<PAGE>
                                 UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 10-Q

(Mark One)
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
         EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2001
                                       OR
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
         EXCHANGE ACT OF 1934
For the transition period from ______________ to ______________

                         Commission file number: 0-22717

                              ACORN PRODUCTS, INC.
             (Exact name of registrant as specified in its charter)

                DELAWARE                                    22-3265462
    (State or other jurisdiction of                      (I.R.S. Employer
     incorporation or organization)                     Identification No.)

               390 WEST NATIONWIDE BOULEVARD, COLUMBUS, OHIO 43215
          (Address of principal executive offices, including zip code)

                                 (614) 222-4400
              (Registrant's telephone number, including area code)

                                      NONE
   (Former name, former address and former fiscal year, if changed since last
                                    report)

         Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to the
filing requirements for at least the past 90 days. YES X NO
                                                      ---   ---

         Indicate the number of shares outstanding of each of the registrant's
classes of common stock, as of the latest practicable date: 6,062,359 shares of
Common Stock, $.001 par value, were outstanding at November 12, 2001.




<PAGE>


                                    FORM 10-Q

                              ACORN PRODUCTS, INC.

                                TABLE OF CONTENTS
                                -----------------

<TABLE>
<CAPTION>

                                                                                                 PAGE NO.
                                                                                                 --------

PART I.  FINANCIAL INFORMATION

<S>                                                                                                  <C>
         Item 1.  Financial Statements

                      Consolidated Balance Sheets                                                    3
                           December 31, 2000 and September 30, 2001

                      Consolidated Statements of Operations for the Three Months                     4
                           and Nine Months Ended October 1, 2000 and September
                           30, 2001

                      Consolidated Statements of Cash Flows for the Nine Months                      5
                           Ended October 1, 2000 and September 30, 2001

                      Interim Notes to Consolidated Financial Statements                             6

         Item 2.  Management's Discussion and Analysis of Financial                                  8
                       Condition and Results of Operations

PART II. OTHER INFORMATION

         Item 6.  Exhibits and Reports on Form 8-K                                                  12

         Signatures                                                                                 13
</TABLE>



                                        2
<PAGE>


                          PART I. FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS

                      ACORN PRODUCTS, INC. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
                        (IN THOUSANDS, EXCEPT SHARE DATA)


<TABLE>
<CAPTION>
                                                                  December 31, 2000   September 30, 2001
                                                                  -----------------   ------------------
                                                                                         (Unaudited)
<S>                                                                     <C>              <C>
ASSETS
Current assets:
Cash                                                                    $    596         $  1,198
Accounts receivable, less allowance for doubtful accounts                 14,541           11,688
   and sales allowances ($2,125 and $1,398, respectively)
Inventories, less reserves for excess and obsolete inventory              24,488           21,252
   ($1,523 and $834, respectively)
Prepaids and other current assets                                            616              472
                                                                        --------         --------
   Total current assets                                                   40,241           34,610
Property, plant and equipment, net of accumulated depreciation            14,096           11,901
Goodwill, net of accumulated amortization                                 26,813           26,156
Other intangible assets                                                      731              554
                                                                        --------         --------
   Total assets                                                         $ 81,881         $ 73,221
                                                                        ========         ========

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Revolving credit facility                                               $ 19,787         $ 14,798
Acquisition facility                                                      15,342           14,878
Junior participation term loan note                                        6,707            7,489
Accounts payable                                                           7,196            5,745
Accrued expenses                                                           7,307            7,405
Income taxes payable                                                          50               46
Other current liabilities                                                    211              208
                                                                        --------         --------
   Total current liabilities                                              56,600           50,569
Other long-term liabilities                                                2,971              741
                                                                        --------         --------
   Total liabilities                                                      59,571           51,310
Stockholders' equity:
Common stock, par value of $.001 per share, 20,000,000 shares             78,262           78,262
   authorized, 6,464,105 shares issued at December 31,
   2000 and September 30, 2001, and 6,062,159 and 6,062,359 shares
   outstanding at December 31, 2000 and September 30, 2001
Contributed capital-stock options                                            460              460
Accumulated other comprehensive loss                                      (1,551)          (1,551)
Retained earnings (deficit)                                              (52,600)         (52,999)
                                                                        --------         --------
                                                                          24,571           24,172
Common stock in treasury, 401,946 shares at December 31,                  (2,261)          (2,261)
   2000 and 401,746 shares at September 30, 2001
                                                                        --------         --------
Total stockholders' equity                                                22,310           21,911
                                                                        --------         --------
Total liabilities and stockholders' equity                              $ 81,881         $ 73,221
                                                                        ========         ========
</TABLE>




                             See accompanying notes.



