UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, D.C. 20549
 
 FORM 10-Q
  þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended:March 29, 2009
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
 For the transition period from  to
 Commission File Number: 000-50373
 Horne International, Inc.
 
  Delaware
    
    90-0182158(State or other jurisdiction of
    
    (I.R.S. Employerincorporation or organization)
    
    Identification No.)3975 University Drive, Suite 100,Fairfax, Virginia
    
    22030(Address of principal executive offices)
    
    (Zip Code)
 703-641-1100
  þ o
  o o
  Large accelerated filer o
    
    Accelerated filer o
    
    Non-accelerated filer   o
(Do not check if a smaller reporting company)
    
    Smaller reporting company þ
  o þ




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TABLE OF CONTENTS
 PART I  FINANCIAL INFORMATIONItem 1. Financial Statements (Unaudited)Consolidated Balance Sheets as of March 29, 2009 and December 29, 2008
    
    
    2Consolidated Statements of Operations for the fiscal quarters ended March 29, 2009 and March 30, 2008
    
    
    3Consolidated Statement of Stockholders Equity for the fiscal quarter ended
March 29, 2009
    
    
    4Condensed Consolidated Statements of Cash Flows for the fiscal quarters ended
March 29, 2009 and March 30, 2008
    
    
    5Notes to Consolidated Financial Statements
    
    
    6Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    12Item 3. Quantitative and Qualitative Disclosures about Market Risk
    
    
    16Item 4. Controls and Procedures
    
    
    16PART II  OTHER INFORMATIONItem 1. Legal Proceedings
    
    
    17Item 1A Risk Factors
    
    
    17Item 6. EXHIBITS
    
    
    18




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March
    
    
    December29, 2009
    
    
    28, 2008ASSETSCurrent assets:Cash and cash equivalents
    
    $
    17
    
    
    $
    22Receivables, net
    
    
    889
    
    
    
    1,384Prepaid expenses & Other current assets
    
    
    144
    
    
    
    98Current assets of Discontinued Operations
    
    
    27
    
    
    
    98Total current assets
    
    
    1,077
    
    
    
    1,602Property and equipment, net
    
    
    116
    
    
    
    132Investments in joint ventures
    
    
    28
    
    
    
    61Other assets
    
    
    57
    
    
    
    57Other assets of discontinued operations
    
    
    3,279
    
    
    
    3,480TOTAL ASSETS
    
    $
    4,557
    
    
    $
    5,332LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities:Accounts payable
    
    $
    332
    
    
    $
    454Accrued expenses
    
    
    647
    
    
    
    490Deferred revenues
    
    
    57
    
    
    
    97Current portion of debt
    
    
    650
    
    
    
    1,046Current liabilities of discontinued operations
    
    
    1,797
    
    
    
    1,771Total current liabilities
    
    
    3,483
    
    
    
    3,858Long-term liabilities:Non-current liabilities of discontinued operations
    
    
    1,784
    
    
    
    1,812TOTAL LIABILITIES
    
    
    5,267
    
    
    
    5,670Commitments and contingencies (Note 9)Stockholders equity:Preferred stock, $0.0001 par value; 20,000,000 shares
authorized, none issued
    
    
    
    
    
    
    Common stock, $0.0001 par value; 80,000,000 shares authorized,
42,687,324 and 42,687,324 issued and outstanding
    
    
    4
    
    
    
    4Additional paid-in capital
    
    
    78,648
    
    
    
    78,772Accumulated deficit
    
    
    (79,362
    )
    
    
    (79,114
    )Total stockholders equity
    
    
    (710
    )
    
    
    (338
    )TOTAL LIABILITIES AND STOCKHOLDERS EQUITY
    
    $
    4,557
    
    
    $
    5,332
  2




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Three months endedMarch 29,
    
    
    March 30,2009
    
    
    2008Revenues
    
    $
    950
    
    
    $
    1,216Cost of revenues
    
    
    622
    
    
    
    1,144Gross profit
    
    
    328
    
    
    
    72Operating expenses
    
    
    462
    
    
    
    911Loss from operations
    
    
    (134
    )
    
    
    (839
    )Total non-operating (expense)income, net
    
    
    (48
    )
    
    
    5Loss before provision for income taxes
    
    
    (182
    )
    
    
    (834
    )Income tax expense
    
    
    (2
    )
    
    
    Loss before discontinued operations
    
    
    (184
    )
    
