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, 1998
                                     ------------------

[ ] 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.
-----------------------------------------------------------------
(Exact name of small business issuer as specified in its charter)

            Delaware                        59-2332857
-------------------------------       -----------------------
(State or other jurisdiction of       (IRS Employer Identifi-  
incorporation or organization)          cation No.)

100 Park Avenue, 23rd Floor, New York, New York      10017
-------------------------------------------------------------
(Address of principal executive offices)           (Zip code)


Issuer's telephone number, including area code (212) 685-5654
                                               --------------
                           N/A
--------------------------------------------------------------
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
               ----------         ----------
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: 4,070,406 shares of common stock, $.01
par value, as of November 13, 1998.

                                   Page -1-

<PAGE>
                      ACORN HOLDING CORP. AND SUBSIDIARIES
                           Consolidated Balance Sheet
                    September 30, 1998 and December 31, 1997

                                                 September 30,   December 31, 
                                                     1998            1997
                                                 -------------  --------------
               ASSETS                             (Unaudited)
CURRENT ASSETS
    Cash and cash equivalents                     $   482,965   $ 2,882,526
    Restricted cash                                    11,802        41,439
    Investments                                     1,098,097       986,706
    Accounts receivable - trade                       406,656       429,893
    Current portion of note receivable from 
     sale of subsidiary                               110,235       121,696
    Current portion of note receivable 
      - employee                                       40,000        40,000
    Inventories                                     2,314,298     2,506,763
    Prepaid expenses                                   39,708        13,843
    Deferred income tax asset                         121,770       179,000
                                                  -----------   -----------

    Total Current Assets                            4,625,531     7,201,866
                                                  -----------   -----------

MACHINERY AND EQUIPMENT, net of
  accumulated depreciation of
  $2,185,554 as of September 30,
  1998 and $1,998,010 as of
  December 31, 1997                                 2,042,744     1,706,823
                                                  -----------   -----------
OTHER ASSETS
    Deposits and other                                      0        82,563
    Note receivable from sale of
     subsidiary, less current
     portion                                          110,236       243,393
    Note receivable, less
     current portion - employee                        80,000       120,000
    Other investments                                   9,108         9,981
    Goodwill, net of amortization                     299,356       384,887
    Deferred income tax asset                       1,301,890     1,306,000
                                                  -----------   -----------
                                                    1,800,590     2,146,824
                                                  -----------   -----------

                                                  $ 8,468,865   $11,055,513
                                                  ===========   ===========
      LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
    Current maturities of long-term debt          $   121,062   $   121,062
    Accounts payable                                  145,063       303,474
    Accrued expenses                                  212,151       213,519
    Machine purchase deposit liability                 11,802        41,439
    Deferred income                                   300,000       466,680
                                                  -----------   -----------

    Total Current Liabilities                         790,078     1,146,174
                                                  -----------   -----------

LONG-TERM DEBT, less current maturities               151,327       242,122
                                                  -----------   -----------

DEFERRED INCOME                                       599,975       783,306
                                                  -----------   -----------
COMMITMENTS                                              --            --


                                    Page -2-

<PAGE>
ACORN HOLDING CORP. AND SUBSIDIARIES
Consolidated Balance Sheet, Continued
September 30, 1998 and December 31, 1997
                                                 September 30,   December 31, 
                                                     1998            1997
                                                 -------------  --------------
                                                  (Unaudited)

STOCKHOLDERS' EQUITY
    Common Stock, par value $.01 per share:
      20,000,000 shares authorized,
      4,164,806 shares issued as of
      September 30, 1998 and 5,538,906
      issued as of December 31, 1997                   55,389        55,389
    Additional paid-in capital                     14,090,156    14,090,156
    Accumulated deficit                            (4,938,144)   (5,247,684)
    Less common stock in treasury, at cost
      -1,468,500 shares as of September 30,
      1998 and 9,000 shares as of
      December 31, 1997                            (2,279,916)       13,950)
                                                  ------------  ------------

    Total stockholders' equity                      6,927,485     8,883,911
                                                  ------------  ------------

                                                  $ 8,468,865   $11,055,513
                                                  ============  ============
 See accompanying notes

                                    Page -3-

<PAGE>



                      ACORN HOLDING CORP. AND SUBSIDIARIES
                    Consolidated Interim Statement of Income
                                   (Unaudited)
<TABLE>
<CAPTION>

