SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
(Mark One)
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2001
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[ ] TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
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Commission File No. 811-08469
ACORN HOLDING CORP.
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(Exact name of small business issuer as specified in its charter)
Delaware 59-2332857
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(State or other jurisdiction of (IRS Employer Identifi-
incorporation or organization) cation No.)
1251 Avenue of the Americas, 45th Floor, New York, New York 10020-1104
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(Address of principal executive offices) (Zip code)
Issuer's telephone number, including area code (212) 536-4089
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N/A
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Former name, former address and former fiscal year, if changed since last
report.
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Securities Exchange Act of 1934 during the past 12 months (or
for such shorter period that the issuer was required to file such reports) and
(2) has been subject to such filing requirements for the past 90 days.
Yes X No
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APPLICABLE ONLY TO CORPORATE ISSUERS: State the number of shares outstanding of
each of the issuer's classes of common equity, as of the latest practicable
date: 1,595,746 shares of common stock, $.01 par value, as of August 10, 2001
(which reflects the two-for-five reverse stock split effective April 19, 1999).
Acorn Holding Corp. and Subsidiaries
CONSOLIDATED INTERIM BALANCE SHEETS
June 30,
2001 December 31,
ASSETS (unaudited) 2000
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CURRENT ASSETS
Cash and cash equivalents $ 1,394,249 $ 1,012,124
Investment securities 213,732 212,952
Accounts receivable - trade 305,411 357,502
Current portion of note receivable - employee - 40,000
Inventories 2,229,453 2,454,583
Prepaid expenses 63,747 18,396
Deferred income tax asset 30,443 91,328
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Total current assets 4,237,035 4,186,885
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MACHINERY AND EQUIPMENT, net of accumulated depreciation
of $1,518,281 as of June 30, 2001 and $1,338,591
as of December 31, 2000 2,118,270 2,012,537
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OTHER ASSETS
Deposits - 61,200
Other investments 9,108 9,108
Goodwill, net of accumulated amortization of $769,771 85,533 128,297
as of June 30, 2001 and $727,007 as of December 31, 2000
Deferred income tax asset 1,226,297 1,224,374
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1,320,938 1,422,979
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$ 7,676,243 $ 7,622,401
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LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable 181,418 245,457
Accrued expenses
Salaries and bonuses 400,701 277,396
Other 210,830 155,790
Deferred income 75,000 225,000
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Total current liabilities 867,949 903,643
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STOCKHOLDERS' EQUITY
Common stock 16,273 16,273
Additional paid-in capital 11,847,860 11,847,860
Accumulated deficit (5,009,507) (5,116,950)
Accumulated other comprehensive income 1,022 75
Treasury stock (47,354) (28,500)
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Total stockholder' equity 6,808,294 6,718,758
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$ 7,676,243 $7,622,401
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The accompanying notes are an integral part of these statements.
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Acorn Holding Corp. and Subsidiaries
CONSOLIDATED INTERIM STATEMENTS OF OPERATIONS
(unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
2001 2000 2001 2000
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Net sales $ 1,551,326 $ 1,848,156 $ 3,685,920 $ 3,487,707
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Costs and expenses
Cost of sales 1,171,106 1,248,179 2,647,844 2,435,630
Selling, general and administrative 415,427 440,043 876,842 812,710
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1,586,533 1,688,222 3,524,686 3,248,340
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Operating profit (loss) (35,207) 159,934 161,234 239,367
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Other income
Interest income 13,995 32,849 27,549 43,087
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13,995 32,849 27,549 43,087
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Income (loss) before income tax expense (21,212) 192,783 188,783 282,454
Income tax expense (benefit) (9,589) 71,983 81,340 114,676
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Net income (loss) $ (11,623) $ 120,800 $ 107,443 $ 167,778
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Earnings (loss) per share (basic and diluted) $ (0.01) $ 0.07 $ 0.07 $ 0.10
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Weighted average shares outstanding - basic 1,595,746 1,627,362 1,600,669 1,627,362
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Weighted average shares outstanding - diluted 1,595,946 1,627,362 1,601,066 1,627,362
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The accompanying notes are an integral part of these statements.
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Acorn Holding Corp. and Subsidiaries
CONSOLIDATED INTERIM STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY AND COMPREHENSIVE INCOME
From January 1, 2001 to June 30, 2001 (unaudited)
Accumulated
Additional other
Common paid-in Accumulated comprehensive Treasury
stock capital deficit income stock Total
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Balance at January 1, 2001 $ 16,273 $11,847,860 $(5,116,950) $ 75 $ (28,500) $ 6,718,758
Comprehensive income (loss)
Net income - - 107,443 - - 107,443
Net unrealized gain on investments
in securities available-for-sale - - - 947 - 947
Total comprehensive income 108,390
Treasury shares purchased - - - - (18,854) (18,854)
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Balance at June 30, 2001 $ 16,273 $11,847,860 $(5,009,507) $ 1,022 $ (47,354) $ 6,808,294
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The accompanying notes are an integral part of these statements.
