UNITED
STATES


SECURITIES
AND EXCHANGE COMMISSION


WASHINGTON,
D.C. 20549





FORM 10-Q





(Mark One)


x
            QUARTERLY
      REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934




For the
quarterly period ended: June 27,
2010




OR




 ̈
            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.(Exact
      name of registrant as specified in its
charter)




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)




Registrant’s
telephone number, including area code: 703-641-1100




Indicate
by check mark whether the registrant (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months, and (2) has been subject to such filing requirements for
the past 90 days.


Yes x No  ̈





Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, or a non-accelerated filer. See definition of “accelerated
filer and large accelerated filer” in Rule 12b-2 of the Exchange
Act.





Large
Accelerated filer  ̈
Accelerated Filer  ̈
Non-Accelerated Filer  ̈ Small Reporting Company
x





Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act).


Yes  ̈   No
x




As of
June 27, 2010, there were 42,687,324shares of the
issuer’s common stock, par value $0.0001 per share,
outstanding.





TABLE
OF CONTENTS




PART
      I — FINANCIAL INFORMATIONItem
      1. Financial Statements (Unaudited)Consolidated
      Balance Sheets as of June 27, 2010 (Unaudited) and December 27,
      2009
                      
                      2Consolidated
      Statements of Operations (Unaudited) for the three months and six months
      ended June 27, 2010, and June 28, 2009
                      
                      3Consolidated
      Statement of Stockholders’ Deficit (Unaudited) for the six months endedJune 27, 2010
                      
                      4Consolidated
      Statements of Cash Flows (Unaudited) for the six months ended June 27,
      2010, and June 28, 2009
                      
                      5Notes
      to (Unaudited) 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
                      
                      14Item
      4. Controls and Procedures
                      
                      14PART
      II - OTHER INFORMATIONItem
      1. Legal Proceedings
                      
                      15Item
      1A Risk Factors
                      
                      15Item
      6. Exhibits
                      
                      16





HORNE
INTERNATIONAL, INC.


Consolidated
Balance Sheets (Unaudited)


(Dollars
shown in 000’s except share amounts)





June
      27,
                      
                      
                      December
      27,2010
      (unaudited)
                      
                      
                      2009ASSETSCurrent
      assets:Cash
      and cash equivalents
                      
                      $
                      47
                      
                      
                      $
                      15Receivables,
      net
                      
                      
                      761
                      
                      
                      
                      1,228Prepaid
      expenses and other current assets
                      
                      
                      17
                      
                      
                      
                      30Current
      assets of discontinued operations
                      
                      
                      -
                      
                      
                      
                      2Total
      current assets
                      
                      
                      825
                      
                      
                      
                      1,275Property
      and equipment, net
                      
                      
                      61
                      
                      
                      
                      77Other
      assets
                      
                      
                      59
                      
                      
                      
                      57Other
      assets of discontinued operations
                      
                      
                      -
                      
                      
                      
                      1,745TOTAL
      ASSETS
                      
                      $
                      945
                      
                      
                      $
                      3,154LIABILITIES
      AND STOCKHOLDERS' DEFICITCurrent
      liabilities:Accounts
      payable
                      
                      $
                      126
                      
                      
                      $
                      419Line
      of credit
                      
                      
                      217
                      
                      
                      
                      -Accrued
      expenses
                      
                      
                      486
                      
                      
                      
                      601Deferred
      revenues
                      
                      
                      57
                      
                      
                      
                      57Current
      portion of debt
                      
                      
                      495
                      
                      
                      
                      495Current
      liabilities of discontinued operations
                      
                      
                      271
                      
                      
                      
                      304Total
      current liabilities
                      
                      
                      1,652
                      
                      
                      
                      1,876Long-term
      liabilities:Non-current
      liabilities of discontinued operations
                      
                      
                      -
                      
                      
                      
                      1,696TOTAL
      LIABILITIES
                      
                      
                      1,652
                      
                      
                      
                      3,572Commitments
      and contingencies (Note 10)Stockholders'
      deficit:Preferred
      stock, $0.0001 par value; 20,000,000 sharesauthorized,
      none issued
                      
                      
                      -
                      
                      
                      
                      -Common
      stock, $0.0001 par value; 80,000,000 shares authorized,42,687,324
      issued and outstanding
                      
                      
                      4
                      
                      
                      
                      4Additional
      paid-in capital
                      
                      
                      79,548
                      
                      
                      
                      79,029Accumulated
      deficit
                      
                      
                      (80,259
                      )
                      
                      
                      (79,451
                      )Total
      stockholders' deficit
                      
                      
                      (707
                      )
                      
                      
                      (418
                      )TOTAL
      LIABILITIES AND STOCKHOLDERS' DEFICIT
                      
                      $
                      945
                      
                      
                      $
                      3,154





See accompanying notes to (unaudited)
consolidated financial statements.


2


HORNE
INTERNATIONAL, INC.


