false
--12-31
Q3
2012
2012-09-23
10-Q
0001229195
47306054
Smaller Reporting Company
HORNE INTERNATIONAL, INC.
P5D
P5D
P5D
P5D
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<div> <div><!--StartFragment--> <p style="MARGIN: 0pt 0px; FONT: bold 10pt Times New Roman, Times, Serif"> Principles of Consolidation and Basis of Presentation</p> <p style="TEXT-ALIGN: justify; MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif"> </p> <p style="TEXT-ALIGN: justify; MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif"> The consolidated financial statements of Horne International, Inc. include accounts of the Company and its wholly-owned subsidiaries. Intercompany transactions and balances are eliminated in consolidation.</p> <p style="TEXT-ALIGN: justify; MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif"> </p> <p style="TEXT-ALIGN: justify; MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif"> The accompanying unaudited consolidated financial statements for the nine month periods ended September 23, 2012, and September 25, 2011 have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and pursuant to the rules and regulations of the Securities and Exchange Commission for Form 10-Q and Rule 8-03 of Regulation S-X. Accordingly, they do not include all of the information and disclosures required by generally accepted accounting principles for complete financial statements. In the opinion of management, the accompanying unaudited consolidated financial statements contain all adjustments, consisting only of normal recurring accruals, considered necessary for a fair presentation of the Company's financial position, results of operations, and cash flows as of and for the periods presented.</p> <p style="TEXT-ALIGN: justify; MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif"> </p> <p style="TEXT-ALIGN: justify; MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif"> The results of operations for the nine month period ended September 23, 2012 are not necessarily indicative of the results that may be expected for the year. These interim consolidated financial statements should be read in conjunction with the consolidated financial statements and related footnotes included in the Company's Annual Report on Form 10-K for the fiscal year ended December 25, 2011.</p> <!--EndFragment--></div> </div>
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<div> <div><!--StartFragment--> <p style="TEXT-ALIGN: justify; MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif"> <strong>Cash Equivalents</strong></p> <p style="TEXT-ALIGN: justify; MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif"> </p> <p style="TEXT-ALIGN: justify; MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif"> The Company considers all highly liquid investments with an original maturity of three months or less to be cash equivalents.</p> <!--EndFragment--></div> </div>
-202000
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<div> <div><!--StartFragment--> <p style="TEXT-TRANSFORM: uppercase; MARGIN: 0pt 0px; FONT: bold 10pt Times New Roman, Times, Serif"> 9. COMMITMENTS AND CONTINGENCIES</p> <p style="TEXT-ALIGN: justify; MARGIN: 0pt 0px; FONT: bold 10pt Times New Roman, Times, Serif"> </p> <p style="TEXT-ALIGN: justify; MARGIN: 0pt 0px; FONT: bold 10pt Times New Roman, Times, Serif"> Operating Leases</p> <p style="TEXT-ALIGN: justify; MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif"> </p> <p style="TEXT-ALIGN: justify; MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif"> The Company leases office space at one location in the United States. Rent expense totaled approximately $102,283 and $73,000 for the nine months ending September 23, 2012 and September 25, 2011, respectively. The Company also enters into various other non-cancellable leases for office equipment and vehicles as necessary.</p> <p style="TEXT-ALIGN: justify; MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif"> </p> <p style="TEXT-ALIGN: justify; MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif"> The table below summarizes our future annual minimum lease payments under non-cancellable agreements with an initial term of greater than one year at inception. (000's)</p> <p style="TEXT-ALIGN: justify; MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif"> </p> <table style="WIDTH: 70%; BORDER-COLLAPSE: collapse; FONT: 10pt Times New Roman, Times, Serif" cellspacing="0" cellpadding="0"> <tr style="VERTICAL-ALIGN: bottom"> <td> </td> <td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: center; FONT-WEIGHT: bold" colspan="2">2012</td> <td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold"> </td> <td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: center; FONT-WEIGHT: bold" colspan="2">2013</td> <td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold"> </td> <td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: center; FONT-WEIGHT: bold" colspan="2">2014</td> <td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold"> </td> </tr> <tr style="BACKGROUND-COLOR: rgb(204,255,204); VERTICAL-ALIGN: bottom"> <td style="TEXT-ALIGN: left; WIDTH: 55%">Operating Leases</td> <td style="WIDTH: 1%"> </td> <td style="TEXT-ALIGN: left; WIDTH: 1%">$</td> <td style="TEXT-ALIGN: right; WIDTH: 12%">34</td> <td style="TEXT-ALIGN: left; WIDTH: 1%"> </td> <td style="WIDTH: 1%"> </td> <td style="TEXT-ALIGN: left; WIDTH: 1%">$</td> <td style="TEXT-ALIGN: right; WIDTH: 12%">90</td> <td style="TEXT-ALIGN: left; WIDTH: 1%"> </td> <td style="WIDTH: 1%"> </td> <td style="TEXT-ALIGN: left; WIDTH: 1%">$</td> <td style="TEXT-ALIGN: right; WIDTH: 12%">-</td> <td style="TEXT-ALIGN: left; WIDTH: 1%"> </td> </tr> </table> <p style="TEXT-ALIGN: justify; MARGIN: 0pt 0px; FONT: bold 10pt Times New Roman, Times, Serif"> </p> <p style="TEXT-ALIGN: justify; MARGIN: 0pt 0px; FONT: bold 10pt Times New Roman, Times, Serif"> Capital Leases</p> <p style="TEXT-ALIGN: justify; MARGIN: 0pt 0px; FONT: bold 10pt Times New Roman, Times, Serif"> </p> <p style="TEXT-ALIGN: justify; MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif"> The Company updated its corporate office phone system in March 2010. The Company entered into a three-year lease agreement with a $1 buyout option for the phone system with AVAYA Financial Services. This lease requires a monthly payment of $1,010 plus all applicable taxes.</p> <p style="TEXT-ALIGN: justify; MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif"> </p> <p style="TEXT-ALIGN: justify; MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif"> The table below summarizes our future annual minimum lease payments under this non-cancellable agreement with an initial term of greater than one year at inception. (000's)</p> <p style="TEXT-ALIGN: justify; MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif"> </p> <table style="WIDTH: 70%; BORDER-COLLAPSE: collapse; FONT: 10pt Times New Roman, Times, Serif" cellspacing="0" cellpadding="0"> <tr style="VERTICAL-ALIGN: bottom"> <td> </td> <td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: center; FONT-WEIGHT: bold" colspan="2">2012</td> <td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold"> </td> <td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: center; FONT-WEIGHT: bold" colspan="2">2013</td> <td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold"> </td> <td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: center; FONT-WEIGHT: bold" colspan="2">2014</td> <td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold"> </td> </tr> <tr style="BACKGROUND-COLOR: rgb(204,255,204); VERTICAL-ALIGN: bottom"> <td style="TEXT-ALIGN: left; WIDTH: 55%">Capital Leases</td> <td style="WIDTH: 1%"> </td> <td style="TEXT-ALIGN: left; WIDTH: 1%">$</td> <td style="TEXT-ALIGN: right; WIDTH: 12%">3</td> <td style="TEXT-ALIGN: left; WIDTH: 1%"> </td> <td style="WIDTH: 1%"> </td> <td style="TEXT-ALIGN: left; WIDTH: 1%">$</td> <td style="TEXT-ALIGN: right; WIDTH: 12%">3</td> <td style="TEXT-ALIGN: left; WIDTH: 1%"> </td> <td style="WIDTH: 1%"> </td> <td style="TEXT-ALIGN: left; WIDTH: 1%">$</td> <td style="TEXT-ALIGN: right; WIDTH: 12%">-</td> <td style="TEXT-ALIGN: left; WIDTH: 1%"> </td> </tr> </table> <p style="TEXT-ALIGN: left; MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif"> </p> <p style="TEXT-ALIGN: justify; MARGIN: 0pt 0px; FONT: bold 10pt Times New Roman, Times, Serif"> Contingent Liabilities</p> <p style="TEXT-ALIGN: justify; MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif"> </p> <p style="TEXT-ALIGN: justify; MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif"> The Company, through its Horne Engineering Services subsidiary, was a member of Weskem, a limited liability company that specialized in environmental remediation. In 2011 the Company received notice of outstanding legal liability of $10,000 associated with the investment. There may be future liabilities but at this time such liabilities are not quantifiable.</p> <p style="TEXT-ALIGN: justify; MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif"> </p> <p style="TEXT-ALIGN: justify; MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif"> On March 6, 2012, the Company notified Intelligent Decisions, Inc. of the termination of the Stock Option Agreement and Restricted Stock Agreement between the Company and Intelligent Decisions, Inc. The Company has terminated 8,333,333 stock options associated with this agreement in 2011 and 2012. The Company is also disputing invoices in the amount of $36,000, under the terms of the Agreement, which payments by the Company are made in restricted common stock of the Company, equals 400,000 shares of restricted stock. In 2012 the Company received a letter from Intelligent Decisions counsel disputing the Company's right to terminate the Agreement and the stock options.</p> <!--EndFragment--></div> </div>
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<div> <div><!--StartFragment--> <p style="TEXT-TRANSFORM: uppercase; MARGIN: 0pt 0px; FONT: bold 10pt Times New Roman, Times, Serif"> 6. Line of Credit</p> <p style="TEXT-ALIGN: justify; MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif"> </p> <p style="TEXT-ALIGN: justify; MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif"> In April 2011, the Company entered into a financing agreement with United Capital Funding under which the Company is able to factor certain eligible accounts receivable. The Company is able to receive 85 percent of any invoices factored to the lender. The agreement calls for a minimum factoring fee of 4.25% for the first five days and 4.25% for each additional five day period.</p> <!--EndFragment--></div> </div>
