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, 1998
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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.)
100 Park Avenue, 23rd Floor, New York, New York 10017
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(Address of principal executive offices) (Zip code)
Issuer's telephone number, including area code (212) 685-5654
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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: 4,172,906 shares of common stock, $.01
par value, as of May 18, 1998.
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ACORN HOLDING CORP. AND SUBSIDIARIES
Consolidated Interim Balance Sheet
March 31, 1998 and December 31, 1997
March 31, 1998 December 31, 1997
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ASSETS (Unaudited)
CURRENT ASSETS
Cash and cash equivalents $ 1,149,765 $ 2,882,526
Restricted cash 36,735 41,439
U.S. Treasury bills 452,959 986,706
Accounts receivable - trade 392,965 429,893
Other receivables 33,480 0
Current portion of note receivable
from sale of subsidiary 121,696 121,696
Current portion of note receivable
- employee 40,000 40,000
Inventories 2,451,657 2,506,763
Prepaid expenses 103,194 13,843
Deferred income tax asset 155,592 179,000
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Total Current Assets 4,938,043 7,201,866
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MACHINERY AND EQUIPMENT, net of accumulated
depreciation of $1,998,010 as of December 31,
1998 and $2,055,333 as of March 31, 1998 2,097,111 1,706,823
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OTHER ASSETS
Deposits and other 0 82,563
Note receivable from sale of subsidiary,
less current portion 243,393 243,393
Note receivable, less current portion
- employee 80,000 120,000
Other investments 9,108 9,981
Goodwill, net of amortization 363,505 384,887
Deferred income tax asset 1,347,206 1,306,000
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2,043,212 2,146,824
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$ 9,078,366 $ 11,055,513
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LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Current maturities of long-term debt $ 121,062 $ 121,062
Accounts payable 321,913 303,474
Accrued expenses 310,809 213,519
Machine purchase deposit liability 36,735 41,439
Deferred income 383,315 466,680
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Total Current Liabilities 1,173,834 1,146,174
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LONG-TERM DEBT, less current maturities 211,858 242,122
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DEFERRED INCOME 750,000 783,306
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COMMITMENTS 0 0
STOCKHOLDERS' EQUITY
Common Stock 55,389 55,389
Additional paid-in capital 14,090,156 14,090,156
Accumulated deficit (5,094,546) (5,247,684)
Less common stock in treasury,
at cost - 9,000 shares (2,108,325) ( 13,950)
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Total stockholders' equity 6,942,674 8,883,911
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$ 9,078,366 $ 11,055,513
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See accompanying notes
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ACORN HOLDING CORP. AND SUBSIDIARIES
Consolidated Interim Statement of Income
March 31, 1998 and March 31, 1997
March 31, 1998 March 31, 1997
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(Unaudited) (Unaudited)
Net sales $ 2,056,016 $ 6,551,995
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Costs and expenses
Costs of sales 1,418,871 3,411,797
Selling, general and administrative 475,792 3,045,032
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1,894,663 6,456,829
Operating profit 161,353 95,166
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Other income
Gain on investment 0 108,456
Interest income, net 2,646 (10,226)
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2,646 98,230
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Income before income taxes 163,999 193,396
Income taxes expense (benefit
Current 85,865 66,000
Deferred (75,865) (59,000)
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10,000 7,000
Net Income $ 153,999 $ 186,396
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Earnings per share $ 0.034 $ 0.034
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Weighted average shares outstanding 4,490,502 5,538,906
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See accompanying notes.