Consolidated
Statements of Operations (Unaudited)


(Dollars
shown in 000’s except share and per share amounts)





For
      the Three Months Ended
                    
                    
                    For
      the Six Months EndedJune
      27,
                    
                    
                    June
      28,
                    
                    
                    June
      27,
                    
                    
                    June
      28,2010
                    
                    
                    2009
                    
                    
                    2010
                    
                    
                    2009Revenues
                    
                    $
                    850
                    
                    
                    $
                    1,273
                    
                    
                    $
                    1,842
                    
                    
                    $
                    2,224Cost
      of Revenue
                    
                    
                    675
                    
                    
                    
                    909
                    
                    
                    
                    1,371
                    
                    
                    
                    1,531Gross
      Profit
                    
                    
                    175
                    
                    
                    
                    364
                    
                    
                    
                    471
                    
                    
                    
                    693Operating
      Expense
                    
                    
                    308
                    
                    
                    
                    375
                    
                    
                    
                    1,170
                    
                    
                    
                    837Net
      Operating Loss
                    
                    
                    (133
                    )
                    
                    
                    (11
                    )
                    
                    
                    (699
                    )
                    
                    
                    (144
                    )Non-operating
      expense, net
                    
                    
                    (22
                    )
                    
                    
                    (14
                    )
                    
                    
                    (50
                    )
                    
                    
                    (61
                    )Loss
      before income taxes
                    
                    
                    (155
                    )
                    
                    
                    (25
                    )
                    
                    
                    (749
                    )
                    
                    
                    (205
                    )Income
      tax expense
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    (2
                    )
                    
                    
                    (2
                    )Loss
      from continuing operations
                    
                    
                    (155
                    )
                    
                    
                    (25
                    )
                    
                    
                    (751
                    )
                    
                    
                    (207
                    )Loss
      from discontinued operations
                    
                    
                    (105
                    )
                    
                    
                    (5
                    )
                    
                    
                    (57
                    )
                    
                    
                    (69
                    )Net
      and total comprehensive loss
                    
                    $
                    (260
                    )
                    
                    $
                    (30
                    )
                    
                    $
                    (808
                    )
                    
                    $
                    (276
                    )Weighted
      average common shares outstanding:Basic
      and diluted
                    
                    
                    42,687,324
                    
                    
                    
                    42,687,324
                    
                    
                    
                    42,687,324
                    
                    
                    
                    42,687,324Basic
      and diluted loss per shareLoss
      from continuing operations
                    
                    $
                    (0.01
                    )
                    
                    $
                    (0.00
                    )
                    
                    $
                    (0.02
                    )
                    
                    $
                    (0.01
                    )Loss
      from discontinued operations
                    
                    
                    (0.00
                    )
                    
                    
                    (0.00
                    )
                    
                    
                    (0.00
                    )
                    
                    
                    (0.00
                    )Total
      basic and diluted loss per share
                    
                    $
                    (0.01
                    )
                    
                    $
                    (0.00
                    )
                    
                    $
                    (0.02
                    )
                    
                    $
                    (0.01
                    )




See
accompanying notes to (unaudited) consolidated financial
statements.


3


HORNE
INTERNATIONAL, INC.


Consolidated
Statement of Stockholders’ Deficit (Unaudited)


For the
Six Months Ended June 27, 2010


(Dollars
shown in 000’s except share amounts)





Common Stock
                
                
                
                
                
                AccumulatedShares
                
                
                Amount
                
                
                APIC
                
                
                Deficit
                
                
                TotalBalance
      as of December 27, 2009
                
                
                42,687,324
                
                
                $
                4
                
                
                $
                79,029
                
                
                $
                (79,451
                )
                
                $
                (418
                )Stock-based
      compensation
                
                
                
                
                
                
                
                
                
                
                519
                
                
                
                
                
                
                
                519Net
      loss
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                (808
                )
                
                
                (808
                )Balance
      as of June 27, 2010
                
                
                42,687,324
                
                
                $
                4
                
                
                $
                79,548
                
                
                $
                (80,259
                )
                
                $
                (707
                )





See
accompanying notes to the (unaudited) consolidated financial
statements.


4


HORNE
INTERNATIONAL, INC.


Consolidated
Statements of Cash Flows (Unaudited)


(Dollars
shown in 000’s except share amounts)





June
      27,
                    
                    
                    June
      28,2010
                    
                    
                    2009Cash
      flows from operating activities:Continuing
      OperationsNet
      loss from continuing operations
                    
                    $
                    (751
                    )
                    
                    $
                    (207
                    )Adjustments
      to reconcile net loss to net cash flowsCash
      provided in operating activitiesStock-based
      compensation
                    
                    
                    519
                    
                    
                    
                    14Depreciation
      and amortization
                    
                    
                    16
                    
                    
                    
                    31Writedown
      of Weskem investments to fair value
                    
                    
                    -
                    
                    
                    
                    (10
                    )Decrease
      (increase) in balance sheet itemsReceivables,
      net
                    
                    
                    467
                    
                    
                    
                    654Prepaid
      expenses
                    
                    
                    12
                    
                    
                    
                    (9
                    )Accounts
      payable
                    
                    
                    (293
                    )
                    
                    
                    (109
                    )Accrued
      expenses
                    
                    
                    (115
                    )
                    
                    
                    (103
                    )Deferred
      revenue
                    
                    
                    -
                    
                    
                    
                    (41
                    )Other
      assets
                    
                    
                    (2
                    )
                    
                    
                    -Net
      cash (used in) provided by continuing operations
                    
                    
                    (147
                    )
                    
                    
                    220Discontinued
      OperationsNet
      loss from discontinued operations
                    
                    
                    (57
                    )
                    
                    
                    (69
                    )Cash
      provided by discontinued operations
                    
                    
                    19
                    
                    
                    
                    225Net
      Cash (used in) provided by discontinued operations
                    
                    
                    (38
                    )
                    
                    
                    156Net
      cash (used in) provided by operations
                    
                    
                    (185
                    )
                    
                    
                    376Cash
      flows from investing activities:Proceeds
      from joint ventures under the equity method
                    
                    
                    -
                    
                    
                    
                    71Net
      cash provided by investing activities
                    
                    
                    -
                    
                    
                    
                    71Cash
      flows from financing activities:Net
      (repayments) borrowings on lines of credit
                    
                    
                    217
                    
                    
                    
                    (421
                    )Net
      cash provided (used in) financing activities
                    
                    
                    217
                    
                    
                    
                    (421
                    )Net
      increase in cash and cash equivalents
                    
                    
                    32
                    
                    
                    
                    26Cash
      and cash equivalents at beginning of period
                    
                    
                    15
                    
                    
                    
                    22Cash
      and cash equivalents at end of period
                    
                    $
                    47
                    
                    
                    $
                    48




See
accompanying notes to the (unaudited) consolidated financial
statements.


