U.S. SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                                   FORM 10-KSB

[X]   ANNUAL  REPORT PURSUANT  TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
      ACT OF 1934 FOR THE FISCAL YEAR ENDED DECEMBER 31, 2003

[ ]   TRANSITION REPORT UNDER 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.
                               -------------------
                 (Name of small business issuer in its charter)

      Delaware                                          59-2332857
------------------------                    ------------------------------------
(State of incorporation)                    (I.R.S. Employer Identification No.)


         599 Lexington Avenue, 31st Floor, New York, New York 10022-6030
--------------------------------------------------------------------------------
                    (Address of principal executive offices)

Registrant's telephone number, including area code        (212) 536-4089
                                                   -----------------------------

Securities registered pursuant to Section 12(b) of the Act:  NONE

Securities registered pursuant to Section 12(g) of the Act:  Common  Stock,
$.01  par value

Check  whether  the  Registrant  (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 Registrant was required to file such
reports)  and (2) has been subject to such filing  requirements  for the past 90
days.

                    Yes                        No  X
                       -----                     -----

Check if there is no disclosure of delinquent  filers in response to Item 405 of
Regulation  S-B is not  contained  in  this  Form,  and no  disclosure  will  be
contained,  to the best of the  Registrant's  knowledge,  in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB. [ ]

Registrant's revenues for the fiscal year ended December 31, 2003 were $910,635.

The  aggregate  market value of the voting stock held by  non-affiliates  of the
Registrant  as of February 4, 2005  [valued at the bid price and the asked price
(both of which were $.12) on such date] was $119,966.

The  number of shares of Common  Stock  outstanding  (including  shares  held by
affiliates of the issuer) as of February 4, 2005 was: 1,573,942.

Transitional Small Business Disclosure Format (check one):

                    Yes                        No  X
                       -----                     -----

                    DOCUMENTS INCORPORATED BY REFERENCE: NONE

<PAGE>

ITEM 1.  DESCRIPTION OF BUSINESS
         -----------------------

GENERAL

      Acorn  Holding  Corp.  (the  "Company")  is a  holding  company  with  one
wholly-owned  subsidiary,  Recticon  Enterprises,  Inc.  ("Recticon"),  which it
acquired in 1993 by issuing 320,000 shares of the Company's  common stock,  $.01
par value (the "Common  Stock") to the  stockholders of Recticon in exchange for
all of the outstanding shares of stock of Recticon.

RECENT DEVELOPMENT

      On June 23, 2003, the Company  announced that Recticon had been advised by
its  principal  customer  that the demand for the type of product  Recticon  was
making would not increase and furthermore  there would be a sharp erosion in the
price for such  products  going  forward.  As a result  thereof,  the  Company's
negotiations to raise additional capital were terminated. The Board of Directors
of Recticon and the Company  determined  that since the Company did not have the
financial resources to sustain the anticipated  operating losses of Recticon and
to try to limit the further  erosion of  Recticon's  assets,  the  management of
Recticon  was  authorized  to  liquidate  the assets of  Recticon at the highest
possible price in the shortest  period of time. The  liquidation of Recticon was
completed  and all of the  assets  have been sold for  $1,099,869.  The  Company
believes that as of the date hereof,  all of the creditors of Recticon have been
paid.

      The Company is seeking strategic alternatives including the acquisition of
a private  company which seeks to become public by way of merger.  To date,  the
Company has not been successful in finding such an alternative.

EMPLOYEES

      The Company currently has three executive  officers.  Effective  September
30,  2003,  the Board of  Directors  and the  executive  officers of the Company
agreed not to accept any further  compensation for services  rendered after such
date.

ITEM 2.  DESCRIPTION OF PROPERTY
         -----------------------

      The Company maintains its principal executive office in New York, New York
at no charge to the Company and an office in New Canaan,  Connecticut, at a cost
of $300 per month.

ITEM 3.  LEGAL PROCEEDINGS
         -----------------

      None

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
         ---------------------------------------------------

      None

                                     PART II

ITEM 5.  MARKET FOR THE REGISTRANT'S COMMON EQUITY
         AND RELATED STOCKHOLDER MATTERS
         -----------------------------------------

      The  Company's  Common  Stock was  accepted for listing in October 1988 on
NASDAQ under the symbol  "AVCC".  The Common Stock was delisted on March 3, 2003
and is presently  listed on the  Over-the-Counter  Bulletin Board. The following
table sets forth, for the periods  indicated,  the range of high and low closing
bid  quotations  as reported by NASDAQ.  Such  quotations  reflect  inter-dealer

                                       2
<PAGE>

prices,  without retail mark-up,  mark-down or commission and do not necessarily
represent  actual  transactions.  There presently is a limited public market for
the Common Stock.

       Quarter Ending             Low                High
       --------------             ---                ----

           2003
           ----

        March 31                  $.43               $1.01
        June 30                   $.26               $1.01
        September 30              $.25               $.45
        December 31               $.07               $.25

       Quarter Ending             Low                High
       --------------             ---                ----

           2002
           ----

        March 29                  $1.419             $2.359
        June 28                   $1.289             $1.799
        September 30              $1.009             $1.299
        December 31               $0.400             $1.179


      As of February 4, 2005, there were  approximately 378 holders of record of
the Company's Common Stock with 1,573,942 shares of Common Stock outstanding. In
addition, the Company believes that there are a significant number of beneficial
owners of Common Stock whose  shares are held in "street"  name as of such date.
On February 4, 2005,  the closing bid and asked  quotations  of the Common Stock
were both $.12.

      The  Company  has  never  paid and does not  currently  intend to pay cash
dividends.  In  addition,  the Company has never made,  nor adopted any policies
with respect to, in-kind distributions, and has no present intention of adopting
any such policies or of making any such distributions.

ITEM 6.  MANAGEMENT'S DISCUSSION AND ANALYSIS
         OR PLAN OF OPERATIONS
         ------------------------------------

      Certain  statements  in this Form 10-KSB may  constitute  "forward-looking
statements" within the meaning of the Private  Securities  Litigation Reform Act
of 1995,  including those concerning  management's  expectations with respect to
future financial  performance and future events,  particularly relating to sales
of  current  products.   Such  statements   involve  known  and  unknown  risks,
uncertainties  and  contingencies,  many of which are beyond the  control of the
Company, which could cause actual results and outcomes to differ materially from
those  expressed  herein.  These  statements  are often,  but not  always,  made
typically by use of words or phrases such as  "estimate,"  "plans,"  "projects,"
"anticipates,"  "continuing," "ongoing," "expects," "believes," or similar words
and phrases. Factors that might affect such forward-looking statements set forth
in this Form 10-KSB include,  among others:  (i) increased  competition from new
and existing  competitors and pricing  practices from such  competitors and (ii)
general  industry  and  economic  conditions.   Any  forward-looking  statements
included  in this  Form  10-KSB  are made only as of the date  hereof,  based on
information  available  to the  Company as of the date  hereof,  and  subject to
applicable law to the Company,  the Company  assumes no obligation to update any
forward-looking statements.

      On  June  23,  2003,  the  Company   announced  that  its  only  operating
subsidiary,  Recticon  Enterprises,  Inc.  ("Recticon")  had been advised by its
principal  customer that the demand for the type of product  Recticon was making
would not increase and  furthermore  there would be a sharp erosion in the price
for such products going forward. As a result thereof, the Company's negotiations

                                       3
<PAGE>

to raise additional capital were terminated.  The Board of Directors of Recticon
and the Company  determined  that since the  Company did not have the  financial
resources to sustain the anticipated  operating losses of Recticon and to try to
limit the further erosion of Recticon's  assets,  the management of Recticon was
authorized to liquidate the assets of Recticon at the highest  possible price in
the shortest  period of time.  As of December  31, 2003,  it has sold all of its
assets for $1,099,869.  The Company incurred a loss of $3,236,719 as a result of
such liquidation.  The only ongoing costs and expenses the Company will incur in
the future are accounting  fees,  transfer  agent fees,  and federal,  state and
local taxes.

