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: September 26,
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
September 26, 2010, there were 42,809,999 shares 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 September 26, 2010 (Unaudited) and December 27,
      2009
                        
                        2Consolidated
      Statements of Operations (Unaudited) for the three months and nine months
      ended September 26, 2010, and September 27, 2009
                        
                        3Consolidated
      Statement of Stockholders’ Deficit (Unaudited) for the nine months endedSeptember 26, 2010
                        
                        4Consolidated
      Statements of Cash Flows (Unaudited) for the nine months ended September
      26, 2010, and September 27, 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)





September
      26,
                
                
                December
      272010
                
                
                2009ASSETSCurrent
      assets:Cash
      and cash equivalents
                
                $
                2
                
                
                $
                15Receivables,
      net
                
                
                671
                
                
                
                1,228Prepaid
      expenses and other current assets
                
                
                36
                
                
                
                30Current
      assets of discontinued operations
                
                
                -
                
                
                
                2Total
      current assets
                
                
                709
                
                
                
                1,275Property
      and equipment, net
                
                
                81
                
                
                
                77Other
      assets
                
                
                59
                
                
                
                57Other
      assets of discontinued operations
                
                
                -
                
                
                
                1,745TOTAL
      ASSETS
                
                $
                849
                
                
                $
                3,154LIABILITIES
      AND STOCKHOLDERS' DEFICITCurrent
      liabilities:Accounts
      payable
                
                $
                195
                
                
                $
                419Line
      of credit
                
                
                117
                
                
                
                -Accrued
      expenses
                
                
                543
                
                
                
                601Deferred
      revenues
                
                
                60
                
                
                
                57Current
      portion of debt
                
                
                505
                
                
                
                495Current
      liabilities of discontinued operations
                
                
                253
                
                
                
                304Total
      current liabilities
                
                
                1,673
                
                
                
                1,876Long-term
      liabilities:Non-current
      portion of debt
                
                
                20
                
                
                
                -Non-current
      liabilities of discontinued operations
                
                
                -
                
                
                
                1,696TOTAL
      LIABILITIES
                
                
                1,693
                
                
                
                3,572Commitments
      and contingencies (Note 10)Stockholders'
      deficit:Preferred
      stock, $0.0001 par value; 20,000,000 shares authorized, none
      issued
                
                
                -
                
                
                
                -Common
      stock, $0.0001 par value; 80,000,000 shares authorized, 42,809,999 and
      42,687,324 issued and outstanding
                
                
                4
                
                
                
                4Additional
      paid-in capital
                
                
                79,558
                
                
                
                79,029Accumulated
      deficit
                
                
                (80,406
                )
                
                
                (79,451
                )Total
      stockholders' deficit
                
                
                (844
                )
                
                
                (418
                )TOTAL
      LIABILITIES AND STOCKHOLDERS' DEFICIT
                
                $
                849
                
                
                $
                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 Nine Months EndedSeptember
      26,
                            
                            
                            September
      27,
                            
                            
                            September
      26,
                            
                            
                            September
      27,2010
                            
                            
                            2009
                            
                            
                            2010
                            
                            
                            2009Revenues
                            
                            $
                            769
                            
                            
                            $
                            1,007
                            
                            
                            $
                            2,612
                            
                            
                            $
                            3,230Cost
      of Revenue
                            
                            
                            569
                            
                            
                            
                            714
                            
                            
                            
                            1,941
                            
                            
                            
                            2,245Gross
      Profit
                            
                            
                            200
                            
                            
                            
                            293
                            
                            
                            
                            671
                            
                            
                            
                            985Operating
      Expense
                            
                            
                            292
                            
                            
                            
                            358
                            
                            
                            
                            1,462
                            
                            
                            
                            1,194Net
      Operating Loss
                            
                            
                            (92
                            )
                            
                            
                            (65
                            )
                            
                            
                            (791
                            )
                            
                            
                            (209
                            )Non-operating
      expense, net
                            
                            
                            (55
                            )
                            
                            
                            (3
                            )
                            
                            
                            (107
                            )
                            
                            
                            (66
                            )Loss
      before income taxes
                            
                            
                            (147
                            )
                            
                            
                            (68
                            )
                            
                            
                            (898
                            )
                            
                            
                            (275
                            )Income
      tax expense
                            
                            
                            -
                            
                            
                            
                            -
                            
                            
                            
                            (2
                            )
                            
                            
                            (4
                            )Loss
      from continuing operations
                            
                            
                            (147
                            )
                            