5


HORNE
INTERNATIONAL, INC.


Notes to
(Unaudited) Consolidated Financial Statements




1.
            ORGANIZATION
      AND NATURE OF BUSINESS AND
UNCERTAINTY




Horne
International, Inc. (the “Company” or “Horne”), headquartered in Fairfax,
Virginia, provides program engineering services in the areas of environment,
energy and infrastructure.




The
Company decided to cease operations in the Spectrum Sciences & Software,
Inc. and Coast Engine and Equipment Co. subsidiaries during the first quarter of
2008. These companies represented the entire operations of the Security
Solutions and Repair and Overhaul segments, respectively.




The
Company’s independent accountants stated in their report on the consolidated
financial statements of the Company for the year ended December 27, 2009, that
the Company has had recurring operating losses that raise substantial doubt
about its ability to continue as a going concern. For the six months ended June
27, 2010, the Company incurred a loss from continuing operations of
approximately $751,000 and had a stockholder deficit of approximately $707,000
as of June 27, 2010. 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.




The
Company is dependent upon available cash and operating cash flow 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.




In
December 2009, the Company entered into a two-year receivable noncancellable
financing agreement with Wells Fargo Bank National Association under which the
Company is able to factor certain eligible accounts receivable to a facility
maximum of $1,000,000. The agreement calls for a minimum monthly fee of $3,000
for the term of the agreement. The Company is able to receive 85 percent of any
invoices factored to the lender.




On March
22, 2010, the Company entered into a strategic partnership with Intelligent
Decisions, Inc. (“Intelligent”). Intelligent is an information technology
product and services company headquartered in Ashburn, Virginia, servicing both
commercial and government customers. The partnership will allow the Company to
have a cash line of credit in the amount of $250,000 against business/projects
jointly developed by Intelligent and the Company. This line of credit will be
secured by the Company’s eligible Accounts Receivable on such projects or the
Company’s full-time equivalent employees arising after the inception of the
partnership that are billed against projects as decided by Intelligent in its
sole discretion. No cash will be advanced by Intelligent until Intelligent
receives a perfected security interest (i.e., first lien on the orders to be
advanced under this cash line of credit).




2.
            SUMMARY
      OF SIGNIFICANT ACCOUNTING POLICIES




Principles
of Consolidation and Basis of Presentation




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.




The
accompanying unaudited consolidated financial statements for the six-month
periods ended June 27, 2010, and June 28, 2009, 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 10-01 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.




The
results of operations for the period ended June 27, 2010, 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 year ended December 27,
2009.


6


HORNE
INTERNATIONAL, INC.


Notes to
(Unaudited) Consolidated Financial Statements





Revenue
Recognition




The Company’s two
principal methods of revenue recognition are monthly fixed price contracts in
which revenue is recognized ratably over the contract period and time and
materials contracts in which revenue is recognized as costs are
incurred.




Income
Taxes




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
it is necessary to reduce deferred tax assets to the amount expected to be
realized.




The
Company currently has a net operating loss carry forward of approximately $55
million at June 27, 2010. The Company has not recorded this 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.




Loss
Per Share




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 10,544,333 and 365,000 were
not included in the computation of diluted loss per share for the six months
ended June 27, 2010, and June 28, 2009, respectively, as the inclusion of these
common stock equivalents would have been anti-dilutive.




Stock-based
Compensation




The fair
values of stock option awards are determined using the Black-Sholes 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 8 for a detailed discussion of the Company’s
stock-based compensation plans.




Cash
Equivalents




The
Company considers all highly liquid investments with an original maturity of
three months or less to be cash equivalents.




Fair
Value of Financial Instruments




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.




Use
of Estimates




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.


7


HORNE
INTERNATIONAL, INC.


Notes to
(Unaudited) Consolidated Financial Statements




Recent
Accounting Pronouncements




The
following accounting pronouncements if implemented would have no effect on the
financial statements of the Company.




ASU
2010-01, “Equity (Topic 505) — Accounting for Distributions to Shareholders with
Components of Stock and Cash.” ASU 2010-01 was issued January 2010 and clarifies
that the stock portion of a distribution to shareholders that allows them to
elect to receive cash or stock with a potential limitation on the total amount
of cash that all shareholders can elect to receive in the aggregate is
considered a share issuance that is reflected in earnings per share
prospectively and is not a stock dividend. ASU 2010-01 is effective for interim
and annual periods ending on or after December 15, 2009, and should be applied
on a retrospective basis. ASU 2010-01 had no impact on our consolidated
financial statements.




ASU
2010-06, “Improving Disclosure about Fair Value Measurements,” was issued
January 2010 and requires additional disclosures regarding fair value
measurements, amends disclosures about post-retirement benefit plan assets and
provides clarification regarding the level of disaggregation of fair value
disclosures by investment class. The ASU is effective for interim and annual
reporting periods beginning after December 15, 2009, except for certain Level 3
activity disclosure requirements that will be effective for reporting periods
beginning after December 15, 2010. Adoption of ASU 2010-06 had no material
impact on our consolidated financial statements.




3.
            RECEIVABLES
      (000’s)




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.




