<PAGE>

================================================================================

                     U.S. SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                               Amendment No. 1 to
                                   FORM 10-QSB

(Mark One)

[X]      QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
         ACT OF 1934

         For the quarterly period ended: September 30, 2004

                                       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 000-28863

                           MARKLAND TECHNOLOGIES, INC.
             (Exact name of registrant as specified in its charter)

            FLORIDA                                               84-1334434
(STATE OR OTHER JURISDICTION OF                                 (IRS EMPLOYER
INCORPORATION OR ORGANIZATION)                               IDENTIFICATION NO.)

                             #207 - 54 DANBURY ROAD
                              RIDGEFIELD, CT 06877
              (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES AND ZIP CODE)

                                 (203) 894-9700
              (REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)

         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 (or for such shorter period that the
registrant was required to filed such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No [ ]

         As of November 16, 2004, there were 51,564,458 shares of common stock,
$0.0001 par value, of the registrant issued and outstanding.

         Transitional Small Business Disclosure Format (CHECK ONE):
Yes [ ] No [X]

================================================================================

<PAGE>

                           MARKLAND TECHNOLOGIES, INC.
                               Amendment No. 1 to
                                   FORM 10-QSB
                                TABLE OF CONTENTS
                               SEPTEMBER 30, 2004

                                                                            PAGE
                                                                            ----
PART I.  FINANCIAL INFORMATION:

     Item 1.    Financial Statements (Unaudited)

         Condensed Consolidated Balance Sheet at September 30, 2004........... 1

         Condensed Consolidated Statements of Loss for the Three
         Months Ended September 30, 2004 and 2003............................. 2

         Condensed Consolidated Statement of Stockholders' Equity For the
         Three Months Ended September 30, 2004................................ 3

         Condensed Consolidated Statements of Cash Flows for the
         Three Months Ended September 30, 2004 and 2003....................... 6

         Notes to Condensed Consolidated Financial Statements................. 7

     Item 2.    Management's Discussion and Analysis or Plan of Operations....25

     Item 3.    Controls and Procedures.......................................36

PART II. OTHER INFORMATION

     Item 1.    Legal Proceedings.............................................36

     Item 2.    Changes in Securities and Use of Proceeds.....................37

     Item 6.    Exhibits and Reports on 8-K...................................39

     Signatures ..............................................................46

--------------------------------------------------------------------------------
Statements contained in this Amendment No. 1 to our quarterly on Form 10-QSB,
for the quarter ended September 30, 2004, which are not historical facts
constitute forward-looking statements and are made under the safe harbor
provisions of the Private Securities Litigation Reform Act of 1995.
Forward-looking statements involve substantial risks and uncertainties. You can
identify these statements by forward-looking words such as "may", "will",
"expect", "anticipate", "believe", "estimate", "continue", and similar words.
You should read statements that contain these words carefully. All
forward-looking statements included in this Amendment No. 1 to our quarterly on
Form 10-QSB, for the quarter ended September 30, 2004,  are based on information
available to us on the date hereof, and we assume no obligation to update any
such forward-looking statements. Each forward-looking statement should be read
in conjunction with the financial statements and notes thereto in Part I, Item
1, of this quarterly report and with the information contained in Item 2
together with Management's Discussion and Analysis or Plan of Operation
contained in our annual report on Form 10-KSB for the year ended June 30, 2004,
as amended on October 20, 2004, including, but not limited to, the section
therein entitled "Risk Factors."

<PAGE>
<TABLE>

PART I.  FINANCIAL INFORMATION

                           MARKLAND TECHNOLOGIES, INC. AND SUBSIDIARIES

                               CONDENSED CONSOLIDATED BALANCE SHEET
                                      AT SEPTEMBER 30, 2004
                                           (Unaudited)

                                              ASSETS
CURRENT ASSETS:
<S>                                                                                 <C>
  Cash                                                                              $  6,012,443
  Accounts receivable                                                                  6,188,908
  Other current assets                                                                   389,652

                                                                                    -------------
        TOTAL CURRENT ASSETS                                                          12,591,003
                                                                                    -------------

PROPERTY AND EQUIPMENT- NET OF ACCUMULATED DEPRECIATION OF $87,505                     1,040,128
                                                                                    -------------

OTHER ASSETS
  Deferred financing costs, net of accumulated amortization of $22,697                   518,523
  Amortizable intangible assets, net of accumulated amortization of $1,464,389        13,658,555
  Goodwill                                                                             9,876,472
  Technology rights - Acoustic Core                                                    1,300,000

                                                                                    -------------
      TOTAL OTHER ASSETS                                                              25,353,550
                                                                                    -------------

      TOTAL ASSETS                                                                  $ 38,984,681
                                                                                    =============

                              LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
  Accounts payable                                                                  $  8,295,667
  Accrued expenses and other current liabilities                                       1,776,124
  Unearned contract revenue                                                              126,795
  Convertible secured notes, net of discount                                             218,071
  Current portion of long-term debt                                                    2,537,061
                                                                                    -------------
       Total Current liabilities                                                      12,953,718

NON-CURRENT LIABILITIES
  Long-term debt, less current portion                                                 7,479,763
                                                                                    -------------

      TOTAL LIABILITIES                                                               20,433,481
                                                                                    -------------

COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS' EQUITY
  Series A redeemable convertible preferred stock - no par value;
    30,000 authorized, issued and outstanding; liquidation preference                    300,000
    of $300,000
  Series C 5% cumulative convertible preferred stock - $.0001 par value;
   8,000 authorized; 0 issued and outstanding;                                                --
  Series D convertible preferred stock - $.0001 par value;
    40,000 authorized; 17,725 issued and outstanding;
    liquidation preference of $17,725,000                                                      2
  Common stock - $.0001 par value; 500,000,000 authorized;
    47,902,785 shares issued and outstanding                                               4,784
  Additional paid-in capital                                                          54,349,359
  Unearned compensation                                                              (14,572,976)
  Accumulated deficit                                                                (21,529,969)
                                                                                    -------------

      TOTAL STOCKHOLDERS' EQUITY                                                      18,551,200
                                                                                    -------------

      TOTAL LIABILITIES AND  STOCKHOLDERS' EQUITY                                   $ 38,984,681
                                                                                    =============
</TABLE>

                       The accompanying notes are an integral part of these
                           condensed consolidated financial statements

                                                1
<PAGE>
<TABLE>

                            MARKLAND TECHNOLOGIES, INC. AND SUBSIDIARIES

                             CONDENSED CONSOLIDATED STATEMENTS OF LOSS

                       For The Three Months Ended September 30, 2004 and 2003
                                            (Unaudited)

                                                                        2004               2003
                                                                   -------------      -------------
<S>                                                                <C>                <C>
REVENUES                                                           $ 15,769,851       $    306,724

COST OF REVENUES                                                     12,442,893            256,956
                                                                   -------------      -------------

GROSS PROFIT                                                          3,326,958             49,768
                                                                   -------------      -------------

OPERATING EXPENSES:
  Selling, general and administrative                                 3,571,040            497,812
  Amortization of compensatory element of stock issuances for
    selling, general and administrative fees                             (1,143)           401,980
  Loss on disposal of equipment                                          23,722                 --
  Amortization of intangible assets                                     481,992             33,334
                                                                   -------------      -------------

    TOTAL OPERATING EXPENSES                                          4,075,611            933,126
                                                                   -------------      -------------

OPERATING LOSS                                                         (748,653)          (883,358)
                                                                   -------------      -------------

OTHER EXPENSES (INCOME), NET
  Interest expense                                                      503,215             28,578
  Other income, net                                                      (5,847)                --
                                                                   -------------      -------------

    TOTAL OTHER EXPENSES, NET                                           497,368             28,578
                                                                   -------------      -------------

NET LOSS                                                             (1,246,021)          (911,936)

Deemed Dividend To Preferred Stockholders                                    --             90,000

Preferred Stock Dividend - Series C                                          --             65,689
                                                                   -------------      -------------

NET LOSS APPLICABLE TO COMMON STOCKHOLDERS                         $ (1,246,021)      $ (1,067,625)
                                                                   =============      =============

BASIC AND DILUTED LOSS PER COMMON SHARE:                           $      (0.03)      $      (0.22)
                                                                   =============      =============

WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING
 (AFTER 1-60 REVERSE SPLIT)                                          38,352,594          4,746,887
                                                                   =============      =============
</TABLE>

                        The accompanying notes are an integral part of these
                            condensed consolidated financial statements

                                                 2
<PAGE>
<TABLE>

                                           MARKLAND TECHNOLOGIES, INC. AND SUBSIDIARIES
                                     Condensed Consolidated Statement Of Stockholders' Equity
                                          For The Three Months Ended September 30, 2004

                                                                               SERIES A CONVERTIBLE       SERIES C CONVERTIBLE
                                                       COMMON STOCK              PREFERRED STOCK            PREFERRED STOCK
                                                       ------------              ---------------            ---------------

                                                    SHARES        AMOUNT       SHARES        AMOUNT       SHARES       AMOUNT
                                                    ------        ------       ------        ------       ------       ------
<S>                                                  <C>            <C>           <C>         <C>          <C>         <C>
Balance - July 1, 2004                               31,856,793     $3,180        30,000      $300,000            -            -

Conversion of Series D convertible preferred
    stock into common stock                          11,699,747      1,170             -             -            -            -
Stock issued in connection with
    consulting and employment agreements              3,286,816        328             -             -            -            -
Amortization of employment and
    consulting agreements                                     -          -             -             -            -            -
Stock issued in connection with
    reset rights of private placement investors         833,333         83             -             -            -            -
Stock issued for services provided in
    connection with acquisition of EOIR                 226,096         23             -             -            -            -
Fair value of warrants and beneficial
    conversion feature on convertible secured
    notes                                                     -          -             -             -            -            -

Net loss                                                      -          -             -             -            -            -
                                                     ----------------------------------------------------------------------------

Balance - September 30, 2004                         47,902,785     $4,784        30,000      $300,000            0         $  0
                                                     ============================================================================

                                       The accompanying notes are an integral part of these
                                           condensed consolidated financial statements
</TABLE>

                                                                3
<PAGE>
<TABLE>

                                      MARKLAND TECHNOLOGIES, INC. AND SUBSIDIARIES
                                Condensed Consolidated Statement Of Stockholders' Equity
                                     For The Three Months Ended September 30, 2004

                                                                     SERIES D CONVERTIBLE         UNEARNED
                                                                        PREFERRED STOCK         COMPENSATION
                                                                        ---------------         ------------

                                                                     SHARES         AMOUNT          AMOUNT
                                                                     ------         ------          ------
<S>                                                                  <C>          <C>             <C>
Balance- July 1, 2004                                                22,786       $        2      $(15,176,116)

Conversion of Series D convertible
  preferred stock into common stock                                  (5,061)              --                --
Stock issued in connection with
  consulting and employment agreements                                   --               --           640,300
Amortization of employment and
  consulting agreements                                                  --               --           (37,160)
Stock issued in connection with
    reset rights of private placement investors                          --               --                --
 Stock issued for services in connection with acquisition
    of EOIR                                                              --               --                --
 Fair value of warrants and beneficial conversion feature
    on convertible secured notes                                         --               --                --
Net loss                                                                 --               --                --
                                                                     ------------------------------------------
Balance-September 30, 2004                                           17,725       $        2      $(14,572,976)
                                                                     ==========================================

                                  The accompanying notes are an integral part of these
                                      condensed consolidated financial statements
</TABLE>

                                                           4
<PAGE>
<TABLE>

                                      MARKLAND TECHNOLOGIES, INC. AND SUBSIDIARIES
                                Condensed Consolidated Statement Of Stockholders' Equity
                                     For The Three Months Ended September 30, 2004

                                                          ADDITIONAL                              TOTAL
                                                           PAID-IN         ACCUMULATED         STOCKHOLDERS'
                                                           CAPITAL           DEFICIT             EQUITY
                                                           AMOUNT             AMOUNT             AMOUNT
                                                           ------             ------             ------
<S>                                                    <C>                <C>                <C>
Balance - July 1, 2004                                 $ 50,864,718       $(20,283,948)      $ 15,707,836

Conversion of Series D convertible
  preferred stock into common stock                          (1,170)                 --               --
Stock issued in connection with
  consulting and employment agreements                     (622,611)                --             18,017
Amortization of employment and
  consulting agreements                                          --                 --            (37,160)
Stock issued in connection with
    reset rights of private placement investors                 (83)                --                 --
 Stock issued for services in connection with
    acquisition of EOIR                                     108,505                 --            108,528
 Fair value of warrants and beneficial conversion
    feature on convertible secured notes                  4,000,000                 --          4,000,000
Net loss                                                         --         (1,246,021)        (1,246,021)
                                                       ---------------------------------------------------
 Balance - September 30, 2004                          $ 54,349,359       $(21,529,969)      $ 18,551,200
                                                       ===================================================

                                  The accompanying notes are an integral part of these
                                      condensed consolidated financial statements
</TABLE>

                                                           5
<PAGE>
<TABLE>

                                  MARKLAND TECHNOLOGIES, INC. AND SUBSIDIARIES

                                 CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

                             For The Three Months Ended September 30, 2004 And 2003
                                                   (Unaudited)

                                                                                      2004              2003
                                                                                  ------------      ------------
<S>                                                                               <C>               <C>
CASH FLOWS FROM OPERATING ACTIVITIES:

  Net loss                                                                        $(1,246,021)      $  (911,936)

  Adjustment to reconcile net loss to net cash used in operating activities:
      Depreciation                                                                     77,456                --
      Amortization of intangible asset                                                481,992            33,334
      Amortization of debt discount                                                        --            20,833
      Loss on disposal of equipment                                                    23,722                --
      Non cash interest expense                                                        314,166               --
      Amortization and remeasurement of compensatory stock grants                     (19,143)          401,980
  Changes in operating assets and liabilities:
      Accounts receivable                                                            (834,641)          (28,090)
      Prepaid expenses and other assets                                              (104,582)           11,889
      Accounts payable                                                              4,069,967           200,582
      Accrued expenses and other current
        liabilities                                                                  (259,057)           21,921
                                                                                  ------------      ------------

        NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES                          2,503,859          (249,487)
                                                                                  ------------      ------------

CASH USED IN INVESTING ACTIVITIES:
    Proceeds from sale of property and equipment                                        2,100                --
    Additional transaction costs relating to purchase of EOIR                         (61,611)               --
    Purchase of ASI assets                                                                 --           (85,000)
    Purchase of equipment                                                             (66,749)               --
                                                                                  ------------      ------------
        NET CASH USED IN INVESTING ACTIVITIES                                        (126,260)          (85,000)
                                                                                  ------------      ------------

CASH FLOWS FROM FINANCING ACTIVITIES:
  Proceeds from sale of preferred stock                                                    --           360,000
  Proceeds from convertible secured notes (net)                                   3,458,780                --
  Repayments of notes payable                                                        (325,024)           (3,404)
  Repayments of credit line                                                          (600,000)               --
                                                                                  ------------      ------------

        NET CASH PROVIDED BY FINANCING ACTIVITIES                                   2,533,756           356,596
                                                                                  ------------      ------------

NET INCREASE IN CASH                                                                4,911,355            22,109

CASH - BEGINING                                                                     1,101,088             5,465
                                                                                  ------------      ------------

CASH - ENDING                                                                     $ 6,012,443       $    27,574
                                                                                  ============      ============

                              The accompanying notes are an integral part of these
                                   condensed consolidated financial statements
</TABLE>

                                                        6
<PAGE>
<TABLE>

                     MARKLAND TECHNOLOGIES, INC. AND SUBSIDIARIES

                   CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

                  SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:

                For The Three Months Ended September 30, 2004 and 2003
                                     (Unaudited)

                                                                2004          2003
                                                             ---------      --------
<S>                                                          <C>            <C>
Cash paid during the years for:
  Interest                                                   $ 178,520      $     --
                                                             ==========     =========

  Taxes                                                      $      --      $     --
                                                             ==========     =========

Non-cash investing and financing activities:

  Conversion of accounts payable into common stock           $      --      $450,000
                                                             ==========     =========

  Acquisition of ASI Assets by issuance of common stock      $      --      $850,000
                                                             ==========     =========

  Accrued dividends on preferred stock                       $      --      $ 65,689
                                                             ==========     =========
</TABLE>

                 The accompanying notes are an integral part of these
                     condensed consolidated financial statements

                                          7
<PAGE>

                  MARKLAND TECHNOLOGIES, INC. AND SUBSIDIARIES

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

             For The Three Months Ended September 30, 2004 and 2003
                                   (Unaudited)

1.        BASIS OF PRESENTATION

The accompanying unaudited condensed consolidated financial statements of
Markland Technologies, Inc. and Subsidiaries ("Markland" or the "Company") have
been prepared in accordance with accounting principles generally accepted in the
United States of America for interim financial information, without being
audited, pursuant to the rules and regulations of the Securities and Exchange
Commission. Accordingly, they do not include all of the information and
footnotes required by accounting principles generally accepted in the United
States of America for complete financial statements. In the opinion of
management, all adjustments (consisting of normal recurring accruals) considered
necessary to make the financial statements not misleading have been included.
Operating results for the three months ended September 30, 2004 are not
necessarily indicative of the result that may be expected for the year ending
June 30, 2005. The unaudited condensed consolidated financial statements should
be read in conjunction with the consolidated financial statements and footnotes
included in the Company's 10-KSB for the year ended June 30, 2004 filed with the
Securities and Exchange Commission.

The accompanying consolidated financial statements have been prepared in
conformity with accounting principles generally accepted in the United States of
America, which contemplate continuation of Markland as a going concern. Markland
has incurred net losses of $1,246,021 and $1,067,625 for the three months ended
September 30, 2004 and 2003, respectively. Markland has limited finances and may
require additional funding in order to market and license its products. During
the three months ended September 30, 2004, Markland issued secured convertible
promissory notes and warrants to purchase shares of common stock and received
net proceeds of approximately $3,460,000 which, if not converted, is repayable
between March 15, 2005 and September 30, 2005 (see Note 6). There is no
assurance that Markland can reverse its operating losses, or that it can raise
additional capital to allow it to continue its planned operations. These factors
raise substantial doubt about Markland's ability to continue as a going concern.

Markland's ability to continue as a going concern remains dependent upon the
ability to obtain additional financing or through the generation of positive
cash flows from continuing operations. These financial statements do not include
any adjustments relating to the recoverability of recorded asset amounts that
might be necessary as a result of the above uncertainty. While Markland has
experienced operating losses in the past, due to the acquisition of EOIR
Technologies, Inc., management believes the operating portion of the business
will be cash flow positive in fiscal 2005. Management's business plan is to
continue to grow the customer base and revenues and to control and monitor
operating expenses and capital expenditures. Management believes that the
business as currently constituted will produce positive cash flow which,
together with the current cash levels, will enable Markland to meet existing
financial obligations as they come due during the current fiscal year. However,
management can provide no assurance that the performance of the business will
meet these expectations.

