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, 2000

                          Commission File No. 811-08469

                               ACORN HOLDING CORP.
                          ------- -------------------
                 (Name of small business issuer in its charter)

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

         1251 Avenue of the Americas, 45th Floor, New York, NY 10020-1104
-------------------------------------------------------------------------
              (Address of principal executive offices)           (Zip code)

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

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

Check if 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. [ x ]

Issuer's revenues for the fiscal year ended December 31, 2000 were $7,068,689.

The  aggregate  market value of the voting stock held by  non-affiliates  of the
Registrant  as of March 29,  2001  (valued  at the  average  of the bid price of
$1.50 and the asked price of $1.50 on such date) was $827,259.

The  number of shares of Common  Stock  outstanding  (including  shares  held by
affiliates  of the issuer) as of March 29,  2001:  1,594,742 (which  reflects a
two-for-five reverse stock split, effective April 19, 1999).

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.  Unless otherwise indicated,
all of the  shares  of the  Common  Stock  have been  adjusted  to  reflect  the
two-for-five reverse stock split, effective April 19, 1999 (the "Stock Split").

     The  principal  purpose  of the  Company  is to  derive  earnings  from the
operation of Recticon and possibly other businesses  rather than for the purpose
of obtaining  dividend and interest  income  through the efforts of others.  The
Company may acquire other companies or operating businesses in the future. While
there can be no assurance that any such  acquisitions  will be made, the Company
intends  only to acquire the entire or, at the least,  controlling  interests in
such companies and have such companies operate as subsidiaries of the Company.

Significant Developments

     In November,  1997 the Company  authorized  the repurchase of up to 600,000
shares of the  Company's  Common  Stock,  and in October  1998,  authorized  the
repurchase of additional  500,000 shares  (adjusted to reflect the Stock Split).
The Company had previously  repurchased  588,200  shares of Common Stock,  which
shares have been retired and have resumed the status of authorized  but unissued
shares of Common Stock. Since  December 1, 2000, the Company has  repurchased an
additional  32,616  shares of Common Stock,  which shares are currently  held in
treasury.

Recticon's Present Business

     Recticon,  located in Pottstown,  Pennsylvania,  manufactures  two,  three,
four,  five and six-inch  monocrystalline  silicon  wafers,  which are made from
silicon crystals and are the basic substrate from which integrated  circuits and
other  semiconductor  devices  are  fabricated.  Recticon's  wafers  are used by
university research departments and microelectronic manufacturers,  and are best
suited for use in electronics  devices employed in avionics,  telecommunications
and computers.

     The  business in which  Recticon is engaged is highly  competitive  and the
Company believes that there are many competitors who produce,  sell,  design and
support similar products.  Many of these competitors have substantially  greater
marketing, financial, administrative and other resources than Recticon.

     In 1995,  Recticon entered into long-term  agreements with two of its major
customers,  pursuant  to which said  customers  have paid an  aggregate  of $2.3
Million in cash for the right to receive a specified number of silicon wafers at
a predetermined gross profit margin. In addition, in 1996, Recticon entered into
agreements  pursuant to which  Recticon  received  $2.4 Million in cash from two
customers  in order for  Recticon to purchase  additional  furnaces  and related
equipment  (the  "Units").  By October  2001,  the Units will be turned  over to
Recticon at no cost.  In exchange  therefor,  Recticon  has agreed to sell these
customers the wafers  produced by the Units at a mutually agreed to gross profit
margin to  Recticon.  Recticon  has  expanded  its  facilities  and, as a result
thereof,  has the  capacity to add an  additional  four or five Units.  Recticon
presently  has ten  functioning  Units.  These  new  Units  have not only  given
Recticon  added  capacity,  but have also  enabled it to enter into the five and
six-inch wafer market and, subject to purchasing additional  equipment,  give it
the capacity to enter into the eight-inch market. There can be no assurance that
Recticon  will  acquire  any  additional  Units or  successfully  enter into the
eight-inch wafer market.

                                       2
<PAGE>
     Recticon's raw materials are acquired from silicon  wholesalers.  For 2000,
39%  and  17%,  respectively,  of its  raw  materials  were  acquired  from  two
suppliers,  while for 1999, it was 7% from one supplier.  Although  Recticon has
from time to time experienced shortages of certain supplies, such shortages have
not resulted in any  significant  disruptions in production.  Recticon  believes
that there are adequate alternative sources of supply to meet its requirements.

     For 2000 three customers of Recticon  accounted for 51%, 27% and 11% of its
sales, respectively. For 1999, three customers of the Company accounted for 46%,
31%  and  4% of its  sales,  respectively.  The  loss  of  any  or all of  these
customers,  could have an adverse,  possibly  severe,  effect on the business of
Recticon.

     Compliance with federal,  state and local laws and  regulations  regulating
the discharge of materials into the  environment  has not had, and under present
conditions,  Recticon does not anticipate  that such laws and  regulations  will
have a material effect on the results of operations, capital expenditures or the
competitive position of Recticon.

Employees

         The Company  currently has three  executive  officers,  all of whom are
employees of the Company. Recticon presently employs 42 full-time people, all of
whom are located at its facility in Pottstown.

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.

         Recticon  currently  leases  approximately  30,000  square  feet  in  a
facility in Pottstown, Pennsylvania, pursuant to a lease agreement which expires
on February  28,  2009.  Recticon  has a right of first  refusal to purchase the
property in the event of a sale by the lessor.  Recticon  considers the facility
to be generally  well-maintained,  adequate for its current needs and capable of
supporting a reasonably higher level of demand for its products.

ITEM 3.  Legal Proceedings

         On May 14, 1999,  the Chapter 7 Trustee in  Bankruptcy  for  ServiceMax
Tire & Auto Centers of Michigan,  Inc.,  filed an avoidance action in the United
States  Bankruptcy Court for the Eastern District of Michigan seeking to recover
$1,750,000  from the Company on account of payments  made to the Company and its
subsidiary,  Automotive  Industries,  Inc.  ("AII"),  during 1996 and 1997.  The
Company settled this action,  without  admission of liability,  with the Trustee
for the payment by the  Company of the amount of $10,000 in exchange  for a full
and final  release of all  claims the  Trustee  had or might  have  against  the
Company or AII. An Order  dismissing  the  proceedings  has been  entered in the
Bankruptcy  Court and the  Company  and the Trustee  executed a  Settlement  and
Release Agreement in connection therewith.