                            
                            (68
                            )
                            
                            
                            (900
                            )
                            
                            
                            (279
                            )Gain(Loss)
      from discontinued operations
                            
                            
                            2
                            
                            
                            
                            (55
                            )
                            
                            
                            (55
                            )
                            
                            
                            (125
                            )Net
      and total comprehensive loss
                            
                            $
                            (145
                            )
                            
                            $
                            (123
                            )
                            
                            $
                            (955
                            )
                            
                            $
                            (404
                            )Weighted
      average common shares outstanding:Basic
      and diluted
                            
                            
                            42,703,325
                            
                            
                            
                            42,687,324
                            
                            
                            
                            42,692,716
                            
                            
                            
                            42,687,324Basic
      and diluted loss per shareLoss
      from continuing operations
                            
                            $
                            (0.00
                            )
                            
                            
                            (0.00
                            )
                            
                            
                            (0.02
                            )
                            
                            
                            (0.01
                            )Gain(Loss)
      from discontinued operations
                            
                            
                            0.00
                            
                            
                            
                            (0.00
                            )
                            
                            
                            (0.00
                            )
                            
                            
                            (0.00
                            )Total
      basic and diluted loss per share
                            
                            $
                            (0.00
                            )
                            
                            $
                            (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
Nine Months Ended September 26, 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
                    
                    
                    
                    
                    
                    
                    
                    519Stock
      issuances
                    
                    
                    122,675
                    
                    
                    
                    -
                    
                    
                    
                    10
                    
                    
                    
                    
                    
                    
                    
                    10Net
      loss
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    (955
                    )
                    
                    
                    (955
                    )Balance
      as of September 26, 2010
                    
                    
                    42,809,999
                    
                    
                    $
                    4
                    
                    
                    $
                    79,558
                    
                    
                    $
                    (80,406
                    )
                    
                    $
                    (844
                    )




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)





September
      26,
                    
                    
                    September
      27,2010
                    
                    
                    2009Cash
      flows from operating activities:Continuing
      OperationsNet
      loss from continuing operations
                    
                    $
                    (900
                    )
                    
                    $
                    (279
                    )Adjustments
      to reconcile net loss to net cash flowsCash
      (used) provided in operating activitiesStock-based
      compensation
                    
                    
                    519
                    
                    
                    
                    15Issuance
      of common stocks
                    
                    
                    10
                    
                    
                    
                    -Depreciation
      and amortization
                    
                    
                    24
                    
                    
                    
                    44Writedown
      of Weskem investments to fair value
                    
                    
                    -
                    
                    
                    
                    (10
                    )Loss
      on disposal of equipment
                    
                    
                    2
                    
                    
                    
                    -Decrease
      (increase) in balance sheet itemsReceivables,
      net
                    
                    
                    557
                    
                    
                    
                    658Prepaid
      expenses
                    
                    
                    (5
                    )
                    
                    
                    11Accounts
      payable
                    
                    
                    (224
                    )
                    
                    
                    (33
                    )Accrued
      expenses
                    
                    
                    (58
                    )
                    
                    
                    38Deferred
      revenue
                    
                    
                    3
                    
                    
                    
                    (41
                    )Other
      liabilities
                    
                    
                    30Other
      assets
                    
                    
                    (3
                    )
                    
                    
                    2Net
      cash (used in) provided by continuing operations
                    
                    
                    (45
                    )
                    
                    
                    405Discontinued
      OperationsNet
      loss from discontinued operations
                    
                    
                    (55
                    )
                    
                    
                    (125
                    )Cash
      provided by discontinued operations
                    
                    
                    0
                    
                    
                    
                    256Net
      Cash (used in) provided by discontinued operations
                    
                    
                    (55
                    )
                    
                    
                    131Net
      cash (used in) provided by operations
                    
                    
                    (100
                    )
                    
                    
                    536Cash
      flows from investing activities:Cash
      settlement of share price guarantee
                    
                    
                    -
                    
                    
                    
                    (100
                    )Proceeds
      from joint ventures under the equity method
                    
                    
                    -
                    
                    
                    
                    71Purchase
      of property and equipment
                    
                    
                    (30
                    )
                    
                    
                    -Net
      cash used in investing activities
                    
                    
                    (30
                    )
                    
                    
                    (29
                    )Cash
      flows from financing activities:Net
      cash borrowings (repayments)
                    
                    
                    117
                    
                    
                    
                    (421
                    )Cash
      flows provided by (used in) financing activities
                    