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2013-12-29
2013-12-29
2013-12-29
23000
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<div> <div><!--StartFragment--> <p style="TEXT-TRANSFORM: uppercase; MARGIN: 0pt 0px; FONT: bold 10pt Times New Roman, Times, Serif"> 7. STock Option plan</p> <p style="TEXT-ALIGN: justify; MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif"> </p> <p style="TEXT-ALIGN: justify; MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif"> On March 22, 2010, the Company entered into a strategic partnership with Intelligent Decisions, Inc. ("Intelligent"). Intelligent is an information technology services company headquartered in Ashburn, Virginia, servicing both commercial and government customers. The agreement between the parties provide for Intelligent to provide business support services to the Company. On March 6, 2012, the Company notified Intelligent Decisions, Inc. of the termination of the Stock Option Agreement and Restricted Stock Agreement between the Company and Intelligent Decisions and cancelled 4,166,667 options. As of June 24, 2012, the Company cancelled the remaining 4,166,667 options associated with the agreements. This has resulted in the possibility of a contingent liability and legal litigation. See Note 9 - Commitments and Contingent Liabilities below.</p> <p style="TEXT-ALIGN: justify; MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif"> </p> <p style="TEXT-ALIGN: justify; MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif"> On January 3, 2012, 91 Hill, LLC, Evan Auld-Susott, the Company's former Chief Executive Officer, exercised 500,000 of its stock options at the exercise price of $0.10 per share, and received 500,000 shares of the Company common stock.</p> <p style="TEXT-ALIGN: justify; MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif"> </p> <p style="TEXT-ALIGN: justify; MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif"> The Company has a stock option plan available to eligible employees, non-employee directors, consultants and advisors to acquire proprietary interests in the Company by providing eligible persons an additional incentive to promote the success of the Company as deemed appropriate by senior management. This is accomplished by providing for the granting of Non-Statutory Stock Options to employees, non-employee directors, consultants and advisors. During the first nine months of 2012, the Company did not make any option grants.</p> <p style="TEXT-ALIGN: justify; MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif"> </p> <p style="TEXT-ALIGN: justify; MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif"> The fair values of stock option awards are determined using the Black-Sholes option pricing model. The compensation expense is recognized on a straight-line basis over the vesting period. The Company, beginning in 2006, has included a vesting period for most options granted.</p> <p style="TEXT-ALIGN: justify; MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif"> </p> <p style="TEXT-ALIGN: justify; MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif"> The table below summarizes our stock option activity during the nine months ended September 23, 2012.</p> <p style="TEXT-ALIGN: justify; MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif"> </p> <table style="WIDTH: 100%; BORDER-COLLAPSE: collapse; FONT: 10pt Times New Roman, Times, Serif" cellspacing="0" cellpadding="0"> <tr style="VERTICAL-ALIGN: bottom"> <td nowrap="nowrap"> </td> <td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold" nowrap="nowrap"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: center; FONT-WEIGHT: bold" colspan="2" nowrap="nowrap">Number of Shares</td> <td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold" nowrap="nowrap"> </td> <td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold" nowrap="nowrap"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: center; FONT-WEIGHT: bold" colspan="2" nowrap="nowrap">Weighted Average<br /> Exercise Price</td> <td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold" nowrap="nowrap"> </td> <td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold" nowrap="nowrap"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: center; FONT-WEIGHT: bold" colspan="2" nowrap="nowrap">Weighted Average<br /> Remaining Life (yrs)</td> <td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold" nowrap="nowrap"> </td> <td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold" nowrap="nowrap"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: center; FONT-WEIGHT: bold" colspan="2" nowrap="nowrap">Aggregate Intrinsic<br /> Value</td> <td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold" nowrap="nowrap"> </td> </tr> <tr style="BACKGROUND-COLOR: rgb(204,255,204); VERTICAL-ALIGN: bottom"> <td style="TEXT-ALIGN: left; WIDTH: 48%">Options Outstanding 12/25/2011</td> <td style="WIDTH: 1%"> </td> <td style="TEXT-ALIGN: left; WIDTH: 1%"> </td> <td style="TEXT-ALIGN: right; WIDTH: 10%">7,799,660</td> <td style="TEXT-ALIGN: left; WIDTH: 1%"> </td> <td style="WIDTH: 1%"> </td> <td style="TEXT-ALIGN: left; WIDTH: 1%">$</td> <td style="TEXT-ALIGN: right; WIDTH: 10%">0.12</td> <td style="TEXT-ALIGN: left; WIDTH: 1%"> </td> <td style="WIDTH: 1%"> </td> <td style="TEXT-ALIGN: left; WIDTH: 1%"> </td> <td style="TEXT-ALIGN: right; WIDTH: 10%">3.52</td> <td style="TEXT-ALIGN: left; WIDTH: 1%"> </td> <td style="WIDTH: 1%"> </td> <td style="TEXT-ALIGN: left; WIDTH: 1%">$</td> <td style="TEXT-ALIGN: right; WIDTH: 10%">226,666</td> <td style="TEXT-ALIGN: left; WIDTH: 1%"> </td> </tr> <tr style="BACKGROUND-COLOR: white; VERTICAL-ALIGN: bottom"> <td style="PADDING-LEFT: 9pt">Granted</td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right">-</td> <td style="TEXT-ALIGN: left"> </td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right"> </td> <td style="TEXT-ALIGN: left"> </td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right"> </td> <td style="TEXT-ALIGN: left"> </td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right"> </td> <td style="TEXT-ALIGN: left"> </td> </tr> <tr style="BACKGROUND-COLOR: rgb(204,255,204); VERTICAL-ALIGN: bottom"> <td style="PADDING-LEFT: 9pt">Exercised</td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right">(500,000</td> <td style="TEXT-ALIGN: left">)</td> <td> </td> <td style="TEXT-ALIGN: left">$</td> <td style="TEXT-ALIGN: right">0.10</td> <td style="TEXT-ALIGN: left"> </td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right"> </td> <td style="TEXT-ALIGN: left"> </td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right"> </td> <td style="TEXT-ALIGN: left"> </td> </tr> <tr style="BACKGROUND-COLOR: white; VERTICAL-ALIGN: bottom"> <td style="PADDING-BOTTOM: 1pt; PADDING-LEFT: 9pt">Cancelled</td> <td style="PADDING-BOTTOM: 1pt"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right"> (4,339,280</td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt">)</td> <td style="PADDING-BOTTOM: 1pt"> </td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt">$</td> <td style="TEXT-ALIGN: right; PADDING-BOTTOM: 1pt">0.09</td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt"> </td> <td style="PADDING-BOTTOM: 1pt"> </td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt"> </td> <td style="TEXT-ALIGN: right; PADDING-BOTTOM: 1pt"> </td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt"> </td> <td style="PADDING-BOTTOM: 1pt"> </td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt"> </td> <td style="TEXT-ALIGN: right; PADDING-BOTTOM: 1pt"> </td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt"> </td> </tr> <tr style="BACKGROUND-COLOR: rgb(204,255,204); VERTICAL-ALIGN: bottom"> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 2.5pt">Options Outstanding 9/23/2012</td> <td style="PADDING-BOTTOM: 2.5pt"> </td> <td style="BORDER-BOTTOM: black 2.5pt double; TEXT-ALIGN: left"> </td> <td style="BORDER-BOTTOM: black 2.5pt double; TEXT-ALIGN: right"> 2,960,380</td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 2.5pt"> </td> <td style="PADDING-BOTTOM: 2.5pt"> </td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 2.5pt">$</td> <td style="TEXT-ALIGN: right; PADDING-BOTTOM: 2.5pt">0.15</td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 2.5pt"> </td> <td style="PADDING-BOTTOM: 2.5pt"> </td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 2.5pt"> </td> <td style="TEXT-ALIGN: right; PADDING-BOTTOM: 2.5pt">0.93</td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 2.5pt"> </td> <td style="PADDING-BOTTOM: 2.5pt"> </td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 2.5pt">$</td> <td style="TEXT-ALIGN: right; PADDING-BOTTOM: 2.5pt">0</td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 2.5pt"> </td> </tr> <tr style="BACKGROUND-COLOR: white; VERTICAL-ALIGN: bottom"> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 2.5pt">Options Exercisable 9/23/2012</td> <td style="PADDING-BOTTOM: 2.5pt"> </td> <td style="BORDER-BOTTOM: black 2.5pt double; TEXT-ALIGN: left"> </td> <td style="BORDER-BOTTOM: black 2.5pt double; TEXT-ALIGN: right"> 1,975,043</td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 2.5pt"> </td> <td style="PADDING-BOTTOM: 2.5pt"> </td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 2.5pt">$</td> <td style="TEXT-ALIGN: right; PADDING-BOTTOM: 2.5pt">0.12</td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 2.5pt"> </td> <td style="PADDING-BOTTOM: 2.5pt"> </td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 2.5pt"> </td> <td style="TEXT-ALIGN: right; PADDING-BOTTOM: 2.5pt">0.58</td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 2.5pt"> </td> <td style="PADDING-BOTTOM: 2.5pt"> </td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 2.5pt">$</td> <td style="TEXT-ALIGN: right; PADDING-BOTTOM: 2.5pt">0</td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 2.5pt"> </td> </tr> </table> <!--EndFragment--></div> </div>
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<div> <div><!--StartFragment--> <p style="TEXT-TRANSFORM: uppercase; MARGIN: 0pt 0px; FONT: bold 10pt Times New Roman, Times, Serif"> 8. Discontinued Operations</p> <p style="TEXT-ALIGN: justify; MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif"> </p> <p style="TEXT-ALIGN: justify; MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif"> The Company made the strategic decision to close operations of its Spectrum Sciences and Software, Inc. (SSSI) in early 2008.</p> <!--EndFragment--></div> </div>
