|   |
|--------|

| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE |
|---------------------------------------------------------|
| SECURITIES EXCHANGE ACT OF 1934                         |
|                                                    |
| For the quarterly period ended March 31, 2011           |

| Delaware                                 |   | 22-2786081          |
|------------------------------------------|--------|---------------------|
| (State or other jurisdiction of          |   | (I.R.S. Employer    |
| incorporation or organization)           |   | Identification No.) |
|                                     |   |                |
| 4 West Rockland RoadMontchanin, Delaware |   | 19710               |
| (Address of principal executive offices) |   | (Zip Code)          |

| Class                                   |   | Outstanding at May 4, 2011 |
|-----------------------------------------|--------|----------------------------|
| Common Stock, $0.01 par value per share |   | 17,489,163 shares          |

----

| PART I.  Financial Information |                                                                                            |   |   |
|------------------------------------------|-------------------------------------------------------------------------------------------------|--------|--------|
|                                     |                                                                                            |   |   |   |
| Item 1.                                  | Condensed Financial Statements                                                                  |   |   |   |
|                                     |                                                                                            |   |   |   |
|                                     | Unaudited Condensed Consolidated Financial Statements:                                          |   |   |   |
|                                     |                                                                                            |   |   |   |
|                                     | Consolidated Balance Sheets as of December 31, 2010 and March 31, 2011                          |   |   | 1 |   |
|                                     |                                                                                            |   |   |   |   |
|                                     | Consolidated Statements of Operations for the three month periods ended March 31, 2010 and 2011 |   |   | 2 |   |
|                                     |                                                                                            |   |   |   |   |
|                                     | Consolidated Statement of Changes in Equity for the three month period ended March 31, 2011     |   |   | 3 |   |
|                                     |                                                                                            |   |   |   |   |
|                                     | Consolidated Statements of Cash Flows for the three month periods ended March 31, 2010 and 2011 |   |   | 4 |   |
|                                     |                                                                                            |   |   |   |   |
|                                     | Notes to Consolidated Financial Statements                                                      |   |   | 6 |   |
|                                     |                                                                                            |   |   |   |   |
| Item 2.                                  | Management’s Discussion and Analysis of Financial Condition and Results of Operations     |   |   | 13 |   |
|                                     |                                                                                            |   |   |   |   |
| Item 4.                                  | Controls and Procedures                                                                         |   |   | 23 |   |
|                                     |                                                                                            |   |   |   |
| PART II. Other Information               |                                                                                            |   |   |   |
|                                     |                                                                                            |   |   |   |   |
| Item 1.                                  | Legal Proceedings                                                                               |   |   | 24 |   |
|                                     |                                                                                            |   |   |   |   |
| Item 6.                                  | Exhibits                                                                                        |   |   | 25 |   |
|                                     |                                                                                            |   |   |   |
| Signatures                               |                                                                                            |   | 26     |   |

----

|                                                                                                                                       |   | As ofDecember 31,2010 |    |   | As ofMarch 31,2011 |   |
|--------------------------------------------------------------------------------------------------------------------------------------------|--------|-----------------------|---------|--------|--------------------|--------|
| ASSETS                                                                                                                                     |   |                  |    |   |               |   |
|                                                                                                                                       |   |                  |    |   |               |   |
| Current assets:                                                                                                                            |   |                  |    |   |               |   |
| Cash and cash equivalents                                                                                                                  |   | $                     | 7,356   |   |               | $      | 6,457 |   |
| Restricted deposits                                                                                                                        |   |                  | 1,925   |   |               |   | 1,613 |   |
| Accounts receivable                                                                                                                        |   |                  | 8,873   |   |               |   | 5,125 |   |
| Unbilled revenue and work-in-process                                                                                                       |   |                  | 3,860   |   |               |   | 4,336 |   |
| Inventory                                                                                                                                  |   |                  | 4,314   |   |               |   | 6,522 |   |
| Other current assets                                                                                                                       |   |                  | 1,488   |   |               |   | 2,146 |   |
| Total current assets                                                                                                                       |   |                  | 27,816  |   |               |   | 26,199 |   |
| Property and equipment, net                                                                                                                |   |                  | 10,943  |   |               |   | 10,760 |   |
| Severance assets                                                                                                                           |   |                  | 2,498   |   |               |   | 2,618 |   |
| Restricted deposits                                                                                                                        |   |                  | 85      |   |               |   | 85 |   |
| Intangible assets, net                                                                                                                     |   |                  | 9,300   |   |               |   | 9,047 |   |
| Goodwill                                                                                                                                   |   |                  | 8,393   |   |               |   | 8,441 |   |
| Deferred taxes                                                                                                                             |   |                  | 302     |   |               |   | 294 |   |
| Other assets                                                                                                                               |   |                  | 448     |   |               |   | 611 |   |
| Total assets                                                                                                                               |   | $                     | 59,785  |   |               | $      | 58,055 |   |
|                                                                                                                                       |   |                  |    |   |               |   |   |   |
| LIABILITIES AND EQUITY                                                                                                                     |   |                  |    |   |               |   |   |   |
|                                                                                                                                       |   |                  |    |   |               |   |   |   |
| Current liabilities:                                                                                                                       |   |                  |    |   |               |   |   |   |
| Short-term bank credit and current maturities of long-term bank debt                                                                       |   | $                     | 1,531   |   |               | $      | 1,171 |   |
| Accounts payable                                                                                                                           |   |                  | 4,547   |   |               |   | 4,390 |   |
| Accrued payroll, payroll taxes and social benefits                                                                                         |   |                  | 2,043   |   |               |   | 1,825 |   |
| Other current liabilities                                                                                                                  |   |                  | 5,096   |   |               |   | 5,874 |   |
| Total current liabilities                                                                                                                  |   |                  | 13,217  |   |               |   | 13,260 |   |
| Long-term liabilities:                                                                                                                     |   |                  |    |   |               |   |   |   |
| Accrued severance                                                                                                                          |   |                  | 3,715   |   |               |   | 3,867 |   |
| Long-term debt                                                                                                                             |   |                  | 389     |   |               |   | 394 |   |
| Other long-term liabilities                                                                                                                |   |                  | 587     |   |               |   | 628 |   |
| Total long-term liabilities                                                                                                                |   |                  | 4,691   |   |               |   | 4,889 |   |
| Equity:                                                                                                                                    |   |                  |    |   |               |   |   |   |
| Acorn Energy, Inc. shareholders                                                                                                            |   |                  |    |   |               |   |   |   |
| Common stock - $0.01 par value per share:                                                                                                  |   |                  |    |   |               |   |   |   |
| Authorized – 30,000,000 shares; Issued –18,067,925 and 18,291,083 shares at December 31, 2010 and March 31, 2011, respectively |   |                  | 180     |   |               |   | 182 |   |
| Additional paid-in capital                                                                                                                 |   |                  | 83,596  |   |               |   | 84,607 |   |
| Warrants                                                                                                                                   |   |                  | 427     |   |               |   | 427 |   |
| Accumulated deficit                                                                                                                        |   |                  | (48,431 | )      |               |   | (50,648 | ) |
| Treasury stock, at cost – 801,920 shares at December 31, 2010 and March 31, 2011                                                     |   |                  | (3,036  | )      |               |   | (3,036 | ) |
| Accumulated other comprehensive income                                                                                                     |   |                  | 637     |   |               |   | 740 |   |
| Total Acorn Energy, Inc. shareholders’ equity                                                                                        |   |                  | 33,373  |   |               |   | 32,272 |   |
| Non-controlling interests                                                                                                                  |   |                  | 8,504   |   |               |   | 7,634 |   |
| Total equity                                                                                                                               |   |                  | 41,877  |   |               |   | 39,906 |   |
| Total liabilities and equity                                                                                                               |   | $                     | 59,785  |   |               | $      | 58,055 |   |