                    
                    117
                    
                    
                    
                    (421
                    )Net
      (decrease) increase in cash and cash equivalents
                    
                    
                    (13
                    )
                    
                    
                    86Cash
      and cash equivalents at beginning of period
                    
                    
                    15
                    
                    
                    
                    22Cash
      and cash equivalents at end of period
                    
                    $
                    2
                    
                    
                    $
                    108Supplemental
      disclosure of cash flow information:Cash
      paid for interest
                    
                    $
                    42
                    
                    
                    $
                    96Cash
      paid for taxes
                    
                    $
                    2
                    
                    
                    $
                    3Transfer
      of property and satisfaction of Notes Payable
                    
                    $
                    1,743
                    
                    
                    $
                    0




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 nine months ended
September 26, 2010, the Company incurred a loss from continuing operations of
approximately $900,000 and had a stockholder deficit of approximately $844,000
as of September 26, 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 borrowing of 85
percent of eligible 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 from
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 nine-month
periods ended September 26, 2010, and September 27, 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 September 26, 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 September 26, 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 10,468,333 and 2,331,000 were
not included in the computation of diluted loss per share for the nine months
ended September 26, 2010, and September 27, 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 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 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.




In
October 2009, the FASB issued ASU 2009-13, Multiple Deliverable Revenue
Arrangements, (“ASU 2009-13”), which applies to all deliverables in contractual
arrangements in which a vendor will perform multiple revenue-generating
activities. In April 2010, the FASB issued ASU 2010-17, Revenue
Recognition—Milestone Method, (“ASU 2010-17”), which defines a milestone and
determines when it may be appropriate to apply the milestone method of revenue
recognition for research or development transactions. These pronouncements are
codified in ASC Topic 605, Revenue Recognition, and will be effective for our
fiscal year that begins January 1, 2011. These pronouncements may be applied
prospectively or retrospectively, and early adoption is permitted. We are
evaluating the impact that adoption of ASU 2009-13 and ASU 2010-17 may have on
our consolidated financial statements.




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.




September
      26,
                        
                        
                        December
      27,2010
                        
                        
                        2009Accounts
      ReceivableBilled
      AR
                        
                        $
                        570
                        
                        
                        $
                        1,119Unbilled
      AR
                        
                        
                        91
                        
                        
                        
                        62Holdbacks
                        
                        
                        11
                        
                        
                        
                        48Bad
      Debt Reserve
                        
                        
                        (1
                        )
                        
                        
                        (1
                        )Total
      Accounts Receivable, Net
                        
                        $
                        671
                        
                        
                        $
                        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.


8


HORNE
INTERNATIONAL, INC.


Notes to
(Unaudited) Consolidated Financial Statements




4.      PROPERTY
AND EQUIPMENT (000’s)




September
      26,
                            
                            
                            December
      27,2010
                            
                            
                            2009Property
      & EquipmentBuildings
      & Improvements
                            
                            $
                            5
                            
                            
                            $
                            5Furniture
      & Fixtures
                            
                            
                            11
                            
                            
                            
                            11Office
      Equipment
                            
                            
                            311
                            
                            
                            
                            292Vehicles
                            
                            
                            38
                            
                            
                            
                            38Total
                            
                            $
                            365
                            
                            
                            $
                            346Accumulated
      Depreciation
                            
                            
                            (284
                            )
                            
                            
                            (259
                            )Property
      & Equipment, net
                            
                            $
                            81
                            
                            
                            $
                            87




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.




Darryl
Horne Notes




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 September 26, 2010, the outstanding
balance is $275,000 and accrued interest payable is $54,373.




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 $24,711 as of September 26, 2010. The loan is not
convertible into any Company securities.




6.      LINES
OF CREDIT




In
December 2009, the Company entered into a two-year noncancellable receivable
financing agreement with Wells Fargo Bank National Association under which the
Company is able to factor certain eligible accounts receivable. The Company is
able to receive borrowings of 85 percent of eligible invoices factored to the
lender. The agreement calls for the greater of (i) a minimum monthly fee of
$3,000 for the term of the agreement, or (ii) 1 percent of the gross face amount
of each account purchased by Wells Fargo Business Credit (“WFBC”) payable within
1-30 days of selling the accounts receivable.