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<div> <div><!--StartFragment--> <p style="TEXT-ALIGN: justify; MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif"> <strong>Loss Per Share</strong></p> <p style="TEXT-ALIGN: justify; MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif"> </p> <p style="TEXT-ALIGN: justify; MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif"> Basic loss per share is calculated by dividing net loss by the weighted-average number of common shares outstanding during the reporting period. Diluted loss per share is computed in a manner consistent with that of basic loss per share while giving effect to the impact of common stock equivalents. The Company's common stock equivalents consist of employee, director, and consultant stock options to purchase common stock. Common stock equivalents of 2,960,380, and 7,654,600 were not included in the computation of diluted (loss) income per share for the nine months ended September 23, 2012, and September 25, 2011, respectively, as the inclusion of these common stock equivalents would have been anti-dilutive.</p> <!--EndFragment--></div> </div>
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<div> <div><!--StartFragment--> <p style="TEXT-ALIGN: justify; MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif"> <strong>Fair Value of Financial Instruments</strong></p> <p style="TEXT-ALIGN: justify; MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif"> </p> <p style="TEXT-ALIGN: justify; MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif"> The carrying amount of cash and cash equivalents, receivables, accounts payable and accrued expenses approximates fair value because of the short-term nature of those instruments. The carrying amount and fair market value of the Company's short-term investments are the same since short-term investments are recorded at fair value. Debt is recorded at the cash settlement value of the underlying notes and is not revalued.</p> <!--EndFragment--></div> </div>
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<div> <div><!--StartFragment--> <p style="TEXT-ALIGN: justify; MARGIN: 0pt 0px; FONT: bold 10pt Times New Roman, Times, Serif"> Income Taxes</p> <p style="TEXT-ALIGN: justify; MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif"> </p> <p style="TEXT-ALIGN: justify; MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif"> The Company accounts for income taxes utilizing the asset and liability method. This approach requires the recognition of deferred tax assets and liabilities for the expected future tax consequences attributable to temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis and operating loss and tax credit carry-forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enacted date. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized.</p> <p style="TEXT-ALIGN: justify; MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif"> </p> <p style="TEXT-ALIGN: justify; MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif"> The Company currently has a net operating loss carry forward of approximately $55 million at September 23, 2012. The Company has not recorded any related federal tax benefit in the accompanying consolidated financial statements, due to the possibility that the net operating loss carry forward may not be utilized, for various reasons, including the potential that the Company might not have sufficient profits to use the carry forward or the carry forward may be limited as a result of changes in the Company's equity ownership. The Company adopted Accounting Standards Codification topic 740, subtopic 10 on January 1, 2007, which requires financial statement benefits to be recognized for positions taken for tax return purposes when it is more-likely-than-not that the position will be sustained. There has been no change in our financial position and results of operation due to the adoption of this standard.</p> <!--EndFragment--></div> </div>
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<div> <div><!--StartFragment--> <p style="TEXT-TRANSFORM: uppercase; MARGIN: 0pt 0px; FONT: bold 10pt Times New Roman, Times, Serif"> 3. RECEIVABLES (000'<font style="TEXT-TRANSFORM: none">s</font>)</p> <p style="TEXT-ALIGN: justify; MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif"> </p> <p style="TEXT-ALIGN: justify; MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif"> Receivables primarily comprise of amounts due to the Company for work performed on contracts directly related to commercial and government customers. The Company has a nominal bad debt reserve as most of our contracts are with governmental entities.</p> <p style="TEXT-ALIGN: justify; MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif"> </p> <p style="TEXT-ALIGN: justify; MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif"> Unbilled receivables represent recoverable costs and estimated earnings consisting principally of contract revenues that have been recognized for accounting purposes but are not yet billable to the customer based upon the respective contract terms.</p> <p style="TEXT-ALIGN: justify; MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif"> </p> <table style="WIDTH: 80%; BORDER-COLLAPSE: collapse; FONT: 10pt Times New Roman, Times, Serif" cellspacing="0" cellpadding="0" align="center"> <tr style="VERTICAL-ALIGN: bottom"> <td nowrap="nowrap"> </td> <td style="FONT-WEIGHT: bold" nowrap="nowrap"> </td> <td style="TEXT-ALIGN: center; FONT-WEIGHT: bold" colspan="2" nowrap="nowrap">September 23,</td> <td style="FONT-WEIGHT: bold" nowrap="nowrap"> </td> <td style="FONT-WEIGHT: bold" nowrap="nowrap"> </td> <td style="TEXT-ALIGN: center; FONT-WEIGHT: bold" colspan="2" nowrap="nowrap">December 25,</td> <td style="FONT-WEIGHT: bold" nowrap="nowrap"> </td> </tr> <tr style="VERTICAL-ALIGN: bottom"> <td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold" nowrap="nowrap"> Accounts Receivable</td> <td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold" nowrap="nowrap"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: center; FONT-WEIGHT: bold" colspan="2" nowrap="nowrap">2012</td> <td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold" nowrap="nowrap"> </td> <td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold" nowrap="nowrap"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: center; FONT-WEIGHT: bold" colspan="2" nowrap="nowrap">2011</td> <td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold" nowrap="nowrap"> </td> </tr> <tr style="BACKGROUND-COLOR: rgb(204,255,204); VERTICAL-ALIGN: bottom"> <td style="WIDTH: 74%">Billed</td> <td style="WIDTH: 1%"> </td> <td style="TEXT-ALIGN: left; WIDTH: 1%">$</td> <td style="TEXT-ALIGN: right; WIDTH: 10%">483</td> <td style="TEXT-ALIGN: left; WIDTH: 1%"> </td> <td style="WIDTH: 1%"> </td> <td style="TEXT-ALIGN: left; WIDTH: 1%">$</td> <td style="TEXT-ALIGN: right; WIDTH: 10%">752</td> <td style="TEXT-ALIGN: left; WIDTH: 1%"> </td> </tr> <tr style="BACKGROUND-COLOR: white; VERTICAL-ALIGN: bottom"> <td>Unbilled</td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right">497</td> <td style="TEXT-ALIGN: left"> </td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right">349</td> <td style="TEXT-ALIGN: left"> </td> </tr> <tr style="BACKGROUND-COLOR: rgb(204,255,204); VERTICAL-ALIGN: bottom"> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt">Allowance for uncollectable account</td> <td style="PADDING-BOTTOM: 1pt"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right"> (92</td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt">)</td> <td style="PADDING-BOTTOM: 1pt"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right"> (1</td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt">)</td> </tr> <tr style="BACKGROUND-COLOR: white; VERTICAL-ALIGN: bottom"> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 2.5pt; FONT-WEIGHT: bold"> Total Accounts Receivable, Net</td> <td style="PADDING-BOTTOM: 2.5pt; FONT-WEIGHT: bold"> </td> <td style="BORDER-BOTTOM: black 2.5pt double; TEXT-ALIGN: left; FONT-WEIGHT: bold"> $</td> <td style="BORDER-BOTTOM: black 2.5pt double; TEXT-ALIGN: right; FONT-WEIGHT: bold"> 888</td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 2.5pt; FONT-WEIGHT: bold"> </td> <td style="PADDING-BOTTOM: 2.5pt; FONT-WEIGHT: bold"> </td> <td style="BORDER-BOTTOM: black 2.5pt double; TEXT-ALIGN: left; FONT-WEIGHT: bold"> $</td> <td style="BORDER-BOTTOM: black 2.5pt double; TEXT-ALIGN: right; FONT-WEIGHT: bold"> 1,100</td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 2.5pt; FONT-WEIGHT: bold"> </td> </tr> </table> <!--EndFragment--></div> </div>
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<div> <div><!--StartFragment--> <p style="TEXT-ALIGN: justify; MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif"> <strong>Recent Accounting Pronouncements</strong></p> <p style="TEXT-ALIGN: justify; MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif"> </p> <p style="MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif"> Management does not believe that any recent accounting pronouncements will have a material effect on the Company's consolidated financial statements.</p> <!--EndFragment--></div> </div>
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34000
90000
55000000