                                       3
<PAGE>
                      ACORN PRODUCTS, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                      (IN THOUSANDS, EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
                                         For the Three Months Ended                    For the Nine Months Ended
                                         --------------------------                    -------------------------
                                    October 1, 2000     September 30, 2001       October 1, 2000     September 30, 2001
                                    ---------------     ------------------       ---------------     ------------------
                                      (Unaudited)          (Unaudited)             (Unaudited)          (Unaudited)

<S>                                     <C>                     <C>                  <C>                     <C>
Net sales                               $22,098                 $18,097              $98,005                 $75,841
Cost of goods sold                       18,803                  13,079               78,300                  56,803
                                        -------                 -------              -------                 -------
Gross profit                              3,295                   5,018               19,705                  19,038

Selling, general and                      5,688                   4,476               17,458                  13,350
   administrative expenses
Interest expense                          1,701                   1,616                5,413                   5,184
Asset impairment charge                       0                       0                4,402                       0
Amortization of goodwill                    181                     218                  747                     656
Other expenses, net                       1,396                     (35)               1,641                     183
                                        -------                 -------              -------                 -------
Loss before income taxes                 (5,671)                 (1,257)              (9,956)                   (335)

Income taxes                                 21                      21                   61                      63
                                        -------                 -------              -------                 -------
Net loss                                ($5,692)                ($1,278)            ($10,017)                  ($398)
                                        =======                 =======              =======                 =======
Comprehensive loss                      ($5,692)                ($1,278)            ($10,017)                  ($398)
                                        =======                 =======              =======                 =======
Per Share Data
   (Basic and Diluted):

Net loss - basic and diluted             ($0.94)                 ($0.21)              ($1.65)                 ($0.07)
                                        =======                 =======              =======                 =======
Weighted average shares               6,058,728               6,062,359            6,055,789               6,062,359
   outstanding -                      =========               =========            =========               =========
   basic and diluted
</TABLE>





                             See accompanying notes.




                                       4
<PAGE>


                      ACORN PRODUCTS, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (IN THOUSANDS)



<TABLE>
<CAPTION>
                                                             For the Nine Months Ended
                                                          -----------------------------------
                                                          October 1, 2000  September 30, 2001
                                                          ---------------  ------------------
                                                            (Unaudited)      (Unaudited)

<S>                                                           <C>              <C>
Cash Flows From Operating Activities:
   Net cash provided by operating activities                  $  9,563         $  5,820
Cash Flows From Investing Activities:
   Purchases of property, plant and equipment, net              (1,193)            (534)
   Net proceeds from sale of assets                              1,305                0
                                                              --------         --------
   Net cash provided by (used in) investing activities             112             (534)
Cash Flows From Financing Activities:
   Net activity on revolving loan                              (10,664)          (4,988)
   Proceeds from issuance of long-term debt                        322                0
   Repayment of long-term debt                                       0             (478)
   Purchase of treasury stock                                       86                0
   Subordinated debt                                                 0              782
                                                              --------         --------
   Net cash used in financing activities                       (10,256)          (4,684)
                                                              --------         --------
Net increase (decrease) in cash                                   (581)             602
Cash at beginning of period                                      1,326              596
                                                              --------         --------
Cash at end of period                                         $    745         $  1,198
                                                              ========         ========
Interest paid                                                 $  4,058         $  3,009
                                                              ========         ========
</TABLE>




                             See accompanying notes.