      Because the assets of the Company,  other than cash, have been liquidated,
the  operations  of the  Company  are  shown in the  accompanying  Statement  of
Discontinued Operations for all periods presented.

      The  balance  sheet as of  December  31,  2003  reflects  the value of the
Company  after the  liquidation  of Recticon and a settlement of all accrued and
contractual  claims  of  Recticon.  The  Company  settled  all  of  the  accrued
compensation claims of management totaling $1,302,971.28 as of December 31, 2003
for  approximately  $224,000.  In addition,  the Board and Management  agreed to
waive all contractual  rights,  and agreed not to accept any  compensation on or
after  September  30, 2003.  In addition,  they agreed to  relinquish  all their
options so that there are presently no outstanding options.

      Financial  Condition  - The  Company  is  seeking  strategic  alternatives
including the  acquisition of a private  company which seeks to become public by
way of merger.  To date, the Company has not been  successful in finding such an
alternative. The Company's cash and cash equivalents of $753,785 at December 31,
2002  decreased to $330,098 at December 31, 2003.  The decrease in cash resulted
primarily  from costs  associated  with  maintaining  the Company's  status as a
public company.

      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.

ITEM 7.  FINANCIAL STATEMENTS.
         --------------------

      See Index to Financial Statements after Signature Page.

ITEM 8.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
         ON ACCOUNTING AND FINANCIAL DISCLOSURE
         ---------------------------------------------

      Not Applicable

ITEM 8a.  CONTROLS AND PROCEDURES
          -----------------------

      The management of the Company, including Stephen A. Ollendorff as Chairman
and Chief Executive Officer and Larry V. Unterbrink as Treasurer, have evaluated
the  Company's  disclosure  controls and  procedures as of a date within 90 days
prior to the filing date of this annual report (the  "Evaluation  Date").  Under
rules  promulgated  by the  Commission,  disclosure  controls and procedures are
defined as those controls or other  procedures of an issuer that are designed to
ensure that  information  required to be  disclosed by the issuer in the reports
filed  or  submitted  by it  under  the  Exchange  Act is  recorded,  processed,
summarized and reported,  within the time periods  specified in the Commission's
rules and forms.  Based on the evaluation of the Company's  disclosure  controls
and procedures,  Messrs.  Ollendorff and Unterbrink  determined  that, as of the
Evaluation  Date,  such  controls  and  procedures  were  effective.  Since  the
Evaluation  Date,  there have not been any significant  changes in the Company's
internal  controls  or in other  factors  that could  significantly  affect such
controls.

                                       4
<PAGE>

                                    PART III

ITEM 9.  DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND
         CONTROL PERSONS; COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
         ------------------------------------------------------------------

      The following is a list (along with certain  biographical  information) of
the  executive  officers  and  directors of the  Company.  All  directors of the
Company  are serving a current  term of office  which  continues  until the next
annual meeting of  stockholders,  and all officers are serving a current term of
office which continues until the next annual meeting of directors:

                                 YEAR OF
                                ELECTION
                                   AS
 NAME AND AGE                   DIRECTOR           POSITION
 ------------                   --------           --------

(As of 1/25/2005)

Bert Sager                      1983               Director
  (79)(1)(2)

Stephen A. Ollendorff           1983               Chairman of the Board of
  (66)(1)                                          Directors  (the "Board"),
                                                   Chief Executive Officer and
                                                   Secretary; Director

Edward N. Epstein*              1995               President and Chief
  (64)(1)                                          Operating Officer; Director

Larry V. Unterbrink                -               Treasurer
  (69)(3)

Paula Berliner                  1990               Director
  (61)(1)

Ronald J. Manganiello*          1997               Director
  (55)(1)(2)(4)

George Farley                   2001               Director
  (65)(1)(2)

--------------
*Designees of Edward N. Epstein.  See "Certain Relationships and
 Related Transactions."

(1)   Member of the Stock Option and Compensation Committee.
(2)   Member of the Audit Committee.
(3)   Mr. Unterbrink was a member of the Board from 1985 until February 1995.
(4)   Mr. Manganiello was a member of the Board from November 1995 until January
      1997, and was elected to the Board in December 1997.

--------------

                                       5
<PAGE>

      BERT SAGER was  Co-Chairman of the Board of the Company from November 1995
to  December  1998 and was  Chairman  from June  1989 to  November  1995.  Prior
thereto,  he was President  since the Company's  inception  until June 1989. Mr.
Sager  has been a  private  investor  for more  than  five  years and has been a
practicing attorney since 1949. He is a director of Artesyn  Technologies,  Inc.
("Artesyn"), a publicly-traded manufacturer of standardized electronic products,
of Boca Raton, Florida.

      STEPHEN A.  OLLENDORFF  has been Chief  Executive  Officer of the  Company
since  September 1992,  Chairman of the Board since November 1995,  President of
the  Company  from  June 1989  until  November  1995,  and  Secretary  since the
Company's  inception.  He served as Vice President from the Company's  inception
until his election as  President.  He is currently of counsel to the law firm of
Kirkpatrick & Lockhart  Nicholson  Graham LLP. Mr.  Ollendorff  also serves as a
director of Artesyn.

      EDWARD N. EPSTEIN was elected President and Chief Operating Officer of the
Company in November  1995.  For more than the past five  years,  he has been the
principal  of Edward N.  Epstein & Assoc.,  a consulting  firm  specializing  in
corporate  structure  and  management.  He has also been,  since January 1996, a
principal in the merchant banking firm of New Canaan Capital LLC, and since July
1996,  a  principal  of  Sylhan  LLC,  an   integrated   contract   manufacturer
specializing in the precision machining of refractory metal parts.

      LARRY V.  UNTERBRINK,  Treasurer of the Company since  February 1990, is a
private investor  residing in Florida.  Since November 1986, Mr.  Unterbrink has
been  a  principal  of  Groupe  Financier,  a  publishing  and  consulting  firm
specializing in international finance.

      PAULA  BERLINER  was a Vice  President of the Company from June 1992 until
December  1998 and,  since May 1990,  has been a private  investor  residing  in
Florida.

      RONALD J. MANGANIELLO has been a principal in the merchant banking firm of
New  Canaan  Capital  LLC,  since  January  1996.  Since July 1996 he has been a
principal of Sylhan LLC.

      GEORGE FARLEY - Retired  partner of BDO Seidman;  self-employed  certified
public  accountant and financial  consultant  since August 1999. Chief Financial
Officer of Talk America, Inc. (formerly Talk.com, Inc.) from November 1997 until
August 1999.  Senior Vice President and Chief  Financial  Officer of Twin County
Grocers from September 1995 until October 1997.

      There  are no family  relationships  between  any  executive  officers  or
directors of the Company.

      We have not yet  adopted  a code of  ethics  applicable  to our  principal
executive  officer and our principal  financial and accounting  officer.  We are
currently examining our corporate  governance and other policies and procedures.
Following such  examination,  we expect to adopt a code of ethics  applicable to
all directors, officers and employees.