Markland is subject to risks common to companies in the Homeland Defense
Technology industry, including, but not limited to, development by its
competitors of new technological innovations, dependence on key personnel,
protection of proprietary technology and loss of significant customers. Since
the United States Government represents substantially all of Markland's current
revenue, the loss of this customer would have a material adverse effect on
Markland's future operations.

2.       SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

PRINCIPLES OF CONSOLIDATION
---------------------------

The consolidated financial statements include the accounts of Markland and its
wholly-owned subsidiaries, Security Technology, Inc. ("STI"), Ergo Systems, Inc.
("Ergo"), Science and Technology Research Corporation, Inc. ("STR") and E-OIR
Technologies, Inc. ("EOIR"). All significant inter-company balances and
transactions have been eliminated in consolidation.

USE OF ESTIMATES IN PREPARATION OF FINANCIAL STATEMENTS
-------------------------------------------------------

The preparation of the accompanying consolidated financial statements in
conformity with accounting principles generally accepted in the United States of
America requires management to make certain estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosures of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenue and expenses during the reporting period. Actual
results could differ from those estimates. Significant estimates that are
particularly susceptible to change are the determination of the fair value of
assets acquired and liabilities assumed in business combinations, impairment of
identified intangible assets, goodwill and long lived assets, the fair value of
equity instruments issued, valuation reserves on deferred tax assets and revenue
and costs recognized on long-term, fixed-price contracts.

                                       8

<PAGE>

                  MARKLAND TECHNOLOGIES, INC. AND SUBSIDIARIES

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

             For The Three Months Ended September 30, 2004 and 2003
                                   (Unaudited)

CONCENTRATIONS
--------------

Markland has cash balances in banks in excess of the maximum amount insured by
the FDIC as of September 30, 2004.

Substantially all revenue is generated from contracts with Federal government
agencies. Consequently, substantially all accounts receivable are due from
Federal government agencies either directly or through other government
contractors.

CASH AND CASH EQUIVALENTS
-------------------------

Cash equivalents include interest-bearing deposits with original maturities of
three months or less.

ALLOWANCE FOR DOUBTFUL ACCOUNTS
-------------------------------

The allowance for doubtful accounts reflects management's best estimate of
probable losses inherent in the accounts receivable balance. Management
determines the allowance based on economic conditions, historical experience
with customers and other currently available evidence. Markland's receivables
are from government contracts. Markland has not experienced any losses in
accounts receivable and has provided no allowance at September 30, 2004 or 2003.

PROPERTY AND EQUIPMENT
----------------------

Property and equipment are valued at cost and are being depreciated over their
useful lives using the straight-line method for financial reporting. Routine
maintenance and repairs are charged to expense as incurred. Expenditures which
materially increase the value or extend useful lives are capitalized.

Property and equipment are depreciated using straight-line methods over the
estimated useful lives of assets as follows:

                 Software                                  3 years
                 Computers and equipment                   3 years
                 Vehicles                                  5 years
                 Leasehold improvements                    Shorter of useful
                                                             life and lease term
                 Furniture and fixtures                    5-7 years

Property and equipment consisted of the following at September 30, 2004:

                 Software                                  $      89,783
                 Computer equipment                              561,780
                 Vehicles                                         71,008
                 Leasehold improvements                          313,790
                 Furniture and fixtures                           91,272
                                                           --------------
                                                               1,127,633
                 Less accumulated depreciation                   (87,505)
                                                           -------------
                                                           $   1,040,128
                                                           ==============

Depreciation expense for the three months ended September 30, 2004 and 2003 was
$77,456 and $0, respectively.

INCOME TAXES
------------

The Company accounts for income taxes using the asset and liability method.
Deferred tax assets and liabilities are recognized for the future tax
consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective tax
bases, 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 these temporary differences are expected to be
recovered or settled. A deferred tax asset is recorded for net operating loss
and tax credit carry forwards to the extent that their realization is more
likely than not. The deferred tax benefit or expense for the period represents
the change in the deferred tax asset or liability from the beginning to the end
of the period.

                                       9
<PAGE>

                  MARKLAND TECHNOLOGIES, INC. AND SUBSIDIARIES

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

             For The Three Months Ended September 30, 2004 and 2003
                                   (Unaudited)

REVENUE RECOGNITION
-------------------

We recognize revenue when the following criteria are met: (1) we have persuasive
evidence of an arrangement, such as contracts, purchase orders or written
requests; (2) we have completed delivery and no significant obligations remain,
(3) our price to our customer is fixed or determinable, and (4) collection is
probable. We recognize revenues at the time we perform services related to
border security logistic support. With respect to our revenues from our chemical
detectors, we recognize revenue under the units-of-delivery method. At the time
the units are shipped to the United States Navy, the Company recognizes as
revenue the contract price of each unit and recognizes the applicable cost of
each unit shipped. As of June 30, 2004, the Company had completed delivery of
all outstanding orders under the contract.

Revenues from time and materials contracts are recognized as costs are incurred.

Revenues from firm fixed price contracts are recognized on the
percentage-of-completion method, either measured based on the proportion of
costs recorded to date on the contract to total estimated contract costs or
measured based on the proportion of labor hours expended to date on the contract
to total estimated contract labor hours, as specified in the contract.

Provisions for estimated losses on all contracts are made in the period in which
such losses become known. Changes in job performance, job conditions, and
estimated profitability, including those arising from contract penalty
provisions, and final contract settlements may result in revision to cost and
income and are recognized in the period in which the revisions are determined.

The Company participates in teaming agreements where they are the primary
contractor and they participate with other organizations to provide services to
the Federal government. The Company has managerial and oversight responsibility
for team members as well as the responsibility for the ultimate acceptability
of performance under the contract. The Company includes as revenues the
amounts that they bill under the teaming arrangements and include as direct
costs amounts that are reimbursable or paid to team members.

UNEARNED REVENUE
----------------

Unearned revenue represents cash collection in excess of revenue earned from
fixed price contracts.

FAIR VALUE OF FINANCIAL INSTRUMENTS
-----------------------------------

The financial statements include various estimated fair value information at
September 30, 2004, as required by Statement of Financial Accounting Standards
No. 107, "Disclosures about Fair Value of Financial Instruments." Financial
instruments are initially recorded at historical cost. If subsequent
circumstances indicate that a decline in the fair value of a financial asset is
other than temporary, the financial asset is written down to its fair value.

Unless otherwise indicated, the fair values of financial instruments approximate
their carrying amounts. By their nature, all financial instruments involve risk,
including credit risk for non-performance by counterparties. The maximum
potential loss may exceed any amounts recognized in the consolidated balance
sheets.

The fair value of cash, accounts receivable, bank line of credit and long-term
debt approximate their recorded amounts because of their relative market and
settlement terms. The fair value of the notes payable issued to the former
owners of EOIR (see Note 3) have been recorded at their fair value, as
determined by an independent valuation, which is less than the face value due to
a below market interest rate. The fair value of the secured convertible
promissory notes issued on September 21, 2004 have been recorded at their fair
value which is less than the face value due to a debt discount and warrants
issued in conjunction with the loan.

ADVERTISING COSTS
-----------------

Advertising costs are expensed as incurred. For the three months ended September
30, 2004 and 2003, no advertising and promotion expenses were incurred.

SHIPPING COSTS
--------------

Delivery and shipping costs are included in cost of revenue in the accompanying
consolidated statements of loss.

RESEARCH AND DEVELOPMENT
------------------------

Research and development costs are charged to expense as incurred. Markland
capitalizes costs related to acquired technologies that have achieved
technological feasibility and have alternative uses. Acquired technologies which
do not meet this criteria are expensed as research and development costs.

                                       10
<PAGE>

                  MARKLAND TECHNOLOGIES, INC. AND SUBSIDIARIES

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

             For The Three Months Ended September 30, 2004 and 2003
                                   (Unaudited)

REVERSE STOCK SPLIT/LOSS PER SHARE
----------------------------------

Share amounts and per share data have been restated to reflect a 1 for 60
reverse stock split effective as of October 27, 2003.

Basic and diluted net loss per common share has been computed based on the
weighted average number of shares of common stock outstanding during the periods
presented.

Common stock equivalents, consisting of convertible debt, Series A and Series D
Convertible preferred stock, options and warrants were not included in the
calculation of the diluted loss per share because their inclusion would have had
the effect of decreasing the loss per share otherwise computed.

IMPAIRMENT OF INTANGIBLE ASSETS
-------------------------------

The Company records as goodwill the excess of purchase price over the fair value
of the identifiable net assets acquired. Statements of Financial Accounting
Standards (SFAS ) No. 142, "Goodwill and Other Intangible Assets", prescribes a
two-step process for impairment testing of goodwill, which is performed
annually, as well as when an event triggering impairment may have occurred. The
first step tests for impairment, while the second step, if necessary, measures
the impairment. The Company has elected to perform its annual analysis during
the fourth quarter of each fiscal year. No indicators of impairment were
identified in the three months ended September 30, 2004 and 2003.

IMPAIRMENT OF LONG-LIVED ASSETS
-------------------------------

Pursuant to SFAS No. 144, "Accounting for the Impairment or Disposal of
Long-lived Assets", Markland continually monitors events and changes in
circumstances that could indicate carrying amounts of long-lived assets may not
be recoverable. An impairment loss is recognized when expected cash flows are
less than the asset's carrying value. Accordingly, when indicators or impairment
are present, Markland evaluates the carrying value of such assets in relation to
the operating performance and future undiscounted cash flows of the underlying
assets. Markland's policy is to record an impairment loss when it is determined
that the carrying amount of the asset may not be recoverable. No impairment
charges were recorded in the three months ended September 30, 2004 and 2003.

STOCK-BASED COMPENSATION
------------------------

At September 30, 2004, as permitted under SFAS No. 148, "Accounting for
Stock-Based Compensation - Transition and Disclosure", which amended SFAS No.
123, "Accounting for Stock-Based Compensation", Markland has elected to continue
to follow the intrinsic value method in accounting for its stock-based employee
compensation arrangements as defined by Accounting Principles Board Opinion
("APB") No. 25, "Accounting for Stock Issued to Employees", and related
interpretation including Financial Accounting Standards Board ("FASB")
Interpretation No. 44, "Accounting for Certain Transactions Involving Stock
Compensation", an interpretation of APB No. 25. Had the Company followed the
fair value method in accounting for its stock-based employee compensation it
would have had the following effect on the net loss for the three months ended
September 30,:

<TABLE>
                                                                              2004              2003
                                                                              ----              ----
<S>                                                                      <C>               <C>
Net loss as reported                                                     $ (1,246,021)     $ (1,067,625)

Add: stock based employee compensation (benefit) included in net loss         (19,143)               --

Deduct: stock based employee compensation expense based under fair
value based method                                                            173,902                --
                                                                         -------------     -------------

Pro forma net loss                                                       $ (1,439,066)     $ (1,067,625)
                                                                         =============     =============
Basic and diluted loss per share - as reported                           $      (0.03)     $      (0.22)

Basic and diluted loss per share - pro forma                             $      (0.04)     $      (0.22)
</TABLE>

                                       11
<PAGE>

                  MARKLAND TECHNOLOGIES, INC. AND SUBSIDIARIES

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

             For The Three Months Ended September 30, 2004 and 2003
                                   (Unaudited)

IMPACT OF RECENTLY ISSUED ACCOUNTING STANDARDS
----------------------------------------------

In May 2003, the FASB issued SFAS No. 150, "Accounting for Certain Financial
Instruments with Characteristics of both Liabilities and Equity." This statement
establishes standards for how an issuer classifies and measures certain
financial instruments with characteristics of both liabilities and equity. It
requires that an issuer classify a financial instrument that is within its scope
as a liability. Many of those instruments were previously classified as equity.
SFAS No. 150 is effective for financial instruments entered into or modified
after May 31, 2003, and otherwise is effective at the beginning of the first
interim period beginning after June 15, 2003. The adoption of this statement did
not have any impact on our financial position or results of operations.

In December 2003, the FASB issues FASB Interpretation No. 46R ("FIN 46R"),
"Consolidation of Variable Interest Entities". FIN 46R expands upon existing
accounting guidance that addresses when a company should include in its
financial statements the assets, liabilities and activities of another entity. A
variable interest entity is a corporation, partnership, trust or any other legal
structure used for business purposes that either (a) does not have equity
investors with voting rights or (b) has equity investors that do not provide
sufficient financial resources for the entity to support its activities. FIN 46R
requires a variable interest entity to be consolidated by a company if that
company is subject to a majority of the risk of loss from the variable interest
entity's activities or is entitled to receive a majority of the entity's
residual returns or both. The adoption of this interpretation did not have any
impact on our financial position or results of operations.

3.       ACQUISITIONS

PURCHASE OF SCIENCE AND TECHNOLOGY RESEARCH, INC.
-------------------------------------------------

In October 2003, Markland completed the acquisition of 100% of the common stock
of Science and Technology Research, Inc., a Maryland corporation ("STR"), by its
subsidiary, Security Technology, Inc., a Delaware Corporation ("STI"), through a
merger of STI with newly formed STR Acquisition Corporation, a Maryland
Corporation. STR is a producer of the U.S. Navy's Shipboard Automatic Chemical
Agent Detection and Alarm System (ACADA). The Navy deploys the "man-portable"
point detection system to detect all classic nerve and blister agents as well as
other chemical warfare agent (CWA) vapors.

The aggregate purchase price of STR was $6,475,000 and consisted of $900,000 in
cash, which was paid in October 2003, 1,539,779 shares of common stock valued at
$5,100,000, a promissory note of $375,000 and acquisition costs of $100,000. The
promissory note bears no interest and, pursuant to amended terms, became due in
full on October 15, 2004. Holders of the shares of common stock were granted
piggy-back registration rights. The promissory note is collateralized by all of
the assets of STR and 40% of the common stock of STR held by Markland. At
September 30, 2004 the remaining unpaid balance on the note was $50,000.

Markland also entered into a consulting agreement with the principal shareholder
and employee of STR (see Note 11).

PURCHASE OF E-OIR TECHNOLOGIES, INC.
------------------------------------

On June 29, 2004, Markland acquired all of the outstanding stock of E-OIR
Technologies, Inc. ("EOIR") for $8,000,000 in cash and $11,000,000 in principal
amount of five year notes secured by the assets and stock of EOIR. EOIR is a
provider of technology and services to the US Army Night Vision Laboratories and
has expertise in wide area remote sensing using both electro-optic and infrared
technologies. The acquisition was consummated in furtherance of Markland's
stated strategy of making synergistic acquisitions in order to provide products
and services to Homeland Defense, the Department of Defense and U.S.
Intelligence Agencies.

                                       12




<PAGE>

                  MARKLAND TECHNOLOGIES, INC. AND SUBSIDIARIES

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

             For The Three Months Ended September 30, 2004 and 2003
                                   (Unaudited)

In connection with this acquisition, Markland has also adopted a Stock Incentive
Plan (see Note 9).

Unaudited pro forma financial information for the three months ended September
30, 2003, had the acquisitions of STR and EOIR been completed as of July 1,
2003, is as follows:

MARKLAND-STR-EOIR                               2003 (IN THOUSANDS)
------------------------------------------------------------------------

Revenues                                        $ 12,930
                                                =========

Operating Loss                                  $    (19)
                                                =========

Net loss applicable to common stockholders      $   (482)
                                                =========

Net loss applicable to common stockholders
     per common share                           $  (0.10)
                                                =========

4.       AMORTIZATION OF INTANGIBLE ASSETS

Amortizable intangible assets consist of the following at September 30, 2004:

         Amortizable intangibles - EOIR                          $  11,755,000
         Amortizable intangibles - Ergo                                400,000
         Amortizable intangibles - ASI                               1,000,000
         Amortizable intangibles - STR                               1,967,944
                                                                 --------------
              Total amortizable intangibles                      $  15,122,944
         Accumulated amortization                                   (1,464,389)
                                                                 --------------
              Net amortizable intangibles                        $  13,658,555
                                                                 ==============

The intangible assets entitled "Acoustic Core" which has a carrying value of
$1,300,000 are not available for commercial sale as of September 30, 2004.
Accordingly, no amortization expense has been recorded through September 30,
2004. Amortization expense was $481,992 and $33,334 for the three months ended
September 30, 2004 and 2003, respectively.

5.       BANK LINE OF CREDIT


EOIR has a $600,000 line of credit with Virginia Community Bank. It is secured
by current accounts receivable with variable interest at the prime lending rate
(4.75% at September 30, 2004) plus 1%. The line of credit expires in April,
2005. There was no balance due as of September 30, 2004.

6.       LONG-TERM DEBT

NOTE PAYABLE - AI
-----------------

In December 2003, Markland signed a note to finance an insurance premium. This
note was fully paid as of September 30, 2004.

NOTE PAYABLE - STR ACQUISITION
------------------------------

On October 1, 2003, Markland issued a note in the amount of $375,000 in
connection with the acquisition of STR. This note is payable in full by October
15, 2004. The outstanding balance at September 30, 2004 was $50,000.

On March 15, 2004, Markland agreed to pay to George Yang $40,000 of cash and
issue an additional 50,000 shares of common stock valued at $66,500 in exchange
for his agreement to extend the note to October 15, 2004. These amounts were
charged to interest expense in the statement of loss for the year ended June 30,
2004. Accounts Payable at September 30, 2004 include $40,000 related to this
agreement.

                                       13




<PAGE>

                  MARKLAND TECHNOLOGIES, INC. AND SUBSIDIARIES

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

             For The Three Months Ended September 30, 2004 and 2003
                                   (Unaudited)

NOTES PAYABLE - EOIR ACQUISITION
--------------------------------

On June 29, 2004, EOIR issued notes guaranteed by Markland in the face amount of
$11,000,000 in connection with the acquisition of EOIR's common stock. These
notes accrue interest at 6% compounded monthly and interest is payable in
quarterly installments over 60 months in addition to annual principal payments.
The fair market value of these notes is $9,532,044 as determined by an
independent valuation. The discount of $1,467,956 is being amortized to interest
expense over the life of the notes. During the three months ended September 30,
2004, $73,398 was amortized to interest expense.