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<PAGE>
ACORN HOLDING CORP. AND SUBSIDIARIES
Consolidated Interim Statement of Cash Flows
March 31, 1998 and March 31, 1997
March 31, 1998 March 31, 1997
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(Unaudited) (Unaudited)
Net income from operations $ 153,999 $ 186,396
Adjustments to reconcile net income to
net cash used in
operating activities
Depreciation 57,323 190,779
Amortization 21,382 42,862
(Increase) decrease in assets
Trade receivable 36,928 49,775
Notes and other receivable 0 (8,605)
Inventory 55,106 (46,159)
Prepaid expenses (89,351) (42,617)
Deferred taxes (17,798) (3,726)
Deposits and other assets 82,563 48,417
Accounts payable 17,237 (162,413)
Accrued expenses 85,641 (97,169)
Deferred income (116,671) (608,380)
Other liabilities 11,990 0
Customer machinery acquisition
liability (4,704) (64,136)
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Net cash provided by operating
activities 293,645 (514,976)
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Cash flows from Investing Activities
Purchase of property, plan and
equipment (447,611) (185,000)
Purchase of company stock (2,094,375) 0
Redemption of U.S. Treasury Bill 501,140 0
Purchase of investments, net 0 (468,382)
Proceeds notes receivable 40,000 0
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Net cash used in investing activities (2,000,846) (653,382)
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Cash Flows from Financing Activities
Payment of debt (30,264) (30,654)
Proceeds from line of credit 0 200,000
Proceeds from long-term debt 0 458,160
Payment of capital lease obligations 0 (7,370)
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Net cash used in investing activities (30,264) 620,136
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Net decrease in cash and cash equivalents (1,737,465) (548,222)
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Cash and cash equivalents at beginning
of year 2,923,965 2,594,050
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Cash and cash equivalents at end of year 1,186,500 2,045,828
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See accompanying notes.
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<PAGE>
ACORN HOLDING CORP. AND SUBSIDIARIES
Notes to Consolidated Interim Financial Statements
March 31, 1998
NOTE A - ORGANIZATION AND PURPOSE
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
1997 balance sheet has been derived from the audited financial statements
contained in the 1997 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. Reporting developments have been updated where
appropriate. In this connection, there are no significant changes in
disclosures, except for the following:
Acorn Holding Corp. filed an election with the Securities and Exchange
Commission to be treated as a business development company under the Investment
Company Act of 1940, as amended, and operated as such until November 1997. In
November 1997, Acorn Holding Corp. withdrew its election as an investment
company, ceased to be a business development company, and commenced business as
an operating company. At that date, the name of the company was changed to Acorn
Holding Corp. The financial statements presented reflect Acorn Holding Corp. as
an operating company.
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<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
During the fiscal year ended December 31, 1997, the Company completed the
divestiture of all of its major operating assets other than Recticon
Enterprises, Inc. (its principal subsidiary) ("Recticon") and, on November 4,
1997, pursuant to the approval of the Company's stockholders, withdrew its
election with the Securities and Exchange Commission to be treated as a Business
Development Company under the 1940 Act. Accordingly, the Company will be
operating in the foreseeable future as a holding company with one wholly-owned
subsidiary, Recticon. 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. Although the business in which the Company is engaged is highly
competitive and cyclical in nature, the Company does not foresee any material
impact during the upcoming calendar year on its net sales or income from
continuing operations.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
Exhibit No. 27 -- Financial Data Schedule
(b) Reports on Form 8-K:
On January 26, 1998, the Company filed with the Securities and Exchange
Commission a Current Report on Form 8-K, dated January 22, 1998, relating to the
repurchase of shares of its Common Stock.
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 19, 1998 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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<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF ACORN HOLDING CORP. FOR THE FIRST QUARTER ENDED MARCH
31, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<CIK> 0000737243
<NAME> ACORN HOLDING CORP.
<MULTIPLIER> 1
<CURRENCY> U.S.DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1998
<PERIOD-END> MAR-31-1998
<EXCHANGE-RATE> 1
<CASH> 1,149,765
<SECURITIES> 452,959
<RECEIVABLES> 588,141
<ALLOWANCES> 0
<INVENTORY> 2,451,657
<CURRENT-ASSETS> 4,938,043
<PP&E> 2,097,111
<DEPRECIATION> 2,055,333
<TOTAL-ASSETS> 9,078,366
<CURRENT-LIABILITIES> 1,173,834
<BONDS> 0
0
0
<COMMON> 55,389
<OTHER-SE> 6,887,285
<TOTAL-LIABILITY-AND-EQUITY> 9,078,366
<SALES> 2,056,016
<TOTAL-REVENUES> 2,056,016
<CGS> 1,418,871
<TOTAL-COSTS> 1,894,663
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 163,999
<INCOME-TAX> 10,000
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 153,999
<EPS-PRIMARY> 0.034
<EPS-DILUTED> 0
</TABLE>