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Acorn Holding Corp. and Subsidiaries
CONSOLIDATED INTERIM STATEMENTS OF CASH FLOWS
Six months ended June 30,
(unaudited)
2001 2000
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Cash flows from operating activities
Net income $ 107,443 $ 167,778
Adjustments to reconcile net income to net cash
used in operating activities
Depreciation and amortization 222,454 201,318
Deferred income taxes 58,962 99,481
(Increase) decrease in assets
Accounts receivable 52,091 (124,530)
Inventories 225,130 (251,001)
Prepaid expenses and other assets (45,351) (19,295)
Increase (decrease) in liabilities
Accounts payable (64,039) 371,169
Accrued expenses 178,345 164,666
Deferred income 150,000) (150,000)
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Net cash provided by operating activities 585,035 459,586
Cash flows from investing activities
Purchase of machinery and equipment, including deposits (224,223) (431,961)
Proceeds from redemption of investments 167 6,185
Note receivable payments received 40,000 150,236
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Net cash used in investing activities (184,056) (275,540)
Cash flows from financing activities
Payment of long-term debt - (60,531)
Purchase of treasury stock (18,854) -
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Net cash used in financing activities (18,854) (60,531)
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NET INCREASE IN CASH AND
CASH EQUIVALENTS 382,125 123,515
Cash and cash equivalents at beginning of period 1,012,124 956,357
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Cash and cash equivalents at end of period $ 1,394,249 $1,079,872
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The accompanying notes are an integral part of these statements.
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ACORN HOLDING CORP. AND SUBSIDIARIES
Notes to the Consolidated Interim Financial Statements
June 30, 2001
(Unaudited)
NOTE A - ORGANIZATION AND PURPOSE
Acorn Holding Corp. (Acorn) was incorporated under the laws of the State of
Delaware on September 8, 1983. Acorn is a holding company for it's wholly-owned
subsidiaries, Recticon Enterprises, Inc. (Recticon) and Automotive Industries,
Inc. (Automotive). Recticon is organized to engage in the business of
manufacturing and processing of silicon wafers for the semi-conductor industry.
Automotive is an inactive subsidiary.
NOTE B - BASIS OF PRESENTATION
Interim financial statements reflect all adjustments which are, in the opinion
of management, necessary to a fair statement of the results for the periods. The
2000 balance sheet has been derived from the audited financial statements
contained in the 2000 Annual Report to Stockholders. These interim financial
statements conform with the requirements for interim financial statements and
consequently do not include all the disclosures normally required by accounting
principles generally accepted in the United States. The results for the six
months ended June 30, 2001 are not necessarily indicative of the results to be
expected for the full year. Reporting developments have been updated where
appropriate. In this connection, there are no significant changes in
disclosures, except for the following:
1. Reclassifications
Certain prior period financial information has been reclassified to
conform to current period presentation
NOTE C - COMMON STOCK
At December 31, 2000 and June 30, 2001, the Company had 20,000,000 shares of
$0.01 par value common stock authorized. At December 31, 2000 and June 30, 2001,
1,627,362 shares were issued. At December 31, 2000 and June 30, 2001, 1,608,362
shares and 1,595,746 shares were outstanding respectively.
NOTE D - RECENT ACCOUNTING PRONOUNCEMENTS
On June 29, 2001, the Financial Accounting Standards Board (FASB) approved for
issuance Statement of Financial Accounting Standards (SFAS) 141, Business
Combinations, and SFAS 142, Goodwill and Intangible Assets. Major provisions of
these Statements are as follows: all business combinations initiated after June
30, 2001 must use the purchase method of accounting; the pooling of interest
method of accounting is prohibited except for transactions initiated before July
1, 2001; intangible assets acquired in a business combination must recorded
separately from goodwill if they arise from contractual or other legal rights or
are separable from the acquired entity and can be sold, transferred, licensed,
rented or exchanged, either individually or as part of a related contract, asset
or liability; goodwill and intangible assets with indefinite lives are not
amortized but are tested for impairment annually, except in certain
circumstances, and whenever there is an impairment indicator; all acquired
goodwill must be assigned to reporting units for purposes of impairment testing
and segment reporting; effective January 1, 2002, goodwill will no longer be
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subject to amortization. Although it is still reviewing the provisions of these
Statements, management's preliminary assessment is that these Statements will
not have a material impact on the Company's financial position or results of
operations.
NOTE E - STOCK OPTION PLANS
On June 4, 2001, the Board of Directors adopted the 2001 Performance Equity Plan
and the 2001 Directors' Stock Plan.
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Sales for the three-month period ended June 30, 2001 decreased $296,830
from the three-month period ended June 30, 2000, while sales for the six-month
period ended June 30, 2001 increased $198,213 from the six-month period ended
June 30, 2000. The Company had an operating loss of $35,207 for the three months
ended June 30, 2001 and an operating profit of $161,234 for the six months ended
June 30, 2001, as compared to operating profits of $159,934 and $239,367,
respectively, over the comparable prior year periods.
The principal reason for the decrease in profitability was due to a
decreased demand for the Company's products. Due to the economic slowdown in the
industry, the outlook for the next several months is uncertain.
Although the business in which the Company is engaged is highly
competitive and cyclical in nature, the Company believes that it has sufficient
short-term and long-term liquidity either from cash on hand, credit arrangements
or cash flow from operations.
From time to time in both written reports and oral statements by the
Company's senior management, we may express our expectations regarding future
performance by the Company. These "forward-looking statements" are inherently
uncertain, and investors must recognize that events could turn out to be other
than what senior management expected.
PART II
OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
10.1 Acorn Holding Corp. 2001 Performance Equity Plan
10.2 Acorn Holding Corp. 2001 Directors Stock Option Plan
(b) Reports on Form 8-K:
There were no reports on Form 8-K filed by the Company filed during the
quarter ended June 30, 2001.
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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 the
undersigned, thereunto duly authorized.
ACORN HOLDING CORP.
Date: August 14, 2001
/s/ Larry V. Unterbrink
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Larry V. Unterbrink, Treasurer
(Principal Financial and
Accounting Officer)
/s/ Stephen A. Ollendorff
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Stephen A. Ollendorff,
Chairman, Chief Executive Officer,
and Secretary
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