June
      27,
                              
                              
                              December
      27,2010
                              
                              
                              2009Accounts
      ReceivableBilled
      AR
                              
                              $
                              632
                              
                              
                              $
                              1,119Unbilled
      AR
                              
                              
                              82
                              
                              
                              
                              62Holdbacks
                              
                              
                              48
                              
                              
                              
                              48Bad
      Debt Reserve
                              
                              
                              (1
                              )
                              
                              
                              (1
                              )Total
      AR
                              
                              $
                              761
                              
                              
                              $
                              1,228




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.




4.
            PROPERTY
      AND EQUIPMENT (000’s)




June
      27,
                        
                        
                        December
      27,2010
                        
                        
                        2009Property
      & EquipmentBuildings
      & Improvements
                        
                        $
                        5
                        
                        
                        $
                        5Furniture
      & Fixtures
                        
                        
                        11
                        
                        
                        
                        11Office
      Equipment
                        
                        
                        289
                        
                        
                        
                        290Vehicles
                        
                        
                        38
                        
                        
                        
                        38Total
                        
                        $
                        343
                        
                        
                        $
                        344Accumulated
      Depreciation
                        
                        
                        (282
                        )
                        
                        
                        (267
                        )Property
      & Equipment, net
                        
                        $
                        61
                        
                        
                        $
                        77




5.
            RELATED
      PARTY BORROWINGS




The
Company’s borrowings, not included in discontinued operations, consist of
related party receivable financing and unsecured notes of approximately
$495,000. The rates on the related party notes are 8 percent and 8.5 percent and
approximately half of these notes are secured against company receivables and a
potential legal settlement award.


8


HORNE
INTERNATIONAL, INC.


Notes to
(Unaudited) Consolidated Financial Statements





Darryl
Horne Notes




On August
6, 2009, Horne International, Inc. entered into an Agreement to Transfer
Property with Darryl K. Horne and The Susott Family Limited Partnership and 91
Hill Avenue, LLC. The Agreement provided for the Company’s transfer of the real
property located at 91 Hill Avenue, Fort Walton Beach, Florida, to 91 Hill
Avenue, LLC. In addition, the Company also issued to 91 Hill Avenue, LLC two
million stock options with an exercise price equal to the greater of $0.10 or
$0.25 less than the reported stock price one day prior to the exercise of the
options. As consideration for the transfer of the real property and the
aforementioned stock options, Darryl K. Horne and The Susott Family Limited
Partnership each forgave certain secured and unsecured debt owed to each of them
by the Company. Darryl K. Horne forgave both secured and unsecured debt owed to
him by the Company in the amount of $750,000. The Susott Family Limited
Partnership forgave secured debt owed to it by the Company in the amount of
$1,000,000.




On August
7, 2009, the real property owned by Horne International, Inc. located at 91 Hill
Avenue, Fort Walton Beach, Florida, was transferred to 91 Hill Avenue, LLC
pursuant to the terms of the Agreement to Transfer Property dated August 6,
2009.




During
2008, the Company entered into three separate loan transactions with Darryl K.
Horne, the Company’s President and Chief Executive Officer. The first loan
permitted the Company to borrow up to $525,000 at 8 percent interest rate. The
interest is payable quarterly beginning in July 1, 2008, with principal payable
upon demand. The note is unsecured and is not convertible into any Company
securities. A portion of this loan was settled in connection with the 91 Hill
Avenue transaction described above. As of June 27, 2010, the outstanding balance
is $275,000 and accrued interest payable is $48,827.




In July
2008, the Company entered into a second loan transaction with Mr. Horne, for a
working capital loan to the Company. The terms of the loan provide that the
Company was able to borrow $500,000 at 8 percent interest, with such interest
payable quarterly beginning in October 2008. Principal under the loan was
payable in full at the earlier of (a) twelve (12) months from the loan closing
date and (b) the sale of the Company's Ft Walton Beach, Florida, commercial
property formerly utilized for SSSI's operations (the "SSSI Property"). The
maturity date of the loan could be extended for an additional six (6) months
under certain conditions, including the payment by the Company of a fee equal to
one-half percent of the outstanding principal balance. Mr. Horne's loan was
secured by a second deed of trust on the SSSI Property, which was junior in
priority and subordinate to a first deed of trust securing the Company's
obligations under the Revolving Line of Credit to Evan Auld-Susott, as agent.
The loan was not convertible into any Company securities. The terms of the loan
were approved by the Company's Board of Directors, including each disinterested
director. This loan was discharged in full in connection with the 91 Hill Avenue
transaction described above. There were no amounts outstanding under this loan
at June 27, 2010.




On August
6, 2008, the Company entered into a receivables financing agreement with Mr.
Horne. Under the terms of the agreement, Mr. Horne agreed to finance specific
accounts receivable under a line of credit for up to $790,000 at an interest
rate of 8.5 percent. The Company has taken draws of $220,000 and has accrued
interest payable of $19,933 as of June 27, 2010. The loan is not convertible
into any Company securities.




Evan
Auld-Susott Mortgage Note




On April
10, 2008, the Company entered into a binding term sheet with Evan Auld-Susott as
agent for The Susott FLP for the provision to the Company of a revolving line of
credit. Evan Auld-Susott is a member of the Company's Board of Directors. Under
the line of credit, the Company was able to borrow $1,000,000 at 12.5 percent
interest upon the Company's certification to the lenders that the Company had
fully exhausted all funds available to the Company pursuant to the $500,000
working capital loan from Darryl K. Horne, described above. Interest on the line
of credit was payable quarterly beginning in October 2008 with principal payable
in full at the earlier of (a) twelve (12) months from the line of credit closing
date or (b) the sale of the SSSI Property. The maturity date of the line of
credit could be extended for an additional six (6) months under certain
conditions, including the payment by the Company of a fee equal to the greater
of (i) $2,500 and (ii) one-half percent of the outstanding principal balance.
The lender had a first deed of trust on the SSSI Property, which was senior in
priority and superior to the second deed of trust in favor of Darryl K. Horne
with respect to the working capital loan described above. The loan was not
convertible into any Company securities. The terms of the line of credit were
approved by the Company's Board of Directors, including each disinterested
director.


