agreement, dated as of March 4, 2008, by and between Acorn Energy,
                Inc.
                and John A. Moore.10.2
            
            Common
                Stock Purchase Agreement, dated as of February 29, 2008, by and between
                Acorn Energy, Inc. and EnerTech Capital Partners III L.P.10.3
            
            Stockholders’
                Agreement, dated as of February 29, 2008, by and among CoaLogix,
                Inc.,
                Acorn Energy, Inc. and the other stockholders named therein.31.1
            
            Certification
                of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley
                Act of 2002.31.2
            
            Certification
                of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley
                Act of 2002.32.1
            
            Certification
                of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley
                Act of 2002.32.2
            
            Certification
                of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley
                Act of 2002.




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**SIGNATURES**




Pursuant
      to the requirements of the Securities Exchange Act of 1934, the Registrant
      has
      duly caused this report to be signed on its behalf by its principal financial
      officer thereunto duly authorized.


**ACORN
                  ENERGY, INC.**Dated:
                  May 20, 2008By:
                  **/s/**Michael BarthMichael
                  BarthChief
                  Financial Officer




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