----

|                                                                                                                    |   | Three months ended March 31, |    |
|-------------------------------------------------------------------------------------------------------------------------|--------|--------------------------------------------------|---------|
|                                                                                                                    |   | 2010                                             |    |   | 2011 |   |
| Revenues:                                                                                                               |   |                                             |    |   |   |   |
| SCR services                                                                                                            |   | $                                                | 4,478   |   |   | $ | 3,747 |   |
| Projects                                                                                                                |   |                                             | 2,507   |   |   |   | 2,348 |   |
| Smart grid distribution products and services                                                                           |   |                                             | — |   |   |   | 641 |   |
| Other                                                                                                                   |   |                                             | 99      |   |   |   | 106 |   |
| Total revenues                                                                                                          |   |                                             | 7,084   |   |   |   | 6,842 |   |
|                                                                                                                    |   |                                             |    |   |   |   |   |   |
| Cost of sales:                                                                                                          |   |                                             |    |   |   |   |   |   |
| SCR services                                                                                                            |   |                                             | 2,546   |   |   |   | 2,665 |   |
| Projects                                                                                                                |   |                                             | 1,342   |   |   |   | 1,467 |   |
| Smart grid distribution products and services                                                                           |   |                                             | — |   |   |   | 371 |   |
| Other                                                                                                                   |   |                                             | 82      |   |   |   | 83 |   |
| Total cost of sales                                                                                                     |   |                                             | 3,970   |   |   |   | 4,586 |   |
| Gross profit                                                                                                            |   |                                             | 3,114   |   |   |   | 2,256 |   |
|                                                                                                                    |   |                                             |    |   |   |   |   |   |
| Operating expenses:                                                                                                     |   |                                             |    |   |   |   |   |   |
| Research and development expenses                                                                                       |   |                                             | 48      |   |   |   | 588 |   |
| Selling, general and administrative expenses                                                                            |   |                                             | 4,147   |   |   |   | 4,558 |   |
| Total operating expenses                                                                                                |   |                                             | 4,195   |   |   |   | 5,146 |   |
| Operating loss                                                                                                          |   |                                             | (1,081  | ) |   |   | (2,890 | ) |
| Finance expense, net                                                                                                    |   |                                             | — |   |   |   | (122 | ) |
| Gain on sale of HangXing                                                                                                |   |                                             | — |   |   |   | 492 |   |
| Distribution from EnerTech                                                                                              |   |                                             | 135     |   |   |   | — |   |
| Loss before taxes on income                                                                                             |   |                                             | (946    | ) |   |   | (2,520 | ) |
| Income tax expense                                                                                                      |   |                                             | (75     | ) |   |   | (65 | ) |
| Net loss from continuing operations                                                                                     |   |                                             | (1,021  | ) |   |   | (2,585 | ) |
| Loss from discontinued operations                                                                                       |   |                                             | (2,152  | ) |   |   | — |   |
| Net loss                                                                                                                |   |                                             | (3,173  | ) |   |   | (2,585 | ) |
| Net loss attributable to non-controlling interests                                                                      |   |                                             | 50      |   |   |   | 368 |   |
| Net loss attributable to Acorn Energy, Inc. shareholders.                                                               |   | $                                                | (3,123  | ) |   | $ | (2,217 | ) |
|                                                                                                                    |   |                                             |    |   |   |   |   |   |
| Basic and diluted net loss per share attributable to Acorn Energy, Inc. shareholders:                                   |   |                                             |    |   |   |   |   |   |
| From continuing operations                                                                                              |   | $                                                | (0.08   | ) |   | $ | (0.13 | ) |
| From discontinued operations                                                                                            |   |                                             | (0.17   | ) |   |   | — |   |
| Net loss per share attributable to Acorn Energy, Inc. shareholders                                                      |   | $                                                | (0.25   | ) |   | $ | (0.13 | ) |
|                                                                                                                    |   |                                             |    |   |   |   |   |   |
| Weighted average number of shares outstanding attributable to Acorn Energy, Inc. shareholders – basic and diluted |   |                                             | 12,498  |   |   |   | 17,449 |   |