ITEM 4.  Submission of Matters to a Vote of Security Holders

         The Annual Meeting of  Stockholders of the Company was held on December
12, 2000 (the  "Meeting").  The following  matters were voted on and approved by
the  holders of a majority of the  outstanding  shares of the  Company's  Common
Stock in accordance with Delaware General Corporation Law:

                  (a) The first proposal  presented to the  stockholders was the
election of five  persons as  directors  of the Company to hold office until the
next Annual Meeting of Stockholders  and until their  respective  successors are

                                       3
<PAGE>
duly elected and qualified.  The following  persons were elected as directors of
the Company,  and each person  received  that number of votes set opposite  that
person's name:

                                         VOTES

                                 FOR             WITHHELD
                               ----------------------------
     Paula Berliner            1,362,064         33,930
     Edward N. Epstein         1,346,104         49,890
     Ronald J. Manganiello     1,346,384         49,610
     Stephen A. Ollendorff     1,361,124         34,870
     Bert Sager                1,361,444         34,550

                  (b) The second proposal  presented to the  stockholders was to
ratify the firm of Grant Thornton LLP as the independent  public  accountants of
the Company  for the 2000 fiscal  year.  There were  1,346,263  shares of Common
Stock  cast in favor of such  proposal,  29,300  shares  of Common  Stock  voted
against such proposal, and 20,530 shares abstained.

                                     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 following table sets forth, for the periods
indicated,  the range of high and low  closing  bid  quotations  as  reported by
NASDAQ,  adjusted for the two-for-five stock split,  effective,  April 19, 1999.
Such quotations reflect inter-dealer 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
         --------------            --------     -------
            2000

         March 31                   $1.28125     $4.75
         June 30                    $1.125       $2.75
         September 30               $1.53125     $5.75
         December 31                $1.40625     $2.5625

         Quarter Ending             Low          High
         --------------            --------     -------
            1999

         March 31                   $1.563       $3.344
         June 30                    $1.188       $2.344
         September 30               $1.063       $1.875
         December 31                $ .938       $2.063

     As of March 29, 2001, there were approximately 398 holders of record of the
Company's  Common Stock with 1,594,742  shares of Common Stock  outstanding.  In
addition,  the Company believes that there are more than 1,300 beneficial owners
of Common Stock whose shares are held in "street" name as of such date. On March
29,  2001,  the closing bid and asked  quotations  of the Common Stock were both
$1.50.

     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.

                                       4
<PAGE>

ITEM 6.  Management's Discussion and Analysis
         or Plan of Operations

     On  November  4,  1997,   pursuant  to  the  approval  of  the  Company's
stockholders,  the Company  withdrew  its  election  with the  Commission  to be
treated as a Business  Development  Company under the 1940 Act. Since that time,
the  Company  has been  operating  as a holding  company  with one  wholly-owned
subsidiary, Recticon. The Company believes that it has sufficient short-term and
long-term  liquidity either from cash on hand, credit  arrangements or cash flow
from  operations.  The  business  in which  the  Company  is  engaged  is highly
competitive and cyclical in nature. For the fiscal year ended December 31, 2000,
the Company's net sales increased approximately  $2,786,740 from the fiscal year
ended December 31, 1999 and operating profit increased approximately  $1,298,260
during the corresponding period from a loss of $690,515 in fiscal 1999 to a gain
of $607,745 in fiscal 2000.

     The Company has  maintained  its sales and  profitability  during the first
quarter  of the  fiscal  year  ending  December  31,  2001  and the  Company  is
anticipating  to be  profitable  for the first  quarter  of 2001.  Although  the
Company  hopes to achieve  profitability  during the second  quarter of 2001, no
assurance can be given that the Company will maintain its  profitability  during
the remainder of 2001.

     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

                                    PART III

ITEM 9. Directors, Executive Officers, Promoters and
        Control Persons

     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:

                                       5
<PAGE>
                               Year of
                              Election

                                 as

 Name and Age                 Director       Position
 ------------                 --------       --------
(As of 3/1/2001)

Bert Sager(1)(2)              1983           Director
  (75)

Stephen A. Ollendorff         1983           Chairman of the Board,
  (62)  (1)                                  Chief Executive Officer,
                                             Secretary and Director

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

Larry V. Unterbrink           (3)            Treasurer
  (66)

Robert P. Freeman              -             President and Chief
  (66)                                       Executive Officer
                                             of Recticon

Paula Berliner                1990           Director
  (57)  (1)(2)

Ronald J. Manganiello*        1997           Director
  (51)    (1)(2)(4)

--------------
*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.

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

     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. Mr. Ollendorff was of counsel to the law firm of Hertzog,
Calamari & Gleason from  December  1990 until  January  1999. He is currently of
counsel to the law firm of  Kirkpatrick  & Lockhart  LLP.  Mr.  Ollendorff  also
serves  as  a  director  of  Artesyn  and  Pharmaceutical  Resources,   Inc.,  a
publicly-traded manufacturer of generic drugs, of Spring Valley, New York.

     EDWARD N. EPSTEIN was elected  President and Chief Operating Officer of the
Company  in  November  1995.  For more  than the past five  years,  has been the

                                       6
<PAGE>
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.  She is presently a director of Republic  Security  Financial  Corp., a
holding company for Republic Security Bank.

     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. From 1986 to January 1996, Mr. Manganiello was Chairman
and Chief Executive Officer of Hanger Orthopedic Group,  Inc., a publicly-traded
provider of patient care  services  and  products  for  orthotic and  prosthetic
rehabilitation.

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

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  in respect of their  ownership  of Company  securities.  The Company
believes  that during  fiscal year 2000 all such  required  reports  were timely
filed.

ITEM 10.  Executive Compensation

Summary Compensation Table

     The  following  table sets forth  information  for the fiscal  years  ended
December  31, 2000,  December  31, 1999 and  December  31,  1998,  respectively,
respecting compensation earned by the Chief Executive Officer of the Company and
the  executive  officers  (whose salary and bonus earned in Fiscal 2000 exceeded
$100,000)  of  the  Company  serving  at the  end of  fiscal  1999  (the  "Named
Executives").

                                       7
<PAGE>
                                                                  Long-Term
                                      Annual Compensation(1)      Compensation
                                      ----------------------      ------------
                                                                  Securities
  Name and                                                        Underlying
  Principal Position         Year      Salary($)     Bonus($)     Options(#)(2)
  ------------------         ----      ---------     --------     -------------

  Stephen A. Ollendorff      2000      $256,055(4)     -0-             --
    Chairman and Chief       1999(3)   $250,543(4)     -0-             --
    Executive Officer        1998(3)   $246,597        -0-             --


  Edward N. Epstein          2000      $220,948(4)     -0-             --
    President and Chief      1999      $216,192(4)     -0-             --
    Operating Officer        1998      $212,787        -0-             --

  Robert P. Freeman          2000      $251,280      $ 61,280          --
    President and Chief      1999      $203,353      $ 50,000          --
    Executive Officer -      1998      $197,830      $ 50,000          --
    Recticon Enterprises,
    Inc.