                                       5
<PAGE>


                      ACORN PRODUCTS, INC. AND SUBSIDIARIES
               INTERIM NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

      1. Footnote disclosure which would substantially duplicate the
disclosure contained in the Annual Report to Stockholders for the year ended
December 31, 2000 has not been included. The unaudited interim consolidated
financial statements reflect all adjustments (consisting of normal recurring
adjustments), that in the opinion of management, are necessary to a fair
statement of results for the periods presented and to present fairly the
consolidated financial position of Acorn Products, Inc. (the "Company") as of
September 30, 2001.

         The lawn and garden industry is seasonal in nature, with a high
proportion of sales and operating income generated in January through June.
Accordingly, the Company's sales tend to be greater during those months. As a
result, operating results depend significantly on the spring selling season. To
support this sales peak, the Company must anticipate demand and build
inventories of finished goods throughout the fall and winter. Accordingly,
inventory levels tend to be at their highest, relative to sales, during the last
six months of the year. The seasonality of sales also causes variability in
selling, general and administrative expenses as a percentage of net sales, with
the fixed component of these expenses driving a lower percentage relationship to
net sales in the first half of the year and a higher percentage relationship to
net sales in the second half of the year.

         Weather is the most significant factor in determining market demand for
the Company's products and is inherently unpredictable. Fluctuations in weather
can be favorable or unfavorable for the sale of lawn and garden equipment.
Management believes that a longer winter weather pattern across the country
negatively affected spring season purchases.

      2. Inventories of Acorn Products, Inc. are stated at the lower of cost
or market. Cost is determined using the first-in, first-out (FIFO) method.
Inventories consist of the following:

<TABLE>
<CAPTION>
                                                               December 31, 2000        September 30, 2001
                                                               -----------------        ------------------
                                                                (in thousands)

<S>                                                                       <C>                       <C>
                     Finished goods                                       $11,349                   $11,601
                     Work in process                                        6,652                     5,699
                     Raw materials and supplies                             6,487                     3,952
                                                                          -------                   -------
                     Total inventories                                    $24,488                   $21,252
</TABLE>


      3. In July 2000, the FASB's Emerging Issues Task Force (EITF) issued
EITF 00-10, Accounting for Shipping and Handling Fees and Costs. In accordance
with the provisions of this EITF, the Company has reclassified freight expenses
from sales to cost of goods sold for fiscal 2000.

      4. In February 2001, the Company, acting in its capacity as plan
sponsor and policy holder, notified certain of its retirees of its decision to
eliminate retiree medical and life benefits. The amended change in the
post-retirement benefit plans is effective in the second quarter of fiscal 2001.
Subsequently, certain of the Company's retirees challenged these actions by
taking legal action. The issue was resolved in the Company's favor, that the
Company had reserved the rights to modify or terminate the benefits within the
context of each plan document. In the first nine months of 2001, the Company
recognized a gain of approximately $2,000,000 less related expenses in
connection with the termination of these benefits.

      5. The Company's consolidated financial statements have been presented
on a going concern basis, which contemplates the realization of assets and the
satisfaction of liabilities in the normal course of business. The Company is
substantially dependent upon borrowings under its credit facility.

         On August 9, 2001, the Company entered into a sixteenth amendment to
the amended and restated credit facility (the "sixteenth amendment"), the terms
of which it believes will be sufficient to fund operations through April 30,
2002, the revised term of the facility. The sixteenth amendment provides for a
$35 million revolving credit facility (the "Revolving Facility") from January 1
through June 30 ($25 million from July 1 through October 31; $30 million from
November 1 through December 31). Available borrowings under the Revolving
Facility are based on specified percentages of accounts receivable and
inventory. In addition, the sixteenth amendment



                                       6
<PAGE>

provides for scheduled loan payments to be applied on a pro rata basis to the
outstanding balances under the Company's acquisition loans and Revolving
Facility. The scheduled loan payments are as follows:

                          Date                           Payment
                   --------------------     ----------------------------------

                   July 23, 2001                         $350,000
                   September 30, 2001                    $350,000
                   December 31, 2001                     $350,000
                   March 31, 2002                        $350,000
                   April 30, 2002           Entire remaining principal balance
                                            of the acquisition loans,
                                            together with all accrued but
                                            unpaid interest thereon, and
                                            all other obligations, shall
                                            be due and payable in full.