AUDIT COMMITTEE AND CHARTER

      As of the date of this  Statement,  our audit  committee  consisted of the
following directors:

      George Farley
      Ronald J. Manganiello
      Paula Berliner

                                       6
<PAGE>

      Messrs. Farley, Manganiello and Berliner are deemed independent members of
the audit  committee.  Our audit committee is responsible for: (i) selection and
oversight of our independent  accountant;  (ii) establishing  procedures for the
receipt,  retention and treatment of complaints regarding  accounting,  internal
controls and auditing matters; and (iii) engaging outside advisors.

      The  Board of  Directors  considered  whether  the  independent  principal
accountant  is  independent,  and  concluded  that the auditor for the  previous
fiscal year ended December 31, 2003 was independent.

AUDIT COMMITTEE FINANCIAL EXPERT

      At this time,  Mr. Farley is our audit  committee  financial  expert.  Mr.
Farley is a certified  public  accountant and we believe that he is sufficiently
qualified to act as our financial expert.

SECTION 16(a) COMPLIANCE

      Pursuant to Section  16(a) of the Exchange  Act,  directors  and executive
officers of the Company and beneficial  owners of greater than 10% of the Common
Stock are required to file  certain  reports  with the  Securities  and Exchange
Commission  (the   "Commission")  in  respect  of  their  ownership  of  Company
securities.  The Company believes that during fiscal year 2003 all such required
reports were timely filed, other than with respect to one Form 4 report required
to be filed by Mr. Epstein, which was subsequently filed.

ITEM 10.  EXECUTIVE COMPENSATION

SUMMARY COMPENSATION TABLE

      The  following  table sets forth  information  for the fiscal  years ended
December 31, 2003, December 31, 2002 and December 31, 2001,  respectively,  with
respect to compensation earned by the Chief Executive Officer of the Company and
the  executive  officers  (whose  salary  and bonus  earned in fiscal  year 2003
exceeded $100,000) of the Company (the "Named Executives").


                                     Annual Compensation(1)           Long-Term
                                                                    Compensation
                                                                    ------------
 Name and                                                            Securities
 Principal Position         Year       Salary($)      Bonus($)       Underlying
 ------------------         ----       ---------      --------       Options(#)
                                                                     ----------

 Stephen A. Ollendorff      2003    $0(2)(3)            -0-              --
   Chairman and Chief       2002    $132,380(3)         -0-              --
   Executive Officer        2001    $101,073(3)         -0-              --

 Edward N. Epstein          2003    $ 98,297(2)(4)      -0-              --
   President and Chief      2002    $ 87,043(4)         -0-              --
   Operating Officer        2001    $114,230(4)         -0-              --


(1)   No officer received perquisites which, are in the aggregate,  greater than
      or equal to the lesser of $50,000 or 10% of such  officer's  annual salary
      and bonus.

                                       7
<PAGE>

(2)   Effective  September 30, 2003, the executive officers agreed not to accept
      any further compensation for services rendered after such date, and agreed
      to accept a cash  payment of  approximately  15% of such  executive's  all
      accrued compensation through September 30, 2003.

(3)   Represents  actual cash payments made to Mr.  Ollendorff during the fiscal
      years 2001, 2002 and 2003;  however,  does not include the accrued amounts
      for the respective  period. In fiscal year 2003, Mr. Ollendorff waived the
      cash payment  from the Company in payment of all his accrued  compensation
      through September 30, 2003.

(4)   Represents  actual cash payments made to Mr.  Epstein for the fiscal years
      2001,  2002 and 2003,  but dues not include  the  accrued  amounts for the
      respective   periods.   In  fiscal  year  2003,   Mr.   Epstein   received
      approximately $98,000 in payment of his accrued compensation.

      The Company does not have any annuity,  retirement,  pension,  deferred or
incentive  compensation plan or arrangement  under which any executive  officers
are entitled to benefits, nor does the Company have any long-term incentive plan
pursuant to which  performance  units or other forms of  compensation  are paid.
Executives  who qualify are  permitted  to  participate  in the  Company's  2001
Performance Equity Plan.

STOCK OPTION GRANTS AND VALUES

      During the fiscal year ended December 31, 2003, there were no stock option
grants or stock appreciation  rights granted to the Named Executives.  Effective
September 30, 2003,  all executive  officers and  directors  relinquished  their
rights to any  unexercised  stock options held by such under the Company's stock
option plans. Accordingly,  as of December 31, 2003, there are no exercisable or
non-exercisable options held by any employee, officer, director or other person.

COMPENSATION OF DIRECTORS

      Effective  September  30,  2003,  the  directors  agreed not to accept any
further compensation for services rendered after such date, and agreed to accept
a cash payment of approximately  15% of such accrued  compensation from November
1, 2002 (the date upon which directors began accruing cash compensation) through
September 30, 2003.

      Effective  September 30, 2003, all directors  relinquished their rights to
any  unexercised  stock options held by such under the Company's  2001 Directors
Stock  Option  Plan.  Accordingly,  as  of  December  31,  2003,  there  are  no
exercisable and non-exercisable options held by the directors.

EMPLOYMENT ARRANGEMENTS

      There are no current  employment  agreements  between  the Company and its
executive;  all previous  employment  agreements were terminated as of September
30, 2003.

                                       8
<PAGE>

ITEM 11.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
          MANAGEMENT
          ---------------------------------------------------

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS

      The following table sets forth, as of the close of business on February 1,
2005,  information as to those stockholders (other than members of the Company's
management),  who are known by the Company to  beneficially  own more than 5% of
its outstanding Common Stock:

                                        No. of Shares
Name and Address                        Beneficially             Percentage
of Beneficial Owner                      Owned(1)                 of Class
-------------------                     -------------            ----------

Estate of Herbert Berman(2)                113,440                  7.2%
405 Lexington Avenue
New York, NY 10174

Allen Landers, M.D.
1385 York Avenue
New York, NY 10021                         101,520                  6.4%

---------------
(1)   Beneficial ownership,  as reported in the above table, has been determined
      in accordance  with Rule 13d-3 under the Securities  Exchange Act of 1934,
      as amended (the "Exchange Act").  Unless otherwise  indicated,  beneficial
      ownership includes both sole voting and sole dispositive power.

(2)   Excludes  shares of Common  Stock owned by the adult  children of the late
      Herbert Berman.

OWNERSHIP BY MANAGEMENT

      The following  table sets forth,  as of February 1, 2005,  the  beneficial
ownership of the Common Stock of the Company of (i) each director (including the
Named  Executives) of the Company and (ii) all directors and executive  officers
of the Company as a group (based upon  information  furnished by such  persons).
Under the rules of the Commission,  a person is deemed to be a beneficial  owner
of a security if he has or shares the power to vote or direct the voting of such
security  or the power to dispose or direct the  disposition  of such  security.
Accordingly,  more than one person may be deemed to be a beneficial owner of the
same  securities.  A  person  is also  deemed  to be a  beneficial  owner of any
securities  of which that person has the right to acquire  beneficial  ownership
within 60 days.

   Name and Address of        Amount and Nature of    Percentage of Outstanding
   Beneficial Owner(1)        Beneficial Ownership           Shares Owned
   -------------------        --------------------           ------------

                                107,330
   Bert Sager                     (2)                             6.8%

   Stephen A. Ollendorff        369,690                          23.5%
                                  (3)

                                       9
<PAGE>

Name and Address of          Amount and Nature of    Percentage of Outstanding
Beneficial Owner(1)          Beneficial Ownership           Shares Owned
-------------------          --------------------           ------------

Edward N. Epstein                 309,300                          19.7%
                                  (3)(4)

Paula Berliner                      0                                -

Ronald J. Manganiello              57,278                           3.6%
                                   (5)

George Farley                       0                                -

                                  574,226
All executive officers           (2)(3)(4)                         36.5%
and directors as a group            (5)
(7 persons)

------------------

*     Less than 1%

(1)   Unless otherwise indicated, the address of all the Company's directors and
      executive officers is c/o the Company's principal executive offices at 599
      Lexington Avenue, 31st Floor, New York, NY 10022-6030.

