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 September 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 _____
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: 1,627,358 shares of common stock, $.01 par value, as of November 13, 2001
(which reflects the two-for-five reverse stock split effective April 19, 1999).
Acorn Holding Corp. and Subsidiaries
CONSOLIDATED INTERIM BALANCE SHEETS
September 30, December 31,
2001 2000
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(unaudited)
CURRENT ASSETS
Cash and cash equivalents $ 1,573,797 $ 1,012,124
Investment securities 18,841 212,952
Accounts receivable - trade 151,031 357,502
Current portion of note receivable - employee -- 40,000
Inventories 2,078,701 2,454,583
Prepaid expenses 44,619 18,396
Deferred income tax asset -- 91,328
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Total current assets 3,866,989 4,186,885
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MACHINERY AND EQUIPMENT, net of accumulated depreciation
of $1,610,509 as of September 30, 2001 and $1,338,591
as of December 31, 2000 2,026,042 2,012,537
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OTHER ASSETS
Deposits -- 61,200
Other investments 9,108 9,108
Goodwill, net of accumulated amortization
of $791,156 as of September 30, 2001
and $727,007 as of December 31, 2000 64,148 128,297
Deferred income tax asset 1,231,403 1,224,374
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1,304,659 1,422,979
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$ 7,197,690 $ 7,622,401
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LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 55,331 $ 245,457
Accrued expenses
Salaries and bonuses 462,355 277,396
Other 162,804 155,790
Deferred income -- 225,000
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Total current liabilities 680,490 903,643
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STOCKHOLDERS' EQUITY
Common stock 16,273 16,273
Additional paid-in capital 11,847,860 11,847,860
Accumulated deficit (5,303,421) (5,116,950)
Accumulated other comprehensive income 3,842 75
Treasury stock (47,354) (28,500)
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Total stockholders' equity 6,517,200 6,718,758
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$ 7,197,690 $ 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 Nine months ended
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September 30, September 30,
2001 2000 2001 2000
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Net sales $ 988,802 $ 1,746,766 $ 4,674,722 $ 5,234,473
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Costs and expenses
Cost of sales 906,006 1,310,619 3,553,850 3,746,249
Selling, general and administrative 372,653 442,600 1,249,495 1,255,310
1,278,659 1,753,219 4,803,345 5,001,559
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Operating profit (loss) (289,857) (6,453) (128,623) 232,914
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Other income
Interest income 14,027 11,034 41,576 54,121
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14,027 11,034 41,576 54,121
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Income (loss) before income tax expense (275,830) 4,581 (87,047) 287,035
Income tax expense (benefit) 18,084 2,845 99,424 117,521
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Net income (loss) $ (293,914) $ 1,736 $ (186,471) $ 169,514
========== ========== ========== =========
Earnings (loss) per share (basic and diluted) $ (0.18) $ 0.00 $ (0.12) $ 0.10
========== ========== ========== =========
Weighted average shares outstanding - basic 1,595,742 1,627,358 1,599,009 1,627,358
========== ========== ========== =========
Weighted average shares outstanding - diluted 1,595,742 1,627,358 1,599,009 1,627,358
========== ========== ========== =========
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
Nine months ended September 30, 2001 (unaudited)
Accumulated
Additional other
Common paid-in Accumulated comprehensive Treasury
stock capital deficit income stock Total
---------- ----------- ----------- ------------- --------- ---------
Balance at January 1, 2001 $ 16,273 $11,847,860 $(5,116,950) $ 75 $ (28,500) $6,718,758
Comprehensive income (loss)
Net loss - - (186,471) - - (186,471)
Net unrealized gain on investments
in securities available-for-sale - - - 3,767 - 3,767
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Total comprehensive loss (182,704)
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Treasury shares purchased - - - - (18,854) (18,854)
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Balance at September 30, 2001 $ 16,273 $11,847,860 $(5,303,421) $ 3,842 $ (47,354) $6,517,200
========= ========== =========== ========= ========== ==========
The accompanying notes are an integral part of this statement.
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Acorn Holding Corp. and Subsidiaries
CONSOLIDATED INTERIM STATEMENTS OF CASH FLOWS
Nine months ended September 30,
(unaudited)
2001 2000
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Cash flows from operating activities
Net income (loss) $ (186,471) $ 169,514
Adjustments to reconcile net income to net cash
Provided by operating activities
Depreciation and amortization 336,069 310,565
Deferred income taxes 84,299 99,566
(Increase) decrease in assets
Accounts receivable 206,471 (180,046)
Inventories 375,882 (70,602)
Prepaid expenses and other assets (26,223) 951
Other assets - (2,605)
Increase (decrease) in liabilities
Accounts payable (190,126) 92,937
Accrued expenses 191,973 217,638
Deferred income (225,000) (225,000)
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Net cash provided by operating activities 566,874 412,918
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Cash flows from investing activities
Purchase of machinery and equipment, including deposits (224,225) (483,174)
Proceeds from redemption of investments 197,878 5,130
Note receivable payments received 40,000 150,236
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Net cash provided by (used in) investing activities 13,653 (327,808)
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Cash flows from financing activities
Payment of long-term debt - (90,797)
Proceeds from line of credit - 100,000
Purchase of treasury stock (18,854) -
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Net cash provided by (used in) financing activities (18,854) 9,203
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NET INCREASE IN CASH AND
CASH EQUIVALENTS 561,673 94,313
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 $ 1,573,797 $ 1,050,670
========== ==========
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
September 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
semiconductor 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 nine months ended September 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:
Reclassifications
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Certain prior period financial information has been reclassified to conform
to the current period presentation.
NOTE C - COMMON STOCK
At December 31, 2000 and September 30, 2001, the Company had 20,000,000
shares of $0.01 par value common stock authorized. At December 31, 2000 and
September 30, 2001, 1,627,362 shares were issued. At December 31, 2000 and
September 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 be 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
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purposes of impairment testing and segment reporting; effective January 1,
2002, goodwill will no longer be subject to amortization. Management is still
reviewing the provisions of these Statements, and the impact on the Company's
financial position or results of operations is not determinable.
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, subject to stockholder approval.
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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 September 30, 2001 decreased
$757,964 from the three-month period ended September 30, 2000, while sales for
the nine-month period ended September 30, 2001 decreased $559,751 from the
nine-month period ended September 30, 2000. The Company had an operating loss of
$289,857 for the three-months ended September 30, 2001 and an operating loss of
$128,623 for the nine-months ended September 30, 2001, as compared to an
operating loss of $6,453 and an operating profit of $232,914, 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
None
(b) Reports on Form 8-K:
There were no reports on Form 8-K filed by the Company filed during the
quarter ended September 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: November 13, 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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