OTHER LONG-TERM BANK DEBT
-------------------------
<TABLE>
<S>                                                                                            <C>
Markland's other long-term bank debt consists of the following as of September
30, 2004:

Wachovia Bank, secured by a vehicle, dated November, 2001 with monthly
payments of $877 including interest of 6.1%                                                      $21,288

First Market Bank, secured by research equipment,  dated October, 2002 with monthly
payments of $3,715 including interest of LIBOR plus 2.75% (5.23% at September 30, 2004)          139,530

First Market Bank, dated July, 2002 with monthly payments of $15,278 plus interest of
LIBOR plus 2.75%, (5.23% at September 30, 2004)                                                  130,540

First Market Bank, secured by leasehold improvements, dated March 19, 2003 with monthly
payments of $3,514 including interest of 5.05%                                                    53,753

American Honda Finance, secured by vehicle, dated March 24, 2003 with monthly payments of
$406 including interest of 4.70%                                                                  16,271
                                                                                                --------
                                                                                                $361,382
                                                                                                ========
</TABLE>

CONVERTIBLE NOTE AND WARRANT PURCHASE AGREEMENT
-----------------------------------------------

On September 21, 2004, Markland Technologies, Inc. entered into a Purchase
Agreement with DKR Soundshore Oasis Holding Fund, Ltd. and DKR Soundshore
Strategic Holding Fund, Ltd. (together the "Investors") pursuant to which the
Company sold warrants to purchase shares of common stock (the "Warrants") and
secured convertible promissory notes (the "Convertibles Notes") for the
aggregate consideration of $4,000,000. The Convertible Notes are initially
convertible into $5,200,000 of common stock at a price of $0.80 per share,
subject to certain adjustments as defined in the Purchase Agreement.

The Purchase Agreement contains standard representations, covenants and events
of default. Occurrence of an event of default allows the Investors to accelerate
the payment of the Convertible Notes and/or exercise other legal remedies,
including foreclosing on collateral.

The Warrants entitle the Investors to purchase an aggregate of 5,200,000 shares
of our common stock, at any time and from time to time, through September 21,
2009. The Convertible Notes are in the aggregate principal amount of five
million two hundred thousand dollars ($5,200,000) and accrue interest daily at
the rate of eight percent (8%) per year on the then outstanding and unconverted
principal balance of the Convertible Notes. Under the terms of the Convertible
Notes, Markland is required to pay $4,000,000 of the outstanding principal and
interest by March 15, 2005, and the remaining outstanding balance by September
21, 2005. At anytime, and at the option of the Investors, the outstanding
principal and accrued interest of the Convertible Notes may be converted into
shares of Markland's common stock.

The Company has granted a security interest in and a lien on substantially all
of its assets to the Investors pursuant to the terms of a Security Agreement,
dated September 21, 2004.

                                       14




<PAGE>

                  MARKLAND TECHNOLOGIES, INC. AND SUBSIDIARIES

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

             For The Three Months Ended September 30, 2004 and 2003
                                   (Unaudited)

As part of this financing, James LLC, the largest holder of Series D Preferred
Stock, agreed not to sell any of its holdings of Series D Preferred Stock until
the earlier to occur of: (1) notice from the Company and the investors that the
transactions contemplated had been completed had been terminated, or (2) March
15, 2005. However, pursuant to the terms of the lock-up agreement, James, LLC
may still convert their Series D shares and sell the underlying shares of common
stock in accordance with Rule 144 of the Securities Act of 1933, as amended. In
exchange, Markland agreed that under certain conditions, if they did not redeem
the Series D stock by January 15, 2005, they would issue to James LLC a warrant
to purchase 1,088,160 shares of our common stock at $.80 per share.

Subject to conditions set forth in the Purchase Agreement, the Company may
require the Investor to purchase $1,000,000 of Additional Notes on the
Additional Closing Date.

On September 21, 2004, Markland estimated the fair value of the Warrants and
allocated the gross proceeds of $4,000,000 on a relative fair value basis
between the Convertible Notes and the Warrants. Based on this analysis, Markland
estimated that the relative fair value of the Warrants and Convertible Notes
were approximately $1,659,000 and $2,341,000, respectively. Based on the initial
conversion price of $0.80 per share, Markland estimated that the Convertible
Notes could convert into 6,500,000 shares of common stock and the effective
conversion price was approximately $0.36 per share. Accordingly, Markland
determined that there was a beneficial conversion feature of approximately
$3,054,000. Since the beneficial conversion feature exceeded the carrying value
of the Convertible Notes, the recognition of the beneficial conversion feature
was limited to $2,341,000. The value of the Warrants and beneficial conversion
feature were recorded as additional paid in capital. The Convertible Notes were
recorded net of the fair value of the Warrants and beneficial conversion feature
at $0 and will be accreted to $5,200,000, the face value of the Convertible
Notes, over the term of those notes. Non-cash interest expense related to the
accretion of this discount was $218,071 for the three months ended September 30,
2004.

In conjunction with the issuance of these Convertible Notes and Warrants,
Markland incurred financing costs of $541,220. These costs have been recorded in
Other Assets as deferred financing costs and are being amortized to interest
expense over the term of the Convertible Notes. Non-cash interest expense
related to the amortization of deferred financing costs was $22,697 in the three
months ended September 30, 2004.

7.       EQUITY LINE

On September 10, 2003, Markland entered into a Private Equity Credit Agreement
with Brittany Capital Management, Ltd. ("Brittany"). Markland agreed to issue
and sell to Brittany up to $10,000,000 worth of its common stock over the next
three years. Prior to any sales, Markland is required to file a registration
statement with the Securities and Exchange Commission, relating to the shares to
be issued, and to have such registration statement declared effective.

There can be no assurances that Markland will receive any proceeds from this
agreement. As of September 30, 2004, Markland has not drawn down on this equity
line and no shares have been registered by Markland related to this agreement.
For all periods presented, Markland has determined that the fair value of this
Put was not material.

8.       STOCKHOLDERS' EQUITY

PREFERRED STOCK:
----------------

The Company is authorized to issue 5,000,000 shares of preferred stock which may
be issued in series with such designations, preferences, stated values, rights
qualifications, or limitations as determined by the Board of Directors.

                                       15




<PAGE>

                  MARKLAND TECHNOLOGIES, INC. AND SUBSIDIARIES

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

             For The Three Months Ended September 30, 2004 and 2003
                                   (Unaudited)

         SERIES A REDEEMABLE CONVERTIBLE PREFERRED STOCK
         -----------------------------------------------

On June 30, 2003, Markland issued 30,000 shares of our Series A Non-Voting
Redeemable Convertible Preferred Stock in satisfaction of our remaining
obligations under a promissory note. The Series A Preferred Stock has no par
value, is non-voting and has a stated value of $10 per share. The Series A
Preferred Stock is convertible at any time at the option of the Company, and
cannot be converted by the holder. This stock is convertible at the rate of
three shares of Series A Preferred Stock for each share of common stock. This
conversion rate may be adjusted at any time by the Company as a result of either
the sale of the Company or as a result of a stock split or stock dividend that
is issued by the Company while these shares remain outstanding.

The Company shall have the right, but not the obligation to, at any time after
the issuance of these shares to redeem all or any portion of the outstanding
shares of Series A Preferred Stock from the holder in cash at the stated value
of $10 per share by sending notice to the holder. The Series A Preferred Stock
has a liquidation preference of $10 per share. This stock does not accrue
dividends.

         SERIES C 5% CUMULATIVE CONVERTIBLE PREFERRED STOCK
         --------------------------------------------------

The Series C Preferred Stock is non-voting and has a liquidation preference of
$1,000 per share. The holders of the Series C Preferred Stock are entitled to
receive dividends on each share of preferred stock, which shall accrue on a
daily basis at the rate of 5% per annum on the sum of the liquidation preference
plus all accumulated and unpaid dividends thereon. These dividends shall accrue
whether or not they have been declared or there are legally available funds with
which to pay them, and at the option of the holders are payable either in cash
or in unrestricted common stock. The Series C Preferred Stock is redeemable at
any time by Markland, and cannot be converted by the holders without written
permission for a period of 6 months following the issuance of the shares and
then only 10% may be converted per month thereafter. The Series C Preferred
Stock is convertible at the option of the holder at a conversion price ranging
from 65% to 80% of the common stock's market price at the time of the
conversion.

At September 30, 2004, there were no shares of Series C Preferred Stock issued
or outstanding.

8.       STOCKHOLDERS' EQUITY (CONT)

SERIES D CONVERTIBLE PREFERRED STOCK
------------------------------------
Shares of the Series D Convertible Preferred Stock have a liquidation preference
of $1,000 per share, are non-voting, do not accrue dividends, are redeemable by
Markland anytime and are convertible into shares of Markland's common stock at a
conversion price ranging from 65% to 80% of the common stock's market price at
the time of the conversion.

The Series D preferred stock is convertible at the option of the stockholder at
any time. The number of shares of our common stock into which each share of
Series D preferred is convertible is determined by dividing $1,000 by the
discounted bid price. The "discounted" bid price is the average closing bid
price of our common stock during the five business days immediately preceding
the conversion date multiplied by the applicable discount factor, as set forth
below.

                                       16




<PAGE>

                  MARKLAND TECHNOLOGIES, INC. AND SUBSIDIARIES

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

             For The Three Months Ended September 30, 2004 and 2003
                                   (Unaudited)

------------------------------------------------------------ -------------------

AVERAGE CLOSING BID PRICE (1)                                DISCOUNT FACTOR
-----------------------------                                ---------------
------------------------------------------------------------ -------------------
$15.00 or less                                                           80%
------------------------------------------------------------ -------------------
more than $15.00, but less than or equal to $30.00                       75%
------------------------------------------------------------ -------------------
more than $30.00, but less than or equal to $45.00                       70%
------------------------------------------------------------ -------------------
more than $45.00                                                         65%
------------------------------------------------------------ -------------------

         ----------------------
         (1) After an adjustment for a 1-for-60 reverse stock split effective
             October 27, 2003.

The Series D preferred stock can be converted only to the extent that the Series
D stockholder will not, as a result of the conversion, hold in excess of 9.999%
of the total outstanding shares of our common stock.

During the three months ended September 30, 2004, 5,061 shares of Series D were
converted into 11,699,747 common shares of the Company.

At September 30, 2004 there were 17,725 shares of Series D outstanding.

REVERSE STOCK SPLIT
-------------------

On September 4, 2003, Markland's board of directors approved a resolution to
effect a one-for-sixty reverse stock split. This action was subsequently
approved by shareholder action which was approved by written consent of the
Markland shareholders who held at least a majority of the voting power of the
common stock, at least 67% of the voting power of the Series C Cumulative
Convertible Preferred Stock, and at least 67% of the voting power of the Series
D Cumulative Convertible Preferred Stock. As a result, each sixty shares of
common stock was converted automatically into one share of common stock. To
avoid the issuance of fractional shares of common stock, each fractional share
resulting from the reverse split was rounded up to a whole share. The reverse
stock split did not reduce the 500,000,000 shares of common stock that Markland
is authorized to issue. The resolution, which impacts shareholders of record as
of September 5, 2003 became effective on October 27, 2003. All share amounts and
per share data have been restated to reflect this reverse stock split.

COMMON STOCK ISSUANCES
----------------------

Markland has entered into compensation agreements with certain officers and a
consultant (see Note 11) which provide for, among other things, certain
performance-based stock grants. In connection with these agreements, Markland
issued 3,020,707 shares of common stock during the three months ended September
30, 2004. Due to the indeterminate number of shares to be issued under these
agreements, Markland accounts for these stock compensation plans under variable
accounting.

During the three months ended September 30, 2004, Markland also issued the
following:

         o        266,109 shares of its common stock
                  to other employees and consultants as compensation

         o        11,699,747 shares of its common stock on conversion of 5,061
                  Series D shares.

         o        833,333 shares of its common stock in connection with
                  satisfying reset rights of an existing investor and a result
                  of the Convertible Note and Warrant Purchase Agreement entered
                  into on September 21, 2004 (see Note 6).

                                       17
<PAGE>

                  MARKLAND TECHNOLOGIES, INC. AND SUBSIDIARIES

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

             For The Three Months Ended September 30, 2004 and 2003
                                   (Unaudited)

         o        226,096 shares with a fair value of $108,528 of its common
                  stock issued as finders fees in connection with its
                  acquisition of EOIR which was recorded as additional goodwill.

For the three months ended September 30, 2004, Markland recognized unearned
compensation, par value and additional paid in capital and stock compensation
expense (benefit) of $(603,140), $(622,283) and $(19,143) respectively.

Markland has established the following reserves for the future issuance of
common stock as follows:

         Reserve for the exercise of warrants                       19,903,549
         Reserve for stock option plans                             25,000,000
         Reserve for conversion of Series A Preferred Stock             10,000
         Reserve for conversion of Series D Preferred Stock         28,421,474
                                                                 --------------
                 Total reserves                                     73,335,023
                                                                 ==============

The Company is also obligated to issue certain shares under employment and
consulting agreements (see Note 11).

9.       OPTIONS AND WARRANTS

In conjunction with the Company's acquisition of EOIR, the Company adopted the
2004 Stock Incentive Plan ("the Plan"). The Plan authorizes the Company to issue
up to 25,000,000 common shares in the form of options, stock awards, performance
share awards or stock appreciation rights.

On June 29, 2004, the Company issued options to eleven former minority owners of
EOIR who have continued employment with the Company. These options have a ten
year term and vest ratably over a five year period. Ten of these employees
received options to purchase 9,345,737 shares of common stock at a price of
$.3775. On the date of grant, the intrinsic value of these options, $3,528,016,
was recorded as unearned stock-based compensation and additional paid in
capital. This intrinsic value will be amortized to stock compensation over the
five year vesting period.

One employee received five options, each of which allows for the purchase of a
number of shares equal to .11799575 times a fraction of $1,600,000 divided by
the fair value of the stock on the vesting date. One of these options vests each
year for the next five years. The exercise price of these options will be
one-half the fair value of the stock on the vesting date. The intrinsic value of
these options based on the fair value of the stock on September 30, 2004 is
$471,983. This intrinsic value has been recorded as unearned stock-based
compensation and additional paid in capital. Due to the variable nature of the
exercise price and number of shares to be issued under these options, the
intrinsic value will be remeasured each period until the terms are fixed. The
intrinsic value of each option will be amortized over the vesting periods. As of
September 30, 2004, the maximum number of shares issuable under these options is
1,210,213.

For the three months ended September 30, 2004, the Company recorded $198,848 in
non-cash compensation relating to the above options.

Markland has also agreed to grant options to purchase an additional 5,000,000
shares of common stock to employees of EOIR in the future. Markland expects that
these options will vest over five years after the date of grant and will have an
exercise price equal to the fair market value of the common stock on the date of
grant.

There were no options issued in the three months ended September 30, 2004 and no
options were vested at September 30, 2004.

At September 30, 2004, the Company had the following outstanding warrants:

                                       18
<PAGE>
                  MARKLAND TECHNOLOGIES, INC. AND SUBSIDIARIES

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

             For The Three Months Ended September 30, 2004 and 2003
                                   (Unaudited)

<TABLE>
                                                   Number of
                                                     Shares               Exercise               Date of
                                                  Exercisable              Price               Expiration
                                                -----------------     -----------------     ------------------
<S>                                                <C>                     <C>               <C>
Issued in conjunction with April 2, 2004
   private placement                               3,333,333               $1.25              April 2, 2007
                                                     333,333               $1.40              April 2, 2007
Issued in conjunction with April 16, 2004
   private placement                               3,333,333               $1.50             April 16, 2007
                                                      25,000               $2.00             April 16, 2007
                                                      50,000               $1.00             April 21, 2004
Issued in conjunction with May 3, 2004
   private placement                               7,098,750               $1.50               May 3, 2007
                                                     529,800               $1.50               May 3, 2007

Issued in conjunction with September 21, 2004                                                 September 21,
   convertible note                                5,200,000               $1.50                  2009
                                                -----------------

                    Total                         19,903,549
                                                =================

Weighted average exercise price                                            $1.45
                                                                      =================
Weighted average remaining life                                                                3.52 years
                                                                                            ==================
</TABLE>

10.      NET LOSS PER SHARE

Securities that could potentially dilute basic earnings per share ("EPS") in the
future, and that were not included in the computation of diluted EPS because to
do so would have been anti-dilutive for the periods presented, consists of the
following:

<TABLE>
                                                                                Shares Potentially
                                                                                     Issuable
                                                                                ------------------
<S>                                                                                  <C>
Series A Redeemable Convertible Preferred Stock                                          10,000
Series D Convertible Preferred Stock (convertible at 80% of market value)            28,421,474
Stock options                                                                        10,555,950
Warrants                                                                             19,903,549
Employment and consulting agreements                                                 14,415,564
                                                                                     ----------
         Total as of September 30, 2004                                              73,306,537
                                                                                     ==========
</TABLE>

11.      COMMITMENTS AND CONTINGENCIES

COMPENSATION AGREEMENTS
-----------------------

Effective January 2003, Markland entered into a one-year compensation agreement
with the former chief executive officer and three three-year agreements with an
officer, the president and chief financial officer, and two consultants to
Markland, Robert Tarini and Verdi Consulting, which provided for aggregate
remuneration of $47,500 per month.

One of these agreements provided for the issuance of 1.67% of Markland's
outstanding common stock in multiple installments in 2003. A final issuance
occurred as of December 31, 2003, so that the total amount of shares issued
equaled 1.67% of the outstanding common stock as of December 31, 2003.

In addition, these agreements provided in total for the issuance of 5.01% of the
Company's outstanding common stock in four installments in 2003 on a fully
diluted basis based upon certain performance criteria being met. If necessary,
an additional issuance will occur in January 2004, so that the total amount of
shares issued will equal 5.01% of the outstanding common stock calculated on a
fully-diluted basis assuming the conversion of all convertible securities as of
December 31, 2003.

                                       19




<PAGE>

                  MARKLAND TECHNOLOGIES, INC. AND SUBSIDIARIES

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

             For The Three Months Ended September 30, 2004 and 2003
                                   (Unaudited)

All of the shares issuable under these four agreements were earned as of January
1, 2004. Accordingly, a total of 1,410,719 shares were issued, of which 119,360
were issued during the year ended June 30, 2003 and 1,291,359 were issued during
the year ended June 30, 2004.

On May 12, 2004, Markland entered into five-year compensation agreements with
two executives, the chairman and chief executive officer and the president and
chief financial officer, and a consultant, Verdi Consulting. These agreements,
which are effective on January 1, 2004, provide for the following remuneration:

       Base annual remuneration of $300,000 each (an aggregate of $900,000)
       payable over the five-year period ending January 2, 2009;

       Discretionary bonuses over the term of the agreement of up to 300% of the
       base remuneration; and

       Conditional stock grants over the period commencing April 1, 2004 through
       January 2, 2008, based on defined performance criteria. The stock grants,
       if all earned, entitle each of the three parties to receive up to 7.5% of
       Markland's common stock on a fully diluted basis. These grants are earned
       according to the following schedule:

                           Grant 1          2.5%          April 1, 2004
                           Grant 2          1.0%          July 1, 2004
                           Grant 3          1.0%          October 1, 2004
                           Grant 4          1.0%          January 2, 2005
                           Grant 5          1.0%          January 2, 2006
                           Grant 6          0.5%          January 2, 2007
                           Grant 7          0.5%          January 2, 2008

       The number of shares of common stock to be granted on each grant date is
       equal to the product of (a) the number of fully diluted shares
       outstanding at the grant date and (b) the stock percentage associated
       with that grant date.