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<div> <div><!--StartFragment--> <p style="TEXT-TRANSFORM: uppercase; MARGIN: 0pt 0px; FONT: bold 10pt Times New Roman, Times, Serif"> 1. organization and nature of business and uncertainty</p> <p style="TEXT-ALIGN: justify; MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif"> </p> <p style="TEXT-ALIGN: justify; MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif"> Horne International, Inc. (the "Company" or "we", "us", "our" or similar terms), headquartered in Fairfax, Virginia, is an engineering services company focused on the provision of integrated, systems approach based solutions to the energy and environmental sectors. The Company's solutions are sustainable, agile, and provide immediate, as well as long term results. The Company's service and product offerings encompass engineering, environment, and energy solutions. We provide products and services to both commercial customers and to the United States Government.</p> <p style="TEXT-ALIGN: justify; MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif"> </p> <p style="TEXT-ALIGN: justify; MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif"> Discontinued operations include the results of our Spectrum subsidiary that we decided to close in June 2008.</p> <p style="TEXT-ALIGN: justify; MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif"> </p> <p style="TEXT-ALIGN: justify; MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif"> The Company's independent registered public accountants stated in their report on the consolidated financial statements of the Company for the fiscal year ended December 25, 2011, that the Company has had recurring operating losses that raise substantial doubt about its ability to continue as a going concern. For the nine months ended September 23, 2012, the Company incurred a loss from continuing operations of approximately $1,249 million and had a stockholders' deficit of approximately $1,667 million as of that date. The consolidated financial statements do not include any adjustments related to the recovery and classification of recorded assets, or the amounts and classification of liabilities that might be necessary in the event the Company cannot continue as a going concern.</p> <p style="TEXT-ALIGN: justify; MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif"> </p> <p style="TEXT-ALIGN: justify; MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif"> The Company is dependent upon available cash and operating cash flow in addition to financing cash inflows to meet its capital needs. The Company is considering all strategic options to improve its liquidity and provide it with working capital to fund its continuing business operations which include equity offerings, assets sales or debt financing as alternatives to improve its cash requirements.</p> <p style="TEXT-ALIGN: justify; MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif"> </p> <p style="TEXT-ALIGN: justify; MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif"> During 2008, the Company entered into a loan agreement with Darryl K. Horne, the Company's President and Interim Chief Executive Officer. The loan permitted the Company to borrow up to $525,000 at 8% interest. As of September 23, 2012, the principal outstanding balance is $493,507 and the accrued interest balance is $94,523.</p> <p style="TEXT-ALIGN: justify; MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif"> </p> <p style="TEXT-ALIGN: justify; MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif"> In February 2011, the Company entered into a financing agreement with United Capital Funding Corporation under which the Company is able to factor certain eligible accounts receivable. The agreement calls for a minimum fee of 0.425% of the invoice amount for the first five day period and an additional 0.425% for each five day period thereafter until the invoice is paid. The Company is able to receive 80% of any invoices factored to the lender. As of September 23, 2012, the outstanding balance is zero. The loan is not convertible into any Company securities.</p> <p style="TEXT-ALIGN: justify; MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif"> </p> <p style="TEXT-ALIGN: justify; MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif"> In March 2011, the Company entered into a receivables financing agreement with Evan Auld-Susott, the Company's former Chief Executive Officer, as agent of the Susott Family Limited Partnership (FLP). Under the terms of the agreement, Mr. Auld-Susott agreed to finance specific accounts receivable under a line of credit for up to $500,000 at an interest rate of 13 percent. As of September 23, 2012, the outstanding balance is $190,000 and the accrued interest balance is $24,323. The loan is not convertible into any Company securities.</p> <p style="MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif"> </p> <p style="TEXT-ALIGN: justify; MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif"> On December 29, 2011, the Company entered into a Loan Agreement with Trevor Foster pursuant to which the Company borrowed One Hundred Thousand Dollars ($100,000) from Mr. Foster in exchange for a promissory note in the principal amount of One Hundred Thousand Dollars ($100,000). The note is payable on a quarterly basis and fully due and payable December 29, 2013. The Loan Agreement and Promissory Note provide for interest at a rate of 7% per annum on the outstanding principal, payable quarterly beginning March 31, 2012. The note is unsecured. On May 7, 2012 an amendment was made to the Loan Agreement that permits Mr. Foster to convert the entire principal loan balance into Company common stock at a conversion price equal to $.10 per share. As of September 23, 2012, the outstanding balance of the loan is $100,000 and the accrued interest balance is $5,221.</p> <p style="TEXT-ALIGN: justify; MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif"> </p> <p style="FONT: 10pt Times New Roman, Times, Serif; FONT-SIZE: 10pt; MARGIN: 0pt 0px; TEXT-ALIGN: justify"> On December 29, 2011, the Company entered into a Loan Agreement with Darryl K. Horne, the Company's President and Interim Chief Executive Officer, pursuant to which the Company borrowed Fifty Thousand Dollars ($50,000) from Mr. Horne in exchange for a Promissory Note in the principal amount of Fifty Thousand Dollars ($50,000). The note is payable on a quarterly basis and fully due and payable December 29, 2013. The Loan Agreement and Promissory Note provide for interest at a rate of 7% per annum on the outstanding principal, payable quarterly beginning March 31, 2012. The note is unsecured. On May 7, 2012 an amendment was made to the Loan Agreement that permits Mr. Horne to convert the entire principal loan balance into Company common stock at a conversion price equal to $.10 per share. As of September 23, 2012, the outstanding balance is $50,000 and the accrued interest balance is $2,610.48.</p> <p style="TEXT-ALIGN: justify; MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif"> </p> <p style="TEXT-ALIGN: justify; MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif"> On January 3, 2012, 91 Hill, LLC, an entity affiliated with Evan Auld-Susott, the Company's former Chief Executive Officer, exercised 500,000 of its stock options at the exercise price of $0.10 per share, and received 500,000 shares of the Company common stock.</p> <p style="TEXT-ALIGN: justify; MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif"> </p> <p style="TEXT-ALIGN: justify; MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif"> On March 6, 2012, the Company notified Intelligent Decisions, Inc. of the termination of the Stock Option Agreement and Restricted Stock Agreement between the Company and Intelligent Decisions. The Company cancelled 4,166,667 options associated with the agreements. As of June 24, 2012, the Company cancelled the remaining 4,166,667 options of stock associated with the agreement. This action has resulted in the possibility of a contingent liability and pending litigation. See Note 9 - Contingent Liabilities below.</p> <!--EndFragment--></div> </div>
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19000
2000
0.0001
0.0001
20000000
20000000
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0
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250000
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<div> <div><!--StartFragment--> <p style="TEXT-TRANSFORM: uppercase; MARGIN: 0pt 0px; FONT: bold 10pt Times New Roman, Times, Serif"> 4. Property and equipment (000'<font style="TEXT-TRANSFORM: none">s</font>)</p> <table style="WIDTH: 80%; BORDER-COLLAPSE: collapse; FONT: 10pt Times New Roman, Times, Serif" cellspacing="0" cellpadding="0" align="center"> <tr style="VERTICAL-ALIGN: bottom"> <td nowrap="nowrap"> </td> <td style="FONT-WEIGHT: bold" nowrap="nowrap"> </td> <td style="TEXT-ALIGN: center; FONT-WEIGHT: bold" colspan="2" nowrap="nowrap">September 23,</td> <td style="FONT-WEIGHT: bold" nowrap="nowrap"> </td> <td style="FONT-WEIGHT: bold" nowrap="nowrap"> </td> <td style="TEXT-ALIGN: center; FONT-WEIGHT: bold" colspan="2" nowrap="nowrap">December 25,</td> <td style="FONT-WEIGHT: bold" nowrap="nowrap"> </td> </tr> <tr style="VERTICAL-ALIGN: bottom"> <td style="FONT-WEIGHT: bold" nowrap="nowrap"> </td> <td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold" nowrap="nowrap"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: center; FONT-WEIGHT: bold" colspan="2" nowrap="nowrap">2012</td> <td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold" nowrap="nowrap"> </td> <td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold" nowrap="nowrap"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: center; FONT-WEIGHT: bold" colspan="2" nowrap="nowrap">2011</td> <td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold" nowrap="nowrap"> </td> </tr> <tr style="BACKGROUND-COLOR: rgb(204,255,204); VERTICAL-ALIGN: bottom"> <td style="TEXT-ALIGN: left; WIDTH: 74%">Buildings and Improvements</td> <td style="WIDTH: 1%"> </td> <td style="TEXT-ALIGN: left; WIDTH: 1%">$</td> <td style="TEXT-ALIGN: right; WIDTH: 10%">5</td> <td style="TEXT-ALIGN: left; WIDTH: 1%"> </td> <td style="WIDTH: 1%"> </td> <td style="TEXT-ALIGN: left; WIDTH: 1%">$</td> <td style="TEXT-ALIGN: right; WIDTH: 10%">5</td> <td style="TEXT-ALIGN: left; WIDTH: 1%"> </td> </tr> <tr style="BACKGROUND-COLOR: white; VERTICAL-ALIGN: bottom"> <td style="TEXT-ALIGN: left">Furniture and Fixtures</td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right">11</td> <td style="TEXT-ALIGN: left"> </td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right">11</td> <td style="TEXT-ALIGN: left"> </td> </tr> <tr style="BACKGROUND-COLOR: rgb(204,255,204); VERTICAL-ALIGN: bottom"> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt">Office Equipment</td> <td style="PADDING-BOTTOM: 1pt"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right"> 304</td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt"> </td> <td style="PADDING-BOTTOM: 1pt"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right"> 304</td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt"> </td> </tr> <tr style="BACKGROUND-COLOR: white; VERTICAL-ALIGN: bottom"> <td style="PADDING-LEFT: 9pt; FONT-WEIGHT: bold">Total</td> <td style="FONT-WEIGHT: bold"> </td> <td style="TEXT-ALIGN: left; FONT-WEIGHT: bold">$</td> <td style="TEXT-ALIGN: right; FONT-WEIGHT: bold">320</td> <td style="TEXT-ALIGN: left; FONT-WEIGHT: bold"> </td> <td style="FONT-WEIGHT: bold"> </td> <td style="TEXT-ALIGN: left; FONT-WEIGHT: bold">$</td> <td style="TEXT-ALIGN: right; FONT-WEIGHT: bold">320</td> <td style="TEXT-ALIGN: left; FONT-WEIGHT: bold"> </td> </tr> <tr style="BACKGROUND-COLOR: rgb(204,255,204); VERTICAL-ALIGN: bottom"> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt">Accumulated Depreciation</td> <td style="PADDING-BOTTOM: 1pt"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right"> (311</td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt">)</td> <td style="PADDING-BOTTOM: 1pt"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right"> (288</td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt">)</td> </tr> <tr style="BACKGROUND-COLOR: white; VERTICAL-ALIGN: bottom"> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 2.5pt; PADDING-LEFT: 9pt; FONT-WEIGHT: bold"> Property and Equipment, net</td> <td style="PADDING-BOTTOM: 2.5pt; FONT-WEIGHT: bold"> </td> <td style="BORDER-BOTTOM: black 2.5pt double; TEXT-ALIGN: left; FONT-WEIGHT: bold"> $</td> <td style="BORDER-BOTTOM: black 2.5pt double; TEXT-ALIGN: right; FONT-WEIGHT: bold"> 9</td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 2.5pt; FONT-WEIGHT: bold"> </td> <td style="PADDING-BOTTOM: 2.5pt; FONT-WEIGHT: bold"> </td> <td style="BORDER-BOTTOM: black 2.5pt double; TEXT-ALIGN: left; FONT-WEIGHT: bold"> $</td> <td style="BORDER-BOTTOM: black 2.5pt double; TEXT-ALIGN: right; FONT-WEIGHT: bold"> 32</td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 2.5pt; FONT-WEIGHT: bold"> </td> </tr> </table> <!--EndFragment--></div> </div>