----

|                                                                 |   | Acorn Energy, Inc. Shareholders |    |   |        |   |    |                     |   |
|---------------------------------------------------------------------------|--------|------------------------------------------------|---------|--------|-------------|--------|---------|--------------------------|--------|
|                                                                      |   | Numberof Shares                           |    |   | CommonStock |   |    | AdditionalPaid-InCapital |   |   | Warrants |   |   | AccumulatedDeficit |   |   | TreasuryStock |   |   | AccumulatedOtherComprehensiveIncome |   |   | Total AcornEnergy, Inc.Shareholders’Equity |   |   | Non-controllinginterests |   |   | TotalEquity |   |
| Balances as of December 31, 2010                                          |   |                                           | 18,068  |   |        | $      | 180     |                     |   | $ | 83,596 |   |   | $ | 427 |   |   | $ | (48,431 | ) |   | $ | (3,036 | ) |   | $ | 637 |   |   | $ | 33,373 |   |   | $ | 8,504 |   |   | $ | 41,877 |   |
| Net loss                                                                  |   |                                           | — |   |        |   | — |                     |   |   | — |   |   |   | — |   |   |   | (2,217 | ) |   |   | — |   |   |   | — |   |   |   | (2,217 | ) |   |   | (368 | ) |   |   | (2,585 | ) |
| Differences from translation of subsidiaries’ financial statements  |   |                                           | — |   |        |   | — |                     |   |   | — |   |   |   | — |   |   |   | — |   |   |   | — |   |   |   | 103 |   |   |   | 103 |   |   |   | 4 |   |   |   | 107 |   |
| Comprehensive loss                                                        |   |                                           | — |   |        |   | — |                     |   |   | — |   |   |   | — |   |   |   | — |   |   |   | — |   |   |   | — |   |   |   | (2,114 | ) |   |   | (364 | ) |   |   | (2,478 | ) |
| Adjustment of non-controlling interests following exercise of USSI option |   |                                           | — |   |        |   | — |                     |   |   | 600 |   |   |   | — |   |   |   | — |   |   |   | — |   |   |   | — |   |   |   | 600 |   |   |   | (600 | ) |   |   | — |   |
| Other                                                                     |   |                                           | — |   |        |   | — |                     |   |   | — |   |   |   | — |   |   |   | — |   |   |   | — |   |   |   | — |   |   |   | — |   |   |   | 11 |   |   |   | 11 |   |
| Stock option compensation                                                 |   |                                           | — |   |        |   | — |                     |   |   | 119 |   |   |   | — |   |   |   | — |   |   |   | — |   |   |   | — |   |   |   | 119 |   |   |   | — |   |   |   | 119 |   |
| Stock option compensation of subsidiaries                                 |   |                                           | — |   |        |   | — |                     |   |   | — |   |   |   | — |   |   |   | — |   |   |   | — |   |   |   | — |   |   |   | — |   |   |   | 83 |   |   |   | 83 |   |
| Compensation to consultant granted in stock                               |   |                                           | 26      |   |        |   | *       |                     |   |   | 101 |   |   |   | — |   |   |   | — |   |   |   | — |   |   |   | — |   |   |   | 101 |   |   |   | — |   |   |   | 101 |   |
| Exercise of options and warrants                                          |   |                                           | 197     |   |        |   | 2       |                     |   |   | 191 |   |   |   | — |   |   |   | — |   |   |   | — |   |   |   | — |   |   |   | 193 |   |   |   | — |   |   |   | 193 |   |
| Balances as of March 31, 2011                                             |   |                                           | 18,291  |   |        | $      | 182     |                     |   | $ | 84,607 |   |   | $ | 427 |   |   | $ | (50,648 | ) |   | $ | (3,036 | ) |   | $ | 740 |   |   | $ | 32,272 |   |   | $ | 7,634 |   |   | $ | 39,906 |   |

