U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

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: March 31, 2005

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





TECHNEST HOLDINGS, INC.(Exact name of registrant as specified in its charter)

Nevada88-0357272(State or other jurisdiction of incorporation or organization)(IRS Employer
Identification No.)




90 Grove Street, Suite 204

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



No  √



As of May 16, 2005, there were 442,059,447 shares of common stock, $0.001 par value, of the registrant issued and outstanding.

Transitional Small Business Disclosure Format (Check one):

Yes



No  √





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TECHNEST HOLDINGS, INC.

FORM 10-QSB
TABLE OF CONTENTS
MARCH 31, 2005

Page

PART I.

FINANCIAL INFORMATION:

Item 1.

Financial Statements (Unaudited)

Condensed Consolidated Balance Sheet at March 31, 2005



Condensed Consolidated Statements of Loss for the Three Months Ended 
March 31, 2005 and 2004



Condensed Consolidated Statement of Stockholders Equity (Deficit) For the Three Months Ended
March 31, 2005



Condensed Consolidated Statements of Cash Flows for the Three Months Ended
March 31, 2005 and 2004



Notes to Condensed Consolidated Financial Statements



Item 2.

Managements Discussion and Analysis



Item 3.

Controls and Procedures



PART II.

OTHER INFORMATION

Item 1.

Legal Proceedings



Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds



Item 6.

Exhibits



Signatures



STATEMENTS CONTAINED IN THIS FORM 10-QSB, 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 FORM 10-QSB 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 OURANNUAL REPORT ON FORM 10-KSB FOR THE YEAR ENDED DECEMBER 31, 2004, INCLUDING, BUT NOT LIMITED TO, THE SECTION THEREIN ENTITLED RISK FACTORS.





PART I. FINANCIAL INFORMATION



Item 1. Financial Statements



---



TECHNEST HOLDINGS, INC. AND SUBSIDIARY

CONDENSED CONSOLIDATED BALANCE SHEET

MARCH 31, 2005

(Unaudited)

|ASSETS

CURRENT ASSETS
Cash and cash equivalents                                                      $   247,440
Accounts receivable (including $244,258 from related parties)                      547,621
Inventory and work in process                                                      322,622
Prepaid expenses and other current assets                                           26,217
Due from related party
397,132
------------
TOTAL CURRENT ASSETS                                                           1,541,032
------------

PROPERTY AND EQUIPMENT - Net of accumulated depreciation of $1,364                    20,053
------------
OTHER ASSETS
Definite-lived intangible assets  Net of accumulated amortization of $1,571       159,540
Excess of consideration paid over estimated fair value of
net assets acquired (Note 3)
8,563,620
------------
8,723,160
------------

$10,284,245
============
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



LIABILITIES AND STOCKHOLDERS EQUITY

CURRENT LIABILITIES
Accounts payable                                                               $  456,880
Accrued expenses and other current liabilities                                    216,428
----------
TOTAL CURRENT LIABILITIES                                                       673,308
-----------
COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS EQUITY
Series A Convertible Preferred Stock - $.001 par value;
150 shares authorized; 124.325 shares issued and outstanding
(preference in liquidation of $124,325 at March 31, 2005)                           --
Series B Convertible Preferred Stock - $.001 par value;
1,149,425 shares issued and outstanding (preference in
liquidation of $2,500,000 at March 31, 2005)                                      1,149
Series C Convertible Preferred Stock - $.001 par value;
1,149,425 shares issued and outstanding (preference in
liquidation of $2,500,000 at March 31, 2005)                                      1,149
Common stock - par value $.001 per share;
500,000,000 shares authorized; 442,059,447 shares issued and outstanding        442,059
Additional paid-in capital                                                      9,169,324
Retained earnings, from February 15, 2005                                          (2,744)
----------
TOTAL STOCKHOLDERS EQUITY                                                    9,610,937
----------
TOTAL LIABILITIES AND STOCKHOLDERS EQUITY                                  $10,284,245
==========

See notes to condensed consolidated financial statements.


THE PURCHASE METHOD OF ACCOUNTING WAS USED BY TECHNEST HOLDINGS, INC. TO RECORD THE ASSETS ACQUIRED AND LIABILITIES ASSUMED OF GENEX TECHNOLOGIES, INC. ON FEBRUARY 14, 2005 (SEE NOTE 3).  ACCORDINGLY, THE ACCOMPANYING FINANCIAL STATEMENTS OF TECHNEST HOLDINGS, INC. AND GENEX TECHNOLOGIES, INC. AS OF AND FOR PERIODS ENDED SUBSEQUENT TO THE ACQUISITION ARE NOT COMPARABLE IN ALL MATERIAL RESPECTS TO THE FINANCIAL STATEMENTS OF TECHNEST HOLDINGS, INC. AS OF AND FOR PERIODS ENDED PRIOR TO THE ACQUISITION.



---

TECHNEST HOLDINGS, INC. AND SUBSIDIARY



CONDENSED CONSOLIDATED STATEMENTS OF LOSS



FOR THE THREE MONTHS ENDED MARCH 31, 2005 AND 2004

(Unaudited)



|                                                 | 2005                       | 2004                         
|------------------------------------------------ | -------------------------- | -----------------------------
|                                                 |                            |                              
|REVENUES (including $244,258 to a related party) | $  548,580                 | $            ----            
|COST OF REVENUES                                 | 292,209                    | ----                         
|GROSS PROFIT                                     | 256,371                    | ----                         
|                                                 |                            |                              
|OPERATING EXPENSES:                              |                            |                              
|Selling, general and administrative              |                            |                              
|(including
		$97,790 to related parties)         | 258,582                    | 2,952                        
|                                                 |                            |                              
|TOTAL OPERATING EXPENSES                         | 258,582                    | 2,952                        
|                                                 |                            |                              
|OPERATING LOSS                                   | (2,211)                    | (2,952)                      
|                                                 |                            |                              
|OTHER EXPENSES (INCOME), NET                     |                            |                              
|Interest expense                                 | 1,371                      | ----                         
|Other income, net                                | (838)                      | ----                         
|                                                 |                            |                              
|TOTAL OTHER EXPENSES, NET                        | 533                        | ----                         
|                                                 |                            |                              
|NET LOSS                                         | (2,744)                    | (2,952)                      
|                                                 |                            |                              
|Deemed Dividend on Series A Preferred Stock      | 124,858                    | ----                         
|Deemed Dividend on Series C Preferred Stock      | 2,050,000                  |                              
|                                                 |                            |                              
|NET LOSS APPLICABLE TO COMMON STOCKHOLDERS       | $     (2,177,602)          | $           
		(2,952)       
|                                                 | ============               | ============                 
|BASIC AND DILUTED LOSS PER COMMON SHARE          | $                     0.01 | $                     
		0.00
|                                                 | ============               | ============                 
|WEIGHTED AVERAGE NUMBER                          |                            |                              
|OF COMMON SHARES OUTSTANDING                     | $   235,734,159            | $    41,170,692              
|                                                 | ============               | ============                 
|                                                 |                            |                              







See notes to condensed consolidated financial statements.





THE PURCHASE METHOD OF ACCOUNTING WAS USED BY TECHNEST HOLDINGS, INC. TO RECORD THE ASSETS ACQUIRED AND LIABILITIES ASSUMED OF GENEX TECHNOLOGIES, INC. ON FEBRUARY 14, 2005 (SEE NOTE 3).  ACCORDINGLY, THE ACCOMPANYING FINANCIAL STATEMENTS OF TECHNEST HOLDINGS, INC. AND GENEX TECHNOLOGIES, INC. AS OF AND FOR PERIODS ENDED SUBSEQUENT TO THE ACQUISITION ARE NOT COMPARABLE IN ALL MATERIAL RESPECTS TO THE FINANCIAL STATEMENTS OF TECHNEST HOLDINGS, INC. AS OF AND FOR PERIODS ENDED PRIOR TO THE ACQUISITION.



---

TECHNEST HOLDINGS, INC. AND SUBSIDIARY

CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS EQUITY (DEFICIT)

FOR THE THREE MONTHS ENDED MARCH 31, 2005



SERIES A                   SERIES B

CONVERTIBLE                CONVERTIBLE

COMMON STOCK              PREFERRED STOCK            PREFERRED STOCK

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

SHARES          AMOUNT       SHARES        AMOUNT       SHARES     AMOUNT

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

Balance - January 1, 2005                            29,408,870      $ 29,408            --       $   --           --     $  --



Issuance of Series A Preferred Stock                          --            --           124           --           --        --



Net loss through February 14, 2005                            --            --            --           --           --       --



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

Balance  February 14, 2005                           29,408,870        29,408           124           --           --        --



Impact of applying push down accounting                       --            --            --           --           --        --



Issuance of common stock to Markland

in connection with the Genex acquisition           412,650,577       412,651            --           --           --        --



Issuance of Series B and C Preferred stock

and warrants                                                --            --            --           --    1,149,425     1,149



Net loss from February 15, 2005 to

March 31, 2005                                              --            --            --           --           --        --

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

Balance  March 31, 2005                              442,059,447    $ 442,059           124       $   --    1,149,425    $1,149

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









TECHNEST HOLDINGS, INC. AND SUBSIDIARY

CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS EQUITY (DEFICIT)

FOR THE THREE MONTHS ENDED MARCH 31, 2005





SERIES C

CONVERTIBLE          SUBSCRIPTION

PREFERRED STOCK        RECEIVABLE

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

SHARES        AMOUNT          AMOUNT

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

Balance - January 1, 2005                                                                    --        $  --            $(7,035)



Issuance of Series A Preferred Stock                                                         --           --                 --



Net loss through February 14, 2005                                                          --            --                 --



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

Balance  February 14, 2005                                                                  --           --             (7,035)



Impact of applying push down accounting                                                      --           --              7,035



Issuance of common stock to Markland

in connection with the Genex acquisition                                                   --           --                 --



Issuance of Series B and C Preferred stock

and warrants                                                                       1,149,425         1,149                 --



Net loss from February 15, 2005 to

March 31, 2005                                                                             --           --                 --

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

Balance  March 31, 2005                                                             1,149,425        $1,149               --

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



See notes to condensed consolidated financial statements.



