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SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, D.C. 20549
 FORM 10-QSB
 (Mark
One)
 þ
    
    QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended September 30, 2005
 o
    
    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.
 
  Delaware
    
    59-2332857(State or other jurisdiction of
    
    (IRS Employer Identification No.)incorporation or organization)
 2629 York Avenue, Minden, LA 71055(Address of principal executive offices)
    
    (Zip code)Issuers telephone number, including area code
    
    (318) 382-4574
      o þ
 o þ
   o þ




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Part I Financial InformationItem 1. Financial Statements
    
    1Item 2: Managements Discussion And Analysis Or Plan Of Operation
    
    9Item 3. Controls And Procedures
    
    18Part II Other InformationItem 1: Legal Proceedings
    
    19Item 2: Unregistered Sales Of Equity Securities And Use Of Proceeds
    
    19Item 3: Defaults Upon Senior Securities
    
    19Item 4: Submission Of Matters To A Vote Of The Security Holders
    
    19Item 5: Other Information
    
    20Item 6: Exhibits And Reports On Form 8-K
    
    20Signatures
    
    21Exhibit 31.1
    
    31.1-1Exhibit 31.2
    
    31.2-1Exhibit 32.1
    
    32.1-1Exhibit 32.2
    
    32.2-1Certification of CEO Pursuant to Section 302Certification of CFO Pursuant to Section 302Certification of CEO Pursuant to Section 906Certification of CFO Pursuant to Section 906




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ITEM 1. FINANCIAL STATEMENTS
  1




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ACORN HOLDING CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEET
(Unaudited)
 September 30, 2005
    
    December 31, 2004Current AssetsCash & Cash Equivalents
    
    
    1,117,185
    
    
    
    1,589,665Accounts Receivable
    
    
    7,950,986
    
    
    
    1,821,546Inventory
    
    
    1,611,953
    
    
    
    1,058,265Contract Development
    
    
    2,261,533
    
    
    
    6,261,978Other
    
    
    146,579
    
    
    
    91,132Total Current
    
    
    13,088,236
    
    
    
    10,822,586Fixed AssetsFurniture, Fixtures
    
    
    470,709
    
    
    
    368,412Machinery & Equipment
    
    
    2,246,049
    
    
    
    2,005,5062,716,758
    
    
    
    2,373,918Less Accumulated Depreciation
    
    
    (1,331,611
    )
    
    
    (1,053,380
    )Total Fixed
    
    
    1,385,147
    
    
    
    1,320,538TOTAL ASSETS
    
    
    14,473,383
    
    
    
    12,143,124Current LiabilitiesAccounts Payable
    
    
    2,397,890
    
    
    
    1,515,372Accrued Expense
    
    
    529,567
    
    
    
    457,012Customer Deposits
    
    
    76,056
    
    
    
    Lines of Credit  Notes Payable
    
    
    6,998,981
    
    
    
    2,255,545Due to Shareholders
    
    
    933,455
    
    
    
    2,260,604Deferred Revenue
    
    
    
    
    
    
    2,453,787Total Current
    
    
    10,935,949
    
    
    
    8,942,320TOTAL LIABILITIES
    
    
    10,935,949
    
    
    
    8,942,320Shareholders EquityCommon stock, $0.01 par value,
20,000,000 shares
authorized, 1,573,900 (2004) 100 (2005)
issued and outstanding
    
    
    69,971
    
    
    
    10Additional Paid In Capital
    
    
    2,922,288
    
    
    
    2,992,259Retained Earnings
    
    
    545,165
    
    
    
    208,535Total Equity
    
    
    3,537,434
    
    
    
    3,200,804TOTAL LIABILITIES & EQUITY
    
    
    14,473,383
    
    
    
    12,143,124
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ACORN HOLDING CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2005 AND 2004
(Unaudited)
 Nine Months EndedSeptember 30,2005
    
    
    2004Revenues
    
    
    12,385,602
    
    
    
    4,044,427Direct Contract CostDirect Labor
    
    
    1,136,180
    
    
    
    894,541Direct Materials
    
    
    4,181,076
    
    
    
    1,269,547Other Direct
    
    
    2,064,165
    
    
    
    1,539,952Total Direct Cost
    
    
    7,381,421
    
    
    
    3,702,040Gross Margin
    
    
    5,004,181
    
    
    
    342,387Indirect CostIndirect Expenses
    
    
    825,493
    
    
    
    324,372Overhead Expenses
    
    
    721,919
    
    
    
    1,426,215Depreciation / Amortization
    
    
    701,664
    
    
    
    277,779S G&A Expense
    
    
    1,869,691
    
    
    
    1,901,238Total Indirect costs
    
    
    4,118,767
    
    
    