----

|                                                                                                                                                                  |   | Three months ended March 31, |    |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------------------------------------|---------|
|                                                                                                                                                                  |   | 2010                                             |    |   | 2011 |   |
| Cash flows provided by (used in) operating activities:                                                                                                                |   |                                             |    |   |   |   |
| Net loss                                                                                                                                                              |   | $                                                | (3,173  | ) |   | $ | (2,585 | ) |
| Less net loss from discontinued operations                                                                                                                            |   |                                             | 2,152   |   |   |   | — |   |
| Net loss from continuing operations                                                                                                                                   |   |                                             | (1,021  | ) |   |   | (2,585 | ) |
| Adjustments to reconcile net loss to net cash used in operating activities:                                                                                      |   |                                             |    |   |   |   |   |   |
| Depreciation and amortization                                                                                                                                         |   |                                             | 349     |   |   |   | 807 |   |
| Increase in accrued severance                                                                                                                                         |   |                                             | 135     |   |   |   | 84 |   |
| Stock-based compensation                                                                                                                                              |   |                                             | 266     |   |   |   | 215 |   |
| Deferred taxes                                                                                                                                                        |   |                                             | 11      |   |   |   | (163 | ) |
| Gain on the sale of HangXing                                                                                                                                          |   |                                             | — |   |   |   | (492 | ) |
| Other                                                                                                                                                                 |   |                                             | (20     | ) |   |   | (2 | ) |
| Change in operating assets and liabilities:                                                                                                                           |   |                                             |    |   |   |   |   |   |
| Decrease (increase) in accounts receivable, unbilled work-in process, other current and other assets                                                                  |   |                                             | (785    | ) |   |   | 2,673 |   |
| Increase in inventory                                                                                                                                                 |   |                                             | (581    | ) |   |   | (2,198 | ) |
| Increase in accounts payable, accrued payroll, payroll taxes and social benefits, advances from  customers, other current liabilities and other liabilities |   |                                             | 1,020   |   |   |   | 381 |   |
| Net cash used in operating activities – continuing operations                                                                                                   |   |                                             | (626    | ) |   |   | (1,280 | ) |
|                                                                                                                                                                  |   |                                             |    |   |   |   |   |   |
| Cash flows provided by (used in) investing activities:                                                                                                                |   |                                             |    |   |   |   |   |   |
| Deposits in restricted deposits                                                                                                                                       |   |                                             | (495    | ) |   |   | (520 | ) |
| Release of restricted deposits                                                                                                                                        |   |                                             | 672     |   |   |   | 843 |   |
| Proceeds from the sale of HangXing                                                                                                                                    |   |                                             | — |   |   |   | 492 |   |
| Loan to GridSense prior to consolidation                                                                                                                              |   |                                             | (200    | ) |   |   | — |   |
| Amounts funded for severance assets                                                                                                                                   |   |                                             | (35     | ) |   |   | (49 | ) |
| Acquisitions of property and equipment                                                                                                                                |   |                                             | (1,991  | ) |   |   | (203 | ) |
| Acquisition of USSI, net of cash acquired (See Schedule A)                                                                                                            |   |                                             | 7       |   |   |   | — |   |
| Net cash provided by (used in) investing activities – continuing operations                                                                                     |   |                                             | (2,042  | ) |   |   | 563 |   |
|                                                                                                                                                                  |   |                                             |    |   |   |   |   |   |
| Cash flows provided by (used in) financing activities:                                                                                                                |   |                                             |    |   |   |   |   |   |
| Proceeds from capital raise, net of transaction costs                                                                                                                 |   |                                             | 11,467  |   |   |   | — |   |
| Issuance of shares to non-controlling interests in consolidated subsidiary                                                                                            |   |                                             | 844     |   |   |   | — |   |
| Exercise of options and warrants                                                                                                                                      |   |                                             | 61      |   |   |   | 193 |   |
| Short-term debt borrowings (repayments), net                                                                                                                          |   |                                             | 29      |   |   |   | (329 | ) |
| Proceeds from borrowings of long-term debt                                                                                                                            |   |                                             | — |   |   |   | 76 |   |
| Repayments of long-term debt                                                                                                                                          |   |                                             | (31     | ) |   |   | (169 | ) |
| Other                                                                                                                                                                 |   |                                             | 2       |   |   |   | 12 |   |
| Net cash provided by (used in) financing activities – continuing operations                                                                                     |   |                                             | 12,372  |   |   |   | (217 | ) |
|                                                                                                                                                                  |   |                                             |    |   |   |   |   |   |
| Discontinued operations:                                                                                                                                              |   |                                             |    |   |   |   |   |   |
| Operating cash flows                                                                                                                                                  |   |                                             | (2,276  | ) |   |   | — |   |
| Investing cash flows                                                                                                                                                  |   |                                             | (13     | ) |   |   | — |   |
| Net cash used in discontinued operations                                                                                                                              |   |                                             | (2,289  | ) |   |   | — |   |
|                                                                                                                                                                  |   |                                             |    |   |   |   |   |   |
| Effect of exchange rate changes on cash and cash equivalents                                                                                                          |   |                                             | — |   |   |   | 35 |   |
| Effect of exchange rate changes on cash and cash equivalents of discontinued operations                                                                               |   |                                             | (69     | ) |   |   | — |   |
|                                                                                                                                                                  |   |                                             |    |   |   |   |   |   |
| Net increase (decrease) in cash and cash equivalents                                                                                                                  |   |                                             | 7,346   |   |   |   | (899 | ) |
|                                                                                                                                                                  |   |                                             |    |   |   |   |   |   |
| Cash and cash equivalents at beginning of period                                                                                                                      |   |                                             | 11,208  |   |   |   | 7,356 |   |
| Cash and cash equivalents at end of period                                                                                                                            |   | $                                                | 18,554  |   |   |   | 6,457 |   |