9


HORNE
INTERNATIONAL, INC.


Notes to
(Unaudited) Consolidated Financial Statements





In July
2009, the Company deeded the SSSI property against 91 Hill Avenue, LLC, a
limited liability company established by Darryl K. Horne and Evan Auld-Susott to
take title to the property. In return for the property, Evan Auld-Susott
released in full the $1,000,000 debt due under the April 10, 2008, revolving
line of credit.




6.
            LINES
      OF CREDIT




In
December 2009, the Company entered into a two-year receivable noncancellable
financing agreement with Wells Fargo Bank National Association under which the
Company is able to factor certain eligible accounts receivable. The agreement
calls for a minimum monthly fee of $3,000 for the term of the agreement. The
Company is able to receive 85 percent of any invoices factored to the lender. As
of June 27, 2010, the line of credit balance is $217,156.




7.
            STOCK
      TRANSACTIONS




On March
23, 2010, the Company entered into a strategic partnership with Intelligent
Decisions, Inc. (“Intelligent”). In connection with this partnership, the
Company granted Intelligent options to purchase 8,333,333 shares of Company
common stock as well as up to 12,500,000 restricted stock units. One half of
these options (4,166,667 options) were exercisable immediately upon grant and
the remaining 4,166,666 options are exercisable when the share price of Horne’s
stock reaches $0.50 or the Company achieves annual revenue in the amount of
$15,000,000, whichever is earlier. The options have an exercise price of $0.09
per share, the fair market value of the Company common stock on the date of
grant. The restricted stock units will be issued in exchange for business
support services.




For the
six months ended June 27, 2010, the Company recorded stock option expense of
$515,885 for the first half of the options. The remaining options will be
expensed if and when it becomes probable that the Company is on track to meeting
either performance condition. As of June 27, 2010, the Company has determined
that it is not probable that Horne will meet the performance conditions. The
Company will reassess the probability of whether the terms of the agreement are
attainable on a quarterly basis. The Company will start to recognize expense
when achievement of a performance condition becomes probable.




Under the
terms of the CEECO acquisition agreement from 2005, the 913,242 shares of stock
that were issued to Lou and Marilyn Rogers in March 2008 were subject to a
share price guarantee. Those shares were issued at $0.219 per share. The average
share price, calculated as the ten-day average closing share price centered on
February 28, 2009, was $.0755. As a result the Company recorded a payable
to the Rogers of $131,050 and reduced additional paid in capital by that same
amount. A payable of $8,550 is outstanding at June 27, 2010.




8.
            STOCK-BASED
      COMPENSATION




The
Company has a stock option plan available to compensate employees and directors
as deemed appropriate by senior management. During the first six months of 2010,
the Company granted no new stock options to employees.




The fair
values of stock option awards are determined using the Black-Sholes 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.




The table
below summarizes our stock option activity during the six months ended June 27,
2010.




Number
      of Shares
                
                
                Option
      Price
                
                
                Weighted
      Average PriceOptions
      outstanding 12/27/2009
                
                
                2,211,000Granted
                
                
                8,333,333
                
                
                $
                0.09
                
                
                $
                0.09Exercised
                
                
                -CancelledOptions
      outstanding 6/27/2010
                
                
                10,544,333




10


HORNE
INTERNATIONAL, INC.


Notes to
(Unaudited) Consolidated Financial Statements





The
following table summarizes information about the Company’s outstanding stock
options at June 27, 2010.





Options
      Exercisable & OutstandingExercise
                        
                        
                        Shares
                        
                        
                        Shares
                        
                        
                        Weighted
      AveragePrice
                        
                        
                        Outstanding
                        
                        
                        Exercisable
                        
                        
                        Remaining
      Life (yrs)0.09
                        
                        
                        
                        8,333,333
                        
                        
                        
                        4,166,667
                        
                        
                        
                        7.00.10
                        
                        
                        
                        2,000,000
                        
                        
                        
                        2,000,000
                        
                        
                        
                        2.50.20
                        
                        
                        
                        70,000
                        
                        
                        
                        70,000
                        
                        
                        
                        0.20.35
                        
                        
                        
                        60,000
                        
                        
                        
                        60,000
                        
                        
                        
                        2.00.40
                        
                        
                        
                        6,000
                        
                        
                        
                        6,000
                        
                        
                        
                        0.20.50
                        
                        
                        
                        75,000
                        
                        
                        
                        75,000
                        
                        
                        
                        5.210,544,333
                        
                        
                        
                        6,377,667Total
      options available to issue
                        
                        
                        
                        32,000,000Less
      total options outstanding or exercised
                        
                        
                        
                        30,665,533Total
      options remaining
                        
                        
                        
                        1,334,467




9.
            DISCONTINUED
      OPERATIONS




The
Company made the strategic decision to close the operations of its Spectrum
Sciences and Software, Inc. subsidiary and Coast Engine & Equipment
subsidiary in early 2008. Accordingly, the operating results of these two
entities are included in discontinued operations for all years
presented.




During
2009, the Company deeded one of the two real property sites to creditors who are
affiliated parties in return for the release of $1.75 million of debt owed to
the creditors by the Company. In February 2010, the Company, by Quitclaim Deed
returned the second of the two real property sites to the mortgagors in return
for a release of all obligations and claims under the Contract for Deed. As of
June 27, 2010, the Company has no assets in discontinued
operations.




The
liabilities of discontinued operations at June 27, 2010, primarily consist of
accrued liabilities and a residual debt. The interest rate on the residual debt
is 7.1 percent.