         The sixteenth amendment contains certain covenants, which, among other
things, require the Company to maintain specified financial ratios and satisfy
certain tests, including maintaining cumulative EBITDA above specified levels,
and places limits on future capital expenditures. The sixteenth amendment also
maintains the negative covenants that existed under the previous credit
facility. In addition, in compliance with the requirements of the sixteenth
amendment, the Company has engaged investment bankers to identify strategic
alternatives.

         Borrowings under the sixteenth amendment bear interest at either the
bank prime rate plus a margin of 3% or, at the Company's option, the LIBOR rate
plus a margin of 4%. Interest is due and payable monthly in arrears. In
addition, the Company is required to pay a fee of 0.5% per year on the unused
portion of the Revolving Facility. The sixteenth amendment also includes a
"success fee" of approximately $1,750,000. The success fee can be reduced to a
minimum of $500,000 based upon the Company satisfying certain provisions within
the sixteenth amendment.

         On October 4, 2001, the Company entered into a seventeenth amendment to
the amended and restated credit facility (the "seventeenth amendment"), the
terms of which extended certain of the covenants covered in the sixteenth
amendment.

         Borrowings under the amended facility are secured by substantially all
of the assets of UnionTools and are guaranteed by Acorn. The Acorn guarantee is
secured by a pledge of all the capital stock of UnionTools.

    6.   In June 2001, the FASB issued Statements of Financial Accounting
Standards No. 141, Business Combinations, and No. 142, Goodwill and Other
Intangible Assets, effective for fiscal years beginning after December 15, 2001.
Under the new rules, goodwill and intangible assets deemed to have indefinite
lives will no longer be amortized but will be subject to annual impairment tests
in accordance with the Statements. Other intangible assets will continue to be
amortized over their useful lives.

         The Company will apply the new rules on accounting for goodwill and
other intangible assets beginning in the first quarter of 2002. Application of
the nonamortization provisions of the Statement is expected to result in an
increase in net income of $875,000 ($0.14 per share) per year. During 2002, the
Company will perform the first of the required impairment tests of goodwill as
of January 1, 2002 and has not yet determined what the effect of these tests
will be on the earnings and financial position of the Company.




                                       7
<PAGE>


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

         The following discussion should be read in conjunction with the
Company's consolidated financial statements and the other financial information
included elsewhere in this Quarterly Report on Form 10-Q, as well as the factors
set forth under the caption "Forward-Looking Information" below.

FORWARD-LOOKING INFORMATION

         Statements in the following discussion that indicate the Company's or
management's intentions, hopes, beliefs, expectations or predictions of the
future are forward-looking statements. It is important to note that the
Company's actual results could differ materially from those projected in such
forward-looking statements. Additional information concerning factors that could
cause actual results to differ materially from those suggested in the
forward-looking statements is contained under the caption "Management's
Discussion and Analysis of Financial Condition and Results of Operations" in the
Company's Annual Report on Form 10-K for the year ended December 31, 2000 as
well as in the Current Report on Form 8-K filed with the Securities and Exchange
Commission on September 18, 1997, as amended on October 29, 1998 and November
12, 1999, and as the same may be amended from time to time.

THREE MONTHS ENDED SEPTEMBER 30, 2001 COMPARED TO THREE MONTHS ENDED OCTOBER 1,
2000

         Net Sales. Net sales decreased 18.1%, or $4.0 million, to $18.1 million
in the third quarter of fiscal 2001 compared to $22.1 million in the comparable
period of fiscal 2000. The decline in net sales reflects the discontinuation of
the sale and manufacture of watering products and the ongoing rationalization of
customers and products within our custom injection molding product line. There
was also a decrease in the sale of long handled tools, primarily due to the
credit condition of a few key customers, limiting our ability to ship their full
demand in the third quarter of fiscal 2001.