(2)   Does not include 80 shares of Common Stock owned by Mr. Sager's spouse, as
      sole  trustee of a trust  formed by Ms.  Sager's  mother,  as to which Mr.
      Sager disclaims beneficial ownership.

(3)   Stephen A. Ollendorff,  Chairman of the Board, Chief Executive Officer and
      Secretary of the Company, has entered into an Irrevocable Proxy and Voting
      Agreement with Respect to Election of Directors,  dated December 19, 1995,
      with Edward N.  Epstein,  President  of the  Company,  with respect to the
      shares of Common Stock beneficially  owned by Mr. Epstein.  See "--Certain
      Relationship  and Related  Transactions."  Accordingly,  Mr.  Ollendorff's
      beneficial  ownership includes such shares. Other than as set forth above,
      Mr. Ollendorff disclaims beneficial ownership of such shares.

(4)   Includes shares owned by Mr. Epstein as trustee for his minor child.

(5)   Includes shares owned by Mr. Manganiello's spouse.

ITEM 12.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
          ----------------------------------------------

      Mr.  Ollendorff has entered into an Irrevocable Proxy and Voting Agreement
With Respect to Election of Directors  (the  "Proxy"),  with Edward N.  Epstein,
with respect to the shares of Common  Stock  beneficially  owned by Mr.  Epstein
(the "Stock"), commencing on December 19, 1995 and terminating on December 31 of
such year in which either party shall have given the other party at least twelve
months'  written notice thereof prior to December 31 of such year. If any shares
of the Stock  covered by the Proxy are sold to any other party,  the Proxy as it

                                       10
<PAGE>

relates to such  shares of Stock  shall  terminate  immediately  upon such sale.
Pursuant to the Proxy, Mr.  Ollendorff  undertakes to vote the Stock, as well as
use his best efforts  (including  voting shares of stock of the Company owned by
him) for the  election of the greater of (i) two  directors  or (ii) a number of
directors  equal to 22%  (rounded up to the next  highest  number) of the entire
Board,  acceptable to Mr. Epstein. Mr. Epstein had designated himself and Ronald
J. Manganiello to Mr.  Ollendorff with respect to the election of members of the
Board as acceptable to him.

ITEM 13.  EXHIBITS AND REPORTS ON FORM 8-K
          --------------------------------

      (a)  Exhibits:

      3.1 Certificate of  Incorporation as filed and recorded with the Secretary
of State of Delaware,  as amended - incorporated  by reference to Exhibit 3.1 to
the Company's Annual Report on Form 10-KSB for the year ended December 31, 1997.

      3.3 By-laws,  as amended,  effective  November 7, 1996 -  incorporated  by
reference to Exhibit 3 to the Company's  Quarterly Report on Form 10-QSB for the
quarter ended September 30, 1996.

      10.1 1991 Stock Option  Plan,  as amended -  incorporated  by reference to
Exhibit 10.7 to the Company's  Registration Statement on Form N-2 (No. 33-69610)
filed with the Commission on September 29, 1993.

      10.2 2001  Performance  Equity Plan - incorporated by reference to Exhibit
10.1 to the Company's Quarterly Report on Form 10-QSB for the quarter ended June
30, 2001.

      10.3 2001  Directors  Stock  Option Plan -  incorporated  by  reference to
Exhibit 10.2 to the  Company's  Quarterly  Report on Form 10-QSB for the quarter
ended June 30, 2001.

      21.  List of subsidiaries of the Company.

      31.1  Certification  by the  Chief  Executive  Officer  pursuant  to  Rule
13a-14(a) of the Exchange Act.

      31.2  Certification  of the Chief Executive  Officer Pursuant to 18 U.S.C.
Section 1350, as adopted  pursuant to Section 906 of the  Sarbanes-Oxley  Act of
2002.

      32.1  Certification  by the  Chief  Financial  Officer  pursuant  to  Rule
13a-14(a) of the Exchange Act.

      32.2  Certification  of the  Principal  Financial and  Accounting  Officer
Pursuant to 18 U.S.C.  Section 1350,  as adopted  pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.

      (b)  Reports on Form 8-K:

      There were no reports on Form 8-K filed by the Company  during the quarter
ended December 31, 2003.

ITEM 14.  PRINCIPAL ACCOUNTANT FEES AND SERVICES.
          --------------------------------------

      The  following  table  presents  the  cost  of  the  Company's   principal
accountants'  fees and services for the years ended  December 31, 2003 and 2002,
respectively:

                                       11
<PAGE>

                                  2003                        2002
                                  ----                        ----
      Audit Fees                  $35,969                     $30,500
      Audit related fees            -                           -
      Tax Fees                    $ 3,800                     $12,700
      All Other Fees                -                           -
                                  -------                     -------

        TOTAL                     $39,769                     $31,770

PRE-APPROVAL POLICY FOR AUDIT AND NON-AUDIT SERVICES

      The Company did not utilize any services other than audit and tax services
in fiscal year 2003. It is the policy of the Audit  Committee to pre-approve the
retention of the auditors and their services.

                                       12
<PAGE>

                                   SIGNATURES

      In accordance  with Section 13 or 15(d) of the Securities  Exchange Act of
1934,  the  Registrant  caused  this  report to be  signed on its  behalf by the
undersigned, thereunto duly authorized.

                                         ACORN HOLDING CORP.
                                         (Registrant)

Dated:  February 4, 2005                 By:  /s/ Stephen A. Ollendorff
                                         ----------------------------------
                                         Stephen A. Ollendorff, Chairman
                                         of the Board and Chief Executive
                                         Officer

      In accordance  with the Securities  Exchange Act of 1934,  this report has
been  signed  by the  following  persons  on  behalf  of the  Registrant  in the
capacities and on the dates indicated.

Signature                             Title                          Date
---------                             -----                          ----

                                 Chairman of the Board          February 4, 2005
/s/ Stephen A. Ollendorff        Chief Executive Officer
-----------------------------    (Principal Executive
Stephen A. Ollendorff            Officer), Secretary
                                 and Director

                                 President and Chief            February 4, 2005
/s/ Edward N. Epstein            Operating Officer;
-----------------------------    Director
Edward N. Epstein

                                 Treasurer (Principal           February 4, 2005
/s/ Larry V. Unterbrink          Financial and Accounting
-----------------------------    Officer)
Larry V. Unterbrink


/s/ Paula Berliner               Director                       February 4, 2005
-----------------------------
Paula Berliner


                                 Director
-----------------------------
Ronald J. Manganiello


/s/ Bert Sager                   Director                       February 4, 2005
-----------------------------
Bert Sager



/s/ George Farley                Director                       February 4, 2005
-----------------------------
George Farley

                                       13
<PAGE>







   Financial Statements and Report of Independent Certified Public Accountants
                      Acorn Holding Corp. and Subsidiaries
                           December 31, 2003 and 2002


<PAGE>

                                 C O N T E N T S


                                                                           Page
                                                                           ----

REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS                          F-3

FINANCIAL STATEMENTS

         CONSOLIDATED BALANCE SHEETS                                        F-4

         STATEMENT OF DISCONTINUED OPERATIONS                               F-5

         CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS'
            EQUITY AND COMPREHENSIVE LOSS                                   F-6

         CONSOLIDATED STATEMENTS OF CASH FLOWS                              F-7

         NOTES TO CONSOLIDATED FINANCIAL STATEMENTS                         F-8















                                      F-2

<PAGE>





               Report of Independent Certified Public Accountants
               --------------------------------------------------


Board of Directors
Acorn Holding Corp.