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

(2)  Represents options awarded under the 1991 Stock Option Plan.

(3)  Mr.  Ollendorff  has  voluntarily  assumed   responsibility  for  rent  and
     secretarial  expenses relating to the New York office.  Mr. Ollendorff does
     not receive any fringe benefits from the Company.

(4)  Effective  November,  1999,  Messrs.  Ollendorff  and  Epstein  voluntarily
     reduced by 50% their cash compensation  received from the Company.  For Mr.
     Ollendorff,  includes  the unpaid  balance of $128,027 for fiscal year 2000
     and $20,879 for fiscal year 1999  reflecting  the amounts  being accrued on
     the books of the Company.  For Mr. Epstein,  includes the unpaid balance of
     $110,474 for fiscal year 2000 and $18,016 for fiscal year 1999,  reflecting
     the amounts being accrued on the books of the Company.

     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 1991 Stock
Option Plan.

Stock Option Grants In Last Fiscal Year

     During the fiscal year ended December 31, 2000,  there were no stock option
grants or stock appreciation rights granted to the Named Executives or any other
stock appreciation rights.

     On March 2, 1998 the Stock Option and Compensation Committee authorized the
further  amendment to certain of the Company's  outstanding stock options (which
had previously been amended on November 22, 1994). In exchange for each optionee
agreeing  to an  increase  in the  exercise  price in the event of a "change  of
control" from $1.406 to $3.13 (equal to the "fair market value" of the Company's
Common  Stock on March 2, 1998),  the Company  would  expand the  definition  of
"change of control" to include the merger,  sale or  liquidation of the business
as set forth in (iv) below.  The amended and expanded  definition  of "change of
control" would occur in the following  circumstances:  (i) the first purchase of
shares  of  equity  securities  of the  Company  pursuant  to a tender  offer or
exchange  offer  (other  than an  offer by the  Company)  for 25% or more of the
equity securities of the Company, which offer has not been approved by the Board
of the  Company,  (ii) a single  purchaser or a group of  associated  purchasers
acquiring,  without  the  approval  or  consent  of the  Board  of the  Company,
securities of the Company  representing 25% or more of the combined voting power
of the  Company's  then  outstanding  securities  in one or a related  series of
transactions,  (iii) in respect of an election  of  directors  by the  Company's
stockholders,  the election of any or all of the management's slate of directors
being  contested  or opposed,  whether  through a  solicitation  of proxies,  or
otherwise,  or (iv) on the day the  stockholders  of the  Company  approve (A) a

                                      8
<PAGE>

definitive agreement for the merger or other business combination of the Company
with or into  another  corporation  pursuant  to which the  stockholders  of the
Company  do not own,  immediately  after the  transaction,  more than 50% of the
voting  power  of  the  corporation  that  survives  and  is  a  publicly  owned
corporation  and not a subsidiary  of another  corporation,  or (B) a definitive
agreement for the sale,  exchange,  or other disposition of all or substantially
all of  the  assets  of the  Company,  or (C)  any  plan  or  proposal  for  the
liquidation or dissolution of the Company. As of March 29, 2001, no such "change
of control" has occurred.

     On November 7, 1996, the Board of Directors  authorized the Company to loan
moneys to officers and  employees  of the Company in order to encourage  them to
exercise their stock options. The term of such loans would be for the shorter of
ten years or 60 days after termination of employment of the officer or employee,
interest would accrue and be payable monthly on the principal, at the prevailing
rate  applicable to 90-day  treasury bills at the time the loan is made, and the
loan  would  be  collateralized  at all  times,  which  collateral  (subject  to
applicable  law)  may  include  shares  of  the  Company.   The  loans  must  be
collateralized  so that the fair market  value of the  collateral  would have to
equal or exceed the principal outstanding amount of the loan at all times. As of
March 29,  2001,  no such loans to officers or  employees  have been made by the
Company.

Year-End Option Values Table

     The following table sets forth  information at December 31, 2000 respecting
exercisable and non-exercisable options held by the Named Executives. During the
fiscal year ended December 31, 2000,  the Named  Executives did not exercise any
stock options. The table also includes the value of "in-the-money" stock options
which  represents the spread  between the exercise  prices of the existing stock
options and the year-end price of the Common Stock.

                    Number of Unexercised      Value of Unexercised In-
                        Options Held             the-Money Options
                  at December 31, 2000(1)    Held at December 31, 2000(1)
                  -------------------------  ----------------------------
                                   Not                          Not
Name             Exercisable    Exercisable     Exercisable  Exercisable
----             -----------    -----------     -----------  -----------
Stephen A.
  Ollendorff      120,000          -0-              $-0-         $-0-

Edward N.
  Epstein          48,000          -0-              $-0-         $-0-

Robert P.
  Freeman          40,000          -0-              $-0-         $-0-

----------------
(1) Based upon the closing sales price of the Common Stock on December 29, 2000:
    $1.50.

Compensation of Directors

     Effective  December 1998  directors  who are not executive  officers of the
Company are  compensated  for their services by payment of an annual retainer of
$12,000,  $1,000  per day for each  Board  meeting  attended  in  person by such
director and $750 per day for each committee  meeting attended in person by such
director.  Mr.  Sager and Mrs.  Berliner  are each  entitled as  consultants  to
receive $24,000 per year,  including  directors  fees, for a minimum  three-year
period, which has been renewed by its terms.

                                       9
<PAGE>

Employment Arrangements

     The  Company  has  entered  into an  employment  agreement,  for a  minimum
three-year  period,  which  has been  renewed  by its  terms,  with  Stephen  A.
Ollendorff,  pursuant to which Mr.  Ollendorff  receives annual  compensation of
$250,000,  subject to annual  cost-of-living  adjustments,  from the Company. On
January 17, 1996, Mr. Ollendorff's  employment agreement was amended in order to
clarify certain terms and conditions, including the geographic location in which
services are to be provided,  events of  termination  and his  obligations  with
respect to confidential information, non-solicitation of employees and covenants
not to compete.  Mr.  Ollendorff  agrees to devote such time to the business and
affairs of the Company as he believes is  necessary  for the  operations  of the
Company. In addition,  Mr. Ollendorff has voluntarily assumed responsibility for
rent and  secretarial  expenses  relating to the Company's New York office.  Mr.
Ollendorff receives no fringe benefits from the Company.