         Gross Profit. Gross profit increased 52.3%, or $1.7 million, to $5.0
million for the third quarter of fiscal 2001 compared to $3.3 million in the
comparable period of fiscal 2000. Gross margin increased to 27.7% for the third
quarter of fiscal 2001 compared to 14.9% in the comparable period of fiscal
2000. The majority of the increase in gross profit and gross margin was due to
the net favorable effect of changes in certain employee benefit plans, including
the termination of certain retiree medical and life benefits, which resulted in
a one-time gain of $1.5 million less related expenses. Gross profit and gross
margin were also favorably influenced by continued cost improvements partially
offset by the loss of overhead absorption due to lower production levels in
response to the decline in sales.

         Selling, General and Administrative Expenses. Selling, general and
administrative expenses decreased $1.2 million, or 21.3%, to $4.5 million for
the third quarter of fiscal 2001 versus $5.7 million in the comparable period of
fiscal 2000. As a percentage of net sales, selling, general and administrative
expenses decreased to 24.7% in the third quarter of fiscal 2001 as compared to
25.7% in the comparable period of fiscal 2000. The decrease in selling, general
and administrative expenses is due to cost reductions in sales support costs and
administrative overhead, including the effect of the discontinuation of watering
products.

         Operating Profit. Operating profit (gross profit less selling, general
and administrative expenses) increased $2.9 million, or 122.7%, to a profit of
$0.5 million for the third quarter of fiscal 2001 compared to a loss of $2.4
million in the comparable period of fiscal 2000. The increase in operating
profit for the third quarter was primarily due to the items discussed above.

         Interest Expense. Interest expense decreased $0.1 million, to $1.6
million for the third quarter of fiscal 2001 compared to $1.7 million in the
comparable period of fiscal 2000. The decrease was primarily due to lower
interest rates and slightly lower debt levels, partially offset by costs
incurred to extend our credit facility, expensed during the third quarter of
fiscal 2001.

         Amortization of Goodwill and Other Expenses, Net. Other expenses, net,
including amortization of goodwill, decreased $1.4 million to $0.2 million for
the third quarter of fiscal 2001 compared to $1.6 million in the comparable
period of fiscal 2000. The decrease in other expenses is primarily due to the
loss on sale of assets used in the manufacture and sale of watering products
recognized in the third quarter of fiscal 2000, absent in fiscal 2001.


                                       8
<PAGE>

         Loss Before Income Taxes. Loss before income taxes improved to a loss
of $1.3 million for the third quarter of fiscal 2001 compared to $5.7 million in
the comparable period of fiscal 2000. The improvement was attributed primarily
to the items discussed above.

         Net Loss. Net loss was $1.3 million for the third quarter of fiscal
2001 compared to $5.7 million in the comparable period of fiscal 2000. Net loss
per share (basic and diluted) was $0.21 for the third quarter of fiscal 2001
based on a weighted average number of shares outstanding of approximately 6.1
million, compared to net loss per share of $0.94 (basic and diluted) for the
comparable period of fiscal 2000, based on a weighted average number of shares
outstanding of approximately 6.1 million.

NINE MONTHS ENDED SEPTEMBER 30, 2001 COMPARED TO NINE MONTHS ENDED
OCTOBER 1, 2000

         Net Sales. Net sales decreased 22.6%, or $22.2 million, to $75.8
million for the first nine months of fiscal 2001 compared to $98.0 million in
the comparable period of fiscal 2000. The decline in net sales was driven by a
drop in the sale of long handled tools, caused by soft demand during the spring
season and the credit condition of a few key customers, limiting our ability to
ship their full demand in the first nine months of fiscal 2001. We believe the
soft demand has been industry wide and resulted from customer actions to manage
to lower retail inventories, as well as, a longer winter weather pattern across
the country that negatively effected spring season purchases. The
discontinuation of the sale and manufacture of watering products and the ongoing
rationalization of customers and products within our custom injection molding
product line also contributed to the decline in net sales in the first nine
months of fiscal 2001.

         Gross Profit. Gross profit decreased 3.4%, or $0.7 million, to $19.0
million for the first nine months of fiscal 2001 compared to $19.7 million in
the comparable period of fiscal 2000. Gross margin increased to 25.1% for the
first nine months of fiscal 2001 from 20.1% for the comparable period of fiscal
2000. The decrease in gross profit was due to lower sales volume and the related
loss of overhead absorption from lower production levels, partially offset by
continued cost improvements and the net favorable effect of changes in certain
employee benefit plans, including the termination of certain retiree medical and
life benefits, which resulted in a one-time gain of $2.0 million less related
expenses.