         We have audited the accompanying  consolidated  balance sheets of Acorn
Holding Corp. (a Delaware corporation) as of December 31, 2003 and 2002, and the
related consolidated statements of discontinued operations, stockholders' equity
and  comprehensive  loss,  and cash  flows for each of the years in the two year
period  ended   December  31,  2003.   These   financial   statements   are  the
responsibility of the Company's management.  Our responsibility is to express an
opinion on these financial statements based on our audits.

         We conducted our audits in accordance  with the standards of the Public
Company Accounting Oversight Board (United States). Those standards require that
we plan and perform the audit to obtain  reasonable  assurance about whether the
consolidated  financial statements are free of material  misstatement.  An audit
includes  examining,  on a test  basis,  evidence  supporting  the  amounts  and
disclosures in the financial  statements.  An audit also includes  assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation.  We believe that our
audits provide a reasonable basis for our opinion.

         In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial position of
Acorn  Holding  Corp.  as of December  31, 2003 and 2002,  and the  consolidated
results  of its  operations  and its cash flows for each of the years in the two
year period ended  December 31, 2003 in conformity  with  accounting  principles
generally accepted in the United States of America.

         As discussed in note A-11 to the consolidated financial statements, the
Company adopted  Statement of Financial  Accounting  Standards No. 142, Goodwill
and Other Intangible Assets, on January 1, 2002.



/s/ Grant Thornton LLP

Philadelphia, Pennsylvania
January 12, 2005



                                      F-3

<PAGE>


                      Acorn Holding Corp. and Subsidiaries

                           CONSOLIDATED BALANCE SHEETS

                                   December 31


   ASSETS                                             2003          2002
                                                    ----------    ----------

CURRENT ASSETS
   Cash and cash equivalents                        $  330,098    $  753,785
   Investment securities                                     0        14,230
   Accounts receivable - trade                               0       106,548
   Inventories                                               0     1,852,319
   Prepaid expenses                                          0        40,321
                                                    ----------    ----------

         Total current assets                          330,098     2,767,203
                                                    ----------    ----------

MACHINERY AND EQUIPMENT, net of accumulated
   depreciation of $2,144,940 in 2002                        0     2,819,579
                                                    ----------    ----------

OTHER ASSETS - Other Investments                             0         9,108
                                                    ----------    ----------

         Total assets                               $  330,098    $5,595.890
                                                    ==========    ==========

LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES
   Accounts payable                                 $    5,297    $  106,727
   Accrued expenses:
      Deferred Compensation                                  0       858,383
      Other                                                  0        93,947
   Line of credit                                            0       375,000
                                                    ----------    ----------

      Total current liabilities                          5,297     1,434,057
                                                    ----------    ----------

STOCKHOLDERS' EQUITY
   Common stock                                         15,739        15,856
   Additional paid-in capital                       11,772,377    11,786,229
   Accumulated deficit                             (11,463,315)   (7,628,923)
   Accumulated other comprehensive income                    0         2,640
                                                    ----------    ----------
                                                       324,801     4,175,802
   Treasury stock, at cost                                   0       (13,969)
                                                    ----------    ----------

      Total stockholders' equity                       324,801     4,161,833
                                                    ----------    ----------

                                                    $  330,098    $5,595,890
                                                    ==========    ==========

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.

                                      F-4
<PAGE>

                      Acorn Holding Corp. and Subsidiaries

                      STATEMENT OF DISCONTINUED OPERATIONS

                             Year ended December 31,

                                                        2003          2002
                                                    -----------    -----------

Net sales                                           $   910,635    $ 3,705,005

Costs of Sales                                        1,310,078      3,681,924
                                                     ----------     ----------

   Gross (loss) profit                                (399,443)         23,081

Selling, general and administrative                  1,257,280       1,429,385

Non-recurring income (expense)
   Forgiveness of liabilities                        1,078,837               -
   Loss on liquidation of assets                    (3,248,621)              -
                                                     ----------     ----------

Loss before other income (expense)                  (3,826,507)              -
                                                     ----------     ----------

Other income (expense)
   Interest income                                           -           7,592
   Interest expense                                      (9,822)        (7,208)
   Other                                                  1,937        (59,817)
                                                     ----------     ----------
                                                         (7,885)       (59,433)

Loss before income tax expense                       (3,834,392)    (1,465,737)

Income tax expense                                           -       1,205,410
                                                     ----------     ----------

Net Loss                                            ($ 3,834,392) $ (2,671,147)
                                                     ==========     ==========

Loss per share (basic and diluted)                  ($     2.43)  $      (1.69)
                                                     ==========     ==========

Weighted average shares outstanding - basic           1,576,870      1,582,405
                                                     ==========     ==========

Weighted average shares outstanding - diluted         1,576,870      1,582,405
                                                     ==========     ==========


THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.

                                      F-5
<PAGE>

<TABLE>
<CAPTION>
                                           Acorn Holding Corp. and Subsidiaries

                                CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
                                                 AND COMPREHENSIVE LOSS

                                          Years ended December 31, 2003 and 2002

                                                                              Accumulated
                                              Additional                         Other
                                Common          Paid-in        Accumulated   Comprehensive     Treasury
                                 Stock          Capital          Deficit        income          Stock           Total

<S>                                <C>        <C>             <C>               <C>           <C>           <C>
Balance at January 1, 2002         $16,273    $11,847,860     $(4,957,776)      $4,770        $(62,048)     $ 6,849,079

Comprehensive loss
  Net loss                                                    $(2,671,147)                                  $(2,671,147)
  Net unrealized loss on
    investments or Securities
    sold                                                                        (2,130)                          (2,130)

Total Comprehensive Loss                                                                                     (2,673,277)
                                                                                                            ------------
Treasury Shares Retired              (417)       (61,631)                                        62,048               --
Treasury Shares Purchased                                                                      (13,969)         (13,969)
                                  --------   ------------     ------------    ---------      ----------     ------------

Balance at December 31, 2002        15,856     11,786,229      (7,628,923)        2,640        (13,969)       4,161,833

Comprehensive loss
     Net loss                                                  (3,834,392)                                   (3,834,392)
     Realized loss on
       Securities sold                                                          (2,640)                          (2,640)
                                                                                                            ------------

Total comprehensive loss                                                                                     (3,837,032)
                                                                                                            ------------

Treasury shares retired              (117)       (13,852)               0             0          13,969               0
                                  --------   ------------     ------------    ---------      ----------     ------------

Balance at December 31, 2003       $15,739    $11,772,377    ($11,463,315)           $0              $0        $324,801
                                  ========   ============     ============    =========      ==========     ============


THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.