                                       Three Months Ended           Nine Months Ended
                                          September 30,               September 30,
                                       1998           1997          1998          1997   
                                   -----------    -----------    -----------    -----------
<S>                                <C>            <C>            <C>            <C>        
Net sales                          $ 1,704,344    $ 1,876,507    $ 5,901,353    $ 5,829,151
                                   -----------    -----------    -----------    -----------
Costs and expenses
  Costs of sales                     1,210,695      1,196,285      4,156,296      3,916,367
  Selling, general and
   administrative                      418,441        329,491      1,347,817      1,346,324
                                   -----------    -----------    -----------    -----------
                                     1,629,136      1,525,776      5,504,113      5,262,691

  Operating profit                      75,208        350,731        397,240        566,460
                                   -----------    -----------    -----------    -----------

Other income (expense)
  Gain (loss) on investment
   sales                                     0         (3,000)        18,000        102,000
  Interest, net                           (637)        41,055         (2,556)        52,916
                                   -----------    -----------    -----------    -----------
                                          (637)        38,055         15,444        154,916
    Income from continuing
     operations before income
     taxes                              74,571        388,786        412,684        721,376

Income taxes expense (benefit)
  Current                                3,727        (33,357)         7,513          7,931
  Deferred                              58,378        151,373        117,702        124,252
                                   -----------    -----------    -----------    -----------
                                        62,105        118,016        125,215        132,183
                                   -----------    -----------    -----------    -----------
    Income from continuing
     operations                         12,466        270,770        287,469        589,193

Discontinued operations
  Loss from discontinued
   operations net of tax benefit
   of $239,589                               0              0              0       (379,395)
  Gain on sale of assets of
   Automotive Industries, Inc.,
   net of $700,138 taxes                     0              0              0      1,095,087
                                   -----------    -----------    -----------    -----------
                                             0              0              0        715,692
                                   -----------    -----------    -----------    -----------

Net Income                         $    12,466    $   270,770    $   287,469    $ 1,304,885
                                   ===========    ===========    ===========    ===========

Net Income per share-
  Basic & Dilutive
   Continuing Operations           $      0.00    $      0.05    $      0.07    $      0.10
   Discontinued Operations                0.00           0.00           0.00           0.13
                                   -----------    -----------    -----------    -----------
                                   $      0.00    $      0.05    $      0.07    $     0. 23
                                   ===========    ===========    ===========    ===========

Weighted average shares 
  outstanding-basic and dilutive     4,157,214      5,665,253      4,258,795      5,665,253 
                                   ===========    ===========    ===========    ===========

See accompanying notes.
</TABLE>

                                    Page -4-

<PAGE>



                      ACORN HOLDING CORP. AND SUBSIDIARIES
                  Consolidated Interim Statement of Cash Flows

                                      September 30,  September 30, 
                                          1998           1997
                                      -------------  -------------
                                       (Unaudited)    (Unaudited)

Net income from operations             $   287,469    $ 1,034,885

Adjustments to reconcile net income
 to net cash used in
 operating activities
    Depreciation                           182,088        308,628
    Amortization                            85,531         85,531
    Gain on sale of assets                       0     (1,795,225)
    Loss on sale of property                     0          3,645
    Imputed Interest                             0         53,321
(Increase) decrease in assets
    Trade receivable                        23,237        307,407
    Notes and other receivable                   0        170,165
    Inventory                              192,465        400,107
    Prepaid expenses                       (25,865)        20,197
    Deferred taxes                          61,340          8,443
    Deposits and other assets              104,634              0
Increase (decrease) in liabilities
    Accounts payable                      (158,411)      (843,569)
    Accrued expenses                        (1,368)        90,967
    Deferred income                       (350,011)      (350,010)
    Deferred credit                              0        (53,321)
                                       -----------    -----------

    Net cash provided by (used in)
      operating activities                 401,109       (288,829)
                                       -----------    -----------

Cash flows from Investing Activities
    Purchase of property, plant
     and equipment                        (518,009)      (177,218)
    Purchase of investments, net          (110,518)    (1,357,145)
    Proceeds from sales of
     property, plant and equipment               0      2,506,000
    Proceeds notes receivable              184,618        (80,961)
                                       -----------    -----------

Net cash provided by (used in)
  investing activities                    (443,909)       890,676
                                       -----------    -----------