THE PURCHASE METHOD OF ACCOUNTING WAS USED BY TECHNEST HOLDINGS, INC. TO RECORD THE ASSETS ACQUIRED AND LIABILITIES ASSUMED OF GENEX TECHNOLOGIES, INC. ON FEBRUARY 14, 2005 (SEE NOTE 3).  ACCORDINGLY, THE ACCOMPANYING FINANCIAL STATEMENTS OF TECHNEST HOLDINGS, INC. AND GENEX TECHNOLOGIES, INC. AS OF AND FOR PERIODS ENDED SUBSEQUENT TO THE ACQUISITION ARE NOT COMPARABLE IN ALL MATERIAL RESPECTS TO THE FINANCIAL STATEMENTS OF TECHNEST HOLDINGS, INC. AS OF AND FOR PERIODS ENDED PRIOR TO THE ACQUISITION.



---



TECHNEST HOLDINGS, INC. AND SUBSIDIARY

CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS EQUITY (DEFICIT)

FOR THE THREE MONTHS ENDED MARCH 31, 2005





ADDITIONAL                                 TOTAL

PAID-IN            ACCUMULATED      STOCKHOLDERS

CAPITAL              DEFICIT     EQUITY (DEFICIT)

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

AMOUNT               AMOUNT               AMOUNT

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

Balance  January 1, 2005                                                     $15,200,049          $(15,531,599)      $(309,177)



Issuance of Series A Preferred Stock                                              124,848                 --            124,848



Net loss through February 14, 2005                                                     --               (2,250)          (2,250)



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

Balance  February 14, 2005                                                    15,324,897          (15,533,849)        (186,579)



Impact of applying push down accounting                                       (15,354,304)          15,531,599          184,330



Issuance of common stock to Markland

in connection with the Genex acquisition                                      5,688,607                --           6,101,258



Issuance of Series B and C Preferred stock

and warrants                                                                  3,510,124                --           3,512,422



Net loss from February 15, 2005 to

March 31, 2005                                                                       --               (494)              (494)

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

Balance  March 31, 2005                                                       $9,169,324          $  (2,744)        $9,610,937

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



See notes to condensed consolidated financial statements.



THE PURCHASE METHOD OF ACCOUNTING WAS USED BY TECHNEST HOLDINGS, INC. TO RECORD THE ASSETS ACQUIRED AND LIABILITIES ASSUMED OF GENEX TECHNOLOGIES, INC. ON FEBRUARY 14, 2005 (SEE NOTE 3).  ACCORDINGLY, THE ACCOMPANYING FINANCIAL STATEMENTS OF TECHNEST HOLDINGS, INC. AND GENEX TECHNOLOGIES, INC. AS OF AND FOR PERIODS ENDED SUBSEQUENT TO THE ACQUISITION ARE NOT COMPARABLE IN ALL MATERIAL RESPECTS TO THE FINANCIAL STATEMENTS OF TECHNEST HOLDINGS, INC. AS OF AND FOR PERIODS ENDED PRIOR TO THE ACQUISITION.



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TECHNEST HOLDINGS, INC. AND SUBSIDIARY

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
FOR THE THREE MONTHS ENDED
MARCH 31
-------------------------------
2005      |       2004
-------------  |   -------------
|
CASH FLOWS FROM OPERATING ACTIVITIES:                                          
|
|
Net loss                                                       $    (2,744)   |  $     (2,952)
|
Adjustment to reconcile net loss to net                                      
|
cash provided (used) by operating activities:                              
|
Depreciation and amortization                                    2,935    |            --
Changes in operating assets and liabilities:                                 
|
Accounts receivable                                           (381,064)   |            --
Inventory and work in process                                  (99,665)   |            --
Prepaid expenses and other current assets                         (814)   |            --
Due from related parties                                      (397,132)   |            --
Accounts payable                                                92,173    |         3,041
Accrued expenses and other current                                       
|
liabilities                                                  (13,145)   |            --                                                                                |
-------------  |   -------------
NET CASH USED IN OPERATING ACTIVITIES                       (799,456)   |            89
-------------  |   -------------

CASH FLOWS FROM INVESTING ACTIVITIES:                                          
|
Cash used for acquisition of Genex Technologies, Inc.,                     
|
net of cash acquired                                        (2,515,516)   |            --
-------------  |   -------------
NET CASH USED IN INVESTING ACTIVITIES                     (2,515,516)   |            --
-------------  |   -------------
|
CASH FLOWS FROM FINANCING ACTIVITIES:                                          
|
Proceeds from sale of Series A convertible preferred stock          50,000    |            --
Proceeds from sale of Series B and C convertible                             
|
preferred stock and warrants, net                              3,512,273    |            --
-------------  |   -------------
NET CASH PROVIDED BY FINANCING ACTIVITIES                  3,562,273    |            --
-------------  |   -------------
|
NET INCREASE IN CASH                                                 247,301    |           554
|
CASH - BEGINNING OF PERIOD                                               139    |           988
-------------  |   -------------
|
CASH - END OF PERIOD                                             $   247,440    |  $      1,077
=============  |   =============

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




THE PURCHASE METHOD OF ACCOUNTING WAS USED BY TECHNEST HOLDINGS, INC. TO RECORD THE ASSETS ACQUIRED AND LIABILITIES ASSUMED OF GENEX TECHNOLOGIES, INC. ON FEBRUARY 14, 2005 (SEE NOTE 3).  ACCORDINGLY, THE ACCOMPANYING FINANCIAL STATEMENTS OF TECHNEST HOLDINGS, INC. AND GENEX TECHNOLOGIES, INC. AS OF AND FOR PERIODS ENDED SUBSEQUENT TO THE ACQUISITION ARE NOT COMPARABLE IN ALL MATERIAL RESPECTS TO THE FINANCIAL STATEMENTS OF TECHNEST HOLDINGS, INC. AS OF AND FOR PERIODS ENDED PRIOR TO THE ACQUISITION.



---





TECHNEST HOLDINGS, INC. AND SUBSIDIARY

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (continued)
(UNAUDITED)
		
		
FOR THE THREE MONTHS ENDED
MARCH 31,
------------------------------
2005             2004
-------------    -------------
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:

Cash paid during the periods for:
Interest                                                           $      1,371     $         --
=============    =============

Taxes                                                              $        500     $         --
=============    =============
Non-cash investing and financing activities:

Conversion of notes payable and accrued interest into
Series
A preferred stock                                         $     74,848     $         --
=============    =============
Common stock issued in conjunction with acquisition of
Genex Technologies, Inc.                                          $ 6,101,258     $        --
=============    =============
Deemed dividend preferred stock - beneficial conversion
feature - Series A                                               $    124,858     $        --
=============    =============
Deemed dividend preferred stock - beneficial conversion
feature - Series C                                               $   2,050,00     $        --
=============    =============


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




THE PURCHASE METHOD OF ACCOUNTING WAS USED BY TECHNEST HOLDINGS, INC. TO RECORD THE ASSETS ACQUIRED AND LIABILITIES ASSUMED OF GENEX TECHNOLOGIES, INC. ON FEBRUARY 14, 2005 (SEE NOTE
3).  ACCORDINGLY, THE ACCOMPANYING FINANCIAL STATEMENTS OF TECHNEST HOLDINGS, INC. AND GENEX TECHNOLOGIES, INC. AS OF AND FOR PERIODS ENDED SUBSEQUENT TO THE ACQUISITION ARE NOT COMPARABLE IN ALL MATERIAL RESPECTS TO THE FINANCIAL STATEMENTS OF TECHNEST HOLDINGS, INC. AS OF AND FOR PERIODS ENDED PRIOR TO THE ACQUISITION.





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|TECHNEST HOLDINGS, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS (continued)
(UNAUDITED)

During the quarter ended March 31, 2005, the Company acquired 100% of the outstanding common stock of Genex Technologies, Inc. The transaction had the following non-cash impact on the balance sheet:

Accounts receivable                                      $    166,557
Inventory and work in progress                                 21,417
Property and equipment                                        222,957
Prepaid expenses and other current assets                      25,403
Property and equipment                                        
21,417
	Intangibles                                                 8,724,731
Accounts payable                                             (314,718)
Accrued expenses and other current liabilities               (229,573)
Equity                                                     (6,101,258)
-------------

Net cash used for acquisition, net
of cash acquired of $784,484                           $  2,515,516
=============

The accompanying notes are an integral part of these consolidated financial statements.
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



THE PURCHASE METHOD OF ACCOUNTING WAS USED BY TECHNEST HOLDINGS, INC. TO RECORD THE ASSETS ACQUIRED AND LIABILITIES ASSUMED OF GENEX TECHNOLOGIES, INC. ON FEBRUARY 14, 2005 (SEE NOTE 3).  ACCORDINGLY, THE ACCOMPANYING FINANCIAL STATEMENTS OF TECHNEST HOLDINGS, INC. AND GENEX TECHNOLOGIES, INC. AS OF AND FOR PERIODS ENDED SUBSEQUENT TO THE ACQUISITION ARE NOT COMPARABLE IN ALL MATERIAL RESPECTS TO THE FINANCIAL STATEMENTS OF TECHNEST HOLDINGS, INC. AS OF AND FOR PERIODS ENDED PRIOR TO THE ACQUISITION.



---

TECHNEST HOLDINGS, INC AND SUBSIDIARY

NOTES TO CONDENSED AND CONSOLIDATED FINANCIAL STATEMENTS



For the Three Months Ended March 31, 2005 and 2004

(Unaudited)



1. NATURE OF OPERATIONS



Business History



Technest Holdings, Inc. (Technest or the Company) had no operations between October 10, 2003 and February 14, 2005.