     Effective January 1, 1997, Mr. Ollendorff receives a salary of $120,000 per
year as Chairman of the Board of Recticon Enterprises, Inc. ("Recticon"),  which
amount is paid by the Company  from the amounts  paid by Recticon to the Company
each month.  In addition,  Recticon rents office space in Mr.  Ollendorff's  New
Jersey office and pays rent directly to Mr.  Ollendorff  directly for such space
in the amount of $500 per month.  Any amounts  received by Mr.  Ollendorff  from
Recticon as rent and/or  salary are deducted from his salary from the Company to
the extent and as long as he receives such monies from Recticon.

     The Company  entered into an employment  agreement  with Edward N. Epstein,
effective  January 1, 1996,  for a three year period,  which has been renewed by
its terms,  on a  year-to-year  basis,  through  December  31, 2000 at an annual
compensation of $150,000,  subject to  cost-of-living  adjustments.  Mr. Epstein
agrees to devote  such time to the  business  and  affairs of the  Company as he
believes is necessary for the operations of the Company.

     As a result of an agreement  between Messrs.  Epstein and  Ollendorff,  Mr.
Ollendorff  voluntarily  reduced his annual  compensation by $24,280,  effective
July 1997, in order to increase Mr.  Epstein's  annual  compensation for 1997 by
$24,280.  Mr.  Ollendorff  has agreed not to accept any  increased  compensation
(other than  cost-of-living  increases) until Mr. Epstein's annual  compensation
shall be equal to Mr. Ollendorff's.

     Robert P.  Freeman,  President  and Chief  Executive  Officer of  Recticon,
entered into a letter  agreement  with  Recticon as of February 15, 1995,  which
provides  that if,  within one (1) year of a change of control  (as defined in
the  agreement)  of Recticon,  his  employment  is  terminated  without cause by
Recticon, or he resigns because of (i) assignment,  without his written consent,
of any duties  inconsistent  with his  position,  duties,  responsibilities  and
status with  Recticon,  or change in his  reported  responsibilities,  titles of
offices or any plan, act, scheme or design to  constructively  terminate him, or
(ii)  reduction  by  Recticon of his annual base  salary,  he shall  receive the
following benefits: (i) annual base salary through the date of termination; (ii)
in lieu of any further salary payments,  severance pay on the tenth business day
following the date of termination, a lump sum equal to two times his annual base
salary; and (iii) if Mr. Freeman terminates his employment with Recticon between
the first and second year of a change of control for any reason  other than "for
cause,  Recticon  will pay him the  amount  he would  have  been paid if he had
remained employed through the end of the second year of a change of control, but
in no event less than an amount equal to six months of base salary. In addition,
Recticon  will maintain all medical,  health and accident  plans for a period of
the  earlier  of (i) 24 months or (ii) the date of which he is covered by reason

                                       10
<PAGE>

of his being employed by a new employer. In addition,  the Board of Directors of
Recticon  authorized an annual bonus to Mr. Freeman equal to 5% of the operating
profit of Recticon, prior to the payment of bonuses and without giving effect to
the account supply commitment fees,  corporate charges,  executive  compensation
and consulting fees, but not less than $50,000 through the year 2000.

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 March 15,
2001,  information as to those stockholders (other than members of the Company's
management),  which is 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)          113,200                7.1%
405 Lexington Avenue
New York, NY 10174

Allen Landers, M.D.                  101,520                6.4%
1385 York Avenue
New York, NY 10021
---------------
(1)   Beneficial ownership,  as reported in the above table, has been determined
      in  accordance  with  Rule  13d-3  under the 1934  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 March 15,  2001,  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.

                                       11
<PAGE>

                                  No. of Shares
Name and Address                  Beneficially           Percentage
of Beneficial Owner                Owned(1)                of Class
--------------------              ----------------      -------------
Bert Sager                         171,330 (3)(4)             10.3%
Stephen A. Ollendorff              610,380 (5)(6)             35.6%
Edward N. Epstein                  385,500 (4)(5)(7)          23.5%
Paula Berliner                      67,320 (4)                 4.1%
Ronald J. Manganiello               62,278 (8)                 3.9%
Robert P. Freeman                   56,000 (4)                 3.4%
All executive officers and
  directors as a group
  (7 persons)                    1,043,236 (3)(4)(5)          54.0%
                                           (6)(7)(8)


(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 1251
     Avenue of the Americas, 45th Floor, New York, NY 10020-1104.

(2)  A person is deemed to be the beneficial owner of voting securities that can
     be  acquired  by such  person  within 60 days from March 15,  2001 upon the
     exercise of options,  warrants or convertible  securities.  Each beneficial
     owner's  percentage  ownership is determined  by assuming that  convertible
     securities, options or warrants that are held by such person (but not those
     held by any other person) and which are  exercisable  within 60 days of the
     Record  Date have been  exercised.  Unless  otherwise  noted,  the  Company
     believes  that  all  persons  named  in the  table  have  sole  voting  and
     investment  power with respect to all shares of Common  Stock  beneficially
     owned by them.

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

(4)  Includes the following shares that may be acquired upon exercise of options
     within 60 days from March 15, 2001:  Mr. Sager - 64,000;  Mr.  Ollendorff -
     120,000; Mr. Epstein - 48,000; Ms. Berliner - 28,000; Mr. Freeman - 40,000;
     and all directors and executive officers as group (7 persons) 336,000.

                                       12
<PAGE>

(5)  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 385,500
     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.

(6)  Includes 400 shares owned by Mr. Ollendorff's spouse.

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

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

ITEM 12.  Certain Relationships and Related Transactions

     Mr. Ollendorff,  Chief Executive Officer of the Company,  was of counsel to
Hertzog, Calamari & Gleason, general counsel to the Company, through January 31,
1999.  Effective February 1, 1999, the Company no longer retains counsel who are
affiliated with Mr. Ollendorff.

     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
(12) 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 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 (2) directors or (ii) a
number of directors  equal to 22% (rounded up to the next highest number) of the
entire Board of Directors, 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 Employment  Agreement  dated August 31, 1993,  between the Company and
Stephen A.  Ollendorff  -  incorporated  by  reference  to  Exhibit  10.2 to the
Company's  Registration  Statement  on Form N-2 (No.  33-69610)  filed  with the
Commission on September 19, 1993.

     10.2  Agreement  dated  October 31,  1991  between the Company and Larry V.
Unterbrink - incorporated  by reference to Exhibit 10.3 to the Company's  Annual
Report on Form 10-K for the fiscal year ended December 31, 1991.

                                       13
<PAGE>

     10.3 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.

     10.4 Purchase and Settlement  Agreement,  dated as of April 8, 1994, by and
among  ServiceMax,  ServiceMax  Tire and Auto  Centers of  Michigan,  Inc.,  the
Company, Stephen A. Ollendorff,  Orland Wolford, Bert Sager, Donald R. Nance, C.
James Sabo,  Richard A. Sabo and Robert L. Sabo -  incorporated  by reference to
Exhibit  10.7 to the  Company's  Annual  Report on Form 10-K for the fiscal year
ended December 31, 1993.