         Selling, General and Administrative Expenses. Selling, general and
administrative expenses decreased $4.1 million, or 23.5%, to $13.4 million for
the first nine months of fiscal 2001 versus $17.5 million in the comparable
period of fiscal 2000. As a percentage of net sales, selling, general and
administrative expenses decreased to 17.6% in the first nine months of fiscal
2001 as compared to 17.8% in the comparable period of fiscal 2000. The decrease
in selling, general and administrative expenses is due to cost reductions in
sales support costs and administrative overhead in response to lower sales
volume, including the effect of the discontinuation of watering products.

         Operating Profit. Operating profit (gross profit less selling, general
and administrative expenses) increased $3.4 million, or 153.1%, to a profit of
$5.7 million for the first nine months of fiscal 2001 compared to a profit of
$2.2 million in the comparable period of fiscal 2000. The increase in operating
profit was primarily due to the items discussed above.

         Interest Expense. Interest expense decreased $0.2 million, to $5.2
million for the first nine months of fiscal 2001 compared to $5.4 million in the
comparable period of fiscal 2000. The decrease was primarily due to lower
interest rates and debt levels partially offset by costs incurred to extend our
credit facility.

         Amortization of Goodwill and Other Expenses, Net. Other expenses, net,
including amortization of goodwill, decreased to $0.8 million for the first nine
months of fiscal 2001 compared to $2.4 million in the comparable period of
fiscal 2000. The decrease in other expenses is primarily due to the loss on sale
of assets used in the manufacture and sale of watering products recognized in
the third quarter of fiscal 2000, absent in fiscal 2001.

         Asset Impairment Charge. An asset impairment charge of $4.4 million was
recognized for the first nine months of fiscal 2000 based on management review
of the net realizable value on long-lived assets, specifically the value of
goodwill related to the acquisitions of the Company's watering product line.
There was no asset impairment charge in the comparable period of fiscal 2001.


                                       9
<PAGE>

         Loss Before Income Taxes. Loss before income taxes improved to a loss
of $0.3 million for the first nine months of fiscal 2001 compared to a loss of
$10.0 million in the comparable period of fiscal 2000. The improvement was
attributed primarily to the items discussed above.

         Net Loss. Net loss was $0.4 million for the first nine months of fiscal
2001 compared to a loss of $10.0 million in the comparable period of fiscal
2000. Net loss per share was $0.07 (basic and diluted) for the first nine months
of fiscal 2001 based on a weighted average number of shares outstanding of
approximately 6.1 million, compared to net loss per share of $1.65 (basic and
diluted) for the comparable period of fiscal 2000, based on a weighted average
number of shares outstanding of approximately 6.1 million.

SEASONAL AND QUARTERLY FLUCTUATIONS

         The lawn and garden industry is seasonal in nature, with a high
proportion of sales and operating income generated in January through June.
Accordingly, the Company's sales tend to be greater during those months. As a
result, operating results depend significantly on the spring selling season. To
support this sales peak, the Company must anticipate demand and build
inventories of finished goods throughout the fall and winter. Accordingly,
inventory levels tend to be at their highest, relative to sales, during the last
six months of the year. The seasonality of sales also causes variability in
selling, general and administrative expenses as a percentage of net sales, with
the fixed component of these expenses driving a lower percentage relationship to
net sales in the first half of the year and a higher percentage relationship to
net sales in the second half of the year. These factors increase variations in
quarterly results of operations and potentially expose the Company to greater
adverse effects of changes in economic and industry trends. Moreover, actual
demand for products may vary substantially from the anticipated demand, leaving
the Company with excess inventory or insufficient inventory to satisfy customer
orders.

LIQUIDITY AND CAPITAL RESOURCES

         The Company is substantially dependent upon borrowings under its credit
facility.