       In the event of a change in control of Markland during the period covered
       by the agreement, each executive/consultant will automatically be granted
       all remaining stock grants and will be due cash and expense compensation
       for the shorter of (i) three years from the date of the change in
       control, or (ii) until the end of the term of the agreement. A change in
       control is defined by the agreements as a change in the majority
       ownership of the equity of Markland, or the resignation or termination of
       the majority of the board of directors within a two month period, or the
       replacement of the CEO or the President of Markland.

In June 2004, these agreements were modified to remove the anti-dultion
provision. During the three months ended September 30, 2004, a total of
3,020,707 shares of common stock were issued under these new agreements.

In connection with the STR acquisition, Markland entered into a one year
consulting agreement, as amended on March 17, 2004, with the former President
and principal of STR ("Consultant"). In consideration for the consulting
services to be rendered by Consultant, Markland shall pay to Consultant the sum
of $285,000 (the "fee"). The fee shall be payable as follows: $25,000 is payable
on July 15, 2004, a second payment in the amount of $35,000, is payable on
August 15, 2004, a third payment in the amount of $60,000 is payable on
September 15, 2004, a fourth payment in the amount of $60,000 is payable on
October 15, 2004, a fifth payment in the amount of $60,000 is payable on
November 15, 2004 and the sixth and final payment in the amount of $45,000 is
payable on December 15, 2004. As of September 30, 2004, Markland has accrued
$225,625 related to this agreement.

                                       20




<PAGE>

                  MARKLAND TECHNOLOGIES, INC. AND SUBSIDIARIES

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

             For The Three Months Ended September 30, 2004 and 2003
                                   (Unaudited)

FACILITY RENTAL
---------------

STR leases its location in Fredericksburg, VA, on a month-to-month basis without
a formal agreement. Rent expense relating to this location was $6,937 per month.

We have a three year lease for our executive offices of approximately 1,000
square feet located in Ridgefield, Connecticut and a month-to-month lease for a
manufacturing facility of approximately 5,000 square feet located in
Fredericksburg, Virginia. We also have an administrative office in Providence,
RI which is utilized under a monthly sublease comprising approximately 4,000
square feet.

EOIR, our wholly owned subsidiary, holds a four-year lease for its executive and
administrative offices of approximately 5,420 square feet in Woodbridge,
Virginia. The lease, which has an option to renew for an additional three-year
term, expires on September 30, 2005. EOIR also leases approximately 5,000 square
feet in Spotsylvania, Virginia, where it houses its software development unit.
This lease is currently on a month-to-month basis.

We also have several offices located in Fredericksburg, VA. One office with
approximately 4,722 sq ft., with a 1 year lease, one with 1,200 sq ft. with a 5
year lease, one with 10,000 sq ft., with a 5 year lease, and one with 4,200 sq
ft., with a five year lease. Monthly lease amounts for these facilities total
approximately $31,000.

INCOME TAXES
------------

The Company is currently delinquent on its corporate federal and state income
tax filings. The Company expects that its net operating loss carryforwards will
be sufficient to offset any taxable income. As a result, no provision for income
taxes or any related penalties or interest has been recorded for the three
months ended September 30, 2004.

GOVERNMENT CONTRACTS
--------------------

The Company's billings related to certain U.S. Government contracts are based on
provisional general & administrative and overhead rates which are subject to
audit by the contracting government agency. The Company has limited experience
with these audits.

12.      INCOME TAXES

There was no provision for federal or state income taxes for the three months
ended September 30, 2004 and 2003, due to the Company's operating losses and a
full valuation reserve.

The Company's deferred tax asset before valuation allowance is approximately
$8,000,000 and at September 30, 2004 consisted primarily of net operating loss
carry forwards. The change in the valuation allowance for the three months ended
September 30, 2004 was approximately $1,400,000. When filed, the Company's net
operating loss carry forwards of approximately $20,200,000 will expire in
varying amounts through 2024. The use of the federal net operating loss carry
forwards may be limited in future years as a result of ownership changes in the
Company's common stock, as defined by section 382 of the Internal Revenue Code.
The Company has not completed an analysis of these changes.

The Company has provided a full valuation reserve against the deferred tax asset
because of the Company's loss history and significant uncertainty surrounding
the Company's ability to utilize its net operating loss and tax credit
carryforward.

                                       21




<PAGE>

                  MARKLAND TECHNOLOGIES, INC. AND SUBSIDIARIES

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

             For The Three Months Ended September 30, 2004 and 2003
                                   (Unaudited)

13.      RELATED PARTY TRANSACTIONS

Robert Tarini, our chief executive officer is also chief executive officer of
Syquest, Inc. Syquest performs software and engineering development for the
Markland Group and provides approximately 4000 sq ft of office space to the
Company in Providence, RI. During the three months ended September 30, 2004
Syquest provided $65,359 in engineering and software services and charged
$18,000 for rent.

The Company believes that all transactions described above were made on terms no
less favorable to it than those obtainable from unaffiliated third parties. All
future transactions, if any, with its executive officers, directors and
affiliates will be on terms no less favorable to it than those that will be
obtainable from unrelated third parties at the time such transactions are made.

14.      LITIGATION

On June 28, 2004, Charles Wainer filed a civil suit against the Company in
Florida state court alleging breach of a stock purchase agreement and breach of
an employment agreement stemming from Wainer's sale of his business to a
predecessor of the Company and his subsequent employment thereat. In the
complaint, Wainer alleges Markland owes him $300,000 cash, some unspecified
portion of $700,000 in stock, some unspecified portion of $86,000 cash for lease
payments, and approximately $20,000 in back-pay. The Company believes that these
claims are without merit and plans to vigorously defend the action. On August
11, 2004, the Company answered the complaint and denied any liability.

On or about September 16, 2004, Joseph R. Moulton, Sr. initiated a lawsuit in
the Circuit Court of Spotsylvania County, Virginia, against the Company, EOIR,
our wholly owned subsidiary, and our Chief Executive Officer and Director,
Robert Tarini. Mr. Moulton was the largest single shareholder of EOIR prior to
its acquisition by the Company, owning approximately 67% of the EOIR capital
stock. Mr. Moulton received approximately $5,863,000 in cash and a promissory
note of EOIR in the approximate principal amount of $6,967,000 for his shares of
EOIR at the closing of the acquisition of EOIR by the Company.

In his complaint Mr. Moulton asserts, among other things, that the Company
breached its obligations under the Stock Purchase Agreement, dated June 29,
2004, pursuant to which the Company acquired EOIR, by terminating Mr. Moulton's
employment with EOIR and removing him from the EOIR board of directors.

Mr. Moulton is seeking damages allegedly suffered by his loss of employment,
extreme emotional distress, and costs incurred to enforce his contractual
rights. In addition, he is seeking certain other equitable relief including, the
appointment of a receiver to oversee the management of EOIR until these
promissory notes issued to former EOIR shareholders at the closing of the
acquisition are paid in full and a declaratory judgment that the Company's
actions constitute an event of default under these promissory notes allowing for
the acceleration of all amounts (approximately $11,000,000) due thereunder. The
Company is a guarantor of these notes.

The Company believes that the allegations in this lawsuit are entirely without
merit. The Company has filed an answer denying Mr. Moulton's allegations and
opposing vigorously all equitable relief sought. The Company has also filed a
demurrer seeking to dismiss certain claims. The Company is considering bringing
various claims against Mr. Moulton either by counterclaim or in a separate
action.

In addition, we are subject to legal proceedings, claims, and litigation arising
in the ordinary course of business. While the outcome of these matters is
currently not determinable, we do not expect that the ultimate costs to resolve
these matters will have a material adverse effect on our consolidated financial
position, results of operations, or cash flows.

                                       22




<PAGE>

                  MARKLAND TECHNOLOGIES, INC. AND SUBSIDIARIES

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

             For The Three Months Ended September 30, 2004 and 2003
                                   (Unaudited)

15.      SUBSEQUENT EVENTS

SUBSEQUENT STOCK ISSUANCES
--------------------------

Between September 30, 2004, and November 12, 2004, executives and consultants of
the company were issued 3,616,438 shares of common stock based on employment
agreements, on July 1, and October 1, 2004,

RESIGNATION OF DIRECTOR
-----------------------

On November 1, 2004, Gregory A. Williams notified the Board of Directors of
Markland Technologies, Inc. of his resignation from the Board of Directors of
the Company and his positions as Director, Executive Vice President, Chief
Financial Officer, and Chief Operating Officer of the Company's wholly owned
subsidiary, EOIR Technologies, Inc. ("EOIR"). Mr. Williams was a shareholder of
EOIR prior to the acquisition of EOIR by the Company on June 29, 2004. To the
knowledge of the Company, Mr. Williams' resignation was not in connection with
any disagreement concerning matters relating to the Company's operations,
policies or practices.

On November 1, 2004, Mr. Williams, the Company, and EOIR entered into an
Agreement and General Release detailing the terms and conditions of Mr.
Williams' resignation (the "Separation Agreement"). The Separation Agreement
states, among other things, that (a) the Company is to pay Mr. Williams twelve
months of severance and all accrued and unused vacation time, (b) Mr. Williams
is entitled to retain all benefits until the earlier of December 31, 2005 or
when Mr. Williams finds new employment, (c) the vesting of 40% of the
non-statutory stock options held by Mr. William is accelerated; and (e) Mr.
Williams reaffirms his confidentiality and non-competition obligations and
agrees not to compete with or solicit employees from EOIR for a period of twelve
months.

EQUITY FINANCING
----------------

On November 9, 2004, we entered into a Securities Purchase Agreement (the
"Securities Purchase Agreement") with Harborview Master Fund, LP and Southridge
Partners, LP (the "Investors") pursuant to which we sold warrants to purchase
shares of our common stock and secured convertible promissory notes for the
aggregate consideration of $1,350,000. We received net proceeds of $1,174,500
from this private placement. We intend to use the proceeds from this offering
for working capital. The offer and sale of these securities was made in reliance
on Section 4(2) of Securities Act of 1933, as amended. The Investors are
"accredited investors" within the meaning of Regulation D.

The Securities Purchase Agreement contains standard representations, covenants
and events of default. Occurrence of an event of default allows the Investors to
accelerate the payment of the notes and/or exercise other legal remedies,
including foreclosing on collateral.

The notes issued in connection with this private placement are in the aggregate
principal amount of one million seven hundred fifty five thousand dollars
($1,755,000) and accrue interest daily at the rate of eight percent (8%) per
year on the then outstanding and unconverted principal balance of the notes. The
notes will mature on November 9, 2005.

At any time, and at the option of the Investors, the outstanding principal and
accrued interest of the notes may be converted into shares of our common stock
at an initial conversion price per share of $0.80.

Under the terms of each these notes, we are required to pay a principal amount
on each note equal to the consideration paid by the Investor holding such note
plus any accrued interest by March 15, 2005, and the remaining outstanding
balance by November 9, 2005. If we do not make the March 15, 2005 prepayment,
the conversion price will be adjusted from $0.80 per share to the lower of (i)
$0.80 and (ii) a floating rate equal to 80% of average closing price per share
of our common stock for the five trading days preceding conversion.

                                       23




<PAGE>

                  MARKLAND TECHNOLOGIES, INC. AND SUBSIDIARIES

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

             For The Three Months Ended September 30, 2004 and 2003
                                   (Unaudited)

In the event we issue common stock or common stock equivalents at a price per
share below the then effective conversion price of the convertible notes, the
conversion price will be reduced to that lower price per share.

The warrants issued in connection with this private placement entitle the
Investors to purchase an aggregate of 2,193,750 shares of our common stock, at
any time and from time to time, through November 9, 2009.

Under the terms of the warrants, if we do not make a prepayment of an aggregate
of $1,350,00 in principal, plus any interest having accrued thereon, on the
notes issued to the Investors in this private placement by March 15, 2005, the
exercise price of the warrant will be reduced from $1.50 to the lesser of (i)
$0.792 and (ii) 80% of the average closing price per share of our common stock
on the date the adjustment is made.

Adjustments are also required in the event that we issue common stock or common
stock equivalents at a price per share below the then effective exercise price
of the warrants. The exercise price will be reduced to that lower price per
share.

In the event any of the foregoing adjustments are made, the warrants will become
exercisable for a number of shares equal to the aggregate exercise price (i.e.,
the exercise price per share multiplied by the number of underlying shares)
prior to the adjustment divided by the adjusted exercise price per share.

We have agreed to prepare and file with the SEC a registration statement
covering the resale of all of the shares of our common stock issuable upon
conversion of the notes and the exercise of the warrants issued in connection
with this private placement, as provided in the Securities Purchase Agreement
dated November 9, 2004.

The investors in our September 21, 2004 private placement have consented to the
inclusion of the Investors, and additional selling shareholders with piggy back
registration rights, in the filing of the registration statement on Form SB-2 to
be filed in connection with our September 21, 2004 private placement. In
addition, they have waived their rights to liquidated damages pursuant to the
Registration Rights Agreement dated September 21, 2004, that would have been
paid for our filing of the registration statement on November 10, 2004.

The terms of the Securities Purchase Agreement with the Investors requires that
if either: (i) the registration statement is not declared effective by December
20, 2004, or within five trading days after the SEC notifies us that the
registration will not be reviewed or is not subject to further review or
comments; or (ii) this registration statement is suspended for more than an
aggregate of 20 trading days, whether or not consecutive, in any twelve-month
period, we will be required to pay each of the Investors liquidated damages in
an amount equal to 2% of such Investor's investment amount, half of which may,
at our option, be paid in common stock of equivalent value. Such value shall be
determined based on the lower of (i) the average of the closing price of our
common stock for the five days preceding the payment date and (ii) the closing
price of our common stock on the day preceding the date that stock is delivered
to the Investors.

We have granted a security interest in and a lien on substantially all of our
assets to the Investors pursuant to the terms of the Securities Purchase
Agreement, dated November 9, 2004. This security interest is subordinated to the
security interests granted in connection with the acquisition of EOIR and the
September 21, 2004 private placement.

                                       24




<PAGE>

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

         THE FOLLOWING DISCUSSION AND ANALYSIS SHOULD BE READ IN CONJUNCTION
WITH THE OTHER FINANCIAL INFORMATION AND CONSOLIDATED FINANCIAL STATEMENTS AND
RELATED NOTES APPEARING ELSEWHERE IN THIS AMENDMENT NO. 1 TO OUR QUARTERLY ON
FORM 10-QSB, FOR THE QUARTER ENDED SEPTEMBER 30, 2004. THIS DISCUSSION CONTAINS
FORWARD-LOOKING STATEMENTS THAT INVOLVE RISKS AND UNCERTAINTIES. OUR ACTUAL
RESULTS COULD DIFFER MATERIALLY FROM THOSE ANTICIPATED IN THE FORWARD-LOOKING
STATEMENTS AS A RESULT OF A VARIETY OF FACTORS. READERS ARE CAUTIONED NOT TO
PLACE UNDUE RELIANCE ON ANY FORWARD-LOOKING STATEMENTS CONTAINED IN THIS
AMENDMENT NO. 1 TO OUR QUARTERLY ON QUARTERLY REPORT ON FORM 10-QSB, FOR
THE QUARTER ENDED SEPTEMBER 30, 2004. WE WILL NOT UPDATE THESE FORWARD-LOOKING
STATEMENTS UNLESS THE SECURITIES LAWS AND REGULATIONS REQUIRE US TO DO SO.

OVERVIEW

         The following management's discussion and analysis of financial
condition and results of operations is organized as follows:

         o        OVERVIEW. This section provides a general description of
                  Markland, its business and recent developments and events that
                  have occurred since 2002 that we believe are important in
                  understanding the results of operations and financial
                  condition and to anticipate future trends. In addition, we
                  have provided a brief description of our acquisition of EOIR
                  Technologies, Inc., an event that impacts the comparability of
                  the results being analyzed.

         o        RESULTS OF OPERATIONS. This section provides an analysis of
                  Markland's results of operations for the fiscal quarters ended
                  September 30, 2004 and September 30, 2003. This analysis is
                  presented on a consolidated basis.

         o        LIQUIDITY AND CAPITAL RESOURCES. This section provides an
                  analysis of Markland's cash flows for the fiscal quarters
                  ended September 30, 2004 and September 30, 2003, as well as a
                  discussion of recent financing arrangements including
                  financings that were closed on September 21, 2004 and November
                  9, 2004.

         o        CRITICAL ACCOUNTING POLICIES. This section discusses certain
                  critical accounting policies that we consider important to
                  Markland's financial condition and results of operations, and
                  that required significant judgment and estimates on the part
                  of management in application. Markland's significant
                  accounting policies, including the critical accounting
                  policies discussed in this section, are summarized in the
                  notes to the accompanying consolidated financial statements.

                                    OVERVIEW

BACKGROUND

         GENERAL. We provide to the United States Department of Defense ("DOD")
and to various other United States Intelligence Agencies ("INTEL"); remote
sensing technology products, and services to protect our country's military
personnel and infrastructure assets. We also provide to the Department of
Homeland Security ("Homeland Security"); products, services and emerging
technologies to protect our country's borders, infrastructure assets and
personnel. Our mission is to build world-class integrated solutions for the
Homeland Security ("Homeland Security"), DOD and INTEL marketplaces via
expansion of our existing contracts, development of our emerging technologies
and acquisition of synergistic revenue producing assets.

         We have undergone material changes to our business and our financial
structure during the period covered by the financial statements included in this
Form 10-QSB as amended. Our business, as it exists today, consists of four
business areas: remote sensor systems for military and intelligence
applications, chemical detection, border security and advanced technologies.

                                       25




<PAGE>

         Our primary sources of operating revenue are from our wholly owned
subsidiary E-OIR Technologies, Inc. ("EOIR"), which was acquired by us on June
29, 2004. EOIR offers products and services which include; (i) design and
fabrication of customized remote sensor systems and platforms for DOD, INTEL and
Homeland Security applications; (ii) remote sensor data collection, data signal
processing and data exploitation; and (iii) training in the use of remote sensor
systems and data. These efforts involve systems engineering, system integration,
prototyping, manufacturing and field data collections as well as data analysis
and processing.

         Prior to the acquisition of EOIR, our primary sources of operating
revenue were sales of our automatic chemical agent detection and alarm system
produced by our wholly owned subsidiary Science and Technology Research Inc.
("STR"), border security logistics products and services provided by our wholly
owned subsidiary Ergo Systems, Inc. ("ERGO"), and Small Business Investment
Research ("SBIR") funded research grants for the development of gas plasma
antenna technology.

         Our acquisition of EOIR has materially changed our business. We
completed our acquisition of EOIR on June 29, 2004. We have included a
discussion of certain financial information concerning EOIR in our discussion
and analysis of our financial condition and results of operations. Information
concerning the EOIR acquisition can be found in our Current Report on Form 8-K/A
filed with the SEC on September 13, 2004 (File #000-28863) which includes
audited financial statements for EOIR for the years ended December 31, 2003 and
December 31, 2002, and unaudited financial statements for the three months ended
March 31, 2004, as well as unaudited pro forma information for fiscal year ended
June 30, 2003 and the nine months ended March 31, 2004.