10.
            COMMITMENTS
      AND CONTINGENCIES




Legal
Matters




Our
outstanding legal proceedings are described in Note 15 to our consolidated
financial statements in our Annual Report on Form 10-K for the year ended
December 27, 2009. There have been no material developments regarding any of our
outstanding legal proceedings during the second quarter of 2010 and through the
filing date of this report.


11


HORNE
INTERNATIONAL, INC.


MANAGEMENT’S
DISCUSSION AND ANALYSIS OF


FINANCIAL
CONDITION AND RESULTS OF OPERATIONS




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




The
following discussion provides information which management believes is relevant
to an assessment and an understanding of the Company’s operations and financial
condition. This discussion should be read in conjunction with the attached
unaudited consolidated financial statements and accompanying notes as well as
our annual report on Form 10-K for the fiscal year ended December 27,
2009.




FORWARD-LOOKING
STATEMENTS




The
matters discussed in our Annual Report on Form 10-K may constitute
forward-looking statements within the meaning of The Private Securities
Litigation Reform Act of 1995. These statements involve known and unknown risks,
uncertainties, and other factors that may cause our actual results, activity
levels, performance or achievements to be materially different from any future
results, activity levels, performance or achievements expressed or implied by
such forward-looking statements. In some cases, you can identify these
statements by forward-looking words such as “could”, “expect”, “estimate”,
“may”, “potential”, “will”, and “would”, or similar words. You should read
statements that contain these words carefully because they discuss our future
expectations, contain projections of our future results of operations or of our
financial position, or state other forward-looking information. We believe it is
important to communicate our future expectations to our investors. However,
there may be events in the future that we are not able to predict or control
accurately. The factors listed in the section captioned “Risk Factors,”
contained in our Annual Report of Form 10-K for the fiscal year ended December
27, 2009, as well as any cautionary language in the Form 10-Q, provide examples
of risks, uncertainties, and events that may cause our actual results to differ
materially from the expectations we describe in our forward-looking
statements.




Although
we believe that the expectations reflected in the forward-looking statements are
reasonable, we cannot guarantee future results, activity levels, performance or
achievements. You should not place undue reliance on these forward-looking
statements, which apply only as of the date of this Form 10-Q. Subsequent events
and developments may cause our views to change. While we may elect to update the
forward-looking statements at some point in the future, we specifically disclaim
any obligation to do so.




DESCRIPTION
OF THE COMPANY




The
Company provides a variety of services through its wholly-owned subsidiary,
Horne Engineering Services, LLC. The Company focuses on providing program
engineering, occupational safety and health, environmental sciences, acquisition
and procurement, business process engineering, and public outreach. Our primary
customer in this segment is the U.S. Government, with specific focus within the
Departments of Homeland Security, Defense, and Transportation.




The
Company has devoted a significant amount of resources to its partnership with
Intelligent. The companies are currently exploring and developing numerous
business opportunities. A principal purpose of the partnership has been the
development of an information technology capability related to the Company’s
core competencies. The Company expects this capability to enable it to further
its goal of being a total solutions provider to its customers. The Company has
recently entered into reseller agreements with Ingram Micro, Juniper, Cisco, and
Lenovo related to the IT capability. The Company is pursuing similar agreements
with IT product and equipment companies.




CRITICAL
ACCOUNTING POLICIES AND ESTIMATES




In our
Form 10-K for the fiscal year ended December 28, 2009, our most critical
accounting policies and estimates upon which our financial status depends were
identified as those relating to revenue recognition; stock-based compensation;
net operating losses and tax credit carryforwards; and impairment of long-lived
assets. We reviewed our policies and determined that those policies remain our
most critical accounting policies for the six months ended June 27,
2010.




COMPARISON
OF THREE MONTHS ENDED JUNE 27, 2010, AND JUNE 28, 2009




The
following discussion and analysis should be read in conjunction with the
unaudited financial statements (and notes thereto) and other financial
information of the Company appearing elsewhere in this report.


12


HORNE
INTERNATIONAL, INC.


MANAGEMENT’S
DISCUSSION AND ANALYSIS OF


FINANCIAL
CONDITION AND RESULTS OF OPERATIONS




Consolidated
Overview (000’s)




Three
      months ended June,2010
                    
                    
                    2009Total
      revenue
                    
                    $
                    850
                    
                    
                    
                    100.0
                    %
                    
                    $
                    1,273
                    
                    
                    
                    100.0
                    %Gross
      profit
                    
                    
                    175
                    
                    
                    
                    20.5
                    %
                    
                    
                    364
                    
                    
                    
                    28.6
                    %Operating
      loss
                    
                    
                    (133
                    )
                    
                    
                    -15.8
                    %
                    
                    $
                    (11
                    )
                    
                    
                    -0.9
                    %




Revenue
for the quarter ended June 27, 2010, decreased on a year-over-year basis by $423
or 33%. The main driver of the revenue decrease was $247 of second quarter 2009
real estate services revenue that was not repeated in the second quarter of
2010, a reduction of $66 in our homeland security work revenue, and a decrease
of $55 in our Afghanistan contract revenue due to staffing reductions. Gross
margin as a percentage of sales decreased from 2010 due to the lack of pure
profit real estate services revenue in 2009.




Revenue
for the third quarter of 2010 is expected to be approximately 15 percent higher
than the second quarter of 2010. The primary reason for the expected increase is
the Company’s receipt of an additional task order, its Blanket Purchase
Agreement with the U.S. Army Corps of Engineers in the Ft. Worth District. Gross
margin is expected to increase slightly due to contract cost mix.