    3,929,604Income from Operation
    
    
    885,414
    
    
    
    (3,587,217
    )Other (Expense) IncomeInterest Income
    
    
    27,569
    
    
    
    2,327Interest Expense
    
    
    (201,924
    )
    
    
    (58,501
    )Miscellaneous
    
    
    (20,340
    )
    
    
    26,203Total Other
    
    
    (194,695
    )
    
    
    (29,971
    )Income Before Taxes
    
    
    690,719
    
    
    
    (3,617,188
    )Provision for Taxes
    
    
    
    
    
    
    (9,458
    )Net Income
    
    
    690,719
    
    
    
    (3,607,730
    )Profit (loss) Per Share
    
    
    0.0987
    
    
    
    (36,077.3
    )Weighted Average Shares
    
    
    6,997,072
    
    
    
    100
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CONSOIDATED ACORN HOLDING
STATEMENT OF STOCKHOLDERS EQUITY
PERIOD ENDING SEPTEMBER 30, 2005
 AdditionalCommon
    
    Paid-In
    
    RetainedStock
    
    Capital
    
    Earnings
    
    TotalValentec Balance 12/31/04
    
    
    10
    
    
    
    3,484,773
    
    
    
    316,021
    
    
    
    3,800,804Net Income
    
    
    
    
    
    
    
    
    
    
    690,719
    
    
    
    690,719Re-class Add Paid In Cap
    
    
    
    
    
    
    (600,000
    )
    
    
    
    
    
    
    (600,000
    )Distribution to Parent
    
    
    
    
    
    
    
    
    
    
    (354,089
    )
    
    
    (354,089
    )Valentec 9/30/05
    
    
    10
    
    
    
    2,884,773
    
    
    
    652,651
    
    
    
    3,537,434ConsolidationRe-class Add Paid In Cap
    
    
    
    
    
    
    (354,089
    )
    
    
    
    
    
    
    Distribution to Parent
    
    
    
    
    
    
    354,089
    
    
    
    
    
    
    
    Acorn Stock at Par
    
    
    69,971
    
    
    
    
    
    
    
    
    
    
    
    69,971Re-class Add Paid In Cap
    
    
    
    
    
    
    (69,971
    )
    
    
    
    
    
    
    (69,971
    )Consolidated 09/30/05
    
    
    69,971
    
    
    
    2,814,812
    
    
    
    652,651
    
    
    
    3,537,434
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ACORN HOLDING CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2005 AND 2004
 Nine months ended
    
    Nine months endedSeptember 30, 2005
    
    September 30, 2004Cash from OperationsNet Income
    
    
    690,719
    
    
    
    (3,605,242
    )Depreciation / Amortization
    
    
    701,664
    
    
    
    275,291Net From Operations
    
    
    1,392,383
    
    
    
    (3,329,951
    )(Increase) Decrease in AssetsAccounts Receivable
    
    
    (6,129,440
    )
    
    
    613,581Inventory
    
    
    (553,688
    )
    
    
    (1,389,390
    )Contract Development
    
    
    1,327,468
    
    
    
    1,468,391Income Tax Rec
    
    
    (1,207,905
    )
    
    
    Other assets
    
    
    (5,079
    )
    
    
    Pre Paid Expenses
    
    
    (55,447
    )
    
    
    (444
    )Total
    
    
    (6,624,091
    )
    
    
    (692,138
    )Increase (Decrease) in LiabilitiesAccounts Payable
    
    
    958,576
    
    
    
    (1,061,012
    )Accrued Expense
    
    
    77,632
    
    
    
    942,799Deferred Revenue
    
    
    (158,239
    )
    
    
    Customer Deposits
    
    
    2,331,129
    
    
    
    59,065Total
    
    
    3,209,098
    
    
    
    (58,608
    )Net Cash from Operating Activities
    
    
    (2,022,610
    )
    
    
    (2,696,421
    )Cash Flow from Investing ActivitiesFurniture, Fixtures &
Leasehold Improvements
Machinery & Equipment
    
    
    (342,840
    )
    
    
    (176,241
    )Additional Paid In Capital
    
    
    
    
    
    
    71,246Distribution to Parent
    
    
    (354,089
    )
    
    
    (696,929
    )
    
    
    (104,995
    )Cash Flow from Financing ActivitiesLines of Credit  Notes Payable
    
    
    4,743,436
    
    
    
    1,120,770Additional Paid In Capital
    
    
    (100,000
    )Notes Payable
    
    
    100,000
    
    
    
    Due to Shareholders
    
    
    (1,168,909
    )
    
    
    1,780,9663,574,527
    
    
    
    2,901,736Net Increase (decrease) in Cash
    
    
    854,988
    
    
    
    100,320Cash Beginning of Year
    
    
    262,197
    
    
    