     10.5 Amendment No. 1 to Employment Agreement, dated as of January 17, 1996,
by and between the Company and Stephen A. Ollendorff - incorporated by reference
to Exhibit  10.7 to the  Company's  Annual  Report on Form 10-KSB for the fiscal
year ended December 31, 1995.

     10.6 Employment Agreement, dated as of January 17, 1996, by and between the
Company and Edward N. Epstein - incorporated by reference to Exhibit 10.8 to the
Company's  Annual  Report on Form 10-KSB for the fiscal year ended  December 31,
1995.

     10.7 Amendment No. 1 to Employment Agreement, dated as of January 17, 1996,
by and between the Company and Larry V.  Unterbrink - incorporated  by reference
to Exhibit  10.10 to the  Company's  Annual Report on Form 10-KSB for the fiscal
year ended December 31, 1995.

     10.8 Asset Purchase Agreement, dated May 30, 1997, by and among Morgan Tire
& Auto,  Inc., the Company and  Automotive  Industries,  Inc. - incorporated  by
reference to Exhibit 2.1 to the Company's  Current Report on Form 8-K dated June
9, 1997.

     10.9 Assumption  Agreement,  dated May 30, 1997, by and among Morgan Tire &
Auto,  Inc.,  the Company and  Automotive  Industries,  Inc. -  incorporated  by
reference to Exhibit 2.2 to the Company's  Current Report on Form 8-K dated June
9, 1997.

     10.10 Letter  Agreement,  dated as of February 15, 1995,  between Robert P.
Freeman  and  Recticon -  incorporated  by  reference  to  Exhibit  10-13 to the
Company's Annual Report on Form 10-KSB for the year ended December 31, 1997.

     10.11  Consulting  Agreement,  dated as of January 1, 1999,  between  Paula
Berliner and the Company.

     10.12 Consulting Agreement,  dated as of January 1, 1999 between Bert Sager
and the Company.

     21 List of subsidiaries of the Company.

     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 December 31, 2000.

                                       14
<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:   March 30, 2001          By:  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
---------                           -----                        ----

Stephen A. Ollendorff               Chairman of the Board       March 30, 2001
------------------------            Chief Executive Officer
Stephen A. Ollendorff               (Principal Executive
                                    Officer), Secretary
                                    and Director


Edward N. Epstein                   President and Chief         March 30, 2001
------------------------            Operating Officer;
Edward N. Epstein                   Director


Larry V. Unterbrink                 Treasurer (Principal        March 30, 2001
------------------------            Financial and Accounting
Larry V. Unterbrink                 Officer)


Paula Berliner                      Director                    March 30, 2001
------------------------
Paula Berliner


Ronald J. Manganiello               Director                    March 30, 2001
------------------------
Ronald J. Manganiello


Bert Sager                          Director                    March 30, 2001
------------------------
Bert Sager

                                       15
<PAGE>



                       FINANCIAL STATEMENTS AND REPORT OF
                    INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

                      ACORN HOLDING CORP. AND SUBSIDIARIES

                           December 31, 2000 and 1999












                                      F-1
<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

         CONSOLIDATED STATEMENTS OF OPERATIONS                    F-5

         CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS'
            EQUITY AND COMPREHENSIVE INCOME (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. and Subsidiaries as of December 31, 2000 and 1999, and the related
consolidated  statements  of  operations,  changes in  stockholders'  equity and
comprehensive  income  (loss)  and cash flows for the years  then  ended.  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 auditing standards generally
accepted in the United States.  Those standards require that we plan and perform
the audits to obtain reasonable assurance about whether the 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  financial  statements  referred to above  present
fairly, in all material respects,  the consolidated  financial position of Acorn
Holding  Corp.  and  Subsidiaries  as of  December  31,  2000 and 1999,  and the
consolidated  results of their operations and their  consolidated cash flows for
the years  then  ended,  in  conformity  with  accounting  principles  generally
accepted in the United States.


Grant Thornton LLP
Philadelphia, Pennsylvania
March 19, 2001

                                      F-3
<PAGE>

                      Acorn Holding Corp. and Subsidiaries

                           CONSOLIDATED BALANCE SHEETS

                                  December 31,



         ASSETS                                        2000             1999
                                                   -----------     ------------
CURRENT ASSETS

   Cash and cash equivalents                       $ 1,012,124     $    956,357
   Investment securities                               212,952          208,601
   Accounts receivable - trade                         357,502          355,259
   Current portion of note
      receivable from sale of subsidiary                   -            110,236
   Current portion of note receivable
      - employee                                        40,000           40,000
   Inventories                                       2,454,583        2,073,308
   Prepaid expenses                                     18,396           20,482
   Deferred income tax asset                            91,328          121,770
                                                   -----------     ------------
         Total current assets                        4,186,885        3,886,013
                                                   -----------     ------------
MACHINERY AND EQUIPMENT, net of accumulated
    depreciation of $1,338,591 and $1,016,755
    in 2000 and 1999, respectively                   2,012,537        1,832,326
                                                   -----------     ------------
OTHER ASSETS
   Deposits                                             61,200              -
   Note receivable, less current
     portion - employee                                    -             40,000
   Other investments                                     9,108            9,108
   Goodwill, net of accumulated amortization
     of $727,007 and $641,477 in 2000                  128,297          213,827
      and 1999, respectively
   Deferred income tax asset                         1,224,374        1,337,742
                                                   -----------     ------------
                                                     1,422,979        1,600,677
                                                   -----------     ------------
                                                   $ 7,622,401      $ 7,319,016
                                                   ===========      ===========
         LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES
   Line of credit                                  $       -        $   150,000
   Current maturities of long-term debt                    -            121,062
   Accounts payable                                    542,588          138,257
   Accrued expenses
      Salaries and bonuses                             136,055          136,144
      Other                                                -             39,820
   Deferred income                                     225,000          300,000
                                                   -----------     ------------
         Total current liabilities                     903,643          885,283
                                                   -----------     ------------
DEFERRED INCOME, net of current portion                    -            225,000
                                                   -----------     ------------

STOCKHOLDERS' EQUITY
   Common stock                                         16,273           16,273
   Additional paid-in capital                       11,847,860       11,847,860
   Accumulated deficit                              (5,116,950)      (5,635,154)
   Accumulated other comprehensive income (loss)            75          (20,246)
   Treasury stock                                      (28,500)             -
                                                   -----------     ------------
         Total stockholders' equity                  6,718,758        6,208,733
                                                   -----------     ------------
                                                   $ 7,622,401      $ 7,319,016
                                                   ===========      ===========
The accompanying notes are an integral part of these statements.