----

| Non-cash items:                                                                                           |   |   |   |   |   |   |
|-----------------------------------------------------------------------------------------------------------|--------|--------|--------|--------|--------|--------|
| Value of shares issued as compensation                                                                    |   |   |   |   | $      | 101    |   |
| Adjustment of paid-in-capital and non-controlling interests from the exercise of options by Acorn in USSI |   |   |   |   | $      | 600    |   |
| Asset retirement obligations recorded in property and equipment, net                                      |   |   |   |   | $      | 139    |   |
|                                                                                                      |   |   |   |   |   |   |   |
| Schedule A:                                                                                               |   |   |   |   |   |   |   |
| Assets/liabilities acquired in the acquisition of USSI:                                                   |   |   |   |   |   |   |   |
| Other current assets                                                                                      |   | $      | (55    | )      |   |   |   |   |
| Property and equipment                                                                                    |   |   | (56    | )      |   |   |   |   |
| Intangibles                                                                                               |   |   | (2,565 | )      |   |   |   |   |
| Goodwill                                                                                                  |   |   | (1,402 | )      |   |   |   |   |
| Current liabilities                                                                                       |   |   | 285    |   |   |   |   |   |
| Prior year investment in USSI                                                                             |   |   | 200    |   |   |   |   |   |
| Non-controlling interests                                                                                 |   |   | 3,600  |   |   |   |   |   |
|                                                                                                      |   | $      | 7      |   |   |   |   |   |

----

----

|            |   | As ofDecember 31,2010 |   |   | As ofMarch 31,2011 |   |
|-----------------|--------|---------------------------------|--------|--------|------------------------------|--------|
| Raw materials   |   | $                               | 1,249  |   |                         | $      | 1,367 |   |
| Work-in-process |   |                            | 2,476  |   |                         |   | 4,516 |   |
| Finished goods  |   |                            | 589    |   |                         |   | 639 |   |
|            |   | $                               | 4,314  |   |                         | $      | 6,522 |   |

|                                              |   | Three months ended March 31, |   |
|---------------------------------------------------|--------|--------------------------------------------------|--------|
|                                              |   | 2010                                             |   |   | 2011 |   |
| Net income (loss) attributable to NCI in CoaLogix |   | $                                                | 5      |   |   | $ | (232 | ) |
| Net income attributable to NCI in DSIT            |   |                                             | 60     |   |   |   | 1 |   |
| Net loss attributable to NCI in USSI              |   |                                             | (115   | ) |   |   | (137 | ) |
| Net loss attributable to NCI                      |   | $                                                | (50    | ) |   | $ | (368 | ) |

|                            |   | CoaLogixsegment |    |   | Energy &SonarSecuritySolutionssegment |   |   | GridSensesegment |   |   | USSIsegment |   |   | Total  |    |
|---------------------------------|--------|-----------------|---------|--------|------------------------------------------------|--------|--------|------------------|--------|--------|-------------|--------|--------|--------|---------|
| Balance as of December 31, 2010 |   |            | 3,714   |   |                                           | $      | 568    |             |   | $      | 2,709       |   |   | $      | 1,402   |   |   | $ | 8,393 |   |
| Translation adjustment          |   |            | — |   |                                           |   | 11     |             |   |   | 37          |   |   |   | — |   |   |   | 48 |   |
| Balance as of March 31, 2011    |   | $               | 3,714   |   |                                           | $      | 579    |             |   | $      | 2,746       |   |   | $      | 1,402   |   |   | $ | 8,441 |   |

----

|                              |   | CoaLogix segment |    |   | Energy & SonarSecuritySolutionssegment |   |    | GridSensesegment                         |   |   | USSI segment  |   |   |   |   |
|-----------------------------------|--------|-----------------------|---------|--------|------------------------------------------------------|--------|---------|------------------------------------------|--------|--------|--------------------|--------|--------|--------|--------|
|                              |   | SCRTechnologies**     |    |   | NavalTechnologies                                    |   |    | Software &CustomerRelationships |   |   | SensorTechnologies |   |   |   |   |
|                              |   | Cost                  |    |   | A.A.*                                                |   |    | Cost                                     |   |   | A.A.*              |   |   | Cost   |   |   | A.A.* |   |   | Cost |   |   | A.A.* |   |   | Total |   |
| Balance as of December 31, 2010   |   | $                     | 5,701   |   |                                                 | $      | (1,739  | )                                        |   | $      | 560                |   |   | $      | (207   | ) |   | $ | 2,747 |   |   | $ | (220 | ) |   | $ | 2,565 |   |   | $ | (107 | ) |   | $ | 9,300 |   |
| Amortization                      |   |                  | — |   |                                                 |   | (144    | )                                        |   |   | —            |   |   |   | (20    | ) |   |   | — |   |   |   | (80 | ) |   |   | — |   |   |   | (32 | ) |   |   | (276 | ) |
| Cumulative translation adjustment |   |                  | — |   |                                                 |   | — |                                     |   |   | 11                 |   |   |   | (6     | ) |   |   | 25 |   |   |   | (7 | ) |   |   | — |   |   |   | — |   |   |   | 23 |   |
| Balance as of March 31, 2011      |   | $                     | 5,701   |   |                                                 | $      | (1,883  | )                                        |   | $      | 571                |   |   | $      | (233   | ) |   | $ | 2,772 |   |   | $ | (307 | ) |   | $ | 2,565 |   |   | $ | (139 | ) |   | $ | 9,047 |   |

|                                     |   | Number ofOptions(in shares) |      |   | WeightedAverageExercisePrice |   | WeightedAverageRemainingContractualLife |   | AggregateIntrinsicValue |   |
|------------------------------------------|--------|---------------------------------------|-----------|--------|------------------------------|--------|-----------------------------------------|--------|-------------------------|--------|
| Outstanding at December 31, 2010         |   |                                  | 1,817,665 |   |                         | $      | 3.69                                    |   |                    |   |   |   |
| Granted                                  |   |                                  | 66,666    |   |                         | $      | 3.70                                    |   |                    |   |   |   |
| Exercised                                |   |                                  | (197,385  | )      |                         | $      | 2.57                                    |   |                    |   |   |   |
| Forfeited or expired                     |   |                                  | (314,615  | )      |                         | $      | 2.97                                    |   |                    |   |   |   |
| Outstanding at March 31, 2011            |   |                                  | 1,372,331 |   |                         | $      | 4.02                                    |   | 4.1 years               |   | $ | 534 |   |
| Exercisable at  March 31, 2011 |   |                                  | 1,122,121 |   |                         | $      | 4.07                                    |   | 4.0 years               |   | $ | 400 |   |