After 30
days, the Company is responsible for paying 0.0333 of 1 percent additionally per
day until the account is paid in full together with a fee which shall be equal
to the lesser of the advance of the account times (a) the sum of LIBOR, plus 5
percent per annum, or (b) the lawful maximum, if any. LIBOR shall mean the
greater of (i) 1 percent per annum or (ii) the rate per annum (based on a 360
day year) quoted by Wells Fargo Bank, National Association as the Inter-Bank
Market Offered Rate based upon the rate per annum for United States dollar
deposits of ninety day duration commencing on such date on the London-Inter-Bank
Market, with the understanding that such rate is quoted by Wells Fargo Bank,
National Association for the purpose of calculating the rate of interest payable
hereunder.




As of
September 26, 2010, the line of credit balance is $116,851.


9


HORNE
INTERNATIONAL, INC.


Notes to
(Unaudited) Consolidated Financial Statements




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
nine months ended September 26, 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 September 26, 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.




For the
nine months ended September 26, 2010, the Company issued 122,675 shares of
common stock equal to a value of $0.08 per share, totaling $9,814, in exchange
for business support services.




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 $1,050 is outstanding at September 26, 2010.




8.      STOCK-BASED
COMPENSATION




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 entities (as herein provided) 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 2010, the Company granted no new stock options
to employees.




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.




The table
below summarizes our stock option activity during the nine months ended
September 26, 2010.




Number of Shares
                
                
                Option Price
                
                
                Weighted Average Exercise
    PriceOptions
      outstanding 12/27/2009
                
                
                2,211,000Granted
                
                
                8,333,333
                
                
                $
                0.09
                
                
                $
                0.09Exercised
                
                
                -Cancelled
                
                
                (76,000
                )
                
                $
                0.40
                
                
                $
                0.40Options
      outstanding 9/26/2010
                
                
                10,468,333




The
following table summarizes information about the Company’s outstanding stock
options at September 26, 2010.


10


HORNE
INTERNATIONAL, INC.


Notes to
(Unaudited) Consolidated Financial Statements





Options
Exercisable & Outstanding





Exercise
                                                                      
                                                                      
                                                                      Shares
                                                                      
                                                                      
                                                                      Shares
                                                                      
                                                                      
                                                                      Weighted
      AveragePrice
                                                                      
                                                                      
                                                                      Outstanding
                                                                      
                                                                      
                                                                      Exercisable
                                                                      
                                                                      
                                                                      Remaining Life (yrs)$
                                                                      0.09
                                                                      
                                                                      
                                                                      
                                                                      8,333,333
                                                                      
                                                                      
                                                                      
                                                                      4,166,667
                                                                      
                                                                      
                                                                      
                                                                      6.80.10
                                                                      
                                                                      
                                                                      
                                                                      2,000,000
                                                                      
                                                                      
                                                                      
                                                                      2,000,000
                                                                      
                                                                      
                                                                      
                                                                      2.30.35
                                                                      
                                                                      
                                                                      
                                                                      60,000
                                                                      
                                                                      
                                                                      
                                                                      60,000
                                                                      
                                                                      
                                                                      
                                                                      1.90.50
                                                                      
                                                                      
                                                                      
                                                                      75,000
                                                                      
                                                                      
                                                                      
                                                                      75,000
                                                                      
                                                                      
                                                                      
                                                                      6.010,468,333
                                                                      
                                                                      
                                                                      
                                                                      6,301,667Total
      options available to issue
                                                                      
                                                                      
                                                                      
                                                                      32,000,000Less
      total options outstanding or exercised
                                                                      
                                                                      
                                                                      
                                                                      30,589,533Total
      options remaining
                                                                      
                                                                      
                                                                      
                                                                      1,410,467




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
September 26, 2010, the Company has no assets in discontinued
operations.




The
liabilities of discontinued operations at September 26, 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




Capital
Lease




The
Company upgraded 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 $1,010.48 plus all applicable taxes.




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)




2010
                  
                  
                  2011
                  
                  
                  2012
                  
                  
                  2013
                  
                  
                  