</TABLE>
                                                           F-6
<PAGE>

                      Acorn Holding Corp. and Subsidiaries

                      CONSOLIDATED STATEMENTS OF CASH FLOWS

                             Year ended December 31,

                                   (Unaudited)

                                                          2003          2002
                                                      ------------  ------------

Cash flows from operating activities
   Net (loss)                                         ($3,834,392)  ($2,671,147)
   Adjustments to reconcile net (loss) to net cash
      (used in) provided by operating activities
    Depreciation and amortization                         249,282       460,471
    Impairment of good will                                     0        42,767
    Loss on investments                                     8,796             0
    Loss on Liquidation of Assets                       3,236,719             0
    Deferred income taxes                                       0     1,236,718
    Forgiveness of Accrued Compensation                (1,078,837)            0

    (Increase) decrease in assets
    Accounts receivable                                   106,548        40,768
    Inventories                                           219,445       283,032
    Prepaid expenses and other assets                     (19,689)      (10,037)

    Increase (decrease) in liabilities
    Accounts payable                                     (101,430)      (22,052)
    Accrued expenses                                      126,507       230,559
                                                      ------------  ------------

      Net cash used in operating activities            (1,087,051)     (408,921)
                                                      ------------  ------------

Cash flows from investing activities
   Sales Proceeds (Purchase) of machinery and           1,026,462      (674,569)
   equipment Proceeds from redemption of securities        11,902             -
                                                      ------------  ------------

      Net cash (used in) provided by investing
        activities                                      1,038,364      (674,569)
                                                      ------------  ------------

Cash flows from financing activities
   (Repayment) proceeds from line of credit              (375,000)      375,000
   Purchase of treasury stock                                   -       (13,969)
                                                      ------------  ------------

      Net cash (used in) provided by financing
        activities                                       (375,000)      361,031
                                                      ------------  ------------

      NET DECREASE IN CASH AND
       CASH EQUIVALENTS                                  (423,687)     (772,459)

Cash and cash equivalents at beginning of year            753,785     1,476,244
                                                      ------------  ------------

Cash and cash equivalents at end of year               $  330,098    $  753,785
                                                      ============  ============
Supplemental disclosure of cash flow information
  Cash paid for interest expense                       $    9,822    $    7,208
                                                      ============  ============

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.

                                      F-7
<PAGE>

                      Acorn Holding Corp. and Subsidiaries

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                           December 31, 2003 and 2002

NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

1.  Description of Business and Basis of Presentation
    -------------------------------------------------
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,  AI  Liquidating
Corp. and Recticon  Enterprises,  Inc.  (Recticon).  AI Liquidating  Corp. is an
inactive subsidiary.

Recticon was organized to engage in the business of manufacturing and processing
of silicon wafers for the semi-conductor  industry. All Recticon operations were
discontinued in 2003. (See Note B).

The  consolidated  financial  statements  include the  accounts of Acorn and its
wholly  owned  subsidiaries.  All  significant  inter-company  transactions  and
balances are eliminated in consolidation.

At December 31, 2003,  Acorn and its wholly owned  subsidiaries  were  inactive.
Acorn's only asset was $330,098 of cash and cash equivalents.

2.  Use of Estimates
    ----------------
In preparing the financial  statements in accordance with accounting  principles
generally  accepted in the United  States of America,  management is required to
make estimates and  assumptions  that affect the reported  amounts of assets and
liabilities  and disclosure of contingent  assets and liabilities at the date of
the financial statements,  and revenues and expenses during the reported period.
Actual results could differ from those estimates.

3.  Cash and Cash Equivalents
    -------------------------
Cash and cash  equivalents  consist of cash and highly liquid  investments  with
maturity of three months or less when purchased.

4.  Inventories
    -----------
Inventories are stated at the lower of cost or market. Cost is determined by the
first-in, first-out method.

5.  Machinery and Equipment
    -----------------------
Machinery  and  equipment  are  stated  at cost less  accumulated  depreciation.
Depreciation  is provided by the  straight-line  method  over  estimated  useful
lives. Maintencance and repair costs are charged to expense as incurred.

6.  Income Taxes
    ------------
Deferred income tax assets and liabilities  represent the tax effects,  based on
current tax law, of future deductible or taxable amounts  attributable to events
that have been  recognized  in the  financial  statements.  Income  tax  expense
represents  taxes  payable,  net of  changes in  deferred  income tax assets and
liabilities  during the year.  Acorn  files a  consolidated  federal  income tax
return  which  includes  the   subsidiaries'   taxable  income.   Under  Acorn's
tax-sharing  agreement with its  subsidiaries,  the subsidiaries are required to
pay to Acorn an amount  equivalent  to what each  would have paid had it filed a
separate company federal income tax return and the  subsidiaries' tax losses may
be offset against future years' amounts payable to Acorn.

7.  Earnings Per Share
    ------------------
The Company follows Statement of Financial  Accounting Standards (SFAS) No. 128,
EARNINGS  PER SHARE,  which  requires  presentation  of basic and diluted EPS in
conjunction  with the disclosure of the methodology  used in computing such EPS.
Basic EPS  excludes  dilution  and is computed by dividing  income  available to
common shareholders by the weighted average common shares outstanding during the
period.  Diluted EPS takes into account the potential  dilution that could occur
if  securities  or other  contracts  to issue common  stock were  exercised  and
converted into common stock.

                                      F-8
<PAGE>

                      Acorn Holding Corp. and Subsidiaries

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

                           December 31, 2003 and 2002


NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED


8.  Stock-Based Compensation
    ------------------------
The Company  has  adopted  only the  disclosure  provisions  of SFAS No. 123. It
applies   Accounting   Principles   Board  (APB)  Opinion  No.  25  and  related
interpretations in accounting for its plans and does not recognize  compensation
expense for its  stock-based  compensation  plans.  Had  compensation  cost been
determined  based on the fair value of the options at the grant date  consistent
with SFAS No.  123,  the  Company's  net  earnings  and EPS for the years  ended
December 31, 2003 and 2002 would have reflected the pro forma amounts  indicated
below:

                                             2003                 2002
                                         ------------         ------------

      Net earnings (loss)
         As reported                     $(3,834,392)         $(2,671,147)
         Pro forma                        (3,834,392)          (2,671,147)

      Earnings (loss) per share
         As reported                     $     (2.43)         $     (1.69)
         Pro forma                             (2.43)               (1.69)

These pro forma amounts may not be representative of future disclosures  because
they do not take into effect pro forma  compensation  expense  related to grants
before January 1, 1998.

9.  Comprehensive Income
    --------------------
The Company follows SFAS No. 130, REPORTING  COMPREHENSIVE  INCOME. SFAS No. 130
establishes  standards to provide prominent  disclosure of comprehensive  income
items.  Comprehensive  income is the change in equity of a  business  enterprise
during a period  from  transactions  and other  events  and  circumstances  from
non-owner sources.  Other comprehensive  income consists of net unrealized gains
on investment securities available-for-sale.

10. Investments
    -----------
The  Company  accounts  for its  investments  in  accordance  with SFAS No. 115,
ACCOUNTING FOR CERTAIN  INVESTMENTS IN DEBT AND EQUITY SECURITIES.  Accordingly,
the  Company  classifies  its  investments  as  available-for-sale,  whereby net
unrealized  gains and losses,  net of tax,  are required to be  recognized  as a
separate component of stockholders' equity.

11. Goodwill
    --------
On July 20, 2001, the Financial  Accounting  Standards  Board (FASB) issued SFAS
No. 142,  GOODWILL  AND  INTANGIBLE  ASSETS.  The Company  adopted  SFAS No. 142
effective January 1, 2002, as required.  As of that date, the Company's goodwill
is no longer amortized,  but is tested for impairment at least annually.  During
the third  quarter of 2002,  the Company  determined  that the fair value of its
goodwill  was  impaired  as a result  of  continued  losses  of its  subsidiary,
Recticon,  and wrote  off the  remaining  goodwill  carried  at a book  value of
$42,767 at that date.