MARKLAND BUSINESS

REMOTE SENSOR SYSTEMS FOR MILITARY AND INTELLIGENCE APPLICATIONS

         Our acquisition of EOIR on June 29, 2004, a company which provides
remote sensing technology products and services to the United States Department
of Defense and to various other United States Intelligence Agencies, is a very
important part of our ongoing business strategy of creating a world-class
integrated portfolio of solutions for the Homeland Security, DOD and INTEL
marketplaces.

         EOIR's most significant source of revenues is an Omnibus Contract with
the United States Army Night Vision and Electronic Sensors Directorate which has
a total potential value of approximately $406 million over its five year period
of performance. Approximately 86% of EOIR revenues for its fiscal year ended
December 31, 2003, were derived from this contract. The Omnibus Contract has an
extensive and varied scope that requires us to provide a very broad range of
products and technical services. For those products and technical services that
EOIR does not possess in-house, we have and continue to subcontract to our team
members and other subcontractors as necessary.

CHEMICAL DETECTOR

         In October 2003, our subsidiary, Security Technology, Inc., acquired
all of the common stock of Science and Technology Research, Inc., a chemical
detector manufacturer, as part of our ongoing business strategy of creating an
integrated portfolio of homeland security solutions.

         STR has a contract with the U.S. Navy to be the sole producer of the
U.S. Navy's shipboard Automatic Chemical Agent Detection and Alarm System used
to detect all classic nerve and blister agents as well as other chemical warfare
agent vapors. STR's sole source of revenues is this contract with the United
States Navy which has a total potential value of approximately $37,000,000 over
its period of performance. As of June 30, 2004, we had completed delivery
pursuant to all outstanding orders under this contract. We are experiencing a
decline in demand for our chemical detector unit from the U.S. Navy. We plan to
compensate for this reduced demand by marketing this technology to new customers
within the Homeland Security marketplace and by combining it with other
technologies for sale to customers other than the US Navy. During the three
months ended September 30, 2004 our subsidiary STR recognized approximately
$66,032 of revenue from this contract.

                                       26




<PAGE>

         We are presently working on the design of a next generation "point"
chemical detector product, which will also operate using Ion Mobility
Spectrography (IMS) cell technology and provide networked wireless communication
capability.

         On December 23, 2003, the U.S. Navy signed a ten-year non-exclusive
license agreement with us to transfer certain chemical detection technology
intellectual property rights to us. We believe the license will allow us to
further expand the applications for the "point" chemical detection technology
and market the technology to non-defense customers such as foreign governments
and commercial entities. The company is combining "stand off" chemical detection
technologies from EOIR which are based on hyper spectral infra red technology
with the "point" chemical detection technology of STR which is based on Ion
Mobility Spectroscopy. This integrated and combined chemical detection
capability we believe will accelerate penetration into new markets for the
chemical detection products we now offer and will help to increase our revenues
in the next fiscal year for chemical detection products.

BORDER SECURITY

         We acquired the assets of Ergo Systems, Inc., in January 2003. This
acquisition provided us with contracts with the Department of Homeland Security
to maintain, integrate, and implement design enhancements to border security
systems installed at U.S. ports of entry for the Dedicated Commuter Lane, which
is part of a larger U.S. Customs and Immigration and Naturalization Service
initiative to reduce wait times, improve data accuracy, and improve overall
efficiencies at all border crossings for both freight and passengers.

         During the fiscal year we entered into a teaming agreement with
Accenture, who was recently awarded the US VISIT Contract. The purpose of this
contract is to secure our borders and expedite the entry/exit process while
enhancing the integrity of our immigration system and respecting the privacy of
visitors to the US. We have recently been awarded a subcontract which enables
the company to derive revenues from the US VISIT Contract. During the three
months ended September 30, 2004 our subsidiary Ergo Systems, Inc. recognized
approximately $196,588 of revenue from these contracts. Management believes that
the potential for increased revenues has been greatly enhanced by this
subcontract award.

ADVANCED TECHNOLOGIES

         Through research and development as well as intellectual property
acquisitions, we have established a portfolio of advanced and emerging
technologies, which we intend to commercialize and utilize within our own
proprietary products or license out for the purpose of revenue generation. These
advanced technologies and intellectual property are as follows:

         o        Gas plasma antenna,
         o        Vehicle stopping system,
         o        Acoustic Core(TM) signature analysis,
         o        APTIS(TM) human screening portal, and
         o        Cryptography software.

         Of these five advanced technologies we believe that the nine issued and
pending U.S. patents related to gas plasma antenna technology with demonstrated
applications in the fields of ballistic missile defense, phased array radar, and
forward deployed decontamination have the most demonstrated potential to create
future sustained revenue streams.

                                       27
<PAGE>

COMPANY HISTORY

         EVENTS PRIOR TO FISCAL 2002. Markland, previously known as Quest Net,
was incorporated in Colorado in November 1995, under the name "A.P. Sales Inc."
In December 1998, A.P. Sales Inc. dissolved as a Colorado corporation,
redomiciled in Florida and changed its name to Quest Net Corp. In 2001 our only
asset was the stock of a subsidiary, CWTel, Inc. ("CWTel"), a company in the
telecommunications business. We acquired this company in March 2000 and secured
our payment obligations with 30,000 shares of our Series A Non-Voting Redeemable
Convertible Preferred Stock. CWTel filed for bankruptcy and was liquidated on
March 11, 2002. After the bankruptcy of our subsidiary, we had no active
business operations. On June 30, 2003, we issued 30,000 shares of our Series A
Non-Voting Redeemable Convertible Preferred Stock in satisfaction of our
remaining obligations to the holder of the security interest.

         On March 15, 2001, we acquired all the outstanding capital stock of a
company called Vidikron of America, Inc. ("Vidikron"), a development stage
company in the business of creating digital broadband and wireless networking
solutions for the internet. The sole stockholder of Vidikron was Markland LLC.
To acquire Vidikron we issued 10 shares of our convertible Series B Preferred
Stock to Markland LLC. Markland LLC converted all of its Series B Preferred
Stock in June 2001, which, resulted in Markland LLC owning approximately 85% of
our then outstanding common stock. There is no Series B Preferred Stock
outstanding. At this time we changed our name to Markland Technologies, Inc.

         On October 19, 2000 we executed a promissory note for $3,500,000 in
favor of James LLC. In July 2001, after the Vidikron acquisition, James LLC
elected to convert $2,500,000 of the principal amount of its $3,500,000
promissory note, together with $125,000 accrued interest, into shares of our
common stock. In September 2001, we assumed all of Vidikron's rights and
obligations under a $3,500,000 secured revolving credit facility with Market
LLC. These transactions made Market LLC our senior secured lender.

         EVENTS DURING FISCAL 2002. In May 2002, we received a notice of default
from Market LLC. In June of 2002, we transferred all the stock of Vidikron to
Market LLC in partial satisfaction of our indebtedness to Market LLC. After this
partial payment, we still owed Market LLC $500,000. Our disposition of the
business of Vidikron was treated as a discontinued operation. As a result, we
recorded a loss of $3,259,421 for the fiscal year ended June 30, 2002 resulting
from discontinued operations. At this point in our history we again had no
active business operations. In fiscal 2003, we recorded a gain of $998,713
resulting from the settlement of certain liabilities and obligations recorded in
previous periods in connection with the discontinued operations.

         EVENTS DURING FISCAL 2003. In December 2002, we entered into a
transaction with Eurotech Ltd., ipPartners, Inc., Market LLC, and James LLC.
Pursuant to this transaction, the following took place:

         o        We formed a subsidiary corporation called Security Technology,
                  Inc.

         o        Eurotech transferred certain rights to its Acoustic Core
                  Technology(TM) to our subsidiary.

         o        Crypto.com Inc. (a subsidiary of Eurotech) and ipPartners,
                  Inc. transferred certain rights to their cryptology
                  technologies to our subsidiary.

         o        90% of the shares of our common stock held by Market LLC and
                  James LLC were retired.

         o        We issued shares of common stock representing 80% of our then
                  issued and outstanding common stock to Eurotech, Ltd. and
                  shares of common stock representing 10% of our then issued and
                  outstanding shares of common stock to ipPartners, Inc.

         o        We issued $5,225,000 in stated value of our Series C 5%
                  Cumulative Convertible Preferred Stock to Market LLC and James
                  LLC in satisfaction of $5,225,000 of convertible notes held by
                  Market LLC and James LLC and in exchange for their agreement
                  to surrender 4,498,638 shares of our common stock.

                                       28
<PAGE>

         We are not a majority-owned subsidiary of Eurotech, Ltd. due to the
issuances of additional common stock.

         In January of 2003, we acquired all of the common stock of Ergo
Systems, Inc. ("Ergo"), a provider of security logistic support and related
product development services. Ergo has a contract with the United States
government to provide border security logistic support at five ports of entry.
In consideration for this acquisition, we agreed to pay $400,000 in cash,
payable at certain milestones related to our research efforts. During the year
ended June 30, 2004, we recognized $955,736 from these services.

         In March of 2003, we entered into an agreement to acquire the
intellectual property (including patents), equipment and government contracts
relating to our gas plasma antenna technology from ASI Technology Corporation,
but this transaction did not close until September 30, 2003. In consideration
for this acquisition we issued 283,333 shares of common stock valued at $850,000
and agreed to pay $150,000. During the year ended June 30, 2004, we recognized
revenue of $261,479 from SBIR research grants related to this technology.

         EVENTS DURING FISCAL 2004. In October of 2003, we acquired all of the
common stock of Science and Technology Research Corporation, Inc. ("STR"). This
company is the producer of the U.S. Navy's shipboard automatic chemical agent
detection and alarm system. In consideration for this acquisition, we issued
1,539,779 shares of common stock valued at $5,100,000 and paid $900,000 in cash,
and issued a promissory note for $375,000. During the year ended June 30, 2004,
we recognized revenue of $4,796,715 from sales of our automatic chemical agent
detection and alarm system to the U.S. Navy. We also entered into a consulting
agreement with the former principal shareholder and employee.

         On June 29, 2004, we acquired all of the outstanding stock of EOIR for
$8,000,000 in cash and $11,000,000 in principal amount of five year notes
secured by the assets and stock of EOIR. EOIR is a provider of technology and
services to the United States Army Night Vision and Electronic Sensors
Directorate and has expertise in wide area remote sensing using both
electro-optic and infrared technologies. Markland intends to continue to use the
assets of EOIR for this purpose. We expect that EOIR will represent a majority
of Markland's revenues going forward. We expect that these sensor science
products will be our most significant revenue producing business.

         FINANCING ACTIVITIES. We have financed our business activities through
borrowings and private placements of our securities to institutional investors.
We have engaged in the following financing activities:

         o        In October 2003, we borrowed $1,400,000 from Bay View Capital,
                  LLC. This borrowing was repaid in April 2004.

         o        At various times between April 2003 and March 2004 we have
                  raised an aggregate of approximately $3,832,000 through
                  private placements of our Series D Preferred Stock to an
                  institutional investor.

         o        On April 2, 2004, we sold 3,333,333 shares of common stock and
                  warrants to purchase 3,333,333 shares of our common stock for
                  gross proceeds of $2,000,000 to three investors in a private
                  placement.

         o        On April 16, 2004, we sold 2,500,000 shares of our common
                  stock and warrants to purchase 2,500,000 shares of our common
                  stock for gross proceeds of $2,000,000 to ten investors in a
                  private placement.

                                       29
<PAGE>

         o        On May 3, 2004, we sold 7,098,750 shares of our common stock
                  and warrants to purchase 7,098,750 shares of our common stock
                  for gross proceeds of $5,679,000 to 34 investors in a private
                  placement.

         o        As of April 2004, all of our Series C Cumulative Convertible
                  Preferred Stock has been converted into common stock and none
                  remains outstanding.

         o        On June 30, 2004, we sold 3,500 shares of Series D Preferred
                  Stock to an institutional investor for $2,000,000 in
                  connection with the acquisition of EOIR.

EVENTS AFTER FISCAL 2004
------------------------

         o        On September 21, 2004, we sold secured convertible promissory
                  notes and warrants to purchase shares of common stock to two
                  institutional investors for approximately $4,000,000.

FINANCING ACTIVITIES AFTER SEPTEMBER 30, 2004
---------------------------------------------

         o        On November 9, 2004 we sold convertible promissory notes and
                  warrants to purchase shares of common stock to two
                  institutional investors for approximately $1,350,000.

      RESULTS OF OPERATIONS COMPARISON OF SEPTEMBER 2003 AND SEPTEMBER 2004

         REVENUE:

         Revenue for the fiscal quarter ended September 30, 2004 was $15,769,851
compared to $306,724 for the same period in 2003. Our EOIR subsidiary accounted
for approximately 98% of these revenues in the three months ended September 30,
2004.

         EOIR's most significant source of revenues is a contract with the
United States Army Night Vision and Electronic Sensors Directorate.
Approximately 84% of our revenues were received from this contract. We expect
orders to continue at current levels under this contract, however, no assurance
can be given that they will continue or continue at current levels.

         COST OF REVENUES:

         Cost of revenues for the fiscal quarter ended September 30, 2004 was
$12,442,893, compared to $256,956 for the same period in 2003. Cost of revenues
increased as a result of an increase in sales resulting from our acquisition of
EOIR. We expect that cost of revenues will increase if sales increase, but that
our gross margins will improve with increased sales as we expect to increase the
sale of higher margin products and services into our revenue base as we better
diversify our customer and contract base.

         Gross profits for the quarter ended September 30, 2004 was $3,326,958
compared to $49,768 for the same period in 2003. Gross profits increased as a
result of additional revenue from the acquisition of EOIR. Gross profit as a
percentage of revenue was approximately 21%. We expect this percentage to
increase if sales from our EOIR subsidiary increase.

         SELLING, GENERAL AND ADMINISTRATIVE EXPENSES:

         Selling, general and administrative expense for the quarter ended
September 30, 2004 was $3,571,040 compared to $497,812 in the same period in
2003.

         Selling, general and administrative expense was primarily composed of
payroll, consultants, legal and accounting fees, and vendors. The increase in
selling, general and administrative expense was primarily due to increases in
staff resulting from the acquisition of EOIR and increases due to related sales
growth. As reported on our current report on Form 8-K/A filed with the SEC on
September 13, 2004, EOIR's selling, general and administration expense was
$5,622,521 and $5,188,798, for the fiscal years ended December 31, 2003 and 2002
respectively.

                                       30




<PAGE>

         RESEARCH AND DEVELOPMENT:

         During the fiscal quarter ended September 30, 2004, we did not spend
anything on research and development activities. During the fiscal year ended
June 30, 2003, $522,657 was spent on research and development activities. During
the fiscal year ended June 30, 2004, we reduced our research and development
efforts to concentrate our financial resources on product marketing activities.
We do not expect to have material research and development expenses in the near
term.

         COMPENSATORY ELEMENT OF STOCK ISSUANCES FOR SELLING, GENERAL AND
         ADMINISTRATIVE EXPENSES:

         Compensatory element of stock issuances for selling, general and
administrative expenses for the quarters ended September 30, 2004 and September
30, 2003 was a benefit of $19,143 and a charge of $401,980, respectively. In the
fiscal quarter ended September 30, 2004, this amount consisted of a negative
charge as a result of revaluations made at quarters end to unearned compensation
balances. We do not expect such negative charges to recur. We use our equity to
compensate management and consultants who provide services to us. We expect to
continue to do so in the future. For this reason we expect to continue to incur
such charges.

         OPERATING LOSS:

         Loss from operations for the quarter ended September 30, 2004 was
$748,653. This loss resulted primarily from selling, general and administrative
expenses, which were offset by gross profit. We believe that we will incur
non-cash charges for the compensatory element of stock issuances in future
quarters. Such charges will increase operating loss or reduce operating profit
if we have operating profits.

         Loss from operations for the quarter ended September 30, 2003 was
$883,358. This loss resulted primarily from non-cash charges for the
compensatory element of stock issuances of $401,980 and from selling, general
and administrative expenses, which were offset to a small extent by gross
profit.

         INTEREST EXPENSE:

         Interest expense for the quarter ended September 30, 2004 and September
30, 2003 was $503,215 and $28,578 respectively. Interest and financing expense
was from notes payable issued for bridge financing, premium financing
arrangements and other financing costs.

         In connection with our acquisition of EOIR, EOIR issued, and we
guaranteed, $11,000,000 in original principal amount of notes due to the former
stockholders of EOIR. These notes bear interest at the rate of six (6%) percent
per annum and must be repaid within the next five years. The carrying value of
these notes is $9,605,442 at September 30, 2004. We expect significant increases
in interest expense as a result of this financing and the convertible debt
financing completed on September 21, 2004.

         PREFERRED STOCK DIVIDENDS:

         There were no Preferred Stock dividends for the quarter ended September
30, 2004.

         All of Series C Preferred Stock has been converted. As a result none is
outstanding.

                                       31




<PAGE>

         Preferred Stock dividends for the quarter ended September 30, 2003 were
$155,689. This consisted of deemed dividends to the holder of our Series C
Preferred Stock of $65,689 and deemed dividends to the holder of our Series D
Preferred Stock of $90,000. We expect to continue to finance our operations with
additional debt and equity financing including, possibly, additional sales of
our Series D Preferred Stock with beneficial conversion features. Such financing
could result in additional charges for preferred stock dividends and conversions
of Series D Preferred Stock into common stock.

         NET LOSS APPLICABLE TO COMMON STOCKHOLDERS:

         Net loss applicable to common stockholders for the quarters ended
September 30, 2004 and September 30,2003 was $1,246,021 ($0.03 per share) and
$1,067,625 ($0.22 per share) respectively. Our weighted average number of shares
outstanding on September 30, 2004 and September 30, 2003 were 38,352,594 and
4,746,887, respectively. The reduction in net loss per share from the prior
period is due primarily to the increase in number of shares outstanding. Shares
outstanding increased primarily as a result of our financing activities.

                         LIQUIDITY AND CAPITAL RESOURCES

         During the quarter ended September 30, 2004, we experienced $2,503,859
of positive cash flow from operating activities. This cash flow was the result
of a loss of $1,246,021 from continuing operations offset in part by non-cash
charges for amortization of intangible asset of $481,992 non-cash interest
payments of $314,166 and an increase in accounts payable of $4,069,967.

         On June 29, 2004, we acquired all of the outstanding stock of EOIR for
$8,000,000 in cash and $11,000,000 in principal amount of five year notes
secured by the assets and stock of EOIR. These notes bear interest at the rate
of six (6%) percent per annum and must be repaid within the next five years. The
carrying value of these notes is $9,605,442 at September 30, 2004. We expect
significant increases in interest expense as a result of this financing.

         On September 21, 2004, we sold secured convertible promissory notes and
warrants for the aggregate consideration of $4,000,000 and in the aggregate
principal amount of $5,200,000. These notes accrue interest at the rate of eight
percent (8%) per annum and are due and payable within one year. The carrying
value of this note is $218,071 at September 30, 2004 and the balance will be
accreted over the life of the loan.

