Horne International, Inc. (fka HNIN)

[Oshemae]

Actually this poster summed up the precarious financial situation with this company very nicely...

By: destinboy
01 Apr 2008, 04:52 PM EDT

Ag, some seem to be implying that I am crying wolf. I don’t see why they should fear the information that has been made available by HNIN. It seems pretty simple to me about the dangerously low cash position the company finds itself in today. Numbers don’t lie. Maybe my math could be wrong, but here’s where I figure they could be sitting.

End of year cash---$666K, payment to Amata---$571K (additional $71K announced in today’s PR). That alone would leave a cash position of about $95K.

Add in an additional $170K per month average gross revenues (from the remaining Services segment of the business) for the first 3 months this year (based on last years performance through 9 months) plus the $260K from DH you get the cash position up to about $865K at the end of March 2008.

Now you need to subtract average month operating expenses which had been running over $600K per month in 2007 but should be less with the cut backs. I find it hard to understand how they have more than 2 pennies to rub together. Of course I’m not an accountant, just a simple engineer.

Also note the announcement of 2007 revenues of $17.1M. Need to remember that this would have been $7M lighter down to $10.1M if it hadn’t been for that single gas turbine engine procurement contract announced back in early 2007 (Form 8-K, Apr 24, 2007).

There have not been any new announcements of these large procurement contracts that I have seen. Now with the company down to essentially Horne International LLC as the surviving HNIN entity and with the Amata acquisition still an open issue, there doesn’t seem to be a very rosy picture for significantly increased revenue growth in the near future.

At $10M annual revenue it’s hard to see how operating expenses can be covered as there seems to be no significant additional cash flow. The Services segment is the only remaining revenue stream right now and for the first nine months of last year it only averaged about $170K in gross profits, well below the amounts most likely needed just to maintain the overhead and non operating costs.

Hopefully for those who are long, I may be all wrong. Should the Amata acquisition close and there are adequate potential revenues to entice Wells Fargo Bank to advance a line of credit then there may be a chance for HNIN to turn the corner. Without the Amata acquisition, I don’t see a revenue stream to encourage Wells Fargo Bank to advance the line of credit….Bank of America sure must have not seen it last year when they failed to renew the previous line of credit. Without the additional operating capital being made available there will be “…substantial doubt about the Company’s ability to continue as a going concern.”