320000
320000
9000
32000
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<div> <div><!--StartFragment--> <table style="WIDTH: 80%; BORDER-COLLAPSE: collapse; FONT: 10pt Times New Roman, Times, Serif" cellspacing="0" cellpadding="0" align="center"> <tr style="VERTICAL-ALIGN: bottom"> <td nowrap="nowrap"> </td> <td style="FONT-WEIGHT: bold" nowrap="nowrap"> </td> <td style="TEXT-ALIGN: center; FONT-WEIGHT: bold" colspan="2" nowrap="nowrap">September 23,</td> <td style="FONT-WEIGHT: bold" nowrap="nowrap"> </td> <td style="FONT-WEIGHT: bold" nowrap="nowrap"> </td> <td style="TEXT-ALIGN: center; FONT-WEIGHT: bold" colspan="2" nowrap="nowrap">December 25,</td> <td style="FONT-WEIGHT: bold" nowrap="nowrap"> </td> </tr> <tr style="VERTICAL-ALIGN: bottom"> <td style="FONT-WEIGHT: bold" nowrap="nowrap"> </td> <td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold" nowrap="nowrap"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: center; FONT-WEIGHT: bold" colspan="2" nowrap="nowrap">2012</td> <td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold" nowrap="nowrap"> </td> <td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold" nowrap="nowrap"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: center; FONT-WEIGHT: bold" colspan="2" nowrap="nowrap">2011</td> <td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold" nowrap="nowrap"> </td> </tr> <tr style="BACKGROUND-COLOR: rgb(204,255,204); VERTICAL-ALIGN: bottom"> <td style="TEXT-ALIGN: left; WIDTH: 74%">Buildings and Improvements</td> <td style="WIDTH: 1%"> </td> <td style="TEXT-ALIGN: left; WIDTH: 1%">$</td> <td style="TEXT-ALIGN: right; WIDTH: 10%">5</td> <td style="TEXT-ALIGN: left; WIDTH: 1%"> </td> <td style="WIDTH: 1%"> </td> <td style="TEXT-ALIGN: left; WIDTH: 1%">$</td> <td style="TEXT-ALIGN: right; WIDTH: 10%">5</td> <td style="TEXT-ALIGN: left; WIDTH: 1%"> </td> </tr> <tr style="BACKGROUND-COLOR: white; VERTICAL-ALIGN: bottom"> <td style="TEXT-ALIGN: left">Furniture and Fixtures</td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right">11</td> <td style="TEXT-ALIGN: left"> </td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right">11</td> <td style="TEXT-ALIGN: left"> </td> </tr> <tr style="BACKGROUND-COLOR: rgb(204,255,204); VERTICAL-ALIGN: bottom"> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt">Office Equipment</td> <td style="PADDING-BOTTOM: 1pt"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right"> 304</td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt"> </td> <td style="PADDING-BOTTOM: 1pt"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right"> 304</td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt"> </td> </tr> <tr style="BACKGROUND-COLOR: white; VERTICAL-ALIGN: bottom"> <td style="PADDING-LEFT: 9pt; FONT-WEIGHT: bold">Total</td> <td style="FONT-WEIGHT: bold"> </td> <td style="TEXT-ALIGN: left; FONT-WEIGHT: bold">$</td> <td style="TEXT-ALIGN: right; FONT-WEIGHT: bold">320</td> <td style="TEXT-ALIGN: left; FONT-WEIGHT: bold"> </td> <td style="FONT-WEIGHT: bold"> </td> <td style="TEXT-ALIGN: left; FONT-WEIGHT: bold">$</td> <td style="TEXT-ALIGN: right; FONT-WEIGHT: bold">320</td> <td style="TEXT-ALIGN: left; FONT-WEIGHT: bold"> </td> </tr> <tr style="BACKGROUND-COLOR: rgb(204,255,204); VERTICAL-ALIGN: bottom"> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt">Accumulated Depreciation</td> <td style="PADDING-BOTTOM: 1pt"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right"> (311</td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt">)</td> <td style="PADDING-BOTTOM: 1pt"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right"> (288</td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt">)</td> </tr> <tr style="BACKGROUND-COLOR: white; VERTICAL-ALIGN: bottom"> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 2.5pt; PADDING-LEFT: 9pt; FONT-WEIGHT: bold"> Property and Equipment, net</td> <td style="PADDING-BOTTOM: 2.5pt; FONT-WEIGHT: bold"> </td> <td style="BORDER-BOTTOM: black 2.5pt double; TEXT-ALIGN: left; FONT-WEIGHT: bold"> $</td> <td style="BORDER-BOTTOM: black 2.5pt double; TEXT-ALIGN: right; FONT-WEIGHT: bold"> 9</td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 2.5pt; FONT-WEIGHT: bold"> </td> <td style="PADDING-BOTTOM: 2.5pt; FONT-WEIGHT: bold"> </td> <td style="BORDER-BOTTOM: black 2.5pt double; TEXT-ALIGN: left; FONT-WEIGHT: bold"> $</td> <td style="BORDER-BOTTOM: black 2.5pt double; TEXT-ALIGN: right; FONT-WEIGHT: bold"> 32</td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 2.5pt; FONT-WEIGHT: bold"> </td> </tr> </table> <!--EndFragment--></div> </div>
888000
1100000
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<div> <div><!--StartFragment--> <p style="TEXT-TRANSFORM: uppercase; MARGIN: 0pt 0px; FONT: bold 10pt Times New Roman, Times, Serif"> 5. DEBT ReLated Party AND OTHER BORROWINGS</p> <p style="TEXT-ALIGN: justify; MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif"> </p> <p style="TEXT-ALIGN: justify; MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif"> The Company's borrowings, consisting of related party receivable financing, unsecured notes, and other borrowings net of discount, were approximately $792,000 as of September 23, 2012 and $479,000 as of December 25, 2011. The rates on the related party notes are 13%, 7% and 8%.</p> <p style="TEXT-ALIGN: justify; MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif"> </p> <p style="TEXT-ALIGN: justify; MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif"> <strong><u>Darryl Horne Notes</u></strong></p> <p style="TEXT-ALIGN: justify; MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif"> </p> <p style="TEXT-ALIGN: justify; MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif"> During 2008, the Company entered into a loan agreement with Darryl K. Horne, the Company's President and Interim Chief Executive Officer. The agreement permitted the Company to borrow up to $525,000 at an 8% interest rate. The interest is payable quarterly beginning in July 1, 2008, with principal payable upon demand. This note is unsecured and is not convertible into any Company securities. As of September 23, 2012, the total outstanding balance is $493,507 and accrued interest is 94,523.</p> <p style="TEXT-ALIGN: justify; MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif"> </p> <p style="TEXT-ALIGN: justify; MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif"> On December 29, 2011, the Company entered into a Loan Agreement with Mr. Darryl K. Horne, the Company's President and Interim Chief Executive Officer, pursuant to which the Company borrowed Fifty Thousand Dollars ($50,000) from Mr. Horne in exchange for a promissory note in the principal amount of Fifty Thousand Dollars ($50,000). The note is payable on a quarterly basis and fully due and payable December 29, 2013. The Loan Agreement and Promissory Note provide for interest at a rate of 7% per annum on the outstanding principal, payable quarterly beginning March 31, 2012. The note is unsecured. The Note has been amended to be convertible into common stock at Mr. Horne's option at a per share price equal to $.10 per share.</p> <p style="TEXT-ALIGN: justify; MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif"> </p> <p style="TEXT-ALIGN: justify; MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif"> <strong><u>Evan Auld-Susott Notes</u></strong></p> <p style="TEXT-ALIGN: justify; MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif"> In March 2011, the Company entered into a receivables financing agreement with Evan Auld-Susott, the Company's former Chief Executive Officer, as agent of the Susott Family Limited Partnership. Under the terms of the agreement, Mr. Auld-Susott agreed to finance specific accounts receivable under a line of credit for up to $500,000 at an interest rate of 13%. The outstanding balance and accrued interest is $190,000 and $24,323, respectively, as of September 23, 2012. The receivable is not convertible into any Company securities.</p> <p style="TEXT-ALIGN: justify; MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif"> </p> <p style="TEXT-ALIGN: justify; MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif"> <strong><u>Other Borrowings</u></strong></p> <p style="TEXT-ALIGN: justify; MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif"> On December 29, 2011, the Company entered into a Loan Agreement with Trevor Foster pursuant to which the Company borrowed one hundred thousand dollars ($100,000) from Mr. Foster in exchange for a promissory note in the principal amount of one hundred thousand dollars ($100,000). The note is payable on a quarterly basis and fully due and payable December 29, 2013. The Loan Agreement and Promissory Note provide for interest at a rate of 7% per annum on the outstanding principal, payable quarterly beginning March 31, 2012. The note is unsecured. In May 2012 the note was amended to be payable, at the option of Mr. Foster, by conversion into common stock at a per share price equal to $.10 per share. Mr. Foster has agreed to defer the quarterly payments. As of September 23, 2012, the outstanding balance of the loan is $100,000 and the interest balance is $5,221.</p> <p style="TEXT-ALIGN: justify; MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif"> </p> <p style="TEXT-ALIGN: justify; MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif"> The convertible notes issued to Mr. Horne and Mr. Foster contain a "beneficial conversion" feature that required separate recognition, at issuance, of a portion of the proceeds equal to the intrinsic value of the feature as additional paid-in-capital. This "discount" is being amortized using the effective interest method through a charge to interest expense over the term of the notes. The notes are convertible into 1,500,000 shares of common stock.</p> <!--EndFragment--></div> </div>