    
    (834
    )Loss from discontinued operations
    
    
    (64
    )
    
    
    (1,047
    )Net Loss
    
    $
    (248
    )
    
    $
    (1,881
    )Weighted average common shares outstanding:Basic and diluted
    
    
    42,687,324
    
    
    
    41,834,965Basic and diluted earnings per shareLoss from continuing operations
    
    
    (0.01
    )
    
    
    (0.02
    )Loss from discontinued operations
    
    
    (0.00
    )
    
    
    (0.02
    )Net loss
    
    
    (0.01
    )
    
    $
    (0.04
    )
  3




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Common Stock
    
    
    
    
    
    AccumulatedShares
    
    Amount
    
    APIC
    
    Deficit
    
    TotalBalance as of December 28, 2008
    
    
    42,687,324
    
    
    $
    4
    
    
    $
    78,772
    
    
    $
    (79,114
    )
    
    $
    (338
    )Net Loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    (248
    )
    
    $
    (248
    )Share price guarantee settlement
    
    
    
    
    
    
    
    
    
    
    (131
    )
    
    
    
    
    
    $
    (131
    )Option Issuances
    
    
    
    
    
    
    
    
    
    $
    7
    
    
    
    
    
    
    $
    7Balance as of March 29, 2009
    
    
    42,687,324
    
    
    $
    4
    
    
    $
    78,648
    
    
    $
    (79,362
    )
    
    $
    (710
    )
  4




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Statement of Cash Flows
 March 29,
    
    
    March 30,2009
    
    
    2008Net loss
    
    $
    (248
    )
    
    $
    (1,881
    )Adjustments to reconcile net loss to net Cash used in operating activitiesStock option expense
    
    
    7
    
    
    
    9Depreciation/Amortization
    
    
    16
    
    
    
    71Writedown of investments to fair value
    
    
    (10
    )
    
    
    Cash provided by discontinued operations
    
    
    205
    
    
    
    404Net loss from discontinued operations
    
    
    64
    
    
    
    1,047Decrease (increase) in balance sheet itemsReceivables
    
    
    495
    
    
    
    39Prepaid Expenses
    
    
    (45
    )
    
    
    70Accounts Payable
    
    
    (120
    )
    
    
    309Accrued Expenses
    
    
    26
    
    
    
    (201
    )Deferred Revenue
    
    
    (41
    )
    
    
    Other balance sheet changes
    
    
    (2
    )
    
    
    4Net cash provided by(used in) continuing operations
    
    
    347
    
    
    
    (129
    )Cash flows from investing activitiesCash settlement of share price guarantee
    
    
    
    
    
    
    (90
    )Proceeds from joint ventures under the equity method
    
    
    43
    
    
    
    Cash invested in potential acquisition
    
    
    
    
    
    
    (521
    )Purchase of property and equipment
    
    
    
    
    
    
    (5
    )Net cash provided by(used in) investing activities
    
    
    43
    
    
    
    (616
    )Cash flows from financing activitiesNet cash (repayments)borrowings
    
    
    (396
    )
    
    
    260Net cash (used in)provided by financing activities
    
    
    (396
    )
    
    
    260Net decrease in cash and cash equivalents
    
    
    (6
    )
    
    
    (485
    )Cash and cash equivalents at beginning of period
    
    
    22
    
    
    
    577Cash and cash equivalents at end of period
    
    $
    16
    
    
    $
    92
    5




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1. BASIS OF PRESENTATION
   2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 Organization and Nature of Business
   Revenue Recognition
  Income Taxes
   6




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Loss Per Share
   Impairment of Long-Lived Assets
  Recent Accounting Pronouncements
    7




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3. RECEIVABLES (000s)
  March
    
    
    December29, 2009
    
    
    28, 2008Accounts ReceivableBilled AR
    
    $
    772
    
    
    $
    1,277Unbilled AR
    
    
    70
    
    
    
    60Holdbacks
    
    
    48
    
    
    
    48Bad Debt Reserve
    
    
    (1
    )
    
    
    (1
    )Total AR
    
    $
    889
    
    
    $
    1,384
  4. PROPERTY AND EQUIPMENT (000s)
 March
    
    
    December29, 2009
    
    
    28, 2008Property & EquipmentBuildings & Improvements
    
    
    5
    
    
    
    5Furniture & Fixtures
    
    
    11
    
    
    