On February 14, 2005, Technest became a majority owned subsidiary of Markland Technologies, Inc. (Markland), a homeland defense, armed services and intelligence contractor. Markland is a public company with a class of equity securities registered pursuant to Section 12(g) of the Exchange Act. Technest issued to Markland 412,650,577 shares of its common stock, representing a 93% ownership interest in Technests common stock, in exchange for 10,168,764 shares of Markland common stock which were used as partial consideration for the concurrent acquisition of Genex Technologies, Inc. (Genex) (see Note 3).



Genex Technologies, Inc. offers imaging products and complete solutions for three-dimensional (3D) Imaging and Display, Intelligent Surveillance, and three-dimensional Facial Recognition.



In connection with these acquisitions, the accounts of Technest and Genex have been adjusted using the push down basis of accounting to recognize the allocation of the consideration paid to the respective net assets acquired (see Note 3).



Basis of Presentation



The accompanying unaudited condensed consolidated financial statements of Technest 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 March 31, 2005 are not necessarily indicative of the result that may be expected for the year ending December 31, 2005. The unaudited condensed consolidated financial statements should be read in conjunction with the consolidat

ed financial statements and footnotes included in the Companys 10-KSB for the year ended December 31, 2004 filed with the Securities and Exchange Commission.
(see Note 3
regarding the use of push down accounting and the lack of comparability to prior
periods as a result).



The accompanying condensed consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, which contemplate continuation of Technest as a going concern.  Technests ability to continue as a going concern remains dependent upon the ability to generate 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. 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 operating cash flow which, together with the current cash levels, will enable Technest to meet existing financial obligations as they come due during the curren


cal year. However, management can provide no assurance that the performance of the business will meet these expectations.



Technest 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.



2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES



Principles of Consolidation



The condensed consolidated financial statements include the accounts of Technest and its wholly-owned subsidiary, Genex Technologies, Inc. from the date of acquisition on February 14, 2005. All significant inter-company balances and transactions have been eliminated in consolidation.



Use of Estimates





---

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 revenue recognized under percentage completion method
on firm fixed price contracts, allowance for doubtful accounts, the estimated useful lives of property and equipment, useful lives of patents, the amount due to contracting government agencies as a result of their audits, the allocation of consideration paid to the net assets of businesses acquired
and the fair value of equity instruments.



Concentrations



Technest has cash balances in banks in excess of the maximum amount insured by the FDIC as of March 31, 2005.



A significant portion of revenue is generated from contracts with Federal government agencies. Consequently, a significant portion of all accounts receivable are due from Federal government agencies either directly or through other government contractors.



Accounts Receivable



Accounts receivable represent the amount invoiced for product shipped and amounts invoiced by the Company under contracts. An allowance for doubtful accounts is determined based on managements best estimate of probable losses inherent in the accounts receivable balance. Management assesses the allowance based on known trouble accounts, historical experience and other currently available evidence. If management determines amounts to be uncollectible, they will be charged to operations when that determination is made.



A significant portion of the Companys receivables are due from government contracts, either directly or as a subcontractor. The Company has not experienced any material losses in accounts receivable related to these contracts and has provided no allowance at March 31, 2005. If management determines amounts to be uncollectible, they will be charged to operations when that determination is made.



Inventory and Work in Process



Inventories are stated at the lower of cost or market.  Cost is determined by the first-in, first-out method and market represents the lower of replacement costs or estimated net realizable value.  Work in process represents allowable costs incurred but not billed related to contracts.



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
Computer 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 March 31, 2005:



|Software                                $      12,612
Computer equipment                              4,183
Furniture and fixtures                          4,622
--------------
$      21,417
Less accumulated depreciation                  (1,364)
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Depreciation expense for
the three months ended March 31, 2005 and 2004 was $1,364 and $0, respectively.



Definite-lived
Intangible Assets



Definite-lived intangible
assets represent costs of outside legal counsel related to obtaining new
patents.  Patent costs are amortized over the legal life of the patents,
generally twenty years, starting on the patent issue date.  The costs of
unsuccessful and abandoned patent applications are expensed when abandoned.  The
cost to maintain existing patents are expensed as incurred.  The nature of the
technology underlying these patents relates to 3D imaging, intelligent
surveillance and 3D facial recognition technologies.



Revenue Recognition



We recognize product
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.



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.



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.



Loss Per Share



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, Series A and C 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 March 31, 2005.

The purchase price allocation for the acquisition
of Genex is preliminary.  The Company is engaging an independent valuation firm
to determine the final fair value of the net assets acquired and expects this to
be completed by June 30, 2005.  The Company expects that a material amount of
the excess consideration paid over the final fair value of net assets acquired
will be determined to be in-process research and development.  Any amount
determined to be in-process research and development will be expensed by the
Company immediately.



Impairment of
Long-Lived Assets



Pursuant to SFAS No. 144,
Accounting for the Impairment or Disposal of Long-lived Assets, Technest
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 of impairment are present, Technest evaluates the
carrying value of such assets in relation to the operating performance and
future undiscounted cash flows of the underlying assets. Technest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 March 31, 2005.



---



Stock-Based
Compensation



At March 31, 2005 , as
permitted under SFAS No. 148, Accounting for Stock-Based Compensation -
Transition and Disclosure, which amended SFAS No. 123, Accounting for
Stock-Based Compensation, Technest 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 no effect on the net loss
for the three months ended March 31, 2005 and 2004.



3. ACQUISITIONS



Purchase by Markland
Technologies, Inc.



On February 14, 2005, in
conjunction with a Securities Purchase Agreement between Technest and Markland,
Technest issued 412,650,577 shares of common stock to Markland Technologies,
Inc. in exchange for 10,168,764 shares of Marklands common stock (the Markland
Investment).  The common stock issued to Markland represents a 93% interest in
Technests common stock.  Consequently, Technest became a majority owned
subsidiary of Markland on that date.  The Securities Purchase Agreement contains
provisions for Markland to deliver additional shares of its common stock to
Technest in conjunction with the acquisition of Genex Technologies, Inc. (see
below) and conversion of the Series B Convertible Preferred Stock (see Note 6).



Purchase of Genex
Technologies, Inc.



The acquisition of Genex was effected pursuant to an Agreement and Plan of
Merger dated February 14, 2005 (the Merger Agreement), by and among Markland,
Technest, MTECH Acquisition, Inc. (MTECH), a wholly-owned subsidiary of
Technest, Genex and Jason Geng, the sole stockholder of Genex. A copy of the
Merger Agreement was reported on Form 8-K.

Founded in 1995, Genex has an established history in video surveillance sensor
science. Its Surveillance Group provides innovative sensor and algorithm
solutions that are small, tactical, low power and low cost solutions. Its
surveillance technologies combine powerful algorithms, such as object tracking
and image enhancement, with revolutionary wide-area, 360-degree sensors. These
solutions operate in visible, near-infrared, infrared, and acoustic wavelengths.
Within its biometrics technologies the 3D Facial Recognition Group develops
tools for enhancing facial recognition. By leveraging the power of 3D, Genex
enables existing recognition systems to perform reliably while advancing
progress towards total 3D systems. The companys tools allow for seamless
integration of capabilities, such as 2D-to-3D face conversion and compensation
for pose, lighting, expression, aging, and weight. Management believes that
Genex expertise has particular impact within the DOD and Homeland Security
market place. Genex offers products which include; (i) design and fabrication of
customized remote sensor systems and platforms for DOD, INTEL and Homeland
Security applications; (ii) design and fabrication of three-dimensional facial
recognition products tools for law enforcement; and (iii) design and fabrication
of non-invasive three-dimensional medical imaging tools.  These efforts involve
systems engineering, system integration, prototyping, manufacturing and field
data collections as well as data analysis and processing.

In accordance with the
terms of the Merger Agreement, on February 14, 2005, MTECH, a wholly-owned
subsidiary of Technest, merged with and into Genex, with Genex surviving the
merger as a wholly-owned subsidiary of Technest. As a result of the merger, all
of the outstanding shares of the capital stock of Genex were automatically
converted into the right to receive in the aggregate (i) $3 million of cash;
(ii) 10,168,764 shares of Marklands common stock (the shares of Markland common
stock issued to Technest in the Markland Investment); and (iii) if earned,
contingent payments in the form of additional shares of Technest common stock. A
brokerage fee in connection with this acquisition of $300,000 was also paid. In
addition, Mr. Geng was to receive a twelve month unsecured promissory note in
the principal amount of $550,000 that paid interest at the rate of 6% per annum.
Mr. Gengs share consideration was to be adjusted to reflect changes in the
closing bid price of Markland common stock in the 10 trading days following
February 14, 2005, subject to limitations set forth in the Merger Agreement.
 Following the acquisition, it is the Companys opinion that Mr. Geng omitted
material facts from the Merger Agreement and, as a result, the Company
has not issued and does not intend to issue the promissory note, the additional
Markland share
consideration
or the contingent payments of Technest common stock.



A summary of the initial
allocation of the purchase price to the estimated fair value of the assets
acquired and liabilities assumed is as follows:





---



Cash
			                                                            $
			3,300,000
			Shares of Markland
			Technologies, Inc. common stock                 6,101,258
			------------
			Total
			Purchase Price                                 $ 9,401,258
			============
			
			Estimated fair
			value of net assets acquired:
			
			Estimated fair
			value of assets acquired -
			Current assets,
			including cash of $784,484                    $ 1,199,401
			Property and
			equipment                                             21,417
			Estimated fair
			value of liabilities assumed -
			Accounts
			payable & accrued expenses                              (544,291)
			------------
			Estimated fair
			value of identifiable net
			tangible assets
			acquired                                          676,527
			Intangible assets - intellectual property
			161,111
			Excess of
			consideration paid over estimated
			fair value of net assets acquired
			8,563,620
			------------
			Total
			Purchase Price                                    $ 9,401,258
			============




The purchase price
allocation above is preliminary.  The Company is engaging an independent
valuation firm to determine the final fair value of the net assets acquired and
expects this to be completed by June 30, 2005.  The Company expects that a
material amount of the excess consideration paid over the final fair value of
net assets acquired will be determined to be in-process research and
development.  Any amount determined to be in-process research and development
will be expensed by the Company immediately.