245000
340000
9000
7000
-81863000
-80614000
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<div> <div><!--StartFragment--> <p style="TEXT-ALIGN: justify; MARGIN: 0pt 0px; FONT: bold 10pt Times New Roman, Times, Serif"> Revenue Recognition</p> <p style="BACKGROUND-COLOR: white; MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif"> </p> <p style="BACKGROUND-COLOR: white; MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif"> Revenues are derived from three sources:</p> <p style="BACKGROUND-COLOR: white; MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif"> </p> <table style="BACKGROUND-COLOR: white; MARGIN-TOP: 0pt; FONT: 10pt Times New Roman, Times, Serif; MARGIN-BOTTOM: 0pt" cellspacing="0" cellpadding="0" width="100%"> <tr style="VERTICAL-ALIGN: top"> <td style="WIDTH: 0.25in"> </td> <td style="WIDTH: 0.5in">(i)</td> <td>Government Contracts Services fees, related to professional services and reimbursable travel and training. Revenues from cost reimbursable contracts are recorded as reimbursable costs are incurred, including an estimated share of the applicable contractual fees earned. For performance-based fees under cost reimbursable contracts, we recognize the relevant portion of the expected fee to be awarded by the client at the time such fee can be reasonably estimated, based on factors such as prior award experience and communications with the client regarding performance. For cost reimbursable contracts with performance-based fee incentives, we recognize the relevant portion of the fee upon customer approval. For time-and-materials contracts, revenue is recognized based on billable rates times hours delivered plus materials and other reimbursable costs incurred.</td> </tr> </table> <table style="BACKGROUND-COLOR: white; MARGIN-TOP: 0pt; FONT: 10pt Times New Roman, Times, Serif; MARGIN-BOTTOM: 0pt" cellspacing="0" cellpadding="0" width="100%"> <tr style="VERTICAL-ALIGN: top"> <td style="WIDTH: 0.25in"> </td> <td style="WIDTH: 0.5in">(ii)</td> <td>License, installation and maintenance fees, as an agent of implementation of network services. We recognize revenue on a net basis excluding taxes collected from customers and remitted to government authorities.</td> </tr> </table> <table style="BACKGROUND-COLOR: white; MARGIN-TOP: 0pt; FONT: 10pt Times New Roman, Times, Serif; MARGIN-BOTTOM: 0pt" cellspacing="0" cellpadding="0" width="100%"> <tr style="VERTICAL-ALIGN: top"> <td style="WIDTH: 0.25in"> </td> <td style="WIDTH: 0.5in">(iii)</td> <td>Reselling of hosted module leased equipment to retain ownership. Revenue is recognized once delivery has occurred.</td> </tr> </table> <p style="MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif"> </p> <p style="MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif"> In all cases, revenue is only recognized when persuasive evidence of an arrangement exists, the price is fixed and determinable, delivery has occurred or services have been rendered, and collection of the resulting receivable is reasonably assured. The Company estimates an allowance for services provided.</p> <!--EndFragment--></div> </div>
1001000
1469000
3405000
3812000
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<div> <div><!--StartFragment--> <table style="WIDTH: 80%; BORDER-COLLAPSE: collapse; FONT: 10pt Times New Roman, Times, Serif" cellspacing="0" cellpadding="0" align="center"> <tr style="VERTICAL-ALIGN: bottom"> <td nowrap="nowrap"> </td> <td style="FONT-WEIGHT: bold" nowrap="nowrap"> </td> <td style="TEXT-ALIGN: center; FONT-WEIGHT: bold" colspan="2" nowrap="nowrap">September 23,</td> <td style="FONT-WEIGHT: bold" nowrap="nowrap"> </td> <td style="FONT-WEIGHT: bold" nowrap="nowrap"> </td> <td style="TEXT-ALIGN: center; FONT-WEIGHT: bold" colspan="2" nowrap="nowrap">December 25,</td> <td style="FONT-WEIGHT: bold" nowrap="nowrap"> </td> </tr> <tr style="VERTICAL-ALIGN: bottom"> <td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold" nowrap="nowrap"> Accounts Receivable</td> <td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold" nowrap="nowrap"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: center; FONT-WEIGHT: bold" colspan="2" nowrap="nowrap">2012</td> <td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold" nowrap="nowrap"> </td> <td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold" nowrap="nowrap"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: center; FONT-WEIGHT: bold" colspan="2" nowrap="nowrap">2011</td> <td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold" nowrap="nowrap"> </td> </tr> <tr style="BACKGROUND-COLOR: rgb(204,255,204); VERTICAL-ALIGN: bottom"> <td style="WIDTH: 74%">Billed</td> <td style="WIDTH: 1%"> </td> <td style="TEXT-ALIGN: left; WIDTH: 1%">$</td> <td style="TEXT-ALIGN: right; WIDTH: 10%">483</td> <td style="TEXT-ALIGN: left; WIDTH: 1%"> </td> <td style="WIDTH: 1%"> </td> <td style="TEXT-ALIGN: left; WIDTH: 1%">$</td> <td style="TEXT-ALIGN: right; WIDTH: 10%">752</td> <td style="TEXT-ALIGN: left; WIDTH: 1%"> </td> </tr> <tr style="BACKGROUND-COLOR: white; VERTICAL-ALIGN: bottom"> <td>Unbilled</td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right">497</td> <td style="TEXT-ALIGN: left"> </td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right">349</td> <td style="TEXT-ALIGN: left"> </td> </tr> <tr style="BACKGROUND-COLOR: rgb(204,255,204); VERTICAL-ALIGN: bottom"> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt">Allowance for uncollectable account</td> <td style="PADDING-BOTTOM: 1pt"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right"> (92</td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt">)</td> <td style="PADDING-BOTTOM: 1pt"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right"> (1</td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt">)</td> </tr> <tr style="BACKGROUND-COLOR: white; VERTICAL-ALIGN: bottom"> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 2.5pt; FONT-WEIGHT: bold"> Total Accounts Receivable, Net</td> <td style="PADDING-BOTTOM: 2.5pt; FONT-WEIGHT: bold"> </td> <td style="BORDER-BOTTOM: black 2.5pt double; TEXT-ALIGN: left; FONT-WEIGHT: bold"> $</td> <td style="BORDER-BOTTOM: black 2.5pt double; TEXT-ALIGN: right; FONT-WEIGHT: bold"> 888</td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 2.5pt; FONT-WEIGHT: bold"> </td> <td style="PADDING-BOTTOM: 2.5pt; FONT-WEIGHT: bold"> </td> <td style="BORDER-BOTTOM: black 2.5pt double; TEXT-ALIGN: left; FONT-WEIGHT: bold"> $</td> <td style="BORDER-BOTTOM: black 2.5pt double; TEXT-ALIGN: right; FONT-WEIGHT: bold"> 1,100</td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 2.5pt; FONT-WEIGHT: bold"> </td> </tr> </table> <!--EndFragment--></div> </div>
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<div> <div><!--StartFragment--> <table style="WIDTH: 70%; BORDER-COLLAPSE: collapse; FONT: 10pt Times New Roman, Times, Serif" cellspacing="0" cellpadding="0"> <tr style="VERTICAL-ALIGN: bottom"> <td> </td> <td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: center; FONT-WEIGHT: bold" colspan="2">2012</td> <td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold"> </td> <td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: center; FONT-WEIGHT: bold" colspan="2">2013</td> <td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold"> </td> <td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: center; FONT-WEIGHT: bold" colspan="2">2014</td> <td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold"> </td> </tr> <tr style="BACKGROUND-COLOR: rgb(204,255,204); VERTICAL-ALIGN: bottom"> <td style="TEXT-ALIGN: left; WIDTH: 55%">Capital Leases</td> <td style="WIDTH: 1%"> </td> <td style="TEXT-ALIGN: left; WIDTH: 1%">$</td> <td style="TEXT-ALIGN: right; WIDTH: 12%">3</td> <td style="TEXT-ALIGN: left; WIDTH: 1%"> </td> <td style="WIDTH: 1%"> </td> <td style="TEXT-ALIGN: left; WIDTH: 1%">$</td> <td style="TEXT-ALIGN: right; WIDTH: 12%">3</td> <td style="TEXT-ALIGN: left; WIDTH: 1%"> </td> <td style="WIDTH: 1%"> </td> <td style="TEXT-ALIGN: left; WIDTH: 1%">$</td> <td style="TEXT-ALIGN: right; WIDTH: 12%">-</td> <td style="TEXT-ALIGN: left; WIDTH: 1%"> </td> </tr> </table> <!--EndFragment--></div> </div>
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<div> <div><!--StartFragment--> <table style="WIDTH: 70%; BORDER-COLLAPSE: collapse; FONT: 10pt Times New Roman, Times, Serif" cellspacing="0" cellpadding="0"> <tr style="VERTICAL-ALIGN: bottom"> <td> </td> <td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: center; FONT-WEIGHT: bold" colspan="2">2012</td> <td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold"> </td> <td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: center; FONT-WEIGHT: bold" colspan="2">2013</td> <td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold"> </td> <td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: center; FONT-WEIGHT: bold" colspan="2">2014</td> <td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold"> </td> </tr> <tr style="BACKGROUND-COLOR: rgb(204,255,204); VERTICAL-ALIGN: bottom"> <td style="TEXT-ALIGN: left; WIDTH: 55%">Operating Leases</td> <td style="WIDTH: 1%"> </td> <td style="TEXT-ALIGN: left; WIDTH: 1%">$</td> <td style="TEXT-ALIGN: right; WIDTH: 12%">34</td> <td style="TEXT-ALIGN: left; WIDTH: 1%"> </td> <td style="WIDTH: 1%"> </td> <td style="TEXT-ALIGN: left; WIDTH: 1%">$</td> <td style="TEXT-ALIGN: right; WIDTH: 12%">90</td> <td style="TEXT-ALIGN: left; WIDTH: 1%"> </td> <td style="WIDTH: 1%"> </td> <td style="TEXT-ALIGN: left; WIDTH: 1%">$</td> <td style="TEXT-ALIGN: right; WIDTH: 12%">-</td> <td style="TEXT-ALIGN: left; WIDTH: 1%"> </td> </tr> </table> <!--EndFragment--></div> </div>
