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, 2000
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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: 1,627,358 shares of common stock, $.01 par value, as of August 11, 2000
(which reflects the two-for-five reverse stock split effective April 19, 1999).
Acorn Holding Corp. and Subsidiaries
CONSOLIDATED INTERIM BALANCE SHEETS
June 30,
ASSETS 2000 December 31,
(unaudited) 1999
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CURRENT ASSETS
Cash and cash equivalents $ 1,079,872 $ 956,357
Investment securities 200,669 208,601
Accounts receivable - trade 479,789 355,259
Current portion of note receivable
from sale of subsidiary -- 110,236
Current portion of note receivable
- employee 40,000 40,000
Inventories 2,324,309 2,073,308
Prepaid expenses 35,566 20,482
Deferred income tax asset 121,770 121,770
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Total current assets 4,281,975 3,886,013
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MACHINERY AND EQUIPMENT, net of accumulated
depreciation of $1,167,165, as of
June 30, 2000 and $1,016,755, as of
December 31, 1999 2,105,734 1,832,326
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OTHER ASSETS
Note receivable, less current portion
- employee -- 40,000
Other assets 13,319 9,108
Goodwill, net of amortization of
$684,242, as of June 30, 2000 and
$641,477, as of December 31, 1999 171,062 213,827
Deferred income tax asset 1,454,505 1,544,542
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1,638,886 1,807,477
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$ 8,026,595 $ 7,525,816
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LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Line of credit $ 150,000 $ 150,000
Current maturities of long-term debt 60,531 121,062
Accounts payable 509,426 138,257
Accrued expenses
Salaries and bonuses 158,595 136,144
Other 182,035 39,820
Deferred income 300,000 300,000
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Total current liabilities 1,360,587 885,283
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DEFERRED INCOME 75,000 225,000
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DEFERRED INCOME TAX LIABILITY 216,244 206,800
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STOCKHOLDERS' EQUITY
Common stock 16,280 16,280
Additional paid-in capital 11,847,853 11,847,853
Accumulated deficit (5,467,376) (5,635,154)
Accumulated other comprehensive
income (loss) (21,993) (20,246)
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Total stockholders' equity 6,374,764 6,208,733
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$ 8,026,595 $ 7,525,816
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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
June 30, 1999 and June 30, 2000
(unaudited)
Three Months Three Months Six Months Six Months
Ended June 30, Ended June 30, Ended June 30, Ended June 30,
2000 1999 2000 1999
Net Sales $1,848,156 $1,103,469 $3,487,707 $1,980,924
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Costs and expenses
Costs of sales 1,248,179 888,870 2,435,630 1,693,988
Selling, general and
administrative 440,043 359,023 812,710 769,101
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1,688,222 1,247,893 3,248,340 2,463,089
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Operating profit (loss) 159,934 (144,424) 239,367 (482,165)
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Other income (expense)
Loss on investment -- -- -- (754)
Interest income, net 32,849 49,805 43,087 62,567
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32,849 49,805 43,087 61,813
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Income (loss) before
income tax expenses 192,783 (94,619) 282,454 (420,352)
Income tax expenses 71,983 142,800 114,676 75,994
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Net income (loss) 120,800 (237,419) $167,778 $(496,346)
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Earnings (loss) per share $0.074 (.146) $0.103 $(0.305)
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Weighted average shares
outstanding 1,627,362 1,627,362 1,627,362 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 (LOSS)
Six months ended June 30, 2000
Accumulated
Additional other
Common paid-in Accumulated comprehensive Treasury
stock capital deficit income (loss) stock Total
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Balance at January 1, 2000 $16,280 $11,847,853 $(5,635,154) $ (20,246) -- $6,208,733
Comprehensive income (loss)
Net income (unaudited) -- -- 167,778 -- -- 167,778
Other comprehensive income
(loss), net of
reclassification
adjustments and taxes
(unaudited) -- -- -- (1,747) -- (1,747)
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Total comprehensive income
(unaudited) -- -- -- -- -- 166,031
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Balance at June 30, 2000
(unaudited) $16,280 $11,847,853 $(5,467,376) $ (21,993) $ -- $6,374,764
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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
Six months ended June 30,
(unaudited)
2000 1999
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Cash flows from operating activities
Net income (loss) $ 167,778 $ (496,346)