As a result of the
transaction being structured as a stock acquisition, Technest does not expect
any goodwill resulting from the transaction to be deductible for tax purposes.



In connection with the
Genex acquisition, Technest also raised gross proceeds of $5,000,000 through a
private placement of units consisting of 1,149,425 shares of Series B
Convertible Preferred Stock, 1,149,425 shares of Series C Convertible Preferred
Stock and warrants to purchase 242,735,571 shares of Technests common stock
(see note 6).



Unaudited pro forma
financial information for the three months ended March 31, 2005 and 2004, had
the acquisition Genex been completed as of January 1, is as follows:





2005

2004



Revenues
			                                                $ 1,103,719     $ 
			807,875
			=========
			    ==========
			Profit (loss) from
			operations                               $ 46,374     $ (375,841)
			=========
			    ==========
			
			Deemed dividends
			on beneficial conversion
			to preferred
			stockholders                               $ (2,174,858)   $(2,174,858)
			============   ===========
			
			Net loss
			applicable to common stockholders              $ (2,128,484)   $(2,550,699)
			===========  
			===========
			Net loss
			applicable to common stockholders
			per common
			share                                       $  (0.00)     $   (0.00)
			===========  
			============


Push Down Accounting



Based on the substantial
change in ownership and control of Technest, as well as the fact that the
investors in the Technest financing (see Note 6) represent a collaborative group
brought together to promote the acquisition of Genex, the push down basis of
accounting has been applied to the acquisition of Technest by Markland and the
acquisition of Genex by Technest.  In accordance with the push



---

down basis of accounting, Technests and Genexs net assets were adjusted to
their estimated fair values as of the date of acquisition which resulted in the
basis of the net assets acquired being adjusted as disclosed above and accumulated deficit was reset to zero as of the acquisition date. 
As also
noted above, this allocation of the purchase price is preliminary and is
expected to change based on the completion of an independent business valuation.



Included in the statement
of loss for the three months ended March 31, 2005 is selling, general and
administrative expenses of approximately $2,250 related to the period from
January 1, 2005 to February 14, 2005 prior to the application of push down
accounting.



4. DEFINITE-LIVED
INTANGIBLE ASSETS



Definite-lived intangible
assets consist of the following at March 31, 2005:



|Patents
		$  161,111
		Accumulated
		amortization                    (1,571)
		-------------
		Net definite-lived
		intangible asset    $  159,540
		=============
|------------------------------------------------------------------------------------------------------------------------------------------------------------------



Amortization expense was
$1,571 and $0 for the three months ended March 31, 2005 and 2004, respectively.



5. NOTES PAYABLE



During 2003, the Company
issued an 8% convertible demand note in the principal amount of $57,158.  In
April 2004, the Company issued an 8% demand note in the principal amount of
$10,000.  On February 8, 2005, these notes and accrued interest of $7,770 were
satisfied by the issuance of Series A Convertible Preferred Stock (see Note 6).



Interest expense related
to these notes for the three months ended March 31, 2005 and 2004, was $1,371
and $0, respectively.



6. STOCKHOLDERS EQUITY



Series A Convertible
Preferred Stock

On February 8, 2005, the Companys board of directors designated 150 shares of
preferred stock as Series A Convertible Preferred Stock (Series A Preferred
Stock). The Series A Preferred Stock is non-interest bearing, is not entitled
to receive dividends and is not redeemable. The Series A Preferred Stock has a
liquidation preference of $1,000 per share. The holders of Series A Preferred
Stock have no voting rights except that they will be entitled to vote as a
separate class on any amendment to the terms or authorized number of shares of
Series A Preferred Stock, the issuance of any equity security ranking senior to
the Series A Preferred Stock and the redemption of or the payment of a dividend
in respect of any junior security. At any time, holders of Series A Preferred
Stock may elect to convert their Series A Preferred Stock into common stock.
Each share of Series A Preferred Stock is currently convertible into 1,000,000
shares of common stock provided that, following such conversion, the total
number of shares of common stock then beneficially owned by such holder and its
Affiliates and any other Persons whose beneficial ownership of Common Stock
would be aggregated with the holders for purposes of Section 13(d) of the
Exchange Act, does not exceed 4.999% of the total number of issued and
outstanding shares of common stock.  The Series A Preferred Stock shall rank
pari passu with the Companys Series B and C Preferred Stock.

On February 8, 2005, we entered into an Exchange Agreement and a Securities
Purchase Agreement with Garth LLC pursuant to which we agreed to issue 99.325
shares of our Series A Preferred Stock in exchange for $25,000 in cash and the
surrender of certain of our 8% Promissory Notes held by Garth LLC (the Notes).
Upon conversion, the Notes had an aggregate outstanding principal balance plus
accrued interest of $74,858.  We received net cash proceeds of $25,000 from this
private placement.

On February 8, 2005, we entered into a Securities Purchase Agreement with Verdi
Consulting, Inc. pursuant to which we sold twenty five (25) shares of our Series
A Preferred Stock for the aggregate consideration of $25,000.

The proceeds from the issuance of the Series A Preferred Stock was used to
reduce accounts payable.

Verdi Consulting has certain piggy-back registration rights with respect to the
common stock issuable upon conversion of the Series A Preferred Stock. These
piggy-back registration rights expire when the shares of Common Stock issued
pursuant to conversion of the Series A Shares can be sold without volume
restrictions pursuant to Rule 144(k) of the Act.



---

At March 31, 2005 there were 124.325 shares of Series A Preferred Stock issued
and outstanding.

Series B and C Convertible Preferred Stock

On February 14, 2005, immediately after the acquisition by Markland of a
controlling interest in Technest (see Note 3), the Investors consisting of Southridge Partners LP, Southshore Capital Fund Limited, Verdi Consulting, Inc.,
ipPartners, Inc., DKR Soundshore Oasis Holding Fund, Ltd., DKR Soundshore
Strategic Holding Fund, Ltd. and Deer Creek Fund, LP (collectively, the
Investors) paid $5,000,000 in cash to Technest for 1,149,425 shares of Series
B Convertible Preferred Stock (Series B Preferred Stock), 1,149,425 shares of
Series C Convertible Preferred Stock (Series C Preferred Stock), and five-year
warrants to purchase up to 242,735,571 shares of Technests common stock at an
exercise price of $.0307 per share (the Investor Financing).

These securities were sold in units for a price of $4.35 per unit.  Each unit
consists of one share of Series B Preferred Stock; one share of Series C
Preferred Stock and a warrant to purchase up to 211.18 shares of Technests
common stock.  Gross proceeds received from the sale of the units was
$5,000,000.  From these proceeds, the Company paid a finders fee of $1,200,000
and legal fees related to the financing of $287,727.

The Series B Preferred Stock will be convertible into Markland common stock upon
the earlier to occur of (a) February 14, 2006 or (b) a date which is the first
trading day after the date on which Markland common stock has a closing bid
price of $2.50 or more for five consecutive trading days. The number of shares
to be issued will be determined by dividing the quotient of (a) $5,000,000
divided by the lower of (i) $0.60 and (ii) the market price (as defined in the
Merger Agreement) by (b) 1,149,425.  Shares of the Series B Preferred Stock have
a liquidation preference of $2.175 per share, may only vote on changes to the
rights, privileges and priority of the Series B Preferred Stock, do not accrue
dividends and are not redeemable. The Series B Preferred Stock shall rank pari
passu with the Companys Series A and C Preferred Stock.

The Series C Preferred Stock is convertible into Technest common stock at any
time at the option of the stockholder. The number of shares of Technest common
stock into which each share of Series C Preferred Stock is convertible is
determined by dividing $2.175 by the Series C Conversion Price. The Series C
Conversion Price is $.0102993.  Shares of the Series C Preferred Stock have a
liquidation preference of approximately $2.175 per share, may only vote on
changes to the rights, privileges and priority of the Series C Preferred Stock,
receive dividends on an as converted basis whenever dividends are made to the
Technest common stock holders, and are not redeemable.  The Series C Preferred
Stock shall rank pari passu with the Companys Series A and B Preferred Stock.

Technest has agreed to issue additional shares of its common stock to the
Investors if the units do not have a market value of $6.50 at the end of one
year.

On March 31, 2005, the Company had 1,149,425 shares of Series B Preferred Stock
and 1,149,425 shares of Series C Preferred Stock issued and outstanding.

Beneficial Conversion Features

Based on the effective conversion price of the Series A Preferred Stock, the
Company determined that there was a beneficial conversion feature of
approximately $8,500,000.  The beneficial conversion feature was limited to
$124,858, the proceeds received from the Series A Preferred Stock.  This
beneficial conversion feature has been reflected as a deemed dividend to the
Series A Preferred stockholders in the statement of loss for the quarter ended
March 31, 2005.

The Company allocated the proceeds received in the Investor Financing, on a
relative fair value basis, to the Series B Preferred Stock, the Series C
Preferred stock and the warrants.  For purposes of this allocation, the Company
estimated the fair value of the Series B and C Preferred Stock based on the fair
value of the common stock into which these shares could convert.  The Company
estimated the fair value of the warrants using the Black-Scholes pricing model.
 Using the effective conversion price of the Series C Preferred Stock, the
Company determined that there was a beneficial conversion feature of
$10,177,295.  The beneficial conversion feature was limited to $2,050,000, the
allocated proceeds received from the Series C Preferred Stock.  This beneficial
conversion feature has been reflected as a deemed dividend to the Series C
Preferred stockholders in the statement of loss for the quarter ended March 31,
2005.  Since the Series B Preferred Stock converts into common stock of
Markland, there was considered to be no beneficial conversion feature or deemed
dividend with respect to the common stockholders of Technest.

Common Stock Issuances



On February 14, 2005,
Technest issued to Markland 412,650,577 shares of its common stock in exchange
for 10,168,764 shares of Markland common stock in accordance with the terms of a
Securities Purchase Agreement between Markland and Technest (see Note
3).  On this date, Technest became a majority owned subsidiary of Markland.
 Markland also agreed to issue additional shares of its common stock with a
value of $5,000,000 to Technest upon conversion of Technests Series B Preferred
Stock.