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<div> <div><!--StartFragment--> <table style="WIDTH: 100%; BORDER-COLLAPSE: collapse; FONT: 10pt Times New Roman, Times, Serif" cellspacing="0" cellpadding="0"> <tr style="VERTICAL-ALIGN: bottom"> <td nowrap="nowrap"> </td> <td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold" nowrap="nowrap"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: center; FONT-WEIGHT: bold" colspan="2" nowrap="nowrap">Number of Shares</td> <td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold" nowrap="nowrap"> </td> <td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold" nowrap="nowrap"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: center; FONT-WEIGHT: bold" colspan="2" nowrap="nowrap">Weighted Average<br /> Exercise Price</td> <td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold" nowrap="nowrap"> </td> <td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold" nowrap="nowrap"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: center; FONT-WEIGHT: bold" colspan="2" nowrap="nowrap">Weighted Average<br /> Remaining Life (yrs)</td> <td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold" nowrap="nowrap"> </td> <td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold" nowrap="nowrap"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: center; FONT-WEIGHT: bold" colspan="2" nowrap="nowrap">Aggregate Intrinsic<br /> Value</td> <td style="PADDING-BOTTOM: 1pt; FONT-WEIGHT: bold" nowrap="nowrap"> </td> </tr> <tr style="BACKGROUND-COLOR: rgb(204,255,204); VERTICAL-ALIGN: bottom"> <td style="TEXT-ALIGN: left; WIDTH: 48%">Options Outstanding 12/25/2011</td> <td style="WIDTH: 1%"> </td> <td style="TEXT-ALIGN: left; WIDTH: 1%"> </td> <td style="TEXT-ALIGN: right; WIDTH: 10%">7,799,660</td> <td style="TEXT-ALIGN: left; WIDTH: 1%"> </td> <td style="WIDTH: 1%"> </td> <td style="TEXT-ALIGN: left; WIDTH: 1%">$</td> <td style="TEXT-ALIGN: right; WIDTH: 10%">0.12</td> <td style="TEXT-ALIGN: left; WIDTH: 1%"> </td> <td style="WIDTH: 1%"> </td> <td style="TEXT-ALIGN: left; WIDTH: 1%"> </td> <td style="TEXT-ALIGN: right; WIDTH: 10%">3.52</td> <td style="TEXT-ALIGN: left; WIDTH: 1%"> </td> <td style="WIDTH: 1%"> </td> <td style="TEXT-ALIGN: left; WIDTH: 1%">$</td> <td style="TEXT-ALIGN: right; WIDTH: 10%">226,666</td> <td style="TEXT-ALIGN: left; WIDTH: 1%"> </td> </tr> <tr style="BACKGROUND-COLOR: white; VERTICAL-ALIGN: bottom"> <td style="PADDING-LEFT: 9pt">Granted</td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right">-</td> <td style="TEXT-ALIGN: left"> </td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right"> </td> <td style="TEXT-ALIGN: left"> </td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right"> </td> <td style="TEXT-ALIGN: left"> </td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right"> </td> <td style="TEXT-ALIGN: left"> </td> </tr> <tr style="BACKGROUND-COLOR: rgb(204,255,204); VERTICAL-ALIGN: bottom"> <td style="PADDING-LEFT: 9pt">Exercised</td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right">(500,000</td> <td style="TEXT-ALIGN: left">)</td> <td> </td> <td style="TEXT-ALIGN: left">$</td> <td style="TEXT-ALIGN: right">0.10</td> <td style="TEXT-ALIGN: left"> </td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right"> </td> <td style="TEXT-ALIGN: left"> </td> <td> </td> <td style="TEXT-ALIGN: left"> </td> <td style="TEXT-ALIGN: right"> </td> <td style="TEXT-ALIGN: left"> </td> </tr> <tr style="BACKGROUND-COLOR: white; VERTICAL-ALIGN: bottom"> <td style="PADDING-BOTTOM: 1pt; PADDING-LEFT: 9pt">Cancelled</td> <td style="PADDING-BOTTOM: 1pt"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: left"> </td> <td style="BORDER-BOTTOM: black 1pt solid; TEXT-ALIGN: right"> (4,339,280</td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt">)</td> <td style="PADDING-BOTTOM: 1pt"> </td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt">$</td> <td style="TEXT-ALIGN: right; PADDING-BOTTOM: 1pt">0.09</td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt"> </td> <td style="PADDING-BOTTOM: 1pt"> </td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt"> </td> <td style="TEXT-ALIGN: right; PADDING-BOTTOM: 1pt"> </td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt"> </td> <td style="PADDING-BOTTOM: 1pt"> </td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt"> </td> <td style="TEXT-ALIGN: right; PADDING-BOTTOM: 1pt"> </td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 1pt"> </td> </tr> <tr style="BACKGROUND-COLOR: rgb(204,255,204); VERTICAL-ALIGN: bottom"> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 2.5pt">Options Outstanding 9/23/2012</td> <td style="PADDING-BOTTOM: 2.5pt"> </td> <td style="BORDER-BOTTOM: black 2.5pt double; TEXT-ALIGN: left"> </td> <td style="BORDER-BOTTOM: black 2.5pt double; TEXT-ALIGN: right"> 2,960,380</td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 2.5pt"> </td> <td style="PADDING-BOTTOM: 2.5pt"> </td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 2.5pt">$</td> <td style="TEXT-ALIGN: right; PADDING-BOTTOM: 2.5pt">0.15</td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 2.5pt"> </td> <td style="PADDING-BOTTOM: 2.5pt"> </td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 2.5pt"> </td> <td style="TEXT-ALIGN: right; PADDING-BOTTOM: 2.5pt">0.93</td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 2.5pt"> </td> <td style="PADDING-BOTTOM: 2.5pt"> </td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 2.5pt">$</td> <td style="TEXT-ALIGN: right; PADDING-BOTTOM: 2.5pt">0</td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 2.5pt"> </td> </tr> <tr style="BACKGROUND-COLOR: white; VERTICAL-ALIGN: bottom"> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 2.5pt">Options Exercisable 9/23/2012</td> <td style="PADDING-BOTTOM: 2.5pt"> </td> <td style="BORDER-BOTTOM: black 2.5pt double; TEXT-ALIGN: left"> </td> <td style="BORDER-BOTTOM: black 2.5pt double; TEXT-ALIGN: right"> 1,975,043</td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 2.5pt"> </td> <td style="PADDING-BOTTOM: 2.5pt"> </td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 2.5pt">$</td> <td style="TEXT-ALIGN: right; PADDING-BOTTOM: 2.5pt">0.12</td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 2.5pt"> </td> <td style="PADDING-BOTTOM: 2.5pt"> </td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 2.5pt"> </td> <td style="TEXT-ALIGN: right; PADDING-BOTTOM: 2.5pt">0.58</td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 2.5pt"> </td> <td style="PADDING-BOTTOM: 2.5pt"> </td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 2.5pt">$</td> <td style="TEXT-ALIGN: right; PADDING-BOTTOM: 2.5pt">0</td> <td style="TEXT-ALIGN: left; PADDING-BOTTOM: 2.5pt"> </td> </tr> </table> <!--EndFragment--></div> </div>
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<div> <div><!--StartFragment--> <p style="TEXT-ALIGN: justify; MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif"> <strong>Stock-based Compensation</strong></p> <p style="TEXT-ALIGN: justify; MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif"> </p> <p style="TEXT-ALIGN: justify; MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif"> The fair values of stock option awards are determined using the Black-Sholes option pricing model. The compensation expense is recognized on a straight-line basis over the vesting period. The Company, beginning in 2006, has included a vesting period for most options granted. See Note 7 for a detailed discussion of the Company's stock option plan. The Company accounts for stock incentive plans by measurement and recognition of compensation expense for all share-based awards on estimated fair values, net of estimated and actual forfeitures, on a straight line basis over the period during which the employee is required to provide services in exchange for the award.</p> <!--EndFragment--></div> </div>
47306054
44506054
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<div> <div><!--StartFragment--> <p style="TEXT-TRANSFORM: uppercase; MARGIN: 0pt 0px; FONT: bold 10pt Times New Roman, Times, Serif"> 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES</p> <p style="MARGIN: 0pt 0px; FONT: bold 10pt Times New Roman, Times, Serif"> </p> <p style="MARGIN: 0pt 0px; FONT: bold 10pt Times New Roman, Times, Serif"> Principles of Consolidation and Basis of Presentation</p> <p style="TEXT-ALIGN: justify; MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif"> </p> <p style="TEXT-ALIGN: justify; MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif"> The consolidated financial statements of Horne International, Inc. include accounts of the Company and its wholly-owned subsidiaries. Intercompany transactions and balances are eliminated in consolidation.</p> <p style="TEXT-ALIGN: justify; MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif"> </p> <p style="TEXT-ALIGN: justify; MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif"> The accompanying unaudited consolidated financial statements for the nine month periods ended September 23, 2012, and September 25, 2011 have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and pursuant to the rules and regulations of the Securities and Exchange Commission for Form 10-Q and Rule 8-03 of Regulation S-X. Accordingly, they do not include all of the information and disclosures required by generally accepted accounting principles for complete financial statements. In the opinion of management, the accompanying unaudited consolidated financial statements contain all adjustments, consisting only of normal recurring accruals, considered necessary for a fair presentation of the Company's financial position, results of operations, and cash flows as of and for the periods presented.</p> <p style="TEXT-ALIGN: justify; MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif"> </p> <p style="TEXT-ALIGN: justify; MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif"> The results of operations for the nine month period ended September 23, 2012 are not necessarily indicative of the results that may be expected for the year. These interim consolidated financial statements should be read in conjunction with the consolidated financial statements and related footnotes included in the Company's Annual Report on Form 10-K for the fiscal year ended December 25, 2011.</p> <p style="TEXT-ALIGN: justify; MARGIN: 0pt 0px; FONT: bold 10pt Times New Roman, Times, Serif"> </p> <p style="TEXT-ALIGN: justify; MARGIN: 0pt 0px; FONT: bold 10pt Times New Roman, Times, Serif"> Revenue Recognition</p> <p style="BACKGROUND-COLOR: white; MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif"> </p> <p style="BACKGROUND-COLOR: white; MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif"> Revenues are derived from three sources:</p> <p style="BACKGROUND-COLOR: white; MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif"> </p> <table style="BACKGROUND-COLOR: white; MARGIN-TOP: 0pt; FONT: 10pt Times New Roman, Times, Serif; MARGIN-BOTTOM: 0pt" cellspacing="0" cellpadding="0" width="100%"> <tr style="VERTICAL-ALIGN: top"> <td style="WIDTH: 0.25in"> </td> <td style="WIDTH: 0.5in">(i)</td> <td>Government Contracts Services fees, related to professional services and reimbursable travel and training. Revenues from cost reimbursable contracts are recorded as reimbursable costs are incurred, including an estimated share of the applicable contractual fees earned. For performance-based fees under cost reimbursable contracts, we recognize the relevant portion of the expected fee to be awarded by the client at the time such fee can be reasonably estimated, based on factors such as prior award experience and communications with the client regarding performance. For cost reimbursable contracts with performance-based fee incentives, we recognize the relevant portion of the fee upon customer approval. For time-and-materials contracts, revenue is recognized based on billable rates times hours delivered plus materials and other reimbursable costs incurred.