----

| Volatility              |   |   | 61     | %      |
|-------------------------|--------|--------|--------|--------|
| Expected term (years)   |   |   | 4.5    |   |
| Risk free interest rate |   |   | 2.0    | %      |
| Expected dividend yield |   | None   |   |

|                                          |   | Three months endedMarch 31, |   |
|-----------------------------------------------|--------|--------------------------------------------|--------|
|                                          |   | 2010                                       |   |   | 2011 |   |
| Cost of sales                                 |   | $                                          | 5      |   |   | $ | 29 |   |
| Selling, general and administrative expenses* |   |                                       | 261    |   |   |   | 186 |   |
| Total stock based compensation expense        |   | $                                          | 266    |   |   | $ | 215 |   |

|                                          |   | Number ofWarrants(in shares) |    |   | WeightedAverageExercisePrice |   | WeightedAverageRemainingContractualLife |   |
|-----------------------------------------------|--------|----------------------------------------|---------|--------|------------------------------|--------|-----------------------------------------|--------|
| Outstanding at December 31, 2010              |   |                                   | 313,806 |   |                         | $      | 4.29                                    |   | 2.2 years |   |
| Granted                                       |   |                                   | — |   |                         |   |                                    |   |   |   |
| Exercised                                     |   |                                   | — |   |                         |   |                                    |   |   |   |
| Forfeited or expired                          |   |                                   | — |   |                         |   |                                    |   |   |   |
| Outstanding and exercisable at March 31, 2011 |   |                                   | 313,806 |   |                         | $      | 4.29                                    |   | 2.0 years |   |

----

|                                  |   | Gross CarryingAmount |    |
|---------------------------------------|--------|---------------------------|---------|
| Balance at December 31, 2010          |   | $                         | 412     |   |
| Warranties issued                     |   |                      | — |   |
| Adjustment of provision               |   |                      | (49     | ) |
| Warranty claims                       |   |                      | — |   |
| Balance at  March 31, 2011* |   | $                         | 363     |   |

|                                                |   | As at March 31, 2011 |   |
|-----------------------------------------------------|--------|------------------------------------------|--------|
|                                                |   | Level 1                             |   |   | Level 2 |   |   | Level 3 |   |   | Total |   |
| Cash and cash equivalents                           |   | $                                        | 6,457  |   |   | $ | — |   |   | $ | — |   |   | $ | 6,457 |   |
| Restricted deposits – current and non-current |   |                                     | 1,698  |   |   |   | — |   |   |   | — |   |   |   | 1,698 |   |
| Derivative assets                                   |   |                                     | 83     |   |   |   | — |   |   |   | — |   |   |   | 83 |   |
| Total                                               |   | $                                        | 8,238  |   |   | $ | — |   |   | $ | — |   |   | $ | 8,238 |   |

|                                                |   | As at December 31, 2010 |   |
|-----------------------------------------------------|--------|---------------------------------------------|--------|
|                                                |   | Level 1                                |   |   | Level 2 |   |   | Level 3 |   |   | Total |   |
| Cash and cash equivalents                           |   | $                                           | 7,356  |   |   | $ | — |   |   | $ | — |   |   | $ | 7,356 |   |
| Restricted deposits – current and non-current |   |                                        | 2,010  |   |   |   | — |   |   |   | — |   |   |   | 2,010 |   |
| Derivative assets                                   |   |                                        | 93     |   |   |   | — |   |   |   | — |   |   |   | 93 |   |
| Total                                               |   | $                                           | 9,459  |   |   | $ | — |   |   | $ | — |   |   | $ | 9,459 |   |