---





Markland, a homeland
defense, armed services and intelligence contractor, is a public company with a
class of equity securities registered pursuant to Section 12(g) of the Exchange
Act.



Reverse stock split



On February 14, 2005, the
Board of Directors of Technest and the holders of a majority of the common stock
of Technest approved a 1 for 211.18 reverse split (the Reverse Split). The
Reverse Split will become effective not less than 20 days after a definitive
Schedule 14C Information Statement relating to the Reverse Split is mailed to
the stockholders of Technest.  No effect has been given to this stock split in
these financial statements.



7. OPTIONS AND WARRANTS



In June 2001, the Company
established the 2001 Stock Option Plan (Plan) which provides for the granting
of options which are intended to qualify either as incentive stock options
(Incentive Stock Options) within the meaning of Section 422 of the Internal
Revenue Code of 1986, as amended, or as options which are not intended to meet
the requirements of such section (Non-Statutory Stock Options). The total
number of shares of common stock for issuance under the 2001 Plan shall not
exceed 10,000,000. Options to purchase shares may be granted under the Plan to
persons who, in the case of Incentive Stock Options, are key employees
(including officers) of the Company or, in the case of Non-statutory Stock
Options, are key employees (including officers) or nonemployee directors of, or
nonemployee consultants to, the Company.



The exercise price of all
Incentive Stock Options granted under the Plan must be at least equal to the
fair market value of such shares on the date of the grant or, in the case of
Incentive Stock Options granted to the holder of more than 10% of the Companys
common stock, at least 110% of the fair market value of such shares on the date
of the grant. The maximum exercise period for which Incentive Stock Options may
be granted is ten years from the date of grant (five years in the case of an
individual owning more than 10% of the Companys common stock). The aggregate
fair market value (determined at the date of the option grant) of shares with
respect to which Incentive Stock Options are exercisable for the first time by
the holder of the option during any calendar year shall not exceed $100,000.



The exercise price of all
Non-Statutory Stock Options granted under the Plan must be at least equal to 80%
of the fair market value of such shares on the date of the grant.



No options were granted
pursuant to the Plan during the periods ended March 31, 2005 and 2004.



Summary information with
respect to stock options and warrants granted is as follows:

Weighted
average

|                             | Number
		of Shares |             | Exercise Price
|---------------------------- | ------------------ | ----------- | --------------
|Balance, December 31,
		2004 | 822,744            |             | $
		2.39      
|                             | Issued             | 242,735,571 |               
|                             | Expired            | (16,758)    |               
|                             |                    |             |               
|Balance, March 31,
		2005    | 243,541,567        |             | $
		0.03      
|                             |                    |             |               





The following table
summarizes the Companys stock options and warrants outstanding at March 31,
2005:



Options and warrants
outstanding and exercisable



|Exercise price                    |             | Number      |  | Expiration Date
|--------------------------------- | ----------- | ----------- |  | ---------------
|$
		9.63                          |             | 143,209     |  | 07/23/2005     
|$
		0.35                          |             | 662,777     |  | 12/31/2005     
|$      0.03                       |             | 242,735,571 |  | 02/14/2010     
|                                  |             | 243,541,567 |  |                
|                                 
|Weighted average
		remaining life | 5.0
		years



As of March 31, 2005 all
options and warrants are exercisable.



---



In connection with the
Investor Financing on February 14, 2005 (see Note 6), the Company issued five
year warrants to purchase  242,735,571 shares of Technest common stock at an
exercise price of  $0.0307 per share.  The relative fair value of these warrants
was estimated using the Black-Scholes model and the following assumptions:



|Fair value of
		stock                   | $   
		0.05
|--------------------------------------- | -----------
|Expected
		volatility                   | 0.03       
|Expected dividend
		yield               | 0%         
|Expected lives of
		warrants (in years) | 252%       
|Risk-free interest
		rate               | 3.53%      



In connection with the
acquisition of Genex (see Note 3), Markland agreed to replace options to
purchase 312,000 shares of Genex common stock with fully vested options for the
purchase of the same number of shares of Markland common stock with an exercise
price equal to the fair value of Marklands common stock on the grant date.  The
fair value of these options was considered to be immaterial for purposes of
determining the total consideration paid for Genex.



8. 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:



Shares
			Potentially
			Issuable
			--------
			Series A
			Convertible Preferred Stock                             124,325,000
			Series C
			Convertible Preferred Stock                             242,735,571
			Stock options
			                                                       805,986
			Warrants
			                                                        242,735,571
			-----------
			Total as
			of March 31, 2005                              610,602,128
			===========




9.  COMMITMENTS AND
CONTINGENCIES



Facility Rental



The Company has its
executive office in Ridgefield, CT.  On November 1, 2004, the Company entered
into a three year lease at a monthly rental of $1,500.



Genex leases office space
under the terms of a non-cancelable operating lease that expires in January
2006.  The office space lease provides for annual increases of 3% to the base
rent and requires the Company to reimburse the landlord for its pro rata share
of the increases in annual operating expenses and real estate taxes.





Rent expense for the three
months ended March 31, 2005 and 2004, was $21,874 and $ 0 respectively



Government Contracts



The Companys billings and
revenue on time and material contracts are based on provisional fringe, general
& administrative and overhead rates which are subject to audit by the
contracting government agency.  During an audit conducted in November 2004
covering the fiscal year 2002, the Defense Contract Audit Agency (DCAA)
discovered significant deficiencies in Genexs accounting system that resulted
in misclassified and unallowable costs. Their
examination disclosed eight significant deficiencies in Genexs accounting
system that resulted in misclassified costs.  They were:

1.            Contractor does not follow policies
and procedures concerning accounting for unallowable costs.

2.            Contractor does not follow policies
and procedures concerning accounting for material costs.

3.            Contractor lacks adequate written
policies and procedures concerning capitalization of assets.

4.            Contractor does not have adequate
policies and procedures to ensure proper segregation of duties in handling its
labor costs.

5.            Contractors procedure for
calculating the proposed hourly labor rate of its employees results in
overstated labor costs.

6.            Contractor fails to maintain
policies and procedures for classifying the labor categories of its employees.

7.            Employees fail to follow the
contractors policies and procedures in regards to maintaining timesheets on a
current basis.

8.            Contractors policy of billing
labor costs results in billing the Government for employees that are not
employees of Genex.



Since the acquisition of Genex, the
management of Technest has terminated Genex employees responsible for this
function and rapidly installed appropriate internal controls and oversight over
Genexs accounting system to ensure that they comply with applicable laws and
regulations and are adequate and operating effectively. However, there can be no
assurance that as a result of the prior deficiencies, Genex will be allowed to
complete certain previous contacts awarded by the Department of Defense and may 
be required to refund amounts overbilled to its customers.

As a result of this audit, Genex could
be prevented from completing certain previous contracts awarded by the
Department of Defense and may be required to refund amounts overbilled to its
customers.  The Company has accrued $68,017 for overpayments for 2002 and has
extended the analysis of misclassified and unallowed costs to March 31, 2005.
 At March 31, 2005, the company has determined that $102,228 is repayable to the
government. This amount is included in accrued expenses at March 31, 2005.



Resignation of a
Director



On March 30, 2005, Mark
		Allen resigned from our Board of Directors. Mr. Allens resignation
		became effective upon our receipt of his resignation letter on March 30,
		2005. Mr. Allens resignation is not due to a disagreement with the
		Company or any matter relating to the Companys operations, policies or
		practices. Prior to February 14, 2005, Mr. Allen had been the sole director of the
		Company for approximately 1 month. As the Company had no operations or
		officers during that time, Mr. Allen certified all periodic reports
		filed with the SEC. On April 1, 2005, we appointed our President, Joseph
		P. Mackin, to our Board of Directors. Dr. Mackin currently serves as the
		President of our wholly owned subsidiary Genex Technologies, Inc., a
		Maryland corporation, as well as being a Director and the President of
		our majority shareholder, Markland Technologies, Inc., a Florida
		corporation. Dr. Mackin has been employed by EOIR Technologies, Inc., a
		Virginia corporation and a wholly owned subsidiary of Markland, since
		2000 and is currently the President and CEO of EOIR.






10. INCOME TAXES





---

There was no provision for federal or state income taxes for the three months
ended March 31, 2005 and 2004, due to the Companys operating losses and a full
valuation reserve.



The Companys deferred tax
assets consist primarily of the net operating loss carry forwards.  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.



Prior to its acquisition
by Technest, Genex had elected to have its earnings taxed under Subchapter S of
Chapter 1 of the Internal Revenue Code of 1986, as amended.  On the effective
date of the acquisition, Genex forfeited its status as a Subchapter S
corporation.



11. RELATED PARTY
TRANSACTIONS



With the exception of Deer
Creek Fund LP, ipPartners Inc., and Southshore Capital Fund Limited, all of the
Investors in the Investor Financing on February 14,2005 are either
shareholders, officers and/or Directors of Markland. ipPartners, Inc. is a
corporation majority owned and controlled by Mr. Tarini, Marklands Chief
Executive Officer and Chairman. The Investor Financing was negotiated on behalf
of Markland by senior management of Markland, including Mr. Tarini. The Markland
Investment was approved by a unanimous vote of the Board of Directors of
Markland including, Mr. Mackin and Mr. Ducey, neither of whom has an interest in
the transaction.



During the three months
ended March 31, 2005, the Company billed $244,258 to EOIR, a wholly owned
subsidiary of Markland, for services performed on a sub-contract of EOIR. This
amount is included in accounts receivable at March 31, 2005.  EOIR also provides
administrative and accounting services to Technest.  For the period ended March
31, 2005, the charge for these services amounted to $97,790 which is based on
actual time incurred by EOIR personnel on behalf of Technest and Genex.
 Technest has amounts due from Markland for cash advances in the amount of
$494,922.  The net amount due from Markland and its wholly-owned subsidiaries is
$397,132.