The
overall operating loss increased in the second quarter of 2010 compared to the
second quarter of 2009, primarily due to our real estate services contract that
was terminated in October 2008. We received residual payments under that
contract through June 2009.




COMPARISON
OF SIX MONTHS ENDED JUNE 27, 2010, AND JUNE 28, 2009




The
following discussion and analysis should be read in conjunction with the
unaudited financial statements (and notes thereto) and other financial
information of the Company appearing elsewhere in this report.




Consolidated
Overview (000’s)




Six
      months ended June,2010
                    
                    
                    2009Total
      revenue
                    
                    $
                    1,842
                    
                    
                    
                    100.0
                    %
                    
                    
                    2,224
                    
                    
                    
                    100.0
                    %Gross
      profit
                    
                    
                    471
                    
                    
                    
                    25.6
                    %
                    
                    
                    693
                    
                    
                    
                    31.2
                    %Operating
      loss
                    
                    
                    (699
                    )
                    
                    
                    -34.9
                    %
                    
                    
                    (144
                    )
                    
                    
                    -6.5
                    %





Revenue
for the six months ended June 27, 2010, decreased on a year-over-year basis by
$382 or 17%. The main driver of the revenue decrease was $247 in 2009 real
estate services revenue that was not repeated in 2010, a reduction of $66 in our
homeland security work revenue, and a decrease of $55 in our Afghanistan
contract revenue due to staffing reductions. Gross margin as a percentage of
sales decreased in 2010 due to the lack of pure profit real estate services
revenue in 2009.




The
overall operating loss increased in the first six months of 2010 compared to the
first six months of 2009 primarily due to the termination of our real estate
services contract in October 2008. We received residual payments under that
contract through June 2009.




Discontinued
Operations




During
the first quarter of 2008, the Company made the decision to close two of its
operating subsidiaries, Spectrum Sciences and Software, Inc. and Coast Engine
& Equipment Co. Spectrum operations ceased in May 2008 and CEECO ceased
operations in February 2008. The 2010 discontinued operations activity relates
to legal costs incurred with respect to our ongoing litigation issues described
in our 2009 Annual Report on Form 10-K.




Liquidity
and Capital Resources




Cash and
cash equivalents totaled approximately $47,000 at June 27, 2010. Our cash
position has improved during the quarter due to the proceeds of $271,000 from
the Wells Fargo line of credit described below.


13


HORNE
INTERNATIONAL, INC.


MANAGEMENT’S
DISCUSSION AND ANALYSIS OF


FINANCIAL
CONDITION AND RESULTS OF OPERATIONS




In
December 2009, the Company entered into a two-year receivable noncancellable
financing agreement with Wells Fargo Bank National Association under which the
Company is able to factor certain eligible accounts receivable. The agreement
calls for a minimum monthly fee of $3,000 for the term of the agreement. The
Company is able to receive 85 percent of any invoices factored to the lender. As
of June 27, 2010, the line of credit balance is $217,156.




On March
22, 2010, the Company entered into a strategic partnership with Intelligent. The
partnership will allow the Company to have a cash line of credit in the amount
of $250,000 against business/projects jointly developed by Intelligent and the
Company. This line of credit will be secured by the Company’s eligible Accounts
Receivable on such projects or the Company’s full-time equivalent employees
arising after the inception of the partnership that are billed against projects
as decided by Intelligent in its sole discretion. No cash will be advanced by
Intelligent until Intelligent receives a perfected security interest (i.e.,
first lien on the orders to be advanced under this cash line of credit). As of
June 27, 2010, no funds have been advanced to the Company under this line of
credit.




As
discussed in our 2009 Form 10-K, the Company has substantial liquidity
challenges. While we continue to work towards profitability, there is a
significant uncertainty that the Company will have sufficient cash flow to
sustain its operations.




The
Company continues to pursue additional funding sources in the event that funds
from operations and financing are not sufficient to provide for our operations.
These funding sources would primarily be in the form of bank credit lines. Given
our past financial performance, the costs and fees associated with funding
sources may be more expensive than the Company has historically paid. The
Company can not determine if the funds available from operations will be
sufficient for any acquisitions or facility expansions that may be undertaken
during the year. Should the Company make any acquisitions or expansions, other
sources of financing may be required.




ITEM
3.     QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT
MARKET RISK




In
addition to the risks inherent in our operations, we are exposed to financial,
market, political and economic risks. The following discussion provides
additional detail regarding our exposure to interest rates and foreign exchange
rates.




Interest
Rate Risk




At June
27, 2010, the Company had a revolving credit facility. We have not historically
mitigated our exposure to fluctuations in interest rates by entering into
interest rate hedge agreements, nor do we have any plans to do so in the
immediate future.




Foreign
Exchange Risk




We
currently do not have any foreign currency risk and accordingly, estimate that
an immediate 10 percent change in foreign exchange rates would have no impact on
our reported net loss. We do not currently utilize any derivative financial
instruments to hedge foreign currency risks.




ITEM
4.      CONTROLS AND PROCEDURES




Based on
management’s evaluation (with the participation of our Chief Executive Officer
(CEO) and Interim Chief Financial Officer (CFO)), as of the end of the period
covered by this report, our CEO and CFO have concluded that our disclosure
controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the
Securities Exchange Act of 1934, as amended (the Exchange Act)), are effective
to provide reasonable assurance that information required to be disclosed by us
in reports that we file or submit under the Exchange Act is recorded, processed,
summarized, and reported within the time periods specified in SEC rules and
forms, and is accumulated and communicated to management, including our
principal executive officer and principal financial officer, as appropriate to
allow timely decisions regarding required disclosure.