    152,767Cash End of Year
    
    
    1,117,185
    
    
    
    253,087
 
 5




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NOTE 1 ORGANIZATION AND PURPOSE
     NOTE 2 BASIS OF PRESENTATION
  6




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NOTE 3 ACCOUNTING POLICIES
 (A) Use of Estimates
  (B) Loss per Share
  (C) Income Taxes
  (D) Concentration of Credit Risk
  (E) Business Segments
 Nine months endedRevenues by Segment
    
    September 30, 2005Systems/Management
Systems/Integration
    
    $
    5,489,701Energetic Manufacturing
    
    $
    5,849,049Metal Parts
    
    $
    501,550Other
    
    $
    545,302Total
    
    $
    12,385,602
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Nine months endedGross Margin Segment
    
    September 30, 2005Systems/Management
Systems/ Integration
    
    $
    1,841,302Energetic Manufacturing
    
    $
    2,612,984Metal Parts
    
    $
    386,335Other
    
    $
    163,560Total
    
    $
    5,004,181
 Nine months endedOrder Backlog by Segment
    
    September 30, 2005Systems Management
Systems Integration
    
    $
    30,873,580Energetic Manufacturing
    
    $
    2,969,624Metal Parts Manufacturing
    
    $
    1,467,500Total
    
    $
    35,310,704
 
 *
    
    Prior to the acquisition of Valentec Systems, the Company operated as one
segment therefore segment information for 2004 is not available. (G) Recent Accounting Pronouncements
   8




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ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
    9




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Plan of Operation
   Results of Operations
     Liquidity and Capital Resources
   10




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Valentec Systems, Inc.
   11




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Systems Management / Systems Integration
 120MM Mortar Weapon System with Electronic Fire Control  KESHET.
     Mortar Ammunition.
  12




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Ø
    
    BMJ Belgrade, Herzegovina
    
    M8M PropellantØ
    
    Accurate Energetics, McCuen, TN
    
    Explosive LoadingØ
    
    Medico, Wilkes-Barre, PA
    
    Metal PartsØ
    
    POCAL
    
    Metal PartsØ
    
    Lockheed-Martin, Scranton, PA
    
    Metal PartsØ
    
    Greene Tweed, Kulpsville, PA
    
    O-ring & SealsØ
    
    Ellwood National Forge, Irvine, PA
    
    ForgingØ
    
    Rotek, Inc., Aurora, OH
    
    Bearings
 Energetic Manufacturing
  13




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Ø
    
    GOEX, Inc., Minden, LA
    
    Black PowderØ
    
    ATK, Radford, VA
    
    PropellantØ
    
    Flexible Concepts, Elkhart, IN
    
    Metal ComponentØ
    
    Woodlawn Manufacturing, Marshall, TX
    
    Metal ComponentØ
    
    B & T Screw, Bristol, CT
    
    Metal ComponentØ
    
    Spaulding Composites, Rochester, NH
    
    Plastic Component
 Metal Parts Manufacturing
    Ø
    
    Vy-Comp, Shreveport, LA
    
    Metal ComponentsØ
    
    Northwest Stamping, St. Louis, MO
    
    Metal ComponentsØ
    
    Alta Max, New Orleans, LA
    
    Packaging
 14




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Foreign Work
  Ø
  Ø
   The Contracting Process.
 15




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Customers
 Soltam Systems, Inc.
   16




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DSE, Inc .
  Kingdom of Saudi Arabia
  U.S. Government
  Ø
    
    50,000  Spiral Wrap Cartridge Cases M14B4Ø
    
    49,456  40MM White Star Cluster M585Ø
    
    21,692  40MM Green Star Parachute M661
 17




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Ø
    
    108,768  40MM White Star M583Ø
    
    134,080  M74 Simulators
  Off Balance Sheet Arrangements
  
 ITEM 3. Controls and Procedures
 (A) Evaluation Of Disclosure Controls And Procedures
  (B) Changes In Internal Controls
  18




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PART II  OTHER INFORMATION
 
 ITEM 1. LEGAL PROCEEDINGS
  
 ITEM 2. Changes in Securities
     
 ITEM 3. DEFAULTS UPON SENIOR SECURITIES
  
 ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
  
 ITEM 5. OTHER INFORMATION
  
 ITEM 6 EXHIBITS
     19




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Date
    
    Items1.
    
    September 8, 2005
    
    1.01, 2.03 and 9.012.
    
    August 24, 2005
    
    1.01, 3.02 and 9.013.
    
    August 10, 2005
    
    2.01, 5.02 and 9.01
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ACORN HOLDING CORP.Date: February 9, 2006/s/ Robert A. ZummoRobert A. ZummoChief Executive Officer
 21