    11Office Equipment
    
    
    292
    
    
    
    292Vehicles
    
    
    38
    
    
    
    38Total
    
    $
    346
    
    
    $
    346Accumulated Depreciation
    
    
    (230
    )
    
    
    (214
    )Property & Equipment, net
    
    $
    116
    
    
    $
    132
 5. RELATED PARTY BORROWINGS
 Darryl Horne Notes
   8




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Evan Auld-Susott Mortgage Note
   John Krobath Notes
   9




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6. STOCK TRANSACTIONS
  7. STOCK-BASED COMPENSATION
   Number of shares
    
    Option Price
    
    Weighted Average PriceOptions Outstanding 12/30/2008
    
    
    445,000Granted
    
    
    Exercised
    
    
    Cancelled
    
    
    (80,000
    )
    
    
    0.37 - 0.40
    
    
    
    0.38Options Outstanding 3/29/2009
    
    
    365,000
  Options Exercisable & Outstanding
 Exercise
    
    Shares
    
    Shares
    
    Weighted AveragePrice
    
    Outstanding
    
    Exercisable
    
    Remaining Life (yrs)0.20
    
    
    100,000
    
    
    
    30,000
    
    
    
    4.20.35
    
    
    70,000
    
    
    
    30,000
    
    
    
    3.30.40
    
    
    10,000
    
    
    
    6,000
    
    
    
    3.30.50
    
    
    75,000
    
    
    
    70,000
    
    
    
    7.20.80
    
    
    110,000
    
    
    
    100,000
    
    
    
    0.4365,000
    
    
    
    236,000Total options available to issue
    
    
    
    
    
    
    30,000,000Total options outstanding or exercised
    
    
    
    
    
    
    20,566,200Total options Remaining
    
    
    
    
    
    
    9,433,800
 8. DISCONTINUED OPERATIONS
   10




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9. COMMITMENTS AND CONTINGENCIES
 Legal Matters
  B-Stand Lawsuit
  10. SUBSEQUENT EVENTS
 B-Stand Lawsuit
  Rogers Note
  Related Party Notes
    11




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ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
  FORWARD-LOOKING STATEMENTS
   DESCRIPTION OF THE COMPANY
  CRITICAL ACCOUNTING POLICIES
   12




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Revenue Recognition
  Net Operating Loss Carryforwards
  Impairment of Long-Lived Assets
  Off Balance Sheet Risk
  COMPARISON OF THREE MONTHS ENDED MARCH 29, 2009 AND MARCH 30, 2008
  Consolidated Overview (000s)
 Three months ended March,2009
    
    2008Total revenue
    
    $
    950
    
    
    
    100.0
    %
    
    $
    1,216
    
    
    
    100.0
    %Gross Profit
    
    
    328
    
    
    
    34.5
    %
    
    
    72
    
    
    
    5.9
    %Operating loss
    
    
    (134
    )
    
    
    -14.1
    %
    
    
    (839
    )
    
    
    -69.0
    %
  13




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Services Segment (000s)
 Three months ended March,2009
    
    2008ServicesTotal revenue
    
    $
    950
    
    
    
    100.0
    %
    
    $
    1,216
    
    
    
    100.0
    %Gross profit
    
    
    328
    
    
    
    34.5
    %
    
    
    72
    
    
    
    5.9
    %Operating gain(loss)
    
    $
    284
    
    
    
    29.9
    %
    
    $
    (194
    )
    
    
    -16.0
    %
   Corporate Expenses (000s)
 Fiscal Quarter Ended March2009
    
    
    2008Operating Loss
    
    $
    (418
    )
    
    $
    (645
    )
  Other Income(Expense)
  Discontinued Operations
  14




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Liquidity and Capital Resources
    15




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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
  Interest Rate Risk
   Foreign Exchange Risk
   
 ITEM 4. CONTROLS AND PROCEDURES
   16




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PART II - OTHER INFORMATION
 
 ITEM 1. LEGAL PROCEEDINGS
  B-Stand Lawsuit
  
 Item 1A. Risk Factors.
  17




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ITEM 6. EXHIBITS
               18




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*
    
    Indicates management contract or compensatory arrangement. 19




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SIGNATURES
  HORNE INTERNATIONAL, INC.
 By:
    /s/ Darryl K. HorneDarryl K. HornePresident and Chief Executive OfficerBy:
    /s/ John E, KrobathJohn E. KrobathChief Financial Officer 20