Adjustments to reconcile net income
(loss) to net cash (used in)
provided by operating activities
Depreciation and amortization 201,318 190,990
Deferred income taxes 99,481 75,944
(Increase) decrease in assets
Accounts receivable (124,530) (180,964)
Inventories (251,001) 199,299
Prepaid expenses (15,084) (17,431)
Other assets (4,211) 3,185
Increase (decrease) in liabilities
Accounts payable - Equip. purchase 299,567 --
Accounts payable 71,602 80,548
Accrued expenses 164,666 (23,666)
Deferred income (150,000) (150,000)
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Net cash (used in) provided
by operating activities 459,586 (318,441)
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Cash flows from investing activities
Purchase of machinery and equipment (431,961) (87,969)
Proceeds from redemption of investments 6,185 53,095
Note receivable proceeds 150,236 150,236
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Net cash provided by (used in)
investing activities (275,540) 115,362
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Cash flows from financing activities
Payment of long-term debt (60,531) (60,530)
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Net cash provided by (used in)
financing activities (60,531) (60,530)
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NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS 123,515 (263,609)
Cash and cash equivalents at
beginning of period 956,357 1,126,838
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Cash and cash equivalents at
end of period $ 1,079,872 $ 863,229
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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 CONSOLIDATED INTERIM FINANCIAL STATEMENTS
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 its wholly-owned subsidiaries, Automotive
Industries, Inc. (Automotive) and Recticon Enterprises, Inc. (Recticon).
Automotive is an inactive subsidiary.
Recticon is organized to engage in the business of manufacturing and
processing of silicon wafers for the semi-conductor industry.
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 1999 balance sheet has been derived from the audited financial
statements contained in the 1999 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 generally accepted accounting principles. The results
for the six months ended June 30, 2000 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.
2. Common Stock
On April 19, 1999, the Company approved a resolution to amend the Company's
certificate of incorporation to decrease the issued and outstanding common
shares and to effect a 5-for-2 reverse stock split earnings per share and
weighted average earnings per shares outstanding for all periods have been
changed to reflect the 5-for-2 reverse stock split.
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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, 2000 increased $744,687
from the three-month period ended June 30, 1999, while sales for the six-month
period ended June 30, 2000 increased $1,506,783 from the six-month period ended
June 30, 1999. The Company had operating profits of $159,934 and $239,367 for
the three months and six months ended June 30, 2000, respectively, as compared
to operating losses of $144,424 and $482,165, respectively, over the comparable
prior year periods. The principal reason for the increase in profitability was
due to a higher demand for the Company's products.
Although the business in which the Company is engaged is highly competitive
and cyclical in nature and has been recently incurring losses from operations,
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 1. LEGAL PROCEEDINGS
On May 14, 1999, the Chapter 7 Trustee in Bankruptcy for ServiceMax Tire &
Auto Centers of Michigan, Inc., filed an avoidance action in the United States
Bankruptcy Court for the Eastern District of Michigan seeking to recover
$1,750,000 from the Company on account of payments made to the Company and its
subsidiary, Automotive Industries, Inc. ("AII"), during 1996 and 1997. The
Company settled this action, without admission of liability, with the Trustee
for the payment by the Company of the amount of $10,000 in exchange for a full
and final release of all claims the Trustee had or might have against the
Company or AII. An Order dismissing the proceedings has been entered in the
Bankruptcy Court and the Company and the Trustee executed a Settlement and
Release Agreement in connection therewith.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
Exhibit No. 10.1 - Settlement and Release Agreement between Michael A.
Mason, Chapter 7 Trustee For ServiceMax Tire & Auto Centers of Michigan,
Inc. and Acorn Holding Corp., dated as of June 30, 2000.
Exhibit No. 27 - Financial Data Schedule
(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, 2000.
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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, 2000
Larry V. Unterbrink
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Larry V. Unterbrink, Treasurer
(Principal Financial and
Accounting Officer)
Stephen A. Ollendorff
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Stephen A. Ollendorff,
Chairman, Chief Executive Officer,
and Secretary
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