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.



12.  EMPLOYEE BENEFIT
PLANS



Genex maintains a
Simplified Employee Pension (the SEP Plan) for all employees who have attained
the age of 21 and have completed three years of service. Participants may make
voluntary contributions up to the maximum amount allowed by law, but not to
exceed 15% of each participants eligible compensation. The combined totals of
participant and Genex contributions may not exceed $30,000 by law. Genex
contributions vest immediately to the participants.



Genex also maintains a
define contribution 401(k) profit sharing plan (the 401(k) Plan) for all
employees except those who are non-resident aliens or are covered by a
collective bargaining agreement.  Participants may make voluntary contributions
up to the maximum amount allowable by law but not to exceed 20% of the
participants eligible compensation.  Genex contributions to the 401(k) Plan are
at the discretion of management and vest to the participants ratably over a
five-year period, beginning with the second year of participation.



Genex made no
contributions to either plan in the period from February 15, 2005 to March 31,
2005.



13.  LITIGATION

On July 23, 1998, H & H
Acquisition Corp., individually and purportedly on behalf of Technest Holdings,
commenced an action in federal court in the Southern District of New York
against the Company, the founder and certain officers, among others. The
complaint is an action to recover shares of common stock of the Company and
unspecified damages. Management believes that the claims against the Company and
certain officers are without merit and is vigorously defending the action. The
Company cannot make any assurances about the litigations outcome. However, the
Company could be adversely affected if the plaintiff prevails.

In September 2002 the Company was served with a Summary Judgment Motion
regarding H & H Acquisition Corp. and the Company answered the motion in
November 2002. On January 3, 2005, the court denied the motion for summary
judgment.  Trial of this matter is scheduled to begin in June 2005.

On November 22, 2002, a default Judgment in the sum of $30,106 including
interest and related costs was entered against the Company. This amount is
included in accounts payable as of March 31, 2005.

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Item 2.

Managements Discussion and Analysis
or Plan of Operation

The following discussion and analysis of our financial condition and results
of operations for our financial quarter ending March 31, 2005 should be read
together with our financial statements and related notes included elsewhere in
this report.



This section is organized as follows:



FORWARD LOOKING STATEMENTS





OVERVIEW.  This section provides a general description of Technest, its
business and recent developments and events that have occurred since the 1993
that we believe are important in understanding our results of operations and
financial condition and to anticipate future trends. We have undergone
significant changes since December 31, 2004.  These events affect the
comparability of the results being analyzed.





CERTAIN RESULTS OF OPERATIONS.  This section provides an analysis of
Technests results of operations for the three months ended March 31, 2005 and
2004.





LIQUIDITY AND CAPITAL RESOURCES.  This section provides an analysis of
Technests cash flows for the three months ended March 31, 2005.





CRITICAL ACCOUNTING POLICIES.  This section discusses certain critical
accounting policies that we consider important to Technests financial condition
and results of operations, and that required significant judgment and estimates
on the part of management in application.





RISK FACTORS.  This section describes risks factors related to our
business, results of operations, financial conditions and prospects.



As used in this quarterly report, the terms Technest, we, us, our, and
our company mean Technest Holdings, Inc. and its subsidiaries unless otherwise
indicated. All dollar amounts in this annual report are in U.S. dollars unless
otherwise stated.

FORWARD LOOKING STATEMENTS

The information in this discussion contains forward-looking statements. These
forward-looking statements involve risks and uncertainties, including but not
limited, to statements regarding Technest Holdings, Inc.s capital needs,
business strategy and expectations. Any statements contained herein that are not
statements of historical facts may be deemed to be forward-looking statements.
In some cases, you can identify forward-looking statements by terminology such
as may, should, expect, plan, intend, anticipate, believe,
estimate, predict, potential or continue, the negative of such terms or
other comparable terminology. Actual events or results may differ materially. In
evaluating these statements, you should consider various factors, including the
risks outlined in the Risk Factors section below, and, from time to time, in
other reports we file with the Securities and Exchange Commission (the SEC).
These factors may cause our actual results to differ materially from any
forward-looking statement. Readers are cautioned not to place undue reliance on
any forward looking statements contained in this report. We will not update
these forward looking statements unless the securities laws and regulations
require us to do so.

OVERVIEW

GENERAL.

Prior to our acquisition of Genex on February 14, 2005, we were a public shell
company with no operations, nominal assets, accrued liabilities totaling
$184,468 and 29,408,870 shares of common stock issued and outstanding.  From May
2002 through our acquisition of Genex, we had no operations.

On February 14, 2005,
Technest became a majority owned subsidiary of Markland Technologies, Inc., a
homeland defense, armed services and intelligence contractor. Markland is a
public company with a class of equity securities registered pursuant to Section
12(g) of the Exchange Act. Technest issued to Markland 412,650,577 shares of its
common stock in exchange for 10,168,764 shares of Markland common stock which
were used as partial consideration for the concurrent acquisition of Genex
Technologies, Inc.







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TECHNEST BUSINESS

Through our acquisition of Genex, we offer remote sensing technology products
and services, providing complete solutions for three-dimensional (3D) Imaging
and Display, Intelligent Surveillance, and three-dimensional Facial Recognition
to the United States Department of Defense (DOD) and various other United
States Intelligence Agencies (INTEL), educational and medical institutions and
private commercial entities. This acquisition 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.

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. Our business, as it exists today, consists of four business areas:
intelligent surveillance, chemical and explosives detection, research and
development and commercial products. Our sole sources of operating revenue is
our wholly-owned subsidiary Genex Technologies, Inc. (Genex), which was
acquired by us on February 14, 2005.  Genex offers products which include; (i)
design and fabrication of customized remote sensor systems and platforms for
DOD, INTEL and Homeland Security applications; (ii) design and fabrication of
three-dimensional facial recognition products tools for law enforcement; and
(iii) design and fabrication of non-invasive three-dimensional medical imaging
tools.  These efforts involve systems engineering, system integration,
prototyping, manufacturing and field data collections as well as data analysis
and processing.

Intelligent Surveillance

Genexs intelligent surveillance portfolio is anchored by its real-time embedded
image processing technology and its three-dimensional facial recognition
technology.

Genex currently is engaged in programs to develop: disposable sensors for the
U.S. Army Night Vision Lab; a miniature general purpose sensor processor for the
U.S. Army Picatinny Arsenal; SmartMTI Motion Detection for the U.S. Army
Armament Research, Development and Engineering Center; a weapons flash
detection system for the U.S. Navy Office of Naval Research; and a smart object
avoidance system for the U.S. Navy Naval Surface Warfare System.

Chemical and Explosive Detection

We are targeting key sensing technologies that are critical to both DOD and DHS
missions: Chemical/Biological (Chem/Bio) and Improvised Explosive Devices (IED)
detection sensors. The Chem/Bio and IED Division concentrates on the research
and development of technologies that can reliably detect the presence of
chemical, biological, and explosive devices or components from a stand-off
distance. Under a Phase 2 Small Business Innovation Research (SBIR) grant from
the U.S. Army, Genex is developing a new and unique sensor that can remotely
detect the presence of chemical and biological weapons.

Research and Development

The Research and Development (R&D) division of Genex is focused on developing
our imaging technology portfolio via advanced research in intelligent
surveillance, three-dimensional imaging, and medical imaging. By integrating our
marketing pursuits and with our R&D efforts, we can bring to market
technological advances that have enhanced customer value. Some of our targeted
research areas include: (i) intelligent surveillance using two- and
three-dimensional image processing to support homeland security, military, and
commercial applications; (ii) detection of concealment of intent using thermal
and three-dimensional imaging to support anti-terrorist efforts; (iii) early
detection of cancer using non-invasive and non-radiological diffuse optical
tomography; and (iv) more effective and less risky radiation treatment for
cancer by use of three-dimensional imaging for patient positioning.

Currently there are eight funded Small Business Innovative Research (SBIR)
ongoing programs in Genexs R&D division. Current contracts in place have a
potential value of approximately $2,700,000 in revenue for 2005.  In April 2004,
Genex obtained a three-year grant potentially worth in excess of $2.0 million
from National Institute of Health (NIH) to develop three-dimensional optical
tomography technologies for breast cancer detection.

Commercial Products Division

The Commercial Products Division of Genex is focused on growing commercial
market opportunities for Genexs technology portfolio. Our core technologies of
three-dimensional imaging, three-dimensional display, and intelligent
surveillance have broad application, thus Genexs commercial division is focused
on finding markets which have: high fit of application with our technology; high
revenue potential; economic value add (EVA) for market to adopt our technology;
and accessible customers and channels.  Management plans to generate further
commercial growth primarily through strategic partnerships with customers in
markets passing the above screen to reduce technical risk while providing strong
channels of distribution for market access.



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Commercial revenues in 2004 were approximately $670,000. Current revenues for
the commercial division derive primarily from our three-dimensional FaceCam
product and associated software. This product is utilized by our customers to
create personalized products for customers based on a three-dimensional image
captured by our camera.. The product is being marketed towards applications in
digitized identification such as employee ID and motor vehicle licenses as well
into the medical market place.  Efforts are underway to reduce product costs to
encourage broader market adoption, to improve channels of distribution for this
product, and to establish commercial agreements for mass market deployment.

In addition, while not a current source of significant revenue, we are targeting
manufacturers of products who would benefit strategically by adopting our
technology to produce custom fitted products for their customers. We believe
this strategy has the potential to generate significant revenue as well as a
sustainable competitive advantage based on Genexs ability to generate accurate
three-dimensional measurement data.



RESULTS
OF OPERATIONS



Three months ended
March 31, 2005 compared with the three months ended March 31, 2004



The push down basis of
accounting has been applied to the acquisition of Technest by Markland and the
acquisition of Genex by Technest.  In accordance with the push down basis of
accounting, Technests and Genexs net assets were adjusted to their estimated
fair values as of the date of acquisition.  The results of operations for the
three months ended March 31, 2005 include the operations of Genex from February
15, 2005 through March 31, 2005.  Prior to the acquisition of Genex, Technest
had no operations.  Therefore, the results for the period ended March 31, 2005
are not directly comparable to the same period in the previous year.