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|   | (1) | The Company’s CoaLogix segment provides air pollution control services through selective catalytic reduction (“SCR”) catalyst and management services by the Company’s CoaLogix subsidiary. SCR systems are used by coal-fired power plants to reduce nitrogen oxides (NOx) emissions. |
|--------|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (2) | Energy & Security Sonar Solutions (formerly known as Naval and RT Solutions) whose activities are focused on the following areas – sonar and acoustic related solutions for energy, defense and commercial markets and includes other real-time and embedded hardware & software development and production. Energy & Security Sonar Solutions activities are provided through the Company’s DSIT Solutions Ltd. (“DSIT”) subsidiary. |
|--------|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (3) | The Company’s GridSense segment provides Smart Grid Distribution Automation products and services.  As these activities were acquired in May 2010, there are no comparative results reported for these activities for the three month period ended March 31, 2010. |
|--------|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (4) | The Company’s USSI segment provides Energy and Security Sensor Systems.  USSI's primary focus is to develop and produce fiber optic sensing systems for the energy and security markets.  As these activities were effectively acquired in February 2010, there are only partial comparative results reported for these activities for the three month period ended March 31, 2010. |
|--------|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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|                                      |   | CoaLogix |    |   | Energy &Security SonarSolutions |   |    | GridSense |   |   | USSI    |   |   | Other  |    |   | Total  |   |
|-------------------------------------------|--------|----------|---------|--------|-----------------------------------------------|--------|---------|-----------|--------|--------|---------|--------|--------|--------|---------|--------|--------|--------|
| Three months ended March 31, 2011:        |   |     |    |   |                                          |   |    |      |   |   |    |   |   |   |    |   |   |   |
| Revenues from external customers          |   | $        | 3,747   |   |                                          | $      | 2,026   |      |   | $      | 641     |   |   | $      | 43      |   |   | $      | 385 |   |   | $ | 6,842 |   |
| Intersegment revenues                     |   |     | — |   |                                          |   | — |      |   |   | — |   |   |   | — |   |   |   | — |   |   |   | — |   |
| Segment gross profit                      |   |     | 1,082   |   |                                          |   | 713     |      |   |   | 270     |   |   |   | (9      | )      |   |   | 200 |   |   |   | 2,256 |   |
| Stock compensation expense                |   |     | 83      |   |                                          |   | — |      |   |   | — |   |   |   | — |   |   |   | — |   |   |   | 83 |   |
| Depreciation and amortization expense     |   |     | 604     |   |                                          |   | 50      |      |   |   | 89      |   |   |   | 57      |   |   |   | 7 |   |   |   | 807 |   |
| Segment income (loss) before income taxes |   |     | (836    | )      |                                          |   | (31     | )         |   |   | (822    | )      |   |   | (516    | )      |   |   | 119 |   |   |   | (2,086 | ) |
|                                      |   |     |    |   |                                          |   |    |      |   |   |    |   |   |   |    |   |   |   |   |   |   |   |   |   |
| Three months ended March 31, 2010:        |   |     |    |   |                                          |   |    |      |   |   |    |   |   |   |    |   |   |   |   |   |   |   |   |   |
| Revenues from external customers          |   | $        | 4,478   |   |                                          | $      | 2,281   |      |   | $      | — |   |   | $      | — |   |   | $      | 325 |   |   | $ | 7,084 |   |
| Intersegment revenues                     |   |     | — |   |                                          |   | — |      |   |   | — |   |   |   | — |   |   |   | — |   |   |   | — |   |
| Segment gross profit                      |   |     | 1,932   |   |                                          |   | 1,048   |      |   |   | — |   |   |   | — |   |   |   | 134 |   |   |   | 3,114 |   |
| Stock compensation expense                |   |     | 121     |   |                                          |   | — |      |   |   | — |   |   |   | — |   |   |   | — |   |   |   | 121 |   |
| Depreciation and amortization expense     |   |     | 284     |   |                                          |   | 44      |      |   |   | — |   |   |   | 13      |   |   |   | 6 |   |   |   | 347 |   |
| Segment income (loss) before income taxes |   |     | 20      |   |                                          |   | 461     |      |   |   | — |   |   |   | (127    | )      |   |   | 7 |   |   |   | 361 |   |

|                                                             |   | Three months endedMarch 31, |    |
|------------------------------------------------------------------|--------|--------------------------------------------|---------|
|                                                             |   | 2010                                       |    |   | 2011 |   |
| Total income (loss) for reportable segments                      |   | $                                          | 354     |   |   | $ | (2,205 | ) |
| Other operational segment income                                 |   |                                       | 7       |   |   |   | 119 |   |
| Total operating income (loss)                                    |   |                                       | 361     |   |   |   | (2,086 | ) |
| Gain on sale of HangXing                                         |   |                                       | — |   |   |   | 492 |   |
| Non-controlling interests                                        |   |                                       | 50      |   |   |   | 368 |   |
| Distribution from EnerTech                                       |   |                                       | 135     |   |   |   | — |   |
| Income tax expense*                                              |   |                                       | (75     | ) |   |   | (65 | ) |
| Loss from discontinued operations                                |   |                                       | (2,152  | ) |   |   | — |   |
| Net loss of corporate headquarters and other unallocated costs** |   |                                       | (1,442  | ) |   |   | (926 | ) |
| Net loss attributable to Acorn Energy Inc.                       |   | $                                          | (3,123  | ) |   | $ | (2,217 | ) |

----

|           |   | Three months endedMarch 31, |    |
|----------------|--------|--------------------------------------------|---------|
|           |   | 2010                                       |    |   | 2011 |   |
| CoaLogix       |   | $                                          | 4,478   |   |   | $ | 3,747 |   |
| DSIT Solutions |   |                                       | 2,606   |   |   |   | 2,411 |   |
| GridSense      |   |                                       | — |   |   |   | 641 |   |
| USSI           |   |                                       | — |   |   |   | 43 |   |
| Total          |   | $                                          | 7,084   |   |   | $ | 6,842 |   |

|           |   | Backlog at March 31,2011 |   |
|----------------|--------|-----------------------------------------|--------|
| CoaLogix       |   | $                                       | 7.6    |   |
| DSIT Solutions |   |                                    | 6.0    |   |
| GridSense      |   |                                    | 0.3    |   |
| USSI           |   |                                    | 0.4    |   |
| Total          |   | $                                       | 14.3   |   |