                                      F-4
<PAGE>

                      CONSOLIDATED STATEMENTS OF OPERATIONS

                             Year ended December 31,


                                                    2000            1999
                                                -----------    -----------
Net sales                                       $ 7,068,689    $ 4,281,949
                                                -----------    -----------
Costs and expenses

   Cost of sales                                  4,727,708      3,453,085
   Selling, general and administrative            1,733,236      1,519,379
                                                -----------    -----------
                                                  6,460,944      4,972,464
                                                -----------    -----------
Operating profit (loss)                             607,745       (690,515)
                                                -----------    -----------
Other income (expense)
   Loss on investment                                  --          (11,763)
   Interest income                                   91,994        101,436
   Interest expense                                 (20,989)       (16,985)
                                                -----------    -----------
                                                     71,005         72,688
                                                -----------    -----------

Income (loss) before income tax
    (benefit) expense                               678,750       (617,827)

Income tax (benefit) expense                        160,546        (66,512)
                                                -----------    -----------
Net income (loss)                               $   518,204    $  (551,315)
                                                ===========    ===========

Earnings (loss) per share (basic and diluted)   $      0.32    $     (0.34)
                                                ===========    ===========

Weighted average shares outstanding - basic       1,627,195      1,627,362
                                                  =========      =========

Weighted average shares outstanding - diluted     1,627,213      1,627,362
                                                  =========      =========
The accompanying notes are an integral part of these statements.

                                      F-5
<PAGE>

                      Acorn Holding Corp. and Subsidiaries

          CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY AND
                          COMPREHENSIVE INCOME (LOSS)

                     Years ended December 31, 2000 and 1999


<TABLE>
<CAPTION>
                                                                                   Accumulated
                                                 Additional                          other
                                       Common      paid-in        Accumulated     comprehensive   Treasury
                                       stock       capital          deficit       income (loss)    stock        Total
                                   ----------   ------------    -------------   --------------- ----------   -------------
<S>                                <C>          <C>             <C>             <C>             <C>           <C>

Balance at December 31, 1998       $  40,684    $ 11,823,449    $ (5,083,839)   $    (15,194)   $     --      $  6,765,100

Five for two reverse stock split     (24,411)         24,411            --              --            --
Comprehensive income (loss)
   Net loss                             --              --          (551,315)           --            --          (551,315)
   Net unrealized loss on
    investments in securities
    available-for-sale                                                                (5,052)                       (5,052)
                                                                                                              ------------
   Total comprehensive income
    (loss)                              --              --              --              --            --          (556,367)
                                   ---------    ------------    ------------    ------------    ----------    ------------

Balance at December 31, 1999          16,273      11,847,860      (5,635,154)        (20,246)         --         6,208,733

Comprehensive income (loss)
   Net income                           --              --           518,204            --            --           518,204
   Net unrealized gain on
     investments in securities
     available-for-sale                 --              --              --            20,321          --            20,321
                                                                                                              ------------
   Total comprehensive income                                                                                      538,525
                                                                                                              ------------
Treasury shares purchased               --              --              --              --         (28,500)        (28,500)
                                   ---------    ------------    ------------    ------------    ----------    ------------

Balance at December 31, 2000       $  16,273    $ 11,847,860    $ (5,116,950)   $         75    $  (28,500)   $  6,718,758
                                   =========    ============    ============    ============    ==========    ============
</TABLE>
The accompanying notes are an integral part of these statements.



                                      F-6

<PAGE>

                      Acorn Holding Corp. and Subsidiaries

                      CONSOLIDATED STATEMENTS OF CASH FLOWS

                             Year ended December 31,

                                                        2000           1999
                                                   -----------    ------------
Cash flows from operating activities
   Net income (loss)                               $   518,204    $  (551,315)
   Adjustments to reconcile net income
         (loss) to net cash provided by
         (used in) operating activities
      Realized loss on investment                         --          (11,763)
      Depreciation and amortization                    407,367        382,230
      Deferred income taxes                            143,810        (66,519)
      (Increase) decrease in assets
         Accounts receivable                            (2,243)      (270,442)
         Inventories                                  (381,275)       (17,481)
         Prepaid expenses and other assets               2,086          2,326
      Increase (decrease) in liabilities
         Accounts payable                              404,331        118,100
         Accrued expenses                              (39,909)        48,943
         Deferred income                              (300,000)      (300,000)
                                                   -----------    -----------
           Net cash provided by (used in)
             operating activities                      752,371       (665,921)
                                                   -----------    -----------
Cash flows from investing activities
   Purchase of machinery and equipment,
     including deposits                               (563,248)      (150,283)
   Proceeds from redemption of investments              15,970        466,549
   Note receivable payments received                   150,236        150,236
                                                   -----------    -----------
           Net cash (used in) provided by
            investing activities                      (397,042)       466,502
                                                   -----------    -----------
Cash flows from financing activities
   (Repayments) proceeds from line of
     credit, net                                      (150,000)       150,000
   Payment of long-term debt                          (121,062)      (121,062)
   Purchase of treasury stock                          (28,500)          --
                                                   -----------    -----------
           Net cash (used in) provided by
              financing activities                    (299,562)        28,938
                                                   -----------    -----------
           NET INCREASE (DECREASE) IN CASH AND
              CASH EQUIVALENTS                          55,767       (170,481)

Cash and cash equivalents at beginning of year         956,357      1,126,838
                                                   -----------    -----------
Cash and cash equivalents at end of year           $ 1,012,124    $   956,357
                                                   ===========    ===========
Supplemental disclosure of cash flow information
   Interest paid                                   $    20,989    $    16,985
                                                   ===========    ===========
The accompanying notes are an integral part of these statements.

                                      F-7
<PAGE>
                      Acorn Holding Corp. and Subsidiaries

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                           December 31, 2000 and 1999

NOTE A - ORGANIZATION AND PURPOSE

     Acorn Holding Corp. (Acorn) was incorporated under the laws of the State of
     Delaware on September 8, 1983.

     Acorn is a holding  company for its wholly owned  subsidiaries,  Automotive
     Industries,  Inc. (Automotive) and Recticon  Enterprises,  Inc. (Recticon).
     Automotive is an inactive subsidiary.

     Recticon  is  organized  to engage in the  business  of  manufacturing  and
     processing of silicon wafers for the semi-conductor industry.

NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

     1.  Principles of Consolidation

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

     2.  Use of Estimates

     In  preparing  the  financial  statements  in  accordance  with  accounting
     principles generally accepted in the United States,  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.  Concentration of Risk

     Recticon  provides its products to customers  throughout the United States.
     Recticon  performs ongoing credit  evaluations of its customers'  financial
     condition and generally requires no collateral from its customers. Bad debt
     expense is not significant.

     4.  Cash and Cash Equivalents

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

     5.  Inventories

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

     6.  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. Maintenance and repair costs are charged to expense as incurred.

                                                        (Continued)

                                      F-8
<PAGE>

                      Acorn Holding Corp. and Subsidiaries

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

                           December 31, 2000 and 1999

NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued

     7.  Deferred Income

     Deferred  income is an amount  received  from  customers  in  exchange  for
     Recticon's commitment to provide certain quantities of product over periods
     extending  until  September  2001. The deferred  amounts are amortized on a
     straight-line basis over the terms of the agreements.

     8.  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.

     9.  Earnings Per Share

     The Company follows Statement of Financial  Accounting Standards (SFAS) No.
     128,  Earnings  Per  Share,  which  eliminates  primary  and fully  diluted
     earnings per share (EPS) and 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.

     10.  Goodwill

     Goodwill  represents  the  excess  of cost  over the fair  value of the net
     assets  acquired  for the  purchase  of  Recticon.  This  excess  is  being
     amortized over a period of 10 years.

     11.  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.

     12.  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.

                                                        (Continued)

                                      F-9
<PAGE>
                      Acorn Holding Corp. and Subsidiaries

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

                           December 31, 2000 and 1999

NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued

     13.  Reclassifications

     Certain prior year financial  statement  amounts have been  reclassified to
     conform to current year presentation.

NOTE C - INVESTMENT SECURITIES

     The amortized cost,  unrealized gains and losses,  and fair market value of
     the Company's available-for-sale investment securities at December 31, 2000
     and 1999 are:

                                                 2000
                        --------------------------------------------------------
                                         Gross           Gross          Fair
                         Amortized     unrealized      unrealized      market
                           cost          gains           losses        value
                        -----------    ----------      ----------     --------
State and municipal
  obligations           $ 212,877      $     75        $     -        $ 212,952
                        ==========     ==========      ==========     =========

                                                 1999
                        --------------------------------------------------------
                                         Gross           Gross          Fair
                         Amortized     unrealized      unrealized      market
                           cost          gains           losses        value
                        -----------    ----------      ----------     --------


State and municipal
   obligations          $ 228,847      $     -         $ (20,246)     $ 208,601
                        ==========     ==========      ==========     =========

     The following table lists the  contractual  maturities of investments as of
     December 31, 2000:
                                                                        Fair
                                                        Amortized       market
                                                           cost        value
                                                       -----------    ---------

     After ten years                                   $ 212,877      $ 212,952
                                                       ---------      ---------

                                                       $ 212,877      $ 212,952
                                                       =========      =========

NOTE D - INVENTORIES

     Inventories consist of the following:
                                                         2000             1999
                                                      -----------      --------

         Raw materials and supplies                   $   734,299    $   778,530
         Work in process                                1,434,710      1,147,304
         Finished goods                                   285,574        147,474
                                                        ---------    -----------

                                                      $ 2,454,583    $ 2,073,308
                                                       ==========    ===========

                                      F-10
<PAGE>

                      Acorn Holding Corp. and Subsidiaries

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

                           December 31, 2000 and 1999

NOTE E - CREDIT ARRANGEMENTS

     Recticon has available a $750,000  revolving line of credit which is due on
     demand. Interest is payable monthly at the prime rate (9.5% at December 31,
     2000).  The line is available  through  April 30,  2001,  and is secured by
     Recticon's  assets and is guaranteed by Acorn. At December 31, 2000,  there
     was $750,000 available under the line of credit.

NOTE F - LONG-TERM DEBT

     Recticon has long-term debt consisting of the following:

                                                  2000             1999
                                                -----------      ----------
     Term loan at 8.25% interest per annum;
        principal payable in 48 monthly
        installments  of $10,088,  with
        final payment due December 30, 2000;
        secured by Recticon's assets           $    -            $   121,062

         Less current maturities                    -                121,062
                                               ------------      -----------
                                               $    -            $     -
                                               ============      ===========

NOTE G - DEFERRED INCOME

     Recticon received nonrefundable payments from customers in exchange for its
     commitment to provide certain  quantities of product over periods extending
     until September 2001. The payments  received have been recorded as deferred
     income and are being amortized over the periods of the contracts. The sales
     price of the product to be delivered  under the  agreements is permitted to
     provide a gross profit not to exceed 35%. The customers are not required to
     purchase any amount of product under the agreements.

     The  remaining  deferred  income of $225,000  will be  recognized as income
     during 2001.

NOTE H - INCOME TAXES

     The Company depreciates its machinery and equipment for income tax purposes
     at rates which vary from those used for financial  reporting  purposes.  In
     addition, the Company has reported certain income for tax purposes which is
     being  recognized over a period of years for financial  statement  purposes
     (note G).

     The income tax provision consists of the following:

                                              2000             1999
                                          -----------      --------
         Current

              Federal                     $       -        $     -
              State                            16,736            -
                                          -----------      ----------

         Deferred

              Federal                         109,986       (66,512)
              State                            33,824            -
                                          -----------      ----------
                                              143,810       (66,512)
                                          -----------      ----------
                                          $   160,546      $(66,512)
                                           ==========      ==========

                                                        (Continued)

                                      F-11
<PAGE>

                      Acorn Holding Corp. and Subsidiaries

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

                           December 31, 2000 and 1999




NOTE H - INCOME TAXES - Continued

     Deferred tax assets (liabilities) consist of the following:

                                                  2000             1999
                                              -----------      --------

         Net operating loss carryforwards     $ 2,174,000      $  2,290,000
         Depreciation                            (222,000)         (206,000)
         Deferred income                           91,000           214,000
         Carrying value of assets                 385,000           293,000
         Note receivable                          192,000           192,000
         Other                                     92,000            73,000
                                                ---------        ----------
                                                2,712,000         2,856,000
         Less valuation allowance               1,397,000         1,397,000
                                                ---------      ------------
                                              $ 1,315,000      $  1,459,000
                                               ==========       ===========

     A valuation  allowance has been established against the deferred tax assets
     of net operating loss carryforwards due to separate return limitations that
     are  applicable to $1,397,000  of net operating  losses.  The remaining net
     operating loss carryforwards of $2,283,000 begin to expire in 2006.