         We believe that required investment capital will be available to us,
but there can be no assurance that we will be able to raise funds on terms
acceptable to us, or at all. We have the ability to adjust the level of research
and development and selling and administrative expenses to some extent based on
the availability of resources. However, reductions in expenditures could delay
development and adversely affect our ability to generate future revenues.

         Any equity-based source of additional funds could be dilutive to
existing equity holders and the dilution could be material. The lack of
sufficient funds from operations or additional capital could force us to curtail
or scale back operations and would therefore have an adverse effect on our
business. Other than cash and cash equivalents, we have no unused sources of
liquidity at this time. We expect to incur additional operating losses as a
result of expenditures for research and development and marketing costs for our
security products and technologies. The timing and amounts of these expenditures
and the extent of our operating losses will depend on many factors, some of
which are beyond our control. Accordingly, there can be no assurance that our
current expectations regarding required financial resources will prove to be
accurate. We anticipate that the commercialization of our technologies may
require increased operating costs; however, we cannot currently estimate the
amounts of these costs.

                                       32




<PAGE>

GOING CONCERN

         For three months ended September 30, 2004 and September 30, 2003, we
incurred a loss from continuing operations of $1,246,021 and $ 911,936
respectively.

         We have limited finances and require additional funding in order to
market and license our products. There is no assurance that we can reverse our
operating losses, or that we can raise additional capital to allow us to
continue our planned operations. These factors raise substantial doubt about our
ability to continue as a going concern.

         The report of our independent registered public accounting firm for the
fiscal year 2004 includes an explanatory paragraph as to the uncertainty that we
will continue as a going concern. While we have experienced operating losses in
the past, due to our acquisition of EOIR, the operating portion of our business
is currently cash flow positive. Our business plan is to continue to grow our
customer base and our revenues and to control and monitor operating expenses and
capital expenditures. In addition, after the conclusion of the 2004 fiscal year,
we consummated a financing through which we realized net cash of approximately
$3,460,000, which if not converted is repayable by September 30, 2005. We
believe that our business as currently constituted will produce positive cash
flow which, together with our current cash levels, will enable us to meet our
existing financial obligations as they come due during the current fiscal year.
However, we can provide no assurance that the performance of our business will
meet our expectations.

OFF-BALANCE SHEET ARRANGEMENTS

         We have no significant off-balance sheet arrangements that have or are
reasonably likely to have a current or future effect on our financial condition,
changes in financial condition, revenues or expenses, results of operations,
liquidity, capital expenditures or capital resources that is material to
stockholders.

EFFECT OF INFLATION AND CHANGES IN PRICES

Management does not believe that inflation and changes in price will have a
material effect on operations.

CRITICAL ACCOUNTING POLICIES

         The preparation of Markland's financial statements and related
disclosures 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 the disclosure
of contingent assets and liabilities as of the date of the financial statements
and the amounts of revenues and expenses recorded during the reporting periods.
We base our estimates on historical experience, where applicable, and other
assumptions that we believe are reasonable under the circumstances. Actual
results may differ from our estimates under different assumptions or conditions.

         The sections below present information about the nature of and
rationale for our critical accounting policies.

         PRINCIPLES OF CONSOLIDATION

         Our consolidated financial statements include the accounts of Markland
and its wholly-owned subsidiaries, Security Technology, Inc., Ergo Systems,
Inc., Science and Technology Research Corporation, Inc and E-OIR Technologies,
Inc. We have eliminated all significant inter-company balances and transactions.

                                       33




<PAGE>

         CONCENTRATIONS

         Statement of Financial Accounting Standards ("SFAS") No. 105,
"Disclosure of Information about Financial Instruments With Off-Balance-Sheet
Risk and Financial Instruments with Concentrations of Credit Risk," requires
that we disclose any significant off-balance-sheet and credit risk
concentrations. We are subject to concentrations of credit risk because the
majority of our revenues and accounts receivable are derived from the US Navy,
Computer Science Corporation and The Department of Homeland Security, none of
whom is required to provide collateral for amounts owed to us. We do not believe
that we are subject to any unusual credit risks, other than the normal level of
risk attendant to operating our business.

         As of September 30,2004, we had cash balances in banks in excess of
the maximum amount insured by the FDIC. In addition, we derive substantially all
of our contract revenue from contracts with Federal government agencies.
Consequently, substantially all of our accounts receivable are due from Federal
government agencies either directly or through other government contractors.

         IMPAIRMENT OF GOODWILL AND AMORTIZABLE INTANGIBLES

         In accordance with SFAS No. 142, "Goodwill and Other Intangible
Assets," we review goodwill for impairment annually, or more frequently if an
event occurs or circumstances change that would more likely than not reduce the
fair value of our business enterprise below its carrying value. The impairment
test requires us to estimate the fair value of our overall business enterprise
down to the reporting unit level. We estimate fair value using both a discounted
cash flows model, as well as an approach using market comparables, both of which
are weighted equally to determine fair value. Under the discounted cash flows
method, we utilize estimated long-term revenue and cash flows forecasts
developed as part of our planning process, as well as assumptions of terminal
value, together with an applicable discount rate, to determine fair value. Under
the market approach, fair value is determined by comparing us to similar
businesses (or guideline companies). Selection of guideline companies and market
ratios require management's judgment. The use of different assumptions within
our discounted cash flows model or within our market approach model when
determining fair value could result in different valuations for goodwill.

         ESTIMATED USEFUL LIVES OF AMORTIZABLE INTANGIBLE ASSETS

         We amortize our amortizable intangible assets over the shorter of the
contractual/legal life or the estimated economic life. We are amortizing the
intangible assets acquired as of a result of the Ergo and ASI acquisitions over
a three-year life commencing with the date of acquisition. With respect to the
Science & Technology Research, Inc. and EOIR Technologies, Inc. acquisitions,
consistent with independent business valuations, we are amortizing the
intangible assets over ten years and nine years respectively.

         IMPAIRMENT OF LONG-LIVED ASSETS

         Pursuant to SFAS No. 144, we continually monitor events and changes in
circumstances that could indicate carrying amounts of long-lived assets may not
be recoverable. We recognize an impairment loss when the carrying value of an
asset exceeds expected cash flows. Accordingly, when indicators or impairment of
assets are present, we evaluate the carrying value of such assets in relation to
the operating performance and future undiscounted cash flows of the underlying
business. Our policy is to record an impairment loss when we determine that the
carrying amount of the asset may not be recoverable. No impairment charges were
recorded for the three months ended September 30, 2004 and 2003.

                                       34




<PAGE>

         REVENUE RECOGNITION

         We recognize product revenue when the following criteria are met: (1)
we have persuasive evidence of an arrangement, such as agreements, purchase
orders or written requests; (2) we have completed delivery and no significant
obligations remain, (3) our price to our customer is fixed or determinable, and
(4) collection is probable. We recognize revenues at the time we perform
services related to border security logistic support. With respect to our
revenues from our chemical detectors, we recognize revenue under the
units-of-delivery method. At the time the units are shipped to the warehouse of
the United States Navy, the Company recognizes as revenues the contract price of
each unit and recognizes the applicable cost of each unit shipped. As of June
30, 2004, we had completed delivery pursuant to all outstanding orders under
this contract.

         Revenues from time and materials contracts are recognized as costs are
incurred.

         Revenues from firm fixed price contracts are recognized on the
percentage-of-completion method, either measured based on the proportion of
costs recorded to date on the contract to total estimated contract costs or
measured based on the proportion of labor hours expended to date on the contract
to total estimated contract labor hours, as specified in the contract.

         Provisions for estimated losses on all contracts are made in the period
in which such losses become known. Changes in job performance, job conditions,
and estimated profitability, including those arising from contract penalty
provisions, and final contract settlements may result in revision to cost and
income and are recognized in the period in which the revisions are determined.

         The Company participates in teaming agreements where they are the
primary contractor and they participate with other organizations to provide
services to the Federal government. The Company has managerial and oversight
responsibility for team members as well as the responsibility for the ultimate
acceptability of performance under the contract. The Company includes as
revenues the amounts that they bill under the teaming arrangements and include
as direct costs amounts that are reimbursable or paid to team members.


         IMPACT OF RECENTLY ISSUED ACCOUNTING STANDARDS

         In December 2003, the FASB issues FASB Interpretation No. 46R ("FIN
46R"), "Consolidation of Variable Interest Entities". FIN 46R expands upon
existing accounting guidance that addresses when a company should include in its
financial statements the assets, liabilities and activities of another entity. A
variable interest entity is a corporation, partnership, trust or any other legal
structure used for business purposes that either (a) does not have equity
investors with voting rights or (b) has equity investors that do not provide
sufficient financial resources for the entity to support its activities. FIN 46R
requires a variable interest entity to be consolidated by a company if that
company is subject to a majority of the risk of loss from the variable interest
entity's activities or is entitled to receive a majority of the entity's
residual returns or both. The adoption of this interpretation did not have any
impact on our financial position or results of operations.

         In May 2003, the FASB issued SFAS No. 150, "Accounting for Certain
Financial Instruments with Characteristics of both Liabilities and Equity." This
statement establishes standards for how an issuer classifies and measures
certain financial instruments with characteristics of both liabilities and
equity. It requires that an issuer classify a financial instrument that is
within its scope as a liability. Many of those instruments were previously
classified as equity. SFAS No. 150 is effective for financial instruments
entered into or modified after May 31, 2003, and otherwise is effective at the
beginning of the first interim period beginning after June 15, 2003. The
adoption of this statement did not have any impact on our financial position or
results of operations.

                                       35




<PAGE>

ITEM 3. CONTROLS AND PROCEDURES.

         EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES. Based on our
management's evaluation (with the participation of our principal executive
officer and principal financial officer), as of the end of the period covered by
this report, our principal executive officer and principal financial officer
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 ensure 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 Securities and Exchange Commission rules and forms.

         Prior to the acquisition of EOIR, the limited size of our internal
financial and controls staff did not permit a significant amount of time or
expense on monitoring and oversight of our general administrative and financial
functions. In the course of management's ongoing evaluation of our controls and
procedures, management has concluded that, due to the limited amount of
resources available for general administrative and financial matters prior to
the acquisition of EOIR the Company: (i) had a less than desirable number of
people performing a majority of the financial duties, (ii) lacked the desired
internal financial and controls staff resources for a comprehensive internal
audit function, and (iii) and in some cases had not been able to promptly
accumulate and process all of our data and reports on a timely basis. Management
believes that at this time, in light of existing newly instituted staff and
controls, which include additional administrative personnel acquired with EOIR,
and the recent addition of an outside consultant, the risks associated with a
lack of segregation of duties and limited staff have been largely mitigated.
However, management will periodically reevaluate the situation, and as
necessary, will put in place additional internal staff and controls to prevent a
lack of discipline around policies and procedures in our administrative and
financial matters.

         CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING. There is no
change in our internal control over financial reporting during our first fiscal
quarter of 2005 that has materially affected, or is reasonably likely to
materially affect, our internal control over financial reporting.

         It should be noted that any system of controls, however well designed
and operated, can provide only reasonable, and not absolute, assurance that the
objectives of the system are met. In addition, the design of any control system
is based in part upon certain assumptions about the likelihood of future events.
Because of these and other inherent limitations of control systems, there can be
no assurance that any design will succeed in achieving its stated goals under
all potential future conditions, regardless of how remote.

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS.

         On June 28, 2004, Charles Wainer filed a civil suit against the Company
in Florida state court alleging breach of a stock purchase agreement and breach
of an employment agreement stemming from Wainer's sale of his business to a
predecessor of the Company and his subsequent employment thereat. In the
complaint, Wainer alleges Markland owes him $300,000 cash, some unspecified
portion of $700,000 in stock, some unspecified portion of $86,000 cash for lease
payments, and approximately $20,000 in back-pay. The Company believes that these
claims are without merit and plans to vigorously defend the action. On August
11, 2004, the Company answered the complaint and denied any liability.

                                       36




<PAGE>

         On or about September 16, 2004, Joseph R. Moulton, Sr. initiated a
lawsuit in the Circuit Court of Spotsylvania County, Virginia, against the
Company, EOIR, our wholly owned subsidiary, and our Chief Executive Officer and
Director, Robert Tarini. Mr. Moulton was the largest single shareholder of EOIR
prior to its acquisition by the Company, owning approximately 67% of the EOIR
capital stock. Mr. Moulton received approximately $5,863,000 in cash and a
promissory note of EOIR in the approximate principal amount of $6,967,000 for
his shares of EOIR at the closing of the acquisition of EOIR by the Company.

         In his complaint Mr. Moulton asserts, among other things, that the
Company breached its obligations under the Stock Purchase Agreement, dated June
29, 2004, pursuant to which the Company acquired EOIR, by terminating Mr.
Moulton's employment with EOIR and removing him from the EOIR board of
directors.

         Mr. Moulton is seeking damages allegedly suffered by his loss of
employment, extreme emotional distress, and costs incurred to enforce his
contractual rights. In addition, he is seeking certain other equitable relief
including, the appointment of a receiver to oversee the management of EOIR until
these promissory notes issued to former EOIR shareholders at the closing of the
acquisition are paid in full and a declaratory judgment that the Company's
actions constitute an event of default under these promissory notes allowing for
the acceleration of all amounts (approximately $11,000,000) due thereunder. The
Company is a guarantor of these notes.

         The Company believes that the allegations in this lawsuit are entirely
without merit. The Company has filed an answer denying Mr. Moulton's allegations
and opposing vigorously all equitable relief sought. The Company has also filed
a demurrer seeking to dismiss certain claims. The Company is considering
bringing various claims against Mr. Moulton either by counterclaim or in a
separate action.

         In addition, we are subject to legal proceedings, claims, and
litigation arising in the ordinary course of business. While the outcome of
these matters is currently not determinable, we do not expect that the ultimate
costs to resolve these matters will have a material adverse effect on our
consolidated financial position, results of operations, or cash flows.

ITEM 2. CHANGES IN SECURITIES AND SMALL BUSINESS ISSUER PURCHASES OF EQUITY
SECURITIES.

         During the period ending September 30, 2004, various holders of the
Company's Series D Convertible Preferred Stock converted shares of preferred
stock into shares of common stock. The total shares issued under such
conversions was approximately 11,568,137. The issuance of these securities was
exempt from registration under Section 4(2) of the Securities Act of 1933, as
amended, as a sale not involving a public offering.

         On July 28, 2004, we issued 1,006,902 shares of our common stock to
each of Robert Tarini and Verdi Consulting, 301,370 shares of common stock to
Kenneth Ducey, Jr. and 705,532 shares of common stock to Asset Growth Company in
connection with employment and consulting agreements. The issuance of these
securities was exempt from registration under Section 4(2) of the Securities Act
of 1933, as amended, as a sale not involving a public offering. For more
information concerning this transaction please refer to Note 11 of our Condensed
Consolidated Financial Statements.

         During the three months ended September 30, 2004, the Company issued an
aggregate of 227,776 shares of common stock to various consultants
under existing contacts. The issuance of these securities was exempt from
registration under Section 4(2) of the Securities Act of 1933, as amended, as
sales not involving a public offering.

                                       37




<PAGE>

         Pursuant to employment agreements dated July 15, 2004, the company
issued 38,333 shares of common stock to two employees on August 26, 2004. The
issuance of these securities was exempt from registration under Section 4(2) of
the Securities Act of 1933, as amended, as a sale not involving a public
offering.

         On September 9, 2004, the Company issued 226,096 shares of common stock
to Tameracq Partners, Inc. pursuant to a consulting agreement in connection with
the Company's recent mergers and acquisitions. The issuance of these securities
was exempt from registration under Section 4(2) of the Securities Act of 1933,
as amended, as a sale not involving a public offering.

         On September 21, 2004, we entered into a Purchase Agreement with DKR
Soundshore Oasis Holding Fund, Ltd. and DKR Soundshore Strategic Holding Fund,
Ltd, pursuant to which we sold warrants to purchase 6,500,000 shares of our
common stock and secured convertible promissory notes in the principal amount of
$5,200,000, for the aggregate consideration of $4,000,000. We received net
proceeds of $3,480,000 from this private placement. The offer and sale of these
securities was made in reliance on Section 4(2) of Securities Act of 1933, as
amended. For more information concerning this transaction please refer to Note 6
of our Condensed Consolidated Financial Statements.

         On September 22, 2004, the Company issued 833,333 shares of common
stock to investors that participated in the Company's April 2, 2004 private
placement in exchange for their waiver and release of certain rights. The
issuance of these securities was exempt from registration under Section 4(2) of
the Securities Act of 1933, as amended, as a sale not involving a public
offering.

SUBSEQUENT STOCK ISSUANCES
--------------------------

         On October 4, 2004, we issued 1,205,479 shares of our common stock to
each of Robert Tarini and Verdi Consulting, 301,370 shares of common stock to
Kenneth Ducey, Jr. and 904,110 shares of common stock to Asset Growth Company in
connection with employment and consulting agreements. The issuance of these
securities was exempt from registration under Section 4(2) of the Securities Act
of 1933, as amended, as a sale not involving a public offering. For more
information concerning this transaction please refer to Note 11 of our Condensed
Consolidated Financial Statements.

         On November 9, 2004, we entered into a Securities Purchase Agreement
with Harborview Master Fund, LP and Southridge Partners, LP pursuant to which we
sold warrants to purchase 2,193,750 shares of our common stock and secured
convertible promissory notes in the principal amount of $1,755,000, for the
aggregate consideration of $1,350,000. We received net proceeds of $1,174,500
from this private placement. The offer and sale of these securities was made in
reliance on Section 4(2) of Securities Act of 1933, as amended. For more
information concerning this transaction please refer to Note 15 of our Condensed
Consolidated Financial Statements.

                                       38




<PAGE>

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K.

(a) EXHIBITS
<TABLE>
                                                                                   INCORPORATED BY REFERENCE
                                                            FILED WITH      ----------------------------------------
                                                            THIS FORM                                        EXHIBIT
EXHIBIT NO.                  DESCRIPTION                      10-QSB/A      FORM          FILING DATE           NO.
-----------                  -----------                      ------        ----          -----------           ---
<S> <C>                                                                      <C>         <C>                    <C>
    3.1      Articles of Incorporation of Quest Net                          8-K         March 20, 2000         1.3
             Corp., filed with the Florida Secretary of
             State on December 28, 1998

    3.2      Articles of Merger filed with the Florida                       8-K         March 20, 2000         1.2
             Secretary of State on March 15, 2000

    3.3      Articles of Amendment to the Articles of                        8-K         April 10, 2001         3.1
             Incorporation of Quest Net Corp., filed
             with the Florida Secretary of State on
             April 4, 2001

    3.4      Articles of Amendment to the Articles of                        8-K         April 10, 2001         3.3
             Incorporation of Quest Net Corp., filed
             with the Florida Secretary of State on June
             21, 2001

    3.5      Articles of Amendment to the Articles of                       SB-2          May 11, 2004          3.5
             Incorporation of Markland Technologies,
             Inc. filed with the Florida Secretary of
             State on December 21, 2001

    3.6      Articles of Amendment to the Articles of                      10-KSB       October 14, 2003        3.6
             Incorporation of Markland Technologies,
             Inc. filed with the Florida Secretary of
             State on September 16, 2003

    3.7      Certificate of Designations of Rights and                     10-KSB       October 14, 2003        3.7
             Preferences of the Series A Non-Voting
             Convertible Preferred Stock

    3.8      Certificate of Designations of Rights and                       8-K       December 20, 2002        3.5
             Preferences of the Series C Cumulative
             Convertible Preferred Stock

    3.9      Certificate of Designations of Rights and                     10-KSB       October 14, 2003        3.5
             Preferences of the Series D Cumulative
             Convertible Preferred Stock

   3.10      Amended and Restated By-Laws                                    8-K         March 20, 2000         1.4

    4.1      Form of common stock certificate of                           10-QSB      February 14, 2003        4.1
             Markland Technologies, Inc.