----

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|                                                                   |   | Three months ended March 31, |    |
|------------------------------------------------------------------------|--------|--------------------------------------------------|---------|
|                                                                   |   | 2010                                             |    |   | 2011 |   |   | Change |   |
|                                                                   |   | ($,000)                                          |    |   | % ofrevenues |   |   | ($,000) |   |   | % ofrevenues |   |   | From2010 to2011 |   |
| Revenues                                                               |   | $                                                | 7,084   |   |   |   | 100 | % |   | $ | 6,842 |   |   |   | 100 | % |   |   | (3 | ) |
| Cost of sales                                                          |   |                                             | 3,970   |   |   |   | 56 |   |   |   | 4,586 |   |   |   | 67 |   |   |   | 16 |   |
| Gross profit                                                           |   |                                             | 3,114   |   |   |   | 44 |   |   |   | 2,256 |   |   |   | 33 |   |   |   | (28 | ) |
| R&D expenses                                                       |   |                                             | 48      |   |   |   | 1 |   |   |   | 588 |   |   |   | 9 |   |   |   | 1,125 |   |
| SG&A expenses                                                      |   |                                             | 4,147   |   |   |   | 59 |   |   |   | 4,558 |   |   |   | 67 |   |   |   | 10 |   |
| Operating loss                                                         |   |                                             | (1,081  | ) |   |   | (15 | ) |   |   | (2,890 | ) |   |   | (42 | ) |   |   | 167 |   |
| Finance expense, net                                                   |   |                                             | — |   |   |   | 0 |   |   |   | (122 | ) |   |   | (2 | ) |   |   |   |   |
| Distribution received from EnerTech                                    |   |                                             | 135     |   |   |   | 2 |   |   |   | — |   |   |   | — |   |   |   | (100 | ) |
| Gain on sale of HangXing                                               |   |                                             | — |   |   |   | — |   |   |   | 492 |   |   |   | 7 |   |   |   |   |   |
| Loss before taxes on income                                            |   |                                             | (946    | ) |   |   | (13 | ) |   |   | (2,520 | ) |   |   | (37 | ) |   |   | 166 |   |
| Taxes on income                                                        |   |                                             | (75     | ) |   |   | (1 | ) |   |   | (65 | ) |   |   | (1 | ) |   |   | (13 | ) |
| Loss from continuing operations                                        |   |                                             | (1,021  | ) |   |   | (14 | ) |   |   | (2,585 | ) |   |   | (38 | ) |   |   | 153 |   |
| Loss from discontinued operations                                      |   |                                             | (2,152  | ) |   |   | (30 | ) |   |   | — |   |   |   | — |   |   |   | (100 | ) |
| Net loss                                                               |   |                                             | (3,173  | ) |   |   | (45 | ) |   |   | (2,585 | ) |   |   | (38 | ) |   |   | (19 | ) |
| Net income (loss) attributable to  non-controlling interests |   |                                             | 50      |   |   |   | 1 |   |   |   | 368 |   |   |   | 5 |   |   |   | 636 |   |
| Net loss attributable to Acorn Energy Inc.                             |   | $                                                | (3,123  | ) |   |   | (44 | ) |   | $ | (2,217 | ) |   |   | (32 | ) |   |   | (29 | ) |

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|                                                             |   | Cash Payments Due During Year Ending March 31, |   |
|------------------------------------------------------------------|--------|-----------------------------------------------------------------------------------|--------|
|                                                             |   | (amounts in thousands)                                                  |   |
| Contractual Obligations                                     |   | Total                                                                             |   |   | 2012 |   |   | 2013-2014 |   |   | 2015-2016 |   |   | 2017 andthereafter |   |
| Long-term bank debt, utilized lines-of-credit and capital leases |   | $                                                                                 | 1,565  |   |   | $ | 1,171 |   |   | $ | 358 |   |   | $ | 36 |   |   | $ | — |   |
| Operating leases (1)                                             |   |                                                                              | 5,385  |   |   |   | 1,801 |   |   |   | 1,847 |   |   |   | 1,056 |   |   |   | 681 |   |
| Potential severance obligations(2)                               |   |                                                                              | 3,899  |   |   |   | 32 |   |   |   | — |   |   |   | 1,336 |   |   |   | 2,531 |   |
| Total contractual cash obligations                               |   | $                                                                                 | 10,849 |   |   | $ | 3,004 |   |   | $ | 2,205 |   |   | $ | 2,428 |   |   | $ | 3,212 |   |

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| 10.1   |   | Amended Subscription Agreement by and among the Registrant, Samuel M. Zentman and other parties named therein dated as of January 12, 2011.#   |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |                                                                                                                                           |
| 10.2   |   | Amended Subscription Agreement by and among the Registrant, Joe B. Cogdell, Jr. and other parties named therein dated as of January 12, 2011.# |
|   |   |                                                                                                                                           |
| 10.3   |   | Amendment to Employment Agreement by and between the Registrant and John A. Moore dated March 15, 2011.*#                                      |
|   |   |                                                                                                                                           |
| 10.4   |   | Amendment to Amended and Restated Non-Plan Stock Option Agreement by and between the Registrant and John A. Moore dated March 10, 2011.*#      |
|   |   |                                                                                                                                           |
| 10.5   |   | Amendment to Amended and Restated Non-Plan Stock Option Agreement by and between the Registrant and John A. Moore dated March 10, 2011.*#      |
|   |   |                                                                                                                                           |
| 10.6   |   | Amendment to Amended and Restated Non-Plan Stock Option Agreement by and between the Registrant and Samuel M. Zentman dated March 30, 2011.*#  |
|   |   |                                                                                                                                           |
| 31.1   |   | Certificate 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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|                           | ACORN ENERGY, INC.               |
|--------------------------------|----------------------------------|
|                           |                             |
| Dated:  May 10, 2011 |                             |
|                           |                             |
|                           | By:  /s/ Michael Barth |
|                           | Michael Barth                    |
|                           | Chief Financial Officer          |

----