</td> </tr> </table> <table style="BACKGROUND-COLOR: white; MARGIN-TOP: 0pt; FONT: 10pt Times New Roman, Times, Serif; MARGIN-BOTTOM: 0pt" cellspacing="0" cellpadding="0" width="100%"> <tr style="VERTICAL-ALIGN: top"> <td style="WIDTH: 0.25in"> </td> <td style="WIDTH: 0.5in">(ii)</td> <td>License, installation and maintenance fees, as an agent of implementation of network services. We recognize revenue on a net basis excluding taxes collected from customers and remitted to government authorities.</td> </tr> </table> <table style="BACKGROUND-COLOR: white; MARGIN-TOP: 0pt; FONT: 10pt Times New Roman, Times, Serif; MARGIN-BOTTOM: 0pt" cellspacing="0" cellpadding="0" width="100%"> <tr style="VERTICAL-ALIGN: top"> <td style="WIDTH: 0.25in"> </td> <td style="WIDTH: 0.5in">(iii)</td> <td>Reselling of hosted module leased equipment to retain ownership. Revenue is recognized once delivery has occurred.</td> </tr> </table> <p style="MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif"> </p> <p style="MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif"> In all cases, revenue is only recognized when persuasive evidence of an arrangement exists, the price is fixed and determinable, delivery has occurred or services have been rendered, and collection of the resulting receivable is reasonably assured. The Company estimates an allowance for services provided.</p> <p style="TEXT-ALIGN: justify; MARGIN: 0pt 0px; FONT: bold 10pt Times New Roman, Times, Serif"> </p> <p style="TEXT-ALIGN: justify; MARGIN: 0pt 0px; FONT: bold 10pt Times New Roman, Times, Serif"> Income Taxes</p> <p style="TEXT-ALIGN: justify; MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif"> </p> <p style="TEXT-ALIGN: justify; MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif"> The Company accounts for income taxes utilizing the asset and liability method. This approach requires the recognition of deferred tax assets and liabilities for the expected future tax consequences attributable to temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis and operating loss and tax credit carry-forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enacted date. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized.</p> <p style="TEXT-ALIGN: justify; MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif"> </p> <p style="TEXT-ALIGN: justify; MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif"> The Company currently has a net operating loss carry forward of approximately $55 million at September 23, 2012. The Company has not recorded any related federal tax benefit in the accompanying consolidated financial statements, due to the possibility that the net operating loss carry forward may not be utilized, for various reasons, including the potential that the Company might not have sufficient profits to use the carry forward or the carry forward may be limited as a result of changes in the Company's equity ownership. The Company adopted Accounting Standards Codification topic 740, subtopic 10 on January 1, 2007, which requires financial statement benefits to be recognized for positions taken for tax return purposes when it is more-likely-than-not that the position will be sustained. There has been no change in our financial position and results of operation due to the adoption of this standard.</p> <p style="TEXT-ALIGN: justify; MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif"> </p> <p style="TEXT-ALIGN: justify; MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif"> <strong>Loss Per Share</strong></p> <p style="TEXT-ALIGN: justify; MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif"> </p> <p style="TEXT-ALIGN: justify; MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif"> Basic loss per share is calculated by dividing net loss by the weighted-average number of common shares outstanding during the reporting period. Diluted loss per share is computed in a manner consistent with that of basic loss per share while giving effect to the impact of common stock equivalents. The Company's common stock equivalents consist of employee, director, and consultant stock options to purchase common stock. Common stock equivalents of 2,960,380, and 7,654,600 were not included in the computation of diluted (loss) income per share for the nine months ended September 23, 2012, and September 25, 2011, respectively, as the inclusion of these common stock equivalents would have been anti-dilutive.</p> <p style="TEXT-ALIGN: justify; MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif"> </p> <p style="TEXT-ALIGN: justify; MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif"> <strong>Stock-based Compensation</strong></p> <p style="TEXT-ALIGN: justify; MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif"> </p> <p style="TEXT-ALIGN: justify; MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif"> The fair values of stock option awards are determined using the Black-Sholes option pricing model. The compensation expense is recognized on a straight-line basis over the vesting period. The Company, beginning in 2006, has included a vesting period for most options granted. See Note 7 for a detailed discussion of the Company's stock option plan. The Company accounts for stock incentive plans by measurement and recognition of compensation expense for all share-based awards on estimated fair values, net of estimated and actual forfeitures, on a straight line basis over the period during which the employee is required to provide services in exchange for the award.</p> <p style="TEXT-ALIGN: justify; MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif"> </p> <p style="TEXT-ALIGN: justify; MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif"> <strong>Cash Equivalents</strong></p> <p style="TEXT-ALIGN: justify; MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif"> </p> <p style="TEXT-ALIGN: justify; MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif"> The Company considers all highly liquid investments with an original maturity of three months or less to be cash equivalents.</p> <p style="TEXT-ALIGN: justify; MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif"> </p> <p style="TEXT-ALIGN: justify; MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif"> <strong>Fair Value of Financial Instruments</strong></p> <p style="TEXT-ALIGN: justify; MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif"> </p> <p style="TEXT-ALIGN: justify; MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif"> The carrying amount of cash and cash equivalents, receivables, accounts payable and accrued expenses approximates fair value because of the short-term nature of those instruments. The carrying amount and fair market value of the Company's short-term investments are the same since short-term investments are recorded at fair value. Debt is recorded at the cash settlement value of the underlying notes and is not revalued.</p> <p style="TEXT-ALIGN: justify; MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif"> </p> <p style="TEXT-ALIGN: justify; MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif"> <strong>Use of Estimates</strong></p> <p style="TEXT-ALIGN: justify; MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif"> </p> <p style="TEXT-ALIGN: justify; MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif"> The preparation of financial statements, in conformity with accounting principles generally accepted in the United States of America, requires management 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 consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Accordingly, results could differ from those estimates and assumptions.</p> <p style="TEXT-ALIGN: justify; MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif"> </p> <p style="TEXT-ALIGN: justify; MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif"> <strong>Recent Accounting Pronouncements</strong></p> <p style="TEXT-ALIGN: justify; MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif"> </p> <p style="MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif"> Management does not believe that any recent accounting pronouncements will have a material effect on the Company's consolidated financial statements.</p> <!--EndFragment--></div> </div>
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<div> <div><!--StartFragment--> <p style="TEXT-TRANSFORM: uppercase; MARGIN: 0pt 0px; FONT: bold 10pt Times New Roman, Times, Serif"> 10. SUBSEQUENT EVENTS</p> <p style="MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif"> </p> <p style="TEXT-ALIGN: justify; MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif"> Management has evaluated all events that occurred after the balance sheet date through the date when these financial statements were issued and determined that the following subsequent event was required to be disclosed:</p> <p style="MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif"> </p> <p style="MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif"> On December 19, 2012, the company through its Horne Engineering Services subsidiary was notified of the failure to win a re-compete on a prime government contract, U.S. Army Procurement to Support Regional Environmental and Energy Offices (REEOs) W91WAW-08-C0012, expiring on December 14, 2012, with an estimated $1.3 million in revenue.</p> <!--EndFragment--></div> </div>
497000
349000
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<div> <div><!--StartFragment--> <p style="TEXT-ALIGN: justify; MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif"> <strong>Use of Estimates</strong></p> <p style="TEXT-ALIGN: justify; MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif"> </p> <p style="TEXT-ALIGN: justify; MARGIN: 0pt 0px; FONT: 10pt Times New Roman, Times, Serif"> The preparation of financial statements, in conformity with accounting principles generally accepted in the United States of America, requires management 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 consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Accordingly, results could differ from those estimates and assumptions.</p> <!--EndFragment--></div> </div>
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