         On August 9, 2001, the Company entered into a sixteenth amendment to
the amended and restated credit facility (the "sixteenth amendment"), the terms
of which it believes will be sufficient to fund operations through April 30,
2002, the revised term of the facility. The sixteenth amendment provides for a
$35 million revolving credit facility (the "Revolving Facility") from January 1
through June 30 ($25 million from July 1 through October 31; $30 million from
November 1 through December 31). Available borrowings under the Revolving
Facility are based on specified percentages of accounts receivable and
inventory. In addition, the sixteenth amendment provides for scheduled loan
payments to be applied on a pro rata basis to the outstanding balances under the
Company's acquisition loans and Revolving Facility. The scheduled loan payments
are as follows:

                     Date                               Payment
              --------------------         ----------------------------------

              July 23, 2001                             $350,000
              September 30, 2001                        $350,000
              December 31, 2001                         $350,000
              March 31, 2002                            $350,000
              April 30, 2002               Entire remaining principal balance
                                           of the acquisition loans,
                                           together with all accrued but
                                           unpaid interest thereon, and
                                           all other obligations, shall
                                           be due and payable in full.


         The sixteenth amendment contains certain covenants, which, among other
things, require the Company to maintain specified financial ratios and satisfy
certain tests, including maintaining cumulative EBITDA above specified levels,
and places limits on future capital expenditures. The sixteenth amendment also
maintains the negative covenants that existed under the previous credit
facility. In addition, in compliance with the requirements of the sixteenth
amendment, the Company has engaged investment bankers to identify strategic
alternatives.




                                       10
<PAGE>


         Borrowings under the sixteenth amendment bear interest at either the
bank prime rate plus a margin of 3% or, at the Company's option, the LIBOR rate
plus a margin of 4%. Interest is due and payable monthly in arrears. In
addition, the Company is required to pay a fee of 0.5% per year on the unused
portion of the Revolving Facility. The sixteenth amendment also includes a
"success fee" of approximately $1,750,000. The success fee can be reduced to a
minimum of $500,000 based upon the Company satisfying certain provisions within
the sixteenth amendment.

         On October 4, 2001, the Company entered into a seventeenth amendment to
the amended and restated credit facility (the "seventeenth amendment"), the
terms of which extended certain of the covenants covered in the sixteenth
amendment.

         The Company continues to take actions to generate cash from sources
other than operations, including the evaluation of all non-strategic assets for
purposes of sale, particularly the liquidation of excess or obsolete inventory.

EFFECTS OF INFLATION

         The Company is adversely effected by inflation primarily through the
purchase of raw materials, increased operating costs and expenses and higher
interest rates. The Company believes that the effects of inflation on operations
have not been material between the third quarter of fiscal 2001 and the
comparable period of 2000.







                                       11
<PAGE>


                           PART II. OTHER INFORMATION

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

         (a)      EXHIBITS.

                            EXHIBIT                        EXHIBIT
                            NUMBER                       DESCRIPTION

                             10.1              Sixteenth Amendment to Amended
                                               and Restated Credit Agreement.

                             10.2              Seventeenth Amendment to Amended
                                               and Restated Credit Agreement.

         (b)  REPORTS ON FORM 8-K.

              None.



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<PAGE>


                                   SIGNATURES

         Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.

                                      ACORN PRODUCTS, INC.


Date:   November 14, 2001        By:    /s/  A. Corydon Meyer
                                        ---------------------------------------
                                        A. Corydon Meyer, President and
                                        Chief Executive Officer
                                        (Principal Executive Officer)


Date:   November 14, 2001        By:    /s/  John G. Jacob
                                        ---------------------------------------
                                        John G. Jacob, Vice President and
                                        Chief Financial Officer
                                        (Principal Financial Officer)




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<PAGE>


                      ACORN PRODUCTS, INC. AND SUBSIDIARIES
                                    FORM 10-Q
                                  EXHIBIT INDEX




           EXHIBIT                                EXHIBIT
           NUMBER                               DESCRIPTION


            10.1           Sixteenth Amendment to Amended and Restated Credit
                           Agreement.

            10.2           Seventeenth Amendment to Amended and Restated Credit
                           Agreement.












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