Revenue



The Company had $548,580
in revenue during the three months ended March 31, 2005 compared with $0 for the
same period in 2004.

Of this amount in 2005,
$244,258 was from sales to a related party.



Gross profit



The gross profit for the
three months ended March 31, 2005 was $256,371.  The Company expects to expand
its commercial product manufacturing capacity and refine its commercial product
costing and, accordingly, gross profit on future commercial product sales may
differ.



Selling, general and
administrative expenses



Selling, general and
administrative expenses for the three months ended March 31, 2005 was $258,582
and consisted primarily of payroll.  Selling, general and administrative
expenses and net loss from operations for the three months ended March 31, 2004
was $2,952.



Net loss



The net loss for the three
months ended March 31, 2005 was $(2,744) compared with $(2,952) for the period
ended March 31, 2004.



Net loss applicable to
common stockholders



The net loss applicable to
common stockholders for the three months ended March 31, 2005 was $(2,177,602).
This reflects the non-cash deemed dividends related to the beneficial conversion
features of $124,858 for Series A convertible preferred stock and $2,050,000 for
Series C convertible preferred stock.  The net loss applicable to common
stockholders for the three months ended March 31, 2004 was $(2,952).



LIQUIDITY AND CAPITAL RESOURCES



Cash and Working
Capital



Following our acquisition
of Genex, the Company had net working capital of $867,724 on March 31, 2005.
 Net cash used in operating activities was $799,456 for the three months ended
March 31, 2005. Of this amount, trade receivables increased by



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$381,064 and amounts due from related parties by $397,132.



Cash Used in Investing
Activities



The Company used net cash
of $2,515,516 for the acquisition of Genex which represents the gross cash paid
for Genex of $3,300,000, less the cash acquired of $784,484.



Cash Provided By
Financing Activities



Net cash provided by
financing activities for the three months ended March 31, 2005 was $3,562,273.
This represented the proceeds from the issuance of Series A, B and C convertible
preferred stock.



Sources of Liquidity



During the three months ended March 31, 2005, we have satisfied our cash
requirements primarily through the issuance of preferred stock.

Going Concern



The accompanying financial
statements have been prepared in conformity with generally accepted accounting
principles, which contemplate continuation of the Company as a going concern.
Our ability to continue as a going concern remains dependent upon the ability to
generate positive cash flows from operations.  These financial statements do not
include any adjustments that might be necessary as a result of the above
uncertainty. While Technest has experienced operating losses in the past, due to
the acquisition of Genex, 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 Genex customer base and revenues and to control and
monitor operating expenses and capital expenditures. In addition, Technest
consummated a financing through which we realized net cash of approximately
$400,000.

Management believes that
the business as currently constituted will produce positive cash flows which,
together with the current cash levels, will enable Technest 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.



Commitments and Contingencies

Facilities

The Company has its
executive office in Ridgefield, CT. On November 1, 2004, the company entered
into a three year lease at a monthly rental of $1,500 with Southridge Holdings
LLC; who is the beneficial owner of 34,827 shares of Series C preferred stock
and 72,820,565  five year warrants to purchase common stock at $0.03 a share.

Genex leases office space
under the terms of a non-cancelable operating lease that expires in January
2006.  The office space lease provides for annual increases of 3% to the base
rent and requires the Company to reimburse the landlord for its pro rata share
of the increases in annual operating expenses and real estate taxes





Legal



On July 23, 1998, H & H
Acquisition Corp., individually and purportedly on behalf of Technest Holdings,
commenced an action in federal court in the Southern District of New York
against the Company, the founder and certain officers, among others. The
complaint is an action to recover shares of common stock of the Company and
unspecified damages. Management believes that the claims against the Company and
certain officers are without merit and is vigorously defending the action. The
Company cannot make any assurances about the litigations outcome. However, the
Company could be adversely affected if the plaintiff prevails.



On November 22, 2002, a default Judgment in the sum of $30,106 including
interest and related costs was entered against the Company. This amount is
included in accounts payable as of March 31, 2005.

Off Balance Sheet Arrangements

We have no 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.

CRITICAL ACCOUNTING POLICIES

Concentrations



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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.  As of March 31, 2005, we had
cash balances in banks in excess of the maximum amount insured by the FDIC. In
addition, we derive a significant portion of our contract revenue from contracts
with Federal government agencies. Consequently, a significant portion of our
accounts receivable is due from Federal government agencies either directly or
through other government contractors.



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 Genex acquisition over the remaining legal life of the
underlying patents beginning with the date of acquisition.



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 March 31, 2005.



Revenue Recognition



We recognize product
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.



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.



Fair Value of Financial
Instruments and Stock-based Compensation



The Company records
stock-based compensation to non-employees at fair value. The Company does not
record expense relating to stock options granted to employees with an exercise
price greater than or equal to market price of the underlying stock at the time
of grant. The Company reports pro forma net loss and loss per share in
accordance with the requirements of Statement of Financial Accounting Standard
(SFAS) No. 148.



The fair value of options
and warrants granted to non-employees is calculated using the Black-Scholes
option pricing model. This option valuation model requires input of assumptions
including the volatility of our stock price, the expected life of the option and
the risk-free interest rate. Because our stock options have characteristics
significantly different from those of traded options, and because changes in the
input assumptions can materially affect the fair value estimate, the existing
model may not necessarily provide a reliable single measure of fair value of our
stock options.



The Company uses the
quoted closing price of the Companys common stock on the measurement date as
the fair value of the underlying common stock.  For all non-employee options and
warrants, the Company has used the contractual life as the expected life of the
instrument.  The risk-free interest rate is the yield on a U.S. government
security with a term approximating the life of the underlying equity instrument.



Income Taxes



The Company accounts for
income taxes under SFAS No. 109, Accounting for Income Taxes. Under SFAS No.
109, the asset and liability method is used in accounting for income taxes.
Under this method, deferred tax assets and liabilities are determined based on



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differences between financial reporting and tax bases of assets and liabilities,
and are measured using the enacted tax rates and laws that will be in effect
when the differences are expected to reverse. As a result primarily of federal
and state net operating loss carryforwards, the Company has a significant
deferred tax asset. A valuation allowance against this asset is recognized if,
based on the weight of available evidence, it is more likely than not (i.e.,
greater than 50% probability) that some portion or all of the deferred tax asset
will not be realized. The United States Tax Reform Act of 1986 contains
provisions that may limit the Companys net operating loss carryforwards
available to be used in any given year in the event of significant changes in
the ownership interests of significant stockholders, as defined.



The Company, in
determining the amount of the gross deferred tax assets, estimates the enacted
tax rates expected to be in effect in the periods in which the deferred tax
asset is expected to be realized. In all periods presented, the Company utilized
35% which represents the maximum corporate federal tax rate. In addition, the
Company has determined that, as of March 31, 2005 and 2004, it is more likely
than not that the Company will not realize any portion of its deferred tax
asset. This determination is based on the fact that the Company has never
consistently generated any substantive taxable income. Additionally, our
auditors have expressed substantial doubt about the Companys ability to
continue as a going concern. The Company will reassess the realizability of the
deferred tax assets each period.



RISK FACTORS

Any investment in our common stock involves a high degree of risk. You should
consider carefully the risks and uncertainties described below, and all other
information contained in this prospectus, before you decide whether to purchase
our common stock. Additional risks and uncertainties not currently known to us
or that we currently deem immaterial may also become important factors that may
harm our business. The occurrence of any of the following risks could harm our
business. The trading price of our common stock could decline due to any of
these risks and uncertainties, and you may lose part or all of your investment.
 This section is organized as follows: (i) risks related to our business,
financial condition and results of operations, (ii) risks related to investing
in low priced stock, (iii) risks relating to investing in a controlled company;
 (iv) risks related to capital structure.



RISKS RELATED TO OUR BUSINESS, FINANCIAL CONDITION AND RESULTS OF OPERATIONS

We have an accumulated deficit, history of losses and may have continued
losses for the foreseeable future with no assurance of profitability; therefore
investors may lose their entire investment

We have had net operating losses each year since its inception. If we continue
to suffer losses as we have in the past, investors may not receive any return on
their investment and may lose their entire investment. During the three months
to March 31, 2005, our net loss applicable to common shareholders was
$(2,177,602).  Although we expect to be cash flow positive with the acquisition
of Genex, there can be no assurances that this will be the case. Even if we
achieve profitability, we may be unable to sustain or increase profitability on
a quarterly or annual basis in the future. It is possible that we will never
achieve profitability.

Our independent auditors believe there is substantial doubt we can continue
as a going concern

Our audited financial statements included on form 10-KSB for the fiscal year
ended December 31, 2004, showed that we had negative working capital of
approximately $309,177 and an accumulated deficit of approximately $15,531,599
 incurred through December 31, 2004.  Our independent auditors believe there is
substantial doubt that we can continue as a going concern. As a result, you may
lose your entire investment.

Following the investor financing and acquisition of Genex we have positive
working capital (unaudited) of $867,724, However, we have a history of losses.
Although we now have revenues with the acquisition of Genex Technologies there
is no assurance that we will operate profitably. If we continue to experience
losses, an investment in our common stock is at risk of being lost.

We may be unable to
obtain additional capital required to fund our operations and finance our
growth.



The
development of our technologies may require additional capital. We may be unable
to obtain additional funds in a timely manner or on acceptable terms, which
would render us unable to fund our operations or expand our business. If we are
unable to obtain capital when needed, we may have to restructure our business or
delay or abandon our development and expansion plans. Although we have been
successful in the past in obtaining financing for working capital, we may have
ongoing capital needs as we expand our business. If we raise additional funds
through the sale of equity or convertible securities, your ownership percentage
of our common stock will be reduced. In addition, these transactions may dilute
the value of our common stock. We may have to issue securities that have rights,
preferences and privileges senior to our common stock. The terms of any
additional indebtedness may include restrictive financial and operating
covenants that would limit our ability to compete and expand.