                  2014+Capital
      Leases
                  
                  $
                  3
                  
                  
                  $
                  12
                  
                  
                  $
                  12
                  
                  
                  $
                  3
                  
                  
                  $
                  -




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 third 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, energy solutions, occupational safety and health, environmental
sciences, acquisition and procurement, business process engineering, public
outreach, and product solutions. Our primary customer in this segment is the
U.S. Government, with specific focus within the Departments of Homeland
Security, Defense, Transportation and other civilian agencies
  The
Company has devoted a significant amount of resources to its partnership with
Intelligent Decisions, from which a five quarter development strategy has been
launched. The goal of the five quarter strategy is a doubling of the Company’s
revenue over the five quarters.  Per the Company/ID agreement, Intelligent
Decisions recently hired a Vice-President of Environmental Technologies and
Services.  This individual’s sole role will be to realize synergies between
the companies and to drive revenue into the Company through the execution of the
five quarter strategy.
  A
principal purpose of the partnership has been the development of an information
technology capability related to the Company’s core competencies.  The
Company has signed a reseller agreement with the IT product and professional
services company ThoughtWorks, Inc.  The Company expects this capability to
enable it to further its goal of being a total solutions provider to its
customers.
  Additionally,
the Company has recently entered into reseller agreements with Ingram Micro,
Juniper, Cisco, Lenovo, IBM, EMC2, and Dell related to the IT capability. 
The aforementioned agreements will support the Company’s acceleration of the go
to market strategy with its partnership Intelligent Decisions.
  12
  HORNE
INTERNATIONAL, INC.
 MANAGEMENT’S
DISCUSSION AND ANALYSIS OF
 FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
  CRITICAL
ACCOUNTING POLICIES AND ESTIMATES
  In our
Form 10-K for the fiscal year ended December 27, 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 nine months ended September 26,
2010.
  COMPARISON
OF THREE MONTHS ENDED SEPTEMBER 26, 2010, AND SEPTEMBER 27, 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)
  Three
      months ended September,2010
                    
                    
                    2009Total
      revenue
                    
                    $
                    769
                    
                    
                    
                    100.0
                    %
                    
                    $
                    1,007
                    
                    
                    
                    100.0
                    %Gross
      profit
                    
                    
                    200
                    
                    
                    
                    26.0
                    %
                    
                    
                    293
                    
                    
                    
                    29.1
                    %Operating
      loss
                    
                    
                    (92
                    )
                    
                    
                    -12.0
                    %
                    
                    
                    (65
                    )
                    
                    
                    -6.5
                    %
 
 Revenue
for the quarter ended September 26, 2010, decreased on a year-over-year basis,
as compared to the quarter ended September 27, 2009. The main driver of the
revenue decrease was due to staffing reductions in our Afghanistan contract.
Gross margin as a percentage of sales was decreased due to the decrease of gross
profit, as compared to the third quarter of 2009.
  Revenue
and gross profit for the fourth quarter of 2010 are expected to be consistent
with the third quarter of 2010.
  COMPARISON
OF NINE MONTHS ENDED SEPTEMBER 26, 2010, AND SEPTEMBER 27, 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)
  Nine
      months ended September,2010
                    
                    
                    2009Total
      revenue
                    
                    $
                    2,612
                    
                    
                    
                    100.0
                    %
                    
                    
                    3,230
                    
                    
                    
                    100.0
                    %Gross
      profit
                    
                    
                    672
                    
                    
                    
                    25.7
                    %
                    
                    
                    985
                    
                    
                    
                    30.5
                    %Operating
      loss
                    
                    
                    (791
                    )
                    
                    
                    -30.3
                    %
                    
                    
                    (209
                    )
                    
                    
                    -6.5
                    %
 
 Revenue
for the quarter ended September 26, 2010, decreased on a year-over-year basis,
as compared to the quarter ended September 27, 2009. The main driver of the
revenue decrease was due to staffing reductions in our Afghanistan contract.
Gross margin as a percentage of sales was decreased due to the decrease of gross
profit, as compared to the third quarter of 2009.
  The
overall operating loss increased in the first nine months of 2010 compared to
the first nine months of 2009 primarily due to the stock option expense of
$515,885 in the first quarter of 2010.
  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.
  13
  HORNE
INTERNATIONAL, INC.
 MANAGEMENT’S
DISCUSSION AND ANALYSIS OF
 FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
  Liquidity
and Capital Resources
  Cash and
cash equivalents totaled approximately $2,106 at September 26, 2010. Our cash
position has declined during the quarter primarily due to operating
losses.
  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 September 26, 2010, the line of credit balance is $116,851.
  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 on the receivables from 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 September 26, 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
September 26, 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. (previously filed with the Securities and Exchange Commission on
August 10, 2010)
 
 10.22
Amendment to HNIN Stock Option Plan (previously filed with the Securities and
Exchange Commission on August 10, 2010)
 
 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 8th day of
November 2010.
  HORNE
INTERNATIONAL, INC.
 
 By:
                /s/ Darryl K. HorneDarryl K. HornePresident and Chief Executive OfficerBy:
                /s/ Paige E. ShannonPaige E. ShannonInterim Chief Financial Office
  18