(Continued)

                                      F-9
<PAGE>

                      Acorn Holding Corp. and Subsidiaries

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

                           December 31, 2003 and 2002


NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED

12.  Asset Impairment
     ----------------
On October 11, 2001, the FASB issued SFAS No. 144, ACCOUNTING FOR THE IMPAIRMENT
OR DISPOSAL OF LONG-LIVED ASSETS. SFAS No. 144 retains the existing requirements
to recognize and measure the Impairment of long-lived assets to be held and used
or to be disposed of by sale.  However,  SFAS 144 makes changes to the scope and
certain measurement  requirements of existing accounting guidance. SFAS 144 also
changes  the  requirements  relating to  reporting  the effects of a disposal or
discontinuation of a segment of a business.  SFAS 144 is effective for financial
statements issued for fiscal years beginning after December 15, 2001 and interim
periods within those fiscal years. The adoption of this Statement applies to the
liquidation of Recticon assets during the year ended December 31, 2003.

13.  Recent Accounting Pronouncements
     --------------------------------
In August 2001, the FASB issued SFAS No. 143,  ACCOUNTING  FOR ASSET  RETIREMENT
OBLIGATIONS.  SFAS No. 143  applies to all  entities,  including  rate-regulated
entities,  that have  legal  obligations  associated  with the  retirement  of a
tangible  long-lived  asset  that  result  from  acquisition,   construction  or
development and (or) normal operations of the long- lived asset. The application
of this Statement is not limited to certain specialized industries,  such as the
extractive or nuclear industries. This Statement also applies, for example, to a
company that  operates a  manufacturing  facility and has a legal  obligation to
dismantle the manufacturing plant and restore the underlying land when it ceases
operation of that plant. A liability for an asset retirement  obligation  should
be recognized if the  obligation  meets the definition of a liability and can be
reasonably  estimated.  The initial  recording should be at fair value. SFAS No.
143 is effective  for  financial  statements  issued for fiscal years  beginning
after June 15, 2002, with earlier application encouraged.  The provisions of the
Statement did not have a material  impact on the financial  condition or results
of operations of the Company.

In April 2002,  SFAS No. 145,  RESCISSION OF FASB  STATEMENTS  NO. 4, 44 AND 64,
AMENDMENT OF FASB NO. 13, AND TECHNICAL  CORRECTION,  was issued.  This standard
changes the accounting principles governing  extraordinary items by, among other
things, providing more definitive criteria for extraordinary items by clarifying
and, to some extent, modifying the existing definition and criteria,  specifying
disclosure for extraordinary  items and specifying  disclosure  requirements for
other unusual or infrequently  occurring  events and  transactions  that are not
extraordinary  items. SFAS No. 145 is effective for financial  statements issued
for fiscal years  beginning after June 15, 2002. The provisions of the Statement
did not  have a  material  impact  on the  financial  condition  or  results  of
operations of the Company.

In July 2002, the FASB issued SFAS No. 146, ACCOUNTING FOR COSTS ASSOCIATED WITH
EXIT OR DISPOSAL ACTIVITIES.  SFAS No. 146 requires companies to recognize costs
associated  with exit or disposal  activities when they are incurred rather than
at the  date of a  commitment  to an exit or  disposal  plan.  SFAS  No.  146 is
effective  prospectively  for  exit  and  disposal  activities  initiated  after
December  31,  2002.  The  adoption  of this  accounting  principle  applies  to
liquidation of Recticon during the year ended December 31, 2003.


(Continued)

                                      F-10
<PAGE>

                      Acorn Holding Corp. and Subsidiaries

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

                           December 31, 2003 and 2002


NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED

In December  2002,  the FASB issued SFAS No.  148,  ACCOUNTING  FOR  STOCK-BASED
COMPENSATION  -  TRANSITION  AND  DISCLOSURE.  SFAS NO. 148 amends SFAS NO. 123,
ACCOUNTING  FOR  STOCK-BASED  COMPENSATION,  to provide  alternative  methods of
transition for a voluntary change to the fair  value-based  method of accounting
for  stock-based  employee  compensation.  In addition,  SFAS No. 148 amends the
disclosure requirements of SFAS No. 123 to require prominent disclosures in both
annual and  interim  financial  statements  about the method of  accounting  for
stock-based employee  compensation and the effect of the method used on reported
results. SFAS No. 148 is effective for fiscal years beginning after December 15,
2002. The expanded annual disclosure  requirements and the transition provisions
are  effective  for fiscal  years ending  after  December 15, 2002.  The interim
disclosure  provisions are effective for financial reports containing  financial
statements for interim  periods  beginning after December 15, 2002. The adoption
of SFAS No.  148 did not  have a  material  effect  on the  Company's  financial
position, results of operations or cash flows.

NOTE B - LIQUIDATION OF RECTICON

On June 23, 2003 the Board of directors of Acorn voted to cease  operations  and
to liquidate the assets of Recticon. Immediately thereafter,  Recticon fulfilled
its backlog of orders and  proceeded to sell or liquidate  its assets and to pay
its creditors. Recticon completed its liquidation prior to December 31, 2003.

The  consolidated  statement  of  discontinued  operations  for the years  ended
December 31, 2003 and 2002 include the discontinued operations of Recticon.

Management  of  Recticon  settled  its  future  lease  obligations  by  paying a
settlement sum and has abandoned the space as of December 31, 2003.

NOTE C - INVESTMENT SECURITIES

The Company has sold or written off its  investment  securities  during the year
ended  December  31, 2003 and  reflected  the  resulting  loss of $11,902 in its
statement of discontinued operations for the year ended December 31, 2003.

The amortized cost,  unrealized  gains and losses,  and fair market value of the
Company's available-for-sale investment securities at December 31, 2002 are:

                                                Gross       Gross
                                  Amortized  unrealized  unrealized  Fair market
                                     Cost       gains      losses       value
State and municipal obligations   $  11,590  $    2,640  $        -  $  14,230
                                  =========  ==========  ==========  =========

                                      F-11
<PAGE>

                      Acorn Holding Corp. and Subsidiaries

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

                           December 31, 2003 and 2002


NOTE D - INVENTORIES

As at December 31, 2003, Recticon, as part of its liquidation,  sold or disposed
of all inventories.
As at December 31, 2002, Recticon Inventories consisted of the following:

Raw materials and supplies                                     $  458,028
Work in process                                                 1,056,874
Finished goods                                                    337,417
                                                               ----------

                                                               $1,852,319
                                                               ==========

NOTE E - CREDIT ARRANGEMENTS

Recticon  had  available a $1,250,000  revolving  line of credit at December 31,
2002,  $375,000 of the line was outstanding at that date. That amount was repaid
during  Recticon's  liquidation of its net assets during 2003. No line of credit
exists at December 31, 2003.

NOTE F - INCOME TAXES

The Company  depreciated  its machinery and equipment for income tax purposes at
rates  which  varied  from  those  used for  financial  reporting  purposes.  In
addition,  the Company has reported  certain  income for tax purposes  which was
being  recognized over a period of years for financial  statement  purposes.  On
liquidation  of  the  Company's  only  operating   subsidiary  all  such  timing
differences were eliminated

The income tax provision consists of the following:

                             2003                  2002
                             ----                  ----
      Current
         Federal             $     0           $        0
         State                     0              (31,308)

      Deferred
         Federal                   0            1,072,056
         State                     0              164,662
                             -------           ----------
                                 -              1,236,718
                             -------           ----------

                             $   -             $1,205,410
                             =======           ==========

                                      F-12
<PAGE>

                      Acorn Holding Corp. and Subsidiaries

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

                           December 31, 2003 and 2002


NOTE F - INCOME TAXES - CONTINUED

Deferred tax assets (liabilities) consist of the following:

                                                        2003          2002
                                                     ----------    ----------

      Net operating loss carryforwards              $ 3,960,000    $2,618,000
      Depreciation                                            0      (167,000)
      Carrying value of assets                                0       447,000
      Note receivable                                         0       192,000
      Other                                                   0        69,000
                                                    ------------   -----------

                                                      3,960,000     3,159,000
      Less valuation allowance                       (3,960,000)   (3,159,000)
                                                    ------------   -----------

                                                    $         0    $        0
                                                    ------------   -----------

A valuation  allowance of $3,453,548 has been  established  against the deferred
tax assets due to the  Company's  current  inability  to utilize the benefits of
these deferred tax assets.