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We may fail to realize
some or all of the anticipated benefits from the acquisition of Genex



Our combined
company may fail to realize some or all of the anticipated benefits and
synergies of the transaction as a result of, among other things, lower than
expected order rates from customers of Genex, unanticipated costs, deterioration
in the U.S. economy and other factors. In addition, the integration of the Genex
business and operations with those of Technest may take longer than anticipated,
may be more costly than anticipated and may have unanticipated adverse results
relating to Genexs existing businesses or customer base.





RISKS RELATED TO INVESTING IN LOW- PRICED STOCK

It may be difficult for you to resell your shares of common stock if an
active market for our common stock does not develop.

Our common stock is not actively traded on a registered securities exchange and
we do not meet the initial listing criteria for any registered securities
exchange or the NASDAQ National Market System. It is quoted on the less
recognized OTC Bulletin Board. This factor may further impair your ability to
sell your shares when you want and/or could depress our stock price. As a
result, you may find it difficult to dispose of, or to obtain accurate
quotations of the price of, our securities because smaller quantities of shares
could be bought and sold, transactions could be delayed and security analyst and
news coverage of our company may be reduced. These factors could result in lower
prices and larger spreads in the bids and ask prices for our shares.

In the absence of a trading market, you may be unable to liquidate your
investment in our stock.

Our common stock is penny stock, with the result that trading of our common
stock in any secondary market may be impeded.

Due to the current price of our common stock, many brokerage firms may not be
willing to effect transactions in our securities, particularly because
low-priced securities are subject to SEC rules imposing additional sales
requirements on broker-dealers who sell low-priced securities (generally those
below $5.00 per share). These disclosure requirements may have the effect of
reducing the trading activity in the secondary market for our stock as it is
subject to these penny stock rules. Therefore, stockholders may have difficulty
selling those securities.  These factors severely limit the liquidity, if any,
of our common stock, and would likely have a material adverse effect on its
market price and on our ability to raise additional capital.

The penny stock rules require a broker-dealer, prior to a transaction in a penny
stock, to deliver a standardized risk disclosure document prepared by the
Commission, that:

(a)

contains a description of the nature and level of risk in the market for penny
stocks in both public offerings and secondary trading;

(b)

contains a description of the brokers or dealers duties to the customer and of
the rights and remedies available to the customer with respect to a violation to
such duties or other requirements of Securities laws;

(c)

contains a brief, clear, narrative description of a dealer market, including bid
and ask prices for penny stocks and the significance of the spread between the
bid and ask price;

(d)

contains a toll-free telephone number for inquiries on disciplinary actions;

(e)

defines significant terms in the disclosure document or in the conduct of
trading in penny stocks; and

(f)

contains such other information and is in such form, including language, type,
size and format, as the SEC may require by rule or regulation.

In addition, the broker-dealer also must provide, prior to effecting any
transaction in a penny stock, the customer with:

(a)

bid and offer quotations for the penny stock;

(b)

the compensation of the broker-dealer and its salesperson in the transaction;

(c)

the number of shares to which such bid and ask prices apply, or other comparable
information relating to the depth and liquidity of the market for such stock;
and



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(d)

a monthly account statements showing the market value of each penny stock held
in the customers account.

Also, the penny stock rules require that prior to a transaction in a penny stock
not otherwise exempt from those rules; the broker-dealer must make a special
written determination that the penny stock is a suitable investment for the
purchaser and receive the purchasers written acknowledgment of the receipt of a
risk disclosure statement, a written agreement to transactions involving penny
stocks, and a signed and dated copy of a written suitability statement.

We cannot predict the extent to which investor interest in our stock or a
business combination, if any, will lead to an increase in its market price or
the development of an active trading market or how liquid that market, if any,
might become.

RISKS  RELATED TO INVESTING IN A CONTROLLED COMPANY

Our principal stockholders control the affairs of our company.  If you are a
minority shareholder, you will not have the ability to influence the affairs of
our company.

Our principal stockholder, Markland Technologies Inc., controls 93% of the
Companys outstanding shares of common stock.  As a result, they direct the
affairs of the Company through the appointment of our executive officers and
directors.

Your rights as a holder of common stock will be subject to, and may be
adversely affected by, the rights of the holders of the preferred stock that
have been issued or might be issued in the future.

Our board of directors has the authority to issue, without any further vote or
action by you and the other common stockholders, a total of up to 5,000,000
shares of preferred stock and to fix the rights, preferences, privileges, and
restrictions, including voting rights, of the preferred stock, which typically
are senior to the rights of the common stockholders.  Your rights as a holder of
common stock will be subject to, and may be adversely affected by, the rights of
the holders of the preferred stock that have been issued or might be issued in
the future. Furthermore, holders of preferred stock may have other rights,
including economic rights, senior to the holders of our common stock. This could
delay, defer or prevent a change in control. As a result, the existence and
issuance of preferred stock could have a material adverse effect on the market
value of the common stock.

We currently have no assured sources for additional financing, and our
success may depend on our ability to obtain further financing.

We have no readily available additional sources of funds without a stock sale or
issuance of additional securities. We may not be able to obtain funding on a
timely basis, on favorable terms, or at all. We do not have a credit facility or
any committed source of financing and may be unable to fund ongoing operations.

Technests executive
officers will not spend full time operating our business.



Technests Chief Executive Officer, Chief Financial Officer and one of its
Directors are also officers and Directors of other companies, including
Markland. As a result, they may not be able to devote their full time to
Technest. As a result of their participation in business activities of other
companies, their limited attention to Technest may delay the development of
Technests business.



RISKS RELATED TO CAPITAL STRUCTURE

Shares eligible for
future sale may adversely affect the market price of Technests common stock, as
the future sale of a substantial amount of outstanding stock in the public
marketplace could reduce the price of Technests common stock.



Pursuant to the terms of
the Merger Agreement and the Registration Rights Agreements executed on February
14, 2005, Technest is obligated to file three (3) registration statements with
the Securities and Exchange Commission within 75-105 days from February 14,
2005. These registration statements will cover the subsequent resale of
outstanding any shares of common stock or shares of common stock underlying
warrants or preferred stock issued or to be issued in connection with the
acquisition of Genex and related transactions. The mean average daily volume of
Technest since January 3, 2005 is approximately 14,128 shares. The market may
not be able to absorb all of the shares that Technest expects to register within
75-105 days from February 14, 2005. This may cause the price of Technest to
decrease.



Item 2.  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.



---



Changes in Internal
Control Over Financial Reporting.



Our internal control over
financial reporting during our quarter ended March 31, 2005  has materially
changed with the acquisition of Technest by Markland and the
acquisition of Genex by Technest. We have integrated the accounting
and controls for these two small companies into our group accounting function at
EOIR in Virginia. The larger scale of this operation allows for more timely
recording of transactions and greater separation of duties than would otherwise
be possible.  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 or about July 23, 1998, H & H Acquisition Corporation, individually and
purportedly on behalf of Technest Holdings, commenced an action in United States
District Court, Southern District of New York entitled H & H Acquisition Corp.,
individually and on behalf of Technest Holdings, Inc. v. Financial Intranet
Holdings, Inc. Technest Holdings, Inc., F/K /A Financial Intranet, Inc., Ben
Stein, Interwest Transfer Co., Steven A. Sanders, Michael Sheppard, Maura Marx,
Henry A. Schwartz, Leonard Gotshalk, Gotshalk Enterprises, Law Office of Steven
A. Sanders, P.C. and Beckman, Millman & Sanders, LLP, 98 Civ. 5269 The Judge is
Judge Barbara S. Jones. The actions principal basis appears to be plaintiffs
claim that Ben Stein wrongfully claims ownership of shares of common stock that
Stein agreed to purchase from plaintiff. According to plaintiff, these shares
belong to plaintiff. The plaintiff asserts sixteen causes of action. Only some
make allegations against Technest Holdings, Inc., Michael Sheppard and Maura
Marx, former officers. The plaintiff alleges:



Mr. Sheppard and Ms. Marx assisted defendants Stein
and Financial Intranet Holdings (a company owned by Mr. Stein) in converting
stock which plaintiff allegedly owns. Plaintiff seeks damages allegedly
sustained because of the alleged conversion.



Mr. Sheppard and Ms. Marx assisted in defrauding
plaintiff with respect to the stock plaintiff claims. Plaintiff seeks damages
allegedly sustained because of the alleged fraud.



Plaintiff alleges in a derivative claim,
purportedly on behalf of Technest Holdings, Inc: that Mr. Sheppard and Ms. Marx
permitted issuance of shares to defendant Gotshalk without proper consideration
and at a price lower than that offered to a company introduced by Plaintiff;
that they refused to allow plaintiff to purchase additional shares; that Mr.
Sheppard and Ms. Marx permitted Technest Holdings, Inc. to pay defendant
Schwartz monies which should not have been paid, and authorized issuance of
stock to Schwartz without proper authority; and that Mr. Sheppard and Ms. Marx
caused the issuance of stock to themselves without proper authority. Plaintiff
seeks damages allegedly sustained for these alleged wrongful acts.



A derivative claim purportedly on behalf of
Technest Holdings, Inc. seeking an order directing the holding of a shareholders
meeting and rescission of actions determined to be improper by the Court or its
designee. A shareholders meeting was held in December 1998.



Technest Holdings, Inc. and its former transfer
agent wrongfully transferred shares belonging to plaintiff to a third party. The
transfer agent has asserted a claim against us seeking indemnification for any
liabilities incurred by the transfer agent in this action.

Plaintiff is entitled to $2,500, plus interest, from us for alleged breach of
contract.  Technest Holdings, Inc. settled this cause of action.

Plaintiff also seeks an accounting from Mr. Sheppard, among other defendants,
for damages Technest Holdings, Inc. allegedly suffered.



---

Technest Holdings, Inc., Mr. Sheppard and Ms. Marx believe that the claims
against Technest