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

                                                        2000            1999
                                                     -----------     ---------

     Tax at statutory federal rate                       34.0%          (34.0)%
     State income taxes, net of federal benefits          2.4            -
     Net operating losses/valuation reserve charge      (12.7)           23.2
                                                     ---------       ---------
                                                         23.7%          (10.8)%
                                                     =========       =========

NOTE I - COMMITMENTS

     Recticon  leases its facilities  under a lease  agreement  which expires on
     February 28, 2009. Minimum lease payments are as follows:

         Year ending December 31,

                  2001                                 $   116,000
                  2002                                     120,000
                  2003                                     120,000
                  2004                                     120,000
                  Thereafter                               536,000
                                                         ---------

                                                       $ 1,012,000
                                                       ===========

     Rental expense for 2000 and 1999 was $96,000.

                                      F-12
<PAGE>

                      Acorn Holding Corp. and Subsidiaries

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

                           December 31, 2000 and 1999

NOTE J - CONCENTRATIONS

     Three  customers  accounted  for 51%, 27% and 11% of sales in 2000 and 46%,
     31% and 4% of sales in 1999.

     For 2000, two vendors accounted for 39% and 17% of materials purchases. For
     1999 one vendor accounted for 7% of materials purchases.

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

NOTE K - RELATED PARTY TRANSACTIONS

     During 2000 and 1999, Acorn and its subsidiaries  paid a law firm, of which
     the  Company's  Chief  Executive  Officer  and  Chairman  was  of  counsel,
     approximately  $7,600  and  $5,200,  respectively,   for  reimbursement  of
     expenses.

     For the years ended December 31, 2000 and 1999,  Acorn paid consulting fees
     of  $48,000  in  each  year  to  two  of  its  former  officers  (currently
     Directors).

     Directors  fees  expense for each of the years ended  December 31, 2000 and
     1999 was $12,000.

NOTE L - EARNINGS (LOSS) PER SHARE

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

                    Income (loss)         Number of Shares         Per
                    (numerator)            (denominator)           share amount
                --------------------   -----------------------   ---------------
                  2000       1999         2000         1999       2000    1999
                --------   ---------   ----------   ----------   ------  -------
 Basic EPS

   Net income
    (loss)      $518,204   $(551,315)  $1,627,195   $1,627,213   $0.32   $(0.34)
                ========   =========   ==========   ==========   =====   ======

     Diluted  EPS is  not  presented,  as the  effect  of  dilutive  securities,
     consisting of options, has no impact.

     In 2000 and 1999, 356,400 and 360,000, respectively, of the 360,000 options
     outstanding  to purchase  common stock (see note M) with an exercise  price
     ranging  from  $2.19 to $8.44,  were not  included  in the  computation  of
     diluted EPS because the option  exercise price was greater than the average
     market price.  In 2000, a total of 3,600 options with an exercise  price of
     $1.53 were included in the diluted EPS calculation.

                                      F-13
<PAGE>

                      Acorn Holding Corp. and Subsidiaries

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

                           December 31, 2000 and 1999

NOTE M - STOCK OPTIONS

     The Company has issued  stock  options to various  officers 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 have a term
     of 10 years  from the date of grant.  The  following  is a summary of stock
     options outstanding at December 31, 2000 and 1999:

                                          2000                  1999
                                ---------------------   ----------------------
                                            Weighted                 Weighted
                                             average                  average
                                            exercise                 exercise
                                 Shares       price      Shares        price
                                ---------   ---------   ---------   ----------

Outstanding at January 1,         360,000   $  4.59       360,000   $   4.59
     Granted                        3,600      1.53           -          -
     Cancelled                     (3,600)    (2.27)          -          -
                                ---------               ---------
Outstanding at December 31,       360,000      4.58       360,000       4.59
                                =========               =========
Options exercisable at
    December 31,                  360,000      4.58       360,000       4.59
                                =========               =========

     The following table summarizes  information about stock options outstanding
     at December 31, 2000:

                                      Options outstanding and exercisable
                                  ----------------------------------------------
                               Weighted             Weighted
           Range of            remaining             average          Exercise
         exercise price           shares        contractual life       price
         --------------        ------------     ----------------      --------

         $8.44                     52,000             1 year            $8.44
         $4.60 - 5.40             176,000             2 years            4.77
         $2.90                     20,000             3 years            2.90
         $2.19                     48,000             4 years            2.19
         $3.95                     40,000             6 years            3.95
         $2.27                     20,400             8 years            2.27
         $1.53                      3,600             9 years            1.53
                                ---------
                                  360,000
                                =========

     The stock  option  agreements,  as  amended  on March 2,  1999,  state that
     outstanding options can be exercised at a price of $3.125 in the event of a
     "change in control," as defined in the  agreements.  Assuming  these shares
     were exercised, there would be no material impact on EPS.

                                                        (Continued)

                                      F-14
<PAGE>
                      Acorn Holding Corp. and Subsidiaries

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

                           December 31, 2000 and 1999

NOTE M - STOCK OPTIONS - Continued

     The Company has adopted only the disclosure  provisions of SFAS No. 123. It
     applies 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, 2000 and
     1999 would have reflected the pro forma amounts indicated below:

                                                  2000             1999
                                              -----------      --------

         Net earnings (loss)
              As reported                     $   518,204      $   (551,315)
              Pro forma                           515,047          (551,315)

         EPS

              As reported                     $      0.32      $      (0.34)
              Pro forma                              0.32             (0.34)

     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.  The fair  value of these  options is
     estimated on the date of grant using the Black-Scholes option pricing model
     with the following  weighted average  assumptions for grants in fiscal year
     2000:  expected  volatility of 86%,  risk-free  interest rate of 5.24%, and
     expected  life of 10 years.  The  weighted  average  fair  value of options
     granted  during fiscal year 2000 was $1.53.  There were no options  granted
     during fiscal year 1999.

NOTE N - COMMON STOCK

     At December 31, 2000 and 1999, the Company had  20,000,000  shares of $0.01
     par value common stock authorized.  At December 31, 2000,  1,627,362 shares
     were issued and 1,608,362  shares were  outstanding.  At December 31, 1999,
     there were 1,627,362 shares issued and outstanding.

     During  2000,  the Company  repurchased  19,000  shares of its common stock
     through the open market.

NOTE O - SEGMENT INFORMATION

     The Company is a holding  company  which owns and operates  one  subsidiary
     which   manufactures   monocrystalline   silicon   wafers   used   in   the
     microelectronics industry. The Company considers its business to consist of
     one reportable operating segment.

NOTE P - CONTINGENCIES

     The Company is involved in legal and administrative  proceedings and claims
     of  various  types  during  the  ordinary  course  of  business.  While any
     litigation  contains an element of uncertainty,  management does not expect
     these legal  matters will have a material  adverse  effect on the Company's
     results of operations or financial position.

                                      F-15