    4.2      Registration Rights Agreement between                          SB-2          May 11, 2004          4.2
             Markland Technologies, Inc., Montana View
             Corporation, Elite Properties, Ltd.,
             Sparrow Ventures, Inc., dated April 2, 2004

    4.3      Form of Common Stock Purchase Warrant dated                    SB-2          May 11, 2004          4.3
             April 2, 2004

    4.4      Form of Common Stock Purchase Warrant dated                    SB-2          May 11, 2004          4.4
             April 16, 2004

    4.5      Form of Common Stock Purchase Warrant dated                    SB-2          May 11, 2004          4.5
             May 3, 2004


                                                         39
<PAGE>

                                                                                   INCORPORATED BY REFERENCE
                                                            FILED WITH      ----------------------------------------
                                                            THIS FORM                                        EXHIBIT
EXHIBIT NO.                  DESCRIPTION                      10-QSB/A      FORM          FILING DATE           NO.
-----------                  -----------                      ------        ----          -----------           ---
    4.6      Registration Rights Agreement, dated March                    10-KSB       October 14, 2003       10.10
             19, 2003, by and between ASI Technology
             Corporation and Markland Technologies, Inc.

    4.7      Registration Rights Agreement by and                          10-KSB       October 14, 2003       10.17
             between Markland Technologies, Inc. and
             Brittany Capital Management limited, dated
             September 10, 2003.

             Consulting Agreement by and between
             Markland Technologies, Inc. and George
    4.8      Yang, dated September 30, 2003.                                 8K        November 12, 2003       10.3

    4.9      Consulting Agreement by and between                            SB-2          May 11, 2004          4.9
             Markland Technologies, Inc. and
             Commonwealth Acquisitions, Ltd., dated
             March 24, 2003.

   4.10      Consulting Agreement by and between ECON                       SB-2          May 11, 2004         4.10
             Investor Relations, Inc., dated January 18,
             2003.

   4.11      Consulting Agreement by and between                            SB-2          May 11, 2004         4.11
             Markland Technologies, Inc. and Marketshare
             Recovery, Inc., dated October 29, 2003

   4.12      Consulting Agreement by and between                           10-QSB      February 23, 2004       10.4
             Markland Technologies, Inc. and Emerging
             Concepts, Inc., dated July 7, 2003

   4.13      Research Agreement by and between Markland                     SB-2          May 11, 2004         4.13
             Technologies, Inc. and The Research Works,
             Inc., dated October 29, 2003

   4.14      Employment Agreement by and between                            SB-2          May 11, 2004         4.14
             Markland Technologies, Inc. and Jo-Ann
             Nichols, dated October 27, 2003.

   4.15      Registration Rights Agreement by and                            8-K       September 23, 2004      99.3
             between Markland Technologies, Inc. and the
             investors named therein, dated September
             21, 2004

   4.16      Form of Common Stock Purchase Warrant                           8-K       September 23, 2004      99.5
             issued by Markland Technologies, Inc. on
             September 21, 2004

   4.17      Lock-up Agreement by and among Markland                         8-K       September 23, 2004      99.7
             Technologies, Inc., Robert Tarini, and
             Kenneth Ducey, Jr.

   4.18      Lock-up Agreement by and between Markland                       8-K       September 23, 2004      99.6
             Technologies, Inc. and James, LLC.

   4.19      Waiver Agreement by and among Markland                          8-K       September 23, 2004      99.8
             Technologies, Inc. and the parties named
             therein, dated September 21, 2004

   10.1      Securities Purchase Agreement, between                         SB-2          May 11, 2004         10.1
             Markland Technologies, Inc., Montana View
             Corporation, Elite Properties, Ltd., and
             Sparrow Ventures, Inc., dated April 2, 2004

   10.2      Securities Purchase Agreement by and among                     SB-2          May 11, 2004         10.2
             Markland Technologies, Inc. and the
             Investors named therein, dated April 16,
             2004.


                                                         40
<PAGE>

                                                                                   INCORPORATED BY REFERENCE
                                                            FILED WITH      ----------------------------------------
                                                            THIS FORM                                        EXHIBIT
EXHIBIT NO.                  DESCRIPTION                      10-QSB/A      FORM          FILING DATE           NO.
-----------                  -----------                      ------        ----          -----------           ---

   10.3      Securities Purchase Agreement by and                           SB-2          May 11, 2004         10.3
             between Markland Technologies, Inc. and the
             Investors named therein, dated May 3, 2004.

   10.4      Agreement and Plan of Merger by and among                       8K        November 12, 2003       10.1
             Markland Technologies, Inc. and STR
             Acquisition Corp., Security Technology,
             Inc., Science and Technology Research,
             Inc., and George Yang, dated September 30,
             2003.

   10.5      Promissory Note made by Markland                                8K        November 12, 2003       10.4
             Technologies, Inc., in favor of George
             Yang, dated September 30, 2003.

   10.6      Security Agreement by and between Markland                     SB-2          May 11, 2004         10.6
             Technologies, Inc. and George Yang, dated
             September 30, 2003.

             Guaranty by Markland Technologies, Inc. in
             favor of George Yang, dated September 30,
   10.7      2003.                                                          SB-2          May 11, 2004         10.7

   10.8      Amendment and Payment Extension Agreement                      SB-2          May 11, 2004         10.8
             by and between Markland Technologies, Inc.
             and George Yang, dated March 17, 2004.

   10.9      Loan Agreement by and between Security                          8K        November 12, 2003       10.2
             Technology, Inc. and Bay View Capital LLC,
             dated September 30, 2003.

   10.10     Promissory Note by and among Markland                           8K        November 12, 2003       10.5
             Technologies, Inc., Security Technology,
             Inc., and Bay View Capital LLC, dated
             September 30, 2003.

   10.11     Security Agreement by and between Security                     SB-2          May 11, 2004         10.11
             Technology, Inc. and Bay View Capital LLC,
             dated September 30, 2003.

   10.12     Security Agreement by and between Markland                     SB-2          May 11, 2004         10.12
             Technologies, Inc. and Bay View Capital LLC.

   10.13     Sublicense Agreement by and between                            SB-2          May 11, 2004         10.13
             Markland Technologies, Inc. and ASI
             Technology Corporation, dated March 19,
             2004.

   10.14     ASI Technology Corporation SBIR Phase II                      SB-2/1A       June 16, 2004         10.14
             Proposal, dated October 8, 2001.

   10.15     ASI Technology Corporation Contract                           SB-2/1A       June 16, 2004         10.15
             with Air Force Office of Scientific Research,
             dated August 1, 2002.

   10.16     ASI Technology Corporation Contract with                      SB-2/1A       June 16, 2004         10.16
             Naval Surface Warfare Center, dated January
             31, 2003.


                                                         41
<PAGE>
                                                                                   INCORPORATED BY REFERENCE
                                                            FILED WITH      ----------------------------------------
                                                            THIS FORM                                        EXHIBIT
EXHIBIT NO.                  DESCRIPTION                      10-QSB/A      FORM          FILING DATE           NO.
-----------                  -----------                      ------        ----          -----------           ---

   10.17     Stock Purchase Agreement by and among Ocean                     8-K        January 28, 2003       10.1
             Data Equipment Corporation, Ergo Systems,
             Markland Technologies, and Security
             Technology, Inc., dated December 9, 2002.

   10.18     Exchange Agreement, dated December 9, 2002,                     8-K       December 20, 2002       10.4
             by and among Markland Technologies, Inc.,
             Market LLC, and James LLC.

   10.19     Exchange Agreement, dated December 9, 2002,                     8-K       December 20, 2002       10.5
             by and among Eurotech, Ltd., Crypto.com
             Inc., Markland Technologies, Inc., Security
             Technology, Inc. ipPartners, Inc., Market
             LLC,  and James LLC.

   10.20     First Amendment to Exchange Agreement,                        10-QSB      February 14, 2003       10.6
             dated December 9, 2002, by and among
             Eurotech, Ltd., Crypto.com Inc., Markland
             Technologies, Inc., Security Technology,
             Inc. ipPartners, Inc., Market LLC,  and
             James LLC.

   10.21     Restated and Amended Convertible Revolving                    10-QSB      February 14, 2003       10.2
             Credit Note Agreement, dated December 10,
             2002, by and between Markland Technologies,
             Inc. and Market LLC.

   10.22     Letter from Sherb & Co., LLP to the                             8-K         March 17, 2003        16.1
             Commission, dated March 12, 2003,
             concerning change in certifying accountant.

   10.23     Technology Purchase Agreement between                           8-K         April 4, 2003         10.1
             Markland Technologies, Inc. and ASI
             Technology Corporation, dated March 19,
             2003.

   10.24     Exchange Agreement, dated March 27, 2003,                       8-K         April 4, 2003         10.2
             by and between Eurotech, Ltd. and Markland
             Technologies, Inc.

   10.25     Registration Rights Agreement, dated March                    10-KSB       October 14, 2003       10.12
             27, 2003, by and between Eurotech, Ltd. and
             Markland Technologies, Inc.

   10.26     Amended and Restated Exchange Agreement,                        8-K         July 30, 2003         10.1
             dated July 24, 2003, by and between
             Markland Technologies, Inc. and Syqwest,
             Inc.

   10.27     Preferred Securities Purchase Agreement by                    10-KSB       October 14, 2003       10.14
             and between Markland Technologies, Inc. and
             James LLC, dated February 2, 2003, relating
             to the issuance of 170 shares of Series C
             5% Convertible Preferred Stock.

   10.28     Preferred Securities Purchase Agreement by                    10-KSB       October 14, 2003       10.15
             and between Markland Technologies, Inc.,
             and James LLC, dated April 1, 2003,
             relating to the issuance of Series D
             Convertible Preferred Stock.

   10.29     Private Equity Credit Agreement by and                        10-KSB       October 14, 2003       10.16
             between Markland Technologies, Inc. and
             Brittany Capital Management Limited, dated
             September 10, 2003.


                                                         42

<PAGE>
                                                                                   INCORPORATED BY REFERENCE
                                                            FILED WITH      ----------------------------------------
                                                            THIS FORM                                        EXHIBIT
EXHIBIT NO.                  DESCRIPTION                      10-QSB/A      FORM          FILING DATE           NO.
-----------                  -----------                      ------        ----          -----------           ---

   10.30     Employment and consulting agreements, dated                   10-KSB       October 14, 2003       10.18
             December 5, 2002, for Delmar Kintner,
             Kenneth Ducey, Robert Tarini, and Verdi
             Consulting.

   10.31     Nonexclusive License Agreement by and between                  SB-2          May 11, 2004         10.31
             Science & Technology Research , Inc. and
             the Secretary of the Navy, dated 11/4/03.

   10.32     International Distribution Agreement                           SB-2          May 11, 2004         10.32
             between Markland Technologies, Inc. and
             Tradeways.

   10.33     Science & Technology Research contract                         SB-2          May 11, 2004         10.33
             Naval Surface Warfare Center, dated January
             31, 2003.

   10.34     Subcontract Agreement by and between ERGO                      SB-2          May 11, 2004         10.34
             Systems, Inc. and Computer Sciences
             Corporation ,dated December 8, 2003.

   10.35     Lease for Property in Fredericksburg,                         SB-2/1A       June 16, 2004         10.35
             Virginia.

   10.36     Co-Operative Research and Development                         SB-2/1A       June 16, 2004         10.35
             Agreement between Markland Technologies,
             Inc. and the U.S. Air Force.

   10.37     Employment Agreement by and between                           10-QSB         May 24, 2004         10.32
             Markland Technologies, Inc. and Robert
             Tarini, dated May 12, 2004 .

   10.38     Employment Agreement by and between                           10-QSB         May 24, 2004         10.33
             Markland Technologies, Inc. and Kenneth
             Ducey, Jr., dated May 12, 2004.

   10.39     Strategic Operations Contractor Agreement                     10-QSB         May 24, 2004         10.34
             by and between Markland Technologies, Inc.
             and Asset Growth Company, dated May 12,
             2004.

   10.40     Consulting Agreement by and between                           10-QSB         May 24, 2004         10.35
             Markland Technologies, Inc. and Chad A.
             Verdi, dated May 12, 2004.

   10.41     Amendment to Employment Agreement between                     SB-2/1A       June 16, 2004         10.41
             Markland Technologies Inc. and Robert
             Tarini dated June 16, 2004.

   10.42     Amendment to the Employment                                   SB-2/1A       June 16, 2004         10.42
             Agreement between Markland
             Technologies Inc. and Kenneth P. Ducey,
             dated June 16, 2004.

   10.43     Amendment to the Consulting Agreement                         SB-2/1A       June 16, 2004         10.43
             between Markland Technologies Inc. and
             Verdi Consulting, dated June 16, 2004.

   10.44     Amendment to the Strategic Operations                         SB-2/1A       June 16, 2004         10.44
             Contractor Agreement by and between
             Markland Technologies, Inc. and Asset
             Growth Company, dated June 16, 2004.


                                                         43

<PAGE>

                                                                                   INCORPORATED BY REFERENCE
                                                            FILED WITH      ----------------------------------------
                                                            THIS FORM                                        EXHIBIT
EXHIBIT NO.                  DESCRIPTION                      10-QSB/A      FORM          FILING DATE           NO.
-----------                  -----------                      ------        ----          -----------           ---

   10.45     Purchase Agreement between Markland                             8-K       September 23, 2004      99.1
             Technologies, Inc. and the investors named
             therein, dated September 21, 2004.

   10.46     Security Agreement between Markland                             8-K       September 23, 2004      99.2
             Technologies, Inc. and the investors named
             therein, dated September 21, 2004.

   10.47     Form of Secured Convertible Promissory Note                     8-K       September 23, 2004      99.4
             issued by Markland Technologies, Inc., on
             September 21, 2004.

   10.48     Night Vision Electronic Sensors Directorate                   10-KSB       October 13, 2004       10.48
             (NVESD) Omnibus Contract between E-OIR
             Measurement Inc., a subsidiary of EOIR and
             United States Army Night Vision and
             Electronic Sensors Directorate.

   10.49     Securities Purchase Agreement between                          SB-2       November 10, 2004       10.50
             Markland Technologies, Inc., Harborview
             Master Fund L.P. and Southridge Partners LP
             dated November 9, 2004.

   10.50     Form of Convertible Note issued to                             SB-2       November 10, 2004       10.51
             Harborview Master Fund L.P. and Southridge
             Partners LP.

   10.51     Form of Warrant issued to Harborview Master                    SB-2       November 10, 2004       10.52
             Fund L.P. and Southridge Partners LP.

   10.52     Subordination Agreement between DKR                            SB-2       November 10, 2004       10.53
             Soundshore Oasis Holding Fund, LLC DKR
             Soundshore Strategic Holding Fund, LLC,
             Harborview Master Fund L.P., Southridge
             Partners LP, and Markland Technologies,
             Inc., dated November 9, 2004.

   10.53     Conditional Waiver and Consent between DKR                     SB-2       November 10, 2004       10.54
             Soundshore Oasis Holding Fund, LLC DKR
             Soundshore Strategic Holding Fund, LLC,
             Harborview Master Fund L.P., Southridge
             Partners LP, and Markland Technologies,
             Inc., dated November 9, 2004.

   10.54     Stock Purchase Agreement by and between                         8-K         June 30, 2004          2.1
             Markland and EOIR, dated June 30,
             2004

   10.55     Forms of Promissory Note.                                       8-K         June 30, 2004          2.2

   10.56     Security Agreement by and between EOIR and                      8-K         June 30, 2004          2.3
             sellers of EOIR stock, dated June 30, 2004.

   10.57     2004 Stock Option Plan, adopted June 30,                        8-K         June 30, 2004          2.4
             2004.

   10.58     Preferred Securities Purchase Agreement.                        8-K         June 30, 2004          2.5

   10.59     Pledge and Security Agreement.                                  8-K         June 30, 2004          2.6

   10.60     Forms of Stock Option.                                          8-K         June 30, 2004          2.7


                                                         44

<PAGE>

                                                                                   INCORPORATED BY REFERENCE
                                                            FILED WITH      ----------------------------------------
                                                            THIS FORM                                        EXHIBIT
EXHIBIT NO.                  DESCRIPTION                      10-QSB/A      FORM          FILING DATE           NO.
-----------                  -----------                      ------        ----          -----------           ---

   10.61     Agreement and General Release, dated
             November 1, 2004, between Markland                             10-QSB       November 15, 2004     10.61
             Technologies, Inc. and Gregory A. Williams

   31.1      Certification by CEO of Periodic Report             X
             Pursuant to Rule 13a-14(a) or Rule 15d-14(a)

   31.2      Certification by CFO of Periodic Report             X
             Pursuant to Rule 13a-14(a) or Rule 15d-14(a)

   32.1      Certification by CEO and CFO of Periodic            X
             Report Pursuant to 18 U.S.C. Section 1350
</TABLE>

(b) REPORTS ON FORM 8-K

      On July 13, 2004, the Company filed a Current Report on Form 8-K reporting
Item 4 and containing certain information regarding the Company's change of
independent registered public accounting firm.

      On July 15, 2004, the Company filed a Current Report on Form 8-K/A
reporting Item 4 and containing certain information regarding the Company's
change of independent registered public accounting firm.

      On August 11, 2004, the Company filed a Current Report on Form 8-K
reporting Items 5, 7, and 12 and containing financial information for the month
ended July 31, 2004 and forward-looking statements, all as presented in a press
release of August 10, 2004

      On September 13, 2004, the Company filed a Current Report on Form 8-K/A
reporting Item 7 and containing certain audited and pro-forma financial
information relating to its acquisition of EOIR Technologies, Inc. on June 29,
2004.

      On September 23, 2004, the Company filed a Current Report on Form 8-K
reporting Items 1.01, 2.01, and 3.02 and containing certain information in
connection with the Company's private placement of securities on September 21,
2004.