14


PART
II - OTHER
INFORMATION




ITEM
1.     LEGAL PROCEEDINGS




Our outstanding legal proceedings are described
in Note 15 to our consolidated financial statements in our Annual Report on Form
10-K for the year ended December 27, 2009. There have been no material
developments regarding any of our outstanding legal proceedings during the first
quarter of 2010 and through the filing date of this report.




Item
1A.  Risk Factors.





We are
subject to several risk factors that could have a direct and material impact on
the operations of the Company and the market price of our common stock. Those
risk factors are disclosed in our 2009 Form 10-K.


15


ITEM
6.     EXHIBITS




2.1 Stock
Purchase and Sale Agreement, dated as of January 28, 2005, by and among Spectrum
Sciences & Software Holdings Corp., Coast Engine and Equipment Co., Inc,
Louis T. Rogers and Marilyn G. Rogers (previously filed on Form 8-K, filed with
the Securities and Exchange Commission on March 3, 2005)





2.2
Agreement and Plan of Merger, dated as of April 14, 2005, by and among Spectrum
Sciences & Software Holdings Corp., Horne Acquisition, LLC, Horne
Engineering Services, Inc., Darryl K. Horne, Charlene M. Horne, and Michael M.
Megless (previously filed on Form 8-K, filed with the Securities and Exchange
Commission on May 17, 2005)





3.1
Certificate of Incorporation, filed August 28, 1998 (previously filed in
registration statement on Form 10SB12B File No. 1-31710, filed with the
Securities and Exchange Commission on June 10, 2003)





3.2
Certificate of Renewal and Revival, filed March 24, 2003 (previously filed in
registration statement on Form 10SB12B File No. 1-31710, filed with the
Securities and Exchange Commission on June 10, 2003)





3.3
Certificate of Amendment of Certificate of Incorporation, filed April 8, 2003
(previously filed in registration statement on Form 10SB12B File No. 1-31710,
filed with the Securities and Exchange Commission on June 10, 2003)





3.4
Certificate of Merger filed with the Delaware Secretary of State (previously
filed in registration statement on Form 10SB12B File No. 1-31710, filed with the
Securities and Exchange Commission on June 10, 2003)





3.5
Articles of Merger filed with the Florida Secretary of State (previously filed
in registration statement on Form 10SB12B File No. 1-31710, filed with the
Securities and Exchange Commission on June 10, 2003)





3.6
Amended Articles of Incorporation of Horne International, Inc. (previously filed
on Form 8-K, filed with the Securities and Exchange Commission on September 6,
2006)





3.7
Amended and Restated Bylaws of Spectrum Sciences & Software Holdings Corp.,
as amended (previously filed on Form 10-Q, filed with the Securities and
Exchange Commission on November 14, 2005)





3.8
Amendment to the Amended and Restated Bylaws of Spectrum Sciences & Software
Holdings Corp., as amended (previously filed on Form 8-K, filed with the
Securities and Exchange Commission on May 2, 2006)





4.1
Specimen Certificate of Common Stock (previously filed on Form 10SB12B File No.
1-31710, filed with the Securities and Exchange Commission on June 10,
2003)





4.2
Registration Rights Agreement, dated as of May 11, 2005, by and between Spectrum
Sciences & Software Holdings Corp., Darryl K. Horne, Charlene M. Horne and
Michael M. Megless (previously filed on Form 8-K, filed with the Securities and
Exchange Commission on May 17, 2005)





10.1*
Employment Agreement, dated as of May 11, 2005, by and between Spectrum Sciences
& Software Holdings Corp. and Darryl K. Horne (previously filed on Form 8-K,
filed with the Securities and Exchange Commission on May 17, 2005)





10.2*
First Amendment to Employment Agreement, dated as of May 23, 2005, by and
between Spectrum Sciences & Software Holdings Corp. and Darryl K. Horne
(previously filed on Form 8-K, filed with the Securities and Exchange Commission
on May 27, 2005)





10.4*
2004 Non-Statutory Stock Option Plan dated March 11, 2004 (previously filed on
Form 8-K, filed with the Securities and Exchange Commission on March 12,
2004)


16


10.5*
Amended and Restated Number 1 2004 Non-Statutory Stock Option Plan, dated April
16, 2004 (previously filed on Form 8-K, filed with the Securities and Exchange
Commission on April 21, 2004)





10.6*
Amended and Restated Number 2 2004 Non-Statutory Stock Option Plan, dated
November 15, 2004 (previously filed on Form 8-K, filed with the Securities and
Exchange Commission on November 19, 2004)





10.11
Receivables financing agreement, dated August 6, 2008 by and between Horne
International, Inc. and Darryl K. Horne. (previously filed with the Securities
and Exchange Commission on November 6, 2008)





10.20
Stock Option Agreement, dated as of March 23, 2010 by and between Horne
International, Inc. and Intelligent Decisions, Inc. (previously filed with the
Securities and Exchange Commission on May 12, 2010)





10.21
Restricted Stock Agreement between Horne International, Inc., and Intelligent
Decisions, Inc. (filed herewith)





10.22
Amendment to HNIN Stock Option Plan (filed herewith)





31.1
Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes
–Oxley Act of 2002 (filed herewith)





31.2
Certification of Chief Financial Officer Pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002 (filed herewith)





32.1
Certification of the Chief Executive Officer and the Chief Financial Officer
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (filed
herewith)





*
Indicates management contract or compensatory arrangement.


17




SIGNATURES




Pursuant
to the requirements of Section 13 or 15(d) of the Securities Exchange Act of
1934, as amended, the Registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized, on this 10th day of August
2010.




HORNE
      INTERNATIONAL, INC.By:
              /s/ Darryl K. HorneDarryl
      K. HornePresident
      and Chief Executive OfficerBy:
              /s/ Paige E. ShannonPaige
      E. ShannonInterim
      Chief Financial Officer


18