Cash Flows from Financing Activities
    Acquisition of treasury stock       (2,265,966)             0
    Additional paid - capital                    0        236,374
    Proceeds from line of credit                 0        534,000
    Payment of debt                        (90,795)      (762,386)
                                       -----------    -----------

    Net cash provided by (used in)
     investing activities               (2,356,761)         7,988
                                       -----------    -----------

Net increase (decrease) in cash
  and cash equivalents                  (2,399,561)       609,835

Cash and cash equivalents at
  beginning of period                    2,882,526      2,210,873
                                       -----------    -----------

Cash and cash equivalents at
  end of period                        $   482,965    $ 2,820,708
                                       ===========    ===========

See accompanying notes

                                    Page -5-

<PAGE>
                      ACORN HOLDING CORP. AND SUBSIDIARIES
               Notes to Consolidated Interim Financial Statements
                               September 30, 1998


NOTE 1 - 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.  The results for the nine months ended September
30, 1998 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:

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.

NOTE 2 - NEW ACCOUNTING PRONOUNCEMENTS

A.   In June 1998,  the  Financial  Accounting  Standards  Board  (FASB)  issued
     Statement of Financial Accounting Standards (SFAS) No. 133, "Accounting for
     Derivative  Instruments  and Hedging  Activity."  SFAS No. 133  establishes
     accounting and reporting  standards for derivative  instruments,  including
     certain derivative instruments imbedded in other contracts, and for hedging
     activities.  It requires that an entity recognize all derivatives as either
     assets or  liabilities  in the statement of financial  position and measure
     those  instruments  at  fair  value.  If  certain  conditions  are  met,  a
     derivative may be  specifically  designated as a hedge.  The accounting for
     changes in the fair value of a  derivative  (gains and loses)  depends upon
     the intended use of the derivative and resulting designation.  SFAS No. 133
     is effective for all fiscal  quarters of fiscal years  beginning after June
     15, 1999. Earlier  application is permitted only as of the beginning of any
     fiscal quarter.  The Company is currently  reviewing the provisions of SFAS
     No. 133.

B.   The  Financial  Accounting  Standards  Board  (FASB)  issued  Statement  of
     Financial  Accounting  Standards (SFAS) No. 130,  "Reporting  Comprehensive
     Income,"  which is effective for years  beginning  after December 15, 1997.
     This new standard requires entities  presenting a complete set of financial
     statements to include details of comprehensive income. Comprehensive income
     consists of net income or loss for the current period and income, expenses,
     gains,  and  losses  that  bypass  the income  statement  and are  reported
     directly in a separate  component  of equity.  The adoption of SFAS No. 130
     will  not have a  material  effect  on the  presentation  of the  Company's
     financial position or results of operations.

                                    Page -6-

<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.

     Sales  for the  three-month  period  ended  September  30,  1998  decreased
$172,163 from the three-month  period ended September 30, 1997,  while sales for
the  nine-month  period  ended  September  30, 1998  increased  $72,202 from the
nine-month  period ended  September  30, 1997.  Operating  profits for the three
months and nine-months ended September 30, 1998 decreased  $275,523 and $169,200
respectively,  over the comparable prior year periods.  The principal reason for
the decline in profitability was due to pricing pressures resulting from a lower
demand for the Company's products,  without a corresponding decrease in the cost
of  sales.  The  Company  does not  foresee,  based on its  present  orders,  an
increased  demand for its products for the next several months.  However,  it is
cautiously  optimistic  that the  Company  may see an  increased  demand for its
products in the second half of the 1999 fiscal year.

     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.  The business in which the Company is engaged is highly  competitive
and cyclical in nature. Therefore, the reported financial information may not be
necessarily indicative during the upcoming calendar year of the future operating
results of the Company.

ITEM 6.   EXHIBITS AND REPORTS ON FORM 8-K

     (a)  Exhibits

     Exhibit No. 27 -- Financial Data Schedule

     (b) Reports on Form 8-K:

     There were no reports on Form 8-K filed by the  Company  during the quarter
ended September 30, 1998.

                             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.


Dated: November 13, 1998            Larry  V. Unterbrink
                                    -----------------------------
                                    Larry V. Unterbrink, Treasurer
                                    (Principal Financial and
                                    Accounting Officer)


                                    Stephen A. Ollendorff
                                    ------------------------------
                                    Stephen A. Ollendorff,
                                    Chairman, Chief Executive Officer,
                                    and Secretary


                             Page -7-