      On September 23, 2004, the Company filed a Current Report on Form 8-K,
reporting Items 8.01 and 9.01 and containing certain information in connection
with the Company's private placement of securities on September 21, 2004, and
forward-looking statements, all as presented in a press release of September 23,
2004.

                                       45

<PAGE>

                                   SIGNATURES

         In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.

                                                     MARKLAND TECHNOLOGIES, INC.

Date: November 17, 2004                      By:     /S/ ROBERT TARINI
                                                 -------------------------------
                                                     Robert Tarini
                                                     Chairman, Director, and
                                                     Chief Executive Officer

                                       46




<PAGE>
<TABLE>
                                                                                   INCORPORATED BY REFERENCE
                                                            FILED WITH      ----------------------------------------
                                                            THIS FORM                                        EXHIBIT
EXHIBIT NO.                  DESCRIPTION                      10-QSB/A      FORM          FILING DATE           NO.
-----------                  -----------                      ------        ----          -----------           ---
<S> <C>                                                                      <C>         <C>                    <C>
    3.1      Articles of Incorporation of Quest Net                          8-K         March 20, 2000         1.3
             Corp., filed with the Florida Secretary of
             State on December 28, 1998

    3.2      Articles of Merger filed with the Florida                       8-K         March 20, 2000         1.2
             Secretary of State on March 15, 2000

    3.3      Articles of Amendment to the Articles of                        8-K         April 10, 2001         3.1
             Incorporation of Quest Net Corp., filed
             with the Florida Secretary of State on
             April 4, 2001

    3.4      Articles of Amendment to the Articles of                        8-K         April 10, 2001         3.3
             Incorporation of Quest Net Corp., filed
             with the Florida Secretary of State on June
             21, 2001

    3.5      Articles of Amendment to the Articles of                       SB-2          May 11, 2004          3.5
             Incorporation of Markland Technologies,
             Inc. filed with the Florida Secretary of
             State on December 21, 2001

    3.6      Articles of Amendment to the Articles of                      10-KSB       October 14, 2003        3.6
             Incorporation of Markland Technologies,
             Inc. filed with the Florida Secretary of
             State on September 16, 2003

    3.7      Certificate of Designations of Rights and                     10-KSB       October 14, 2003        3.7
             Preferences of the Series A Non-Voting
             Convertible Preferred Stock

    3.8      Certificate of Designations of Rights and                       8-K       December 20, 2002        3.5
             Preferences of the Series C Cumulative
             Convertible Preferred Stock

    3.9      Certificate of Designations of Rights and                     10-KSB       October 14, 2003        3.5
             Preferences of the Series D Cumulative
             Convertible Preferred Stock

   3.10      Amended and Restated By-Laws                                    8-K         March 20, 2000         1.4

    4.1      Form of common stock certificate of                           10-QSB      February 14, 2003        4.1
             Markland Technologies, Inc.

    4.2      Registration Rights Agreement between                          SB-2          May 11, 2004          4.2
             Markland Technologies, Inc., Montana View
             Corporation, Elite Properties, Ltd.,
             Sparrow Ventures, Inc., dated April 2, 2004

    4.3      Form of Common Stock Purchase Warrant dated                    SB-2          May 11, 2004          4.3
             April 2, 2004

    4.4      Form of Common Stock Purchase Warrant dated                    SB-2          May 11, 2004          4.4
             April 16, 2004

    4.5      Form of Common Stock Purchase Warrant dated                    SB-2          May 11, 2004          4.5
             May 3, 2004




<PAGE>

                                                                                   INCORPORATED BY REFERENCE
                                                            FILED WITH      ----------------------------------------
                                                            THIS FORM                                        EXHIBIT
EXHIBIT NO.                  DESCRIPTION                      10-QSB/A      FORM          FILING DATE           NO.
-----------                  -----------                      ------        ----          -----------           ---
    4.6      Registration Rights Agreement, dated March                    10-KSB       October 14, 2003       10.10
             19, 2003, by and between ASI Technology
             Corporation and Markland Technologies, Inc.

    4.7      Registration Rights Agreement by and                          10-KSB       October 14, 2003       10.17
             between Markland Technologies, Inc. and
             Brittany Capital Management limited, dated
             September 10, 2003.

             Consulting Agreement by and between
             Markland Technologies, Inc. and George
    4.8      Yang, dated September 30, 2003.                                 8K        November 12, 2003       10.3

    4.9      Consulting Agreement by and between                            SB-2          May 11, 2004          4.9
             Markland Technologies, Inc. and
             Commonwealth Acquisitions, Ltd., dated
             March 24, 2003.

   4.10      Consulting Agreement by and between ECON                       SB-2          May 11, 2004         4.10
             Investor Relations, Inc., dated January 18,
             2003.

   4.11      Consulting Agreement by and between                            SB-2          May 11, 2004         4.11
             Markland Technologies, Inc. and Marketshare
             Recovery, Inc., dated October 29, 2003

   4.12      Consulting Agreement by and between                           10-QSB      February 23, 2004       10.4
             Markland Technologies, Inc. and Emerging
             Concepts, Inc., dated July 7, 2003

   4.13      Research Agreement by and between Markland                     SB-2          May 11, 2004         4.13
             Technologies, Inc. and The Research Works,
             Inc., dated October 29, 2003

   4.14      Employment Agreement by and between                            SB-2          May 11, 2004         4.14
             Markland Technologies, Inc. and Jo-Ann
             Nichols, dated October 27, 2003.

   4.15      Registration Rights Agreement by and                            8-K       September 23, 2004      99.3
             between Markland Technologies, Inc. and the
             investors named therein, dated September
             21, 2004

   4.16      Form of Common Stock Purchase Warrant                           8-K       September 23, 2004      99.5
             issued by Markland Technologies, Inc. on
             September 21, 2004

   4.17      Lock-up Agreement by and among Markland                         8-K       September 23, 2004      99.7
             Technologies, Inc., Robert Tarini, and
             Kenneth Ducey, Jr.

   4.18      Lock-up Agreement by and between Markland                       8-K       September 23, 2004      99.6
             Technologies, Inc. and James, LLC.

   4.19      Waiver Agreement by and among Markland                          8-K       September 23, 2004      99.8
             Technologies, Inc. and the parties named
             therein, dated September 21, 2004

   10.1      Securities Purchase Agreement, between                         SB-2          May 11, 2004         10.1
             Markland Technologies, Inc., Montana View
             Corporation, Elite Properties, Ltd., and
             Sparrow Ventures, Inc., dated April 2, 2004

   10.2      Securities Purchase Agreement by and among                     SB-2          May 11, 2004         10.2
             Markland Technologies, Inc. and the
             Investors named therein, dated April 16,
             2004.




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                                                            FILED WITH      ----------------------------------------
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EXHIBIT NO.                  DESCRIPTION                      10-QSB/A      FORM          FILING DATE           NO.
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   10.3      Securities Purchase Agreement by and                           SB-2          May 11, 2004         10.3
             between Markland Technologies, Inc. and the
             Investors named therein, dated May 3, 2004.

   10.4      Agreement and Plan of Merger by and among                       8K        November 12, 2003       10.1
             Markland Technologies, Inc. and STR
             Acquisition Corp., Security Technology,
             Inc., Science and Technology Research,
             Inc., and George Yang, dated September 30,
             2003.

   10.5      Promissory Note made by Markland                                8K        November 12, 2003       10.4
             Technologies, Inc., in favor of George
             Yang, dated September 30, 2003.

   10.6      Security Agreement by and between Markland                     SB-2          May 11, 2004         10.6
             Technologies, Inc. and George Yang, dated
             September 30, 2003.

             Guaranty by Markland Technologies, Inc. in
             favor of George Yang, dated September 30,
   10.7      2003.                                                          SB-2          May 11, 2004         10.7

   10.8      Amendment and Payment Extension Agreement                      SB-2          May 11, 2004         10.8
             by and between Markland Technologies, Inc.
             and George Yang, dated March 17, 2004.

   10.9      Loan Agreement by and between Security                          8K        November 12, 2003       10.2
             Technology, Inc. and Bay View Capital LLC,
             dated September 30, 2003.

   10.10     Promissory Note by and among Markland                           8K        November 12, 2003       10.5
             Technologies, Inc., Security Technology,
             Inc., and Bay View Capital LLC, dated
             September 30, 2003.

   10.11     Security Agreement by and between Security                     SB-2          May 11, 2004         10.11
             Technology, Inc. and Bay View Capital LLC,
             dated September 30, 2003.

   10.12     Security Agreement by and between Markland                     SB-2          May 11, 2004         10.12
             Technologies, Inc. and Bay View Capital LLC.

   10.13     Sublicense Agreement by and between                            SB-2          May 11, 2004         10.13
             Markland Technologies, Inc. and ASI
             Technology Corporation, dated March 19,
             2004.

   10.14     ASI Technology Corporation SBIR Phase II                      SB-2/1A       June 16, 2004         10.14
             Proposal, dated October 8, 2001.

   10.15     ASI Technology Corporation Contract                           SB-2/1A       June 16, 2004         10.15
             with Air Force Office of Scientific Research,
             dated August 1, 2002.

   10.16     ASI Technology Corporation Contract with                      SB-2/1A       June 16, 2004         10.16
             Naval Surface Warfare Center, dated January
             31, 2003.




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                                                            FILED WITH      ----------------------------------------
                                                            THIS FORM                                        EXHIBIT
EXHIBIT NO.                  DESCRIPTION                      10-QSB/A      FORM          FILING DATE           NO.
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   10.17     Stock Purchase Agreement by and among Ocean                     8-K        January 28, 2003       10.1
             Data Equipment Corporation, Ergo Systems,
             Markland Technologies, and Security
             Technology, Inc., dated December 9, 2002.

   10.18     Exchange Agreement, dated December 9, 2002,                     8-K       December 20, 2002       10.4
             by and among Markland Technologies, Inc.,
             Market LLC, and James LLC.

   10.19     Exchange Agreement, dated December 9, 2002,                     8-K       December 20, 2002       10.5
             by and among Eurotech, Ltd., Crypto.com
             Inc., Markland Technologies, Inc., Security
             Technology, Inc. ipPartners, Inc., Market
             LLC,  and James LLC.

   10.20     First Amendment to Exchange Agreement,                        10-QSB      February 14, 2003       10.6
             dated December 9, 2002, by and among
             Eurotech, Ltd., Crypto.com Inc., Markland
             Technologies, Inc., Security Technology,
             Inc. ipPartners, Inc., Market LLC,  and
             James LLC.

   10.21     Restated and Amended Convertible Revolving                    10-QSB      February 14, 2003       10.2
             Credit Note Agreement, dated December 10,
             2002, by and between Markland Technologies,
             Inc. and Market LLC.

   10.22     Letter from Sherb & Co., LLP to the                             8-K         March 17, 2003        16.1
             Commission, dated March 12, 2003,
             concerning change in certifying accountant.

   10.23     Technology Purchase Agreement between                           8-K         April 4, 2003         10.1
             Markland Technologies, Inc. and ASI
             Technology Corporation, dated March 19,
             2003.

   10.24     Exchange Agreement, dated March 27, 2003,                       8-K         April 4, 2003         10.2
             by and between Eurotech, Ltd. and Markland
             Technologies, Inc.

   10.25     Registration Rights Agreement, dated March                    10-KSB       October 14, 2003       10.12
             27, 2003, by and between Eurotech, Ltd. and
             Markland Technologies, Inc.

   10.26     Amended and Restated Exchange Agreement,                        8-K         July 30, 2003         10.1
             dated July 24, 2003, by and between
             Markland Technologies, Inc. and Syqwest,
             Inc.

   10.27     Preferred Securities Purchase Agreement by                    10-KSB       October 14, 2003       10.14
             and between Markland Technologies, Inc. and
             James LLC, dated February 2, 2003, relating
             to the issuance of 170 shares of Series C
             5% Convertible Preferred Stock.

   10.28     Preferred Securities Purchase Agreement by                    10-KSB       October 14, 2003       10.15
             and between Markland Technologies, Inc.,
             and James LLC, dated April 1, 2003,
             relating to the issuance of Series D
             Convertible Preferred Stock.

   10.29     Private Equity Credit Agreement by and                        10-KSB       October 14, 2003       10.16
             between Markland Technologies, Inc. and
             Brittany Capital Management Limited, dated
             September 10, 2003.




<PAGE>
                                                                                   INCORPORATED BY REFERENCE
                                                            FILED WITH      ----------------------------------------
                                                            THIS FORM                                        EXHIBIT
EXHIBIT NO.                  DESCRIPTION                      10-QSB/A      FORM          FILING DATE           NO.
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   10.30     Employment and consulting agreements, dated                   10-KSB       October 14, 2003       10.18
             December 5, 2002, for Delmar Kintner,
             Kenneth Ducey, Robert Tarini, and Verdi
             Consulting.

   10.31     Nonexclusive License Agreement by and between                  SB-2          May 11, 2004         10.31
             Science & Technology Research , Inc. and
             the Secretary of the Navy, dated 11/4/03.

   10.32     International Distribution Agreement                           SB-2          May 11, 2004         10.32
             between Markland Technologies, Inc. and
             Tradeways.

   10.33     Science & Technology Research contract                         SB-2          May 11, 2004         10.33
             Naval Surface Warfare Center, dated January
             31, 2003.

   10.34     Subcontract Agreement by and between ERGO                      SB-2          May 11, 2004         10.34
             Systems, Inc. and Computer Sciences
             Corporation ,dated December 8, 2003.

   10.35     Lease for Property in Fredericksburg,                         SB-2/1A       June 16, 2004         10.35
             Virginia.

   10.36     Co-Operative Research and Development                         SB-2/1A       June 16, 2004         10.35
             Agreement between Markland Technologies,
             Inc. and the U.S. Air Force.

   10.37     Employment Agreement by and between                           10-QSB         May 24, 2004         10.32
             Markland Technologies, Inc. and Robert
             Tarini, dated May 12, 2004 .

   10.38     Employment Agreement by and between                           10-QSB         May 24, 2004         10.33
             Markland Technologies, Inc. and Kenneth
             Ducey, Jr., dated May 12, 2004.

   10.39     Strategic Operations Contractor Agreement                     10-QSB         May 24, 2004         10.34
             by and between Markland Technologies, Inc.
             and Asset Growth Company, dated May 12,
             2004.

   10.40     Consulting Agreement by and between                           10-QSB         May 24, 2004         10.35
             Markland Technologies, Inc. and Chad A.
             Verdi, dated May 12, 2004.

   10.41     Amendment to Employment Agreement between                     SB-2/1A       June 16, 2004         10.41
             Markland Technologies Inc. and Robert
             Tarini dated June 16, 2004.

   10.42     Amendment to the Employment                                   SB-2/1A       June 16, 2004         10.42
             Agreement between Markland
             Technologies Inc. and Kenneth P. Ducey,
             dated June 16, 2004.

   10.43     Amendment to the Consulting Agreement                         SB-2/1A       June 16, 2004         10.43
             between Markland Technologies Inc. and
             Verdi Consulting, dated June 16, 2004.

   10.44     Amendment to the Strategic Operations                         SB-2/1A       June 16, 2004         10.44
             Contractor Agreement by and between
             Markland Technologies, Inc. and Asset
             Growth Company, dated June 16, 2004.




<PAGE>

                                                                                   INCORPORATED BY REFERENCE
                                                            FILED WITH      ----------------------------------------
                                                            THIS FORM                                        EXHIBIT
EXHIBIT NO.                  DESCRIPTION                      10-QSB/A      FORM          FILING DATE           NO.
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   10.45     Purchase Agreement between Markland                             8-K       September 23, 2004      99.1
             Technologies, Inc. and the investors named
             therein, dated September 21, 2004.

   10.46     Security Agreement between Markland                             8-K       September 23, 2004      99.2
             Technologies, Inc. and the investors named
             therein, dated September 21, 2004.

   10.47     Form of Secured Convertible Promissory Note                     8-K       September 23, 2004      99.4
             issued by Markland Technologies, Inc., on
             September 21, 2004.

   10.48     Night Vision Electronic Sensors Directorate                   10-KSB       October 13, 2004       10.48
             (NVESD) Omnibus Contract between E-OIR
             Measurement Inc., a subsidiary of EOIR and
             United States Army Night Vision and
             Electronic Sensors Directorate.

   10.49     Securities Purchase Agreement between                          SB-2       November 10, 2004       10.50
             Markland Technologies, Inc., Harborview
             Master Fund L.P. and Southridge Partners LP
             dated November 9, 2004.

   10.50     Form of Convertible Note issued to                             SB-2       November 10, 2004       10.51
             Harborview Master Fund L.P. and Southridge
             Partners LP.

   10.51     Form of Warrant issued to Harborview Master                    SB-2       November 10, 2004       10.52
             Fund L.P. and Southridge Partners LP.

   10.52     Subordination Agreement between DKR                            SB-2       November 10, 2004       10.53
             Soundshore Oasis Holding Fund, LLC DKR
             Soundshore Strategic Holding Fund, LLC,
             Harborview Master Fund L.P., Southridge
             Partners LP, and Markland Technologies,
             Inc., dated November 9, 2004.

   10.53     Conditional Waiver and Consent between DKR                     SB-2       November 10, 2004       10.54
             Soundshore Oasis Holding Fund, LLC DKR
             Soundshore Strategic Holding Fund, LLC,
             Harborview Master Fund L.P., Southridge
             Partners LP, and Markland Technologies,
             Inc., dated November 9, 2004.

   10.54     Stock Purchase Agreement by and between                         8-K         June 30, 2004          2.1
             Markland and EOIR, dated June 30,
             2004

   10.55     Forms of Promissory Note.                                       8-K         June 30, 2004          2.2

   10.56     Security Agreement by and between EOIR and                      8-K         June 30, 2004          2.3
             sellers of EOIR stock, dated June 30, 2004.

   10.57     2004 Stock Option Plan, adopted June 30,                        8-K         June 30, 2004          2.4
             2004.

   10.58     Preferred Securities Purchase Agreement.                        8-K         June 30, 2004          2.5

   10.59     Pledge and Security Agreement.                                  8-K         June 30, 2004          2.6

   10.60     Forms of Stock Option.                                          8-K         June 30, 2004          2.7




<PAGE>

                                                                                   INCORPORATED BY REFERENCE
                                                            FILED WITH      ----------------------------------------
                                                            THIS FORM                                        EXHIBIT
EXHIBIT NO.                  DESCRIPTION                      10-QSB/A      FORM          FILING DATE           NO.
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   10.61     Agreement and General Release, dated
             November 1, 2004, between Markland                             10-QSB       November 15, 2004     10.61
             Technologies, Inc. and Gregory A. Williams.

   31.1      Certification by CEO of Periodic Report             X
             Pursuant to Rule 13a-14(a) or Rule 15d-14(a)

   31.2      Certification by CFO of Periodic Report             X
             Pursuant to Rule 13a-14(a) or Rule 15d-14(a)

   32.1      Certification by CEO and CFO of Periodic            X
             Report Pursuant to 18 U.S.C. Section 1350
</TABLE>