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 March 31, 2002
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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 Identification No.)
incorporation or organization)
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: 1,585,642 shares of common stock, $.01 par value, as of May 14, 2002
(which reflects the two-for-five reverse stock split effective April 19, 1999).
Acorn Holding Corp. and Subsidiaries
CONSOLIDATED INTERIM BALANCE SHEETS
March 31, December 31,
2002 2001
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(unaudited)
CURRENT ASSETS
Cash and cash equivalents $ 1,216,333 $ 1,476,244
Investment securities 15,880 16,360
Accounts receivable - trade 169,016 147,316
Inventories 2,030,528 2,135,351
Prepaid expenses 92,179 30,284
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Total current assets 3,523,936 3,805,555
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MACHINERY AND EQUIPMENT, net of
accumulated depreciation of
$1,796,653 and $1,684,469,
respectively 2,705,227 2,605,481
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OTHER ASSETS
Other investments 9,108 9,108
Goodwill 42,767 42,767
Deferred income tax asset 1,255,546 1,236,718
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1,307,421 1,288,593
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$ 7,536,584 $ 7,699,629
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LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 80,372 $ 128,779
Accrued expenses
Salaries and bonuses 586,645 524,006
Other 176,479 197,765
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Total current liabilities 843,496 850,550
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STOCKHOLDERS' EQUITY
Common stock 15,927 16,273
Additional paid-in capital 11,796,352 11,847,860
Accumulated deficit (5,112,014) (4,957,776)
Accumulated other comprehensive income 3,017 4,770
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6,703,282 6,911,127
Treasury stock, at cost (10,194) (62,048)
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Total stockholders' equity 6,693,088 6,849,079
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$ 7,536,584 $ 7,699,629
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The accompanying notes are an integral part of these statements.
2
Acorn Holding Corp. and Subsidiaries
CONSOLIDATED INTERIM STATEMENTS OF OPERATIONS
Three months ended March 31,
(unaudited)
2002 2001
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Net sales $ 1,204,808 $ 2,134,594
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Costs and expenses
Cost of sales 1,022,824 1,476,738
Selling, general and administrative 388,030 461,415
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1,410,854 1,938,153
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Operating (loss) profit (206,046) 196,441
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Interest income 3,329 13,554
(Loss) income before income tax expense (202,717) 209,995
Income tax (benefit) expense (48,479) 90,929
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Net (loss) income $ (154,238) $ 119,066
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(Loss) earnings per share (basic and diluted) $ (0.10) $ 0.07
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Weighted average shares outstanding - basic 1,585,642 1,627,195
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Weighted average shares outstanding - diluted 1,585,642 1,627,213
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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, 2002 to March 31, 2002 (unaudited)
Accumulated
Additional other
Common paid-in Accumulated comprehensive Treasury
stock capital deficit income stock Total
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Balance at January 1, 2002 $ 16,273 $ 11,847,860 $ (4,957,776) $ 4,770 $ (62,048) $ 6,849,079
Comprehensive income (loss)
Net loss - - (154,238) - - (154,238)
Net unrealized loss on
investments in securities
available-for-sale - - - (1,753) - (1,753)
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Total comprehensive loss (155,991)
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Treasury shares retired (346) (51,508) - - 51,854 -
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Balance at March 31, 2002 $ 15,927 $ 11,796,352 $ (5,112,014) $ 3,017 $ (10,194) $ 6,693,088
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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
Three months ended March 31,
(unaudited)
2002 2001
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Cash flows from operating activities
Net (loss) income $ (154,238) $ 119,066
Adjustments to reconcile net income to net cash
Used in operating activities
Depreciation and amortization 112,184 109,879
Deferred income taxes (benefit) (18,828) 74,790
(Increase) decrease in assets
Accounts receivable (21,700) (303,783)
Inventories 104,823 42,155
Prepaid expenses and other assets (61,895) (60,543)
Increase (decrease) in liabilities
Accounts payable (48,407) (19,050)
Accrued expenses 41,353 96,034
Deferred income - (75,000)
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Net cash used in operating activities (46,708) (16,452)
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Cash flows from investing activities
Purchase of machinery and equipment,
including deposits (211,930) (158,640)
Proceeds from redemption of investments (1,273) (1,743)
Note receivable payments received - 40,000
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Net cash used in investing activities (213,203) (120,383)
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Cash flows from financing activities
Proceeds from line of credit - 150,000
Purchase of treasury stock - (18,854)
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Net cash provided by financing activities - 131,146
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NET DECREASE IN CASH AND
CASH EQUIVALENTS (259,911) (5,689)
Cash and cash equivalents at beginning of period 1,476,244 1,012,124
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Cash and cash equivalents at end of period $ 1,216,333 $ 1,006,435
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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
March 31, 2002
(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 2001 balance sheet has been derived from the audited financial
statements contained in the 2001 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 three months ended March 31, 2002 are not necessarily indicative of the
results to be expected for the full year. Reporting developments have been
updated where appropriate.
NOTE C - RECENT ACCOUNTING PRONOUNCEMENTS
On July 20, 2001, the Financial Accounting Standards Board (FASB)
issued SFAS No. 141, "Business Combinations", and SFAS No. 142, "Goodwill and
Intangible Assets". SFAS No. 141 eliminates the use of the pooling method of
accounting and requires the use of purchase accounting for all business
combinations initiated after June 30, 2001. It also provides guidance on
purchase accounting related to the recognition of intangible assets separate
from goodwill. SFAS No. 142 changes the accounting for goodwill from an
amortization method to an impairment-only approach. Under SFAS No. 142, goodwill
will be tested annually and whenever events or circumstances occur indicating
that goodwill might be impaired. SFAS No. 141 and SFAS No. 142 are effective for
all business combinations completed after June 30, 2001. The Company is in the
process of adopting this statement. As of December 31, 2001, the beginning of
fiscal 2002, the Company no longer amortizes goodwill. The Company's goodwill is
subject to an annual impairment test, using a two-step process. If impairment
losses are required to be recognized upon the initial application of this
statement, they would be accounted for as a cumulative effect of the change in
accounting principles. The Company has not yet completed the impairment tests
prescribed by the Statement, but the Company does not believe the adoption of
Statement No. 142 will have a significant impact on the Company's consolidated
financial position or results of operations.
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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 March 31, 2002 decreased
$929,786 from the three-month period ended March 31, 2001. The Company realized
an operating loss for the three months ended March 31, 2002 of $206,046 as
compared to an operating profit of $196,411 for the three months ended March 31,
2001. The principal reason for the decrease was the lower demand for the
Company's products. However, 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.
Sales of the Company's products will primarily depend upon, among other
things: (i) demand for the existing product line, especially among its two
customers; (ii) pricing level and competition; and (iii) the cyclical nature of
the Company's business.
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
N/A
(b) Reports on Form 8-K:
There were no reports on Form 8-K filed by the Company filed during the
quarter ended March 31, 2002.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
ACORN HOLDING CORP.
Date: May 14, 2002
/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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