The income tax provision reconciled to the tax computed at the statutory federal
rate was as follows:

                                                       2003          2002
                                                    ----------    ----------

      Tax at statutory federal rate                    (34.0%)       (34.0%)
      State income taxes on subsidiary taxable
       income, net of federal benefits                   -0-          (2.1)
      Other                                              -0-          (1.9)
      Change in valuation allowance                     34.0         120.2
                                                    ----------    ----------

                                                         0.0%         82.2%
                                                    ==========    ==========

NOTE G - COMMITMENTS

Recticon had leased its facilities  under a lease agreement which was terminated
as part of its liquidation proceedings (See Note B).

Rental expense for 2003 and 2002 was $57,853 and $120,000,  respectively. A rent
settlement  payment  of  $40,000  was  made by  Recticon  to  cancel  its  lease
commitment.

                                      F-13
<PAGE>

                      Acorn Holding Corp. and Subsidiaries

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

                           December 31, 2003 and 2002


NOTE H - CONCENTRATIONS

Acorn and its  subsidiaries  maintain  cash  balances at financial  institutions
located   within  the  United  States  of  America.   Accounts  with   financial
institutions  are insured by the Federal  Deposit  Insurance  Corporation  up to
$100,000. Acorn periodically maintains balances in excess of these limits. Acorn
believes  it is not  exposed  to any  significant  credit  risk on cash and cash
equivalents.

NOTE I - RELATED PARTY TRANSACTIONS

During 2003 and 2002, Acorn and its  subsidiaries  paid a law firm, of which the
Company's  Chief  Executive  Officer and Chairman was of counsel,  approximately
$16,511 and $20,052, respectively, for reimbursement of expenses.

For the years ended December 31, 2003 and 2002,  Acorn paid  consulting  fees of
$8,400  and  $48,000,  respectively  to two of its  former  officers  (currently
Directors).

Directors' fee expense for the year ended December 31, 2002 was $36,000.

The Company had been  accruing  unpaid  salaries to its officers and  Director's
Fees. At November 7, 2003 such accrued and unpaid  salaries and fees amounted to
$1,302,971. On that date, the Board of Directors settled all unpaid salaries and
fees  resulting in a reduction of the liability  (gain) of  $1,078,837  which is
reported in  "non-recurring  income  (expenses)" in the  accompanying  financial
statements.

In connection with the settlement of the accrued compensation, all stock options
held by the officers and directors were also cancelled.

NOTE J - EARNINGS PER SHARE

The Company's  calculation of earnings per share in accordance with SFAS No. 128
is as follows:

<TABLE>
<CAPTION>
                                Income               Number of shares
                              (numerator)              (denominator)         Per share amount
                              -----------              -------------         ----------------
<S>                        <C>          <C>          <C>        <C>          <C>         <C>
                           2003         2002         2003       2002         2003        2002
                           ----         ----         ----       ----         ----        ----
   Basic (Loss)
        per share
      Net (loss)       ($3,834,392) ($2,671,147)  1,576,870    1,582,405    ($2.43)    ($1.69)
      ----------       ===========  ============  =========    =========    ======     =======
</TABLE>

In 2003 and 2002, none of the options  outstanding to purchase common stock (see
Note K) were included in the  computation of diluted  earnings per share because
of net losses incurred. No options were outstanding at December 31, 2003.

                                      F-14
<PAGE>

                      Acorn Holding Corp. and Subsidiaries

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

                           December 31, 2003 and 2002


NOTE K - STOCK OPTIONS

The Company has issued stock options,  under two plans,  to various  officers of
the Company.  In addition,  the Company has issued stock  options  under a third
plan to directors of the Company.  The stock  options were issued with  exercise
prices  equal to the fair market value of the  Company's  common stock as of the
date of grant and had a term of ten years from the date of grant.  The following
is a summary of stock options outstanding at December 31, 2003 and 2002:

<TABLE>
<CAPTION>
                                                   2003                   2002
                                          ----------------------  ---------------------
                                                      Weighted-              Weighted-
                                                       average                average
                                                       exercise              exercise
                                           Shares       price      Shares      price
                                          ---------  -----------  --------  -----------

<S>                                        <C>         <C>          <C>         <C>
  Outstanding at January 1,                364,000    $   3.55     363,000     $  3.55
     Granted                                                         3,000         .49
     Cancelled                            (364,000)       3.55
     Expired                                  -            -
                                          ---------               --------  -----------

  Outstanding at December 31,                 0            0       366,000        3.52
                                          ---------               --------  -----------

  Options exercisable at December 31,         0            0       364,000        3.55
                                          ---------               --------  -----------
</TABLE>

                                              F-15
<PAGE>

                      Acorn Holding Corp. and Subsidiaries

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

                           December 31, 2003 and 2002

NOTE L - COMMON STOCK

At December  31, 2003 and 2002,  the Company had  20,000,000  of $0.01 par value
common stock authorized.  At December 31, 2003, 1,573,946 shares were issued and
outstanding.  At December 31, 2002,  1,585,646  shares were issued and 1,573,946
shares were outstanding.

During 2002 and 2001, the Company  repurchased 11,700 shares of its common stock
through the open  market.  During  2003,  11,700  shares of treasury  stock were
cancelled.

NOTE M - SEGMENT INFORMATION

The Company is a holding  company which owned and operated one subsidiary  which
manufactured   monocrystalline   silicon  wafers  used  in  the  microelectonics
industry.  The  Company  considers  its  business  to consist of one  reportable
operating segment. (See Note B.)

NOTE N - SELECTED QUARTERLY FINANCIAL INFORMATION (UNAUDITED)

                                     Operating      Net Income        Loss
                        Revenues     Income (Loss)  (Loss           per Share
                       -----------   -------------  -----------   ------------

   1st Quarter         $  471,067    $  (616,165)   $  (619,588)      $(0.39)
   2nd Quarter            328,254     (3,654,573)    (3,654,103)       (2.31)
   3rd Quarter             91,314        490,521        490,688         0.31
   4th Quarter             20,000        (46,290)       (51,389)       (0.03)
                       -----------   -------------  -----------       ------
       Total           $  910,635    $(3,826,507)   $(3,834,392)      $(2.43)
                       ===========   =============  ===========       ======


                                     Year ended December 31, 2002
                                     ----------------------------
                                                    Diluted net
                                       Operating        Net           Loss
                        Revenues         loss          loss         per share
                       -----------   ------------   -----------   ------------

   1st Quarter         $1,204,808    $  (206,046)  $  (154,238)      $(0.10)
   2nd Quarter          1,034,620       (197,952)     (195,841)       (0.12)
   3rd Quarter            887,903       (437,075)   (1,704,592)       (1.08)
   4th Quarter            577,674       (565,231)     (616,476)       (0.39)
                       ----------     -----------   -----------       ------

   Total               $3,705,005    $(1,406,304)   $(2,671,147)     $(1.69)
                       ==========     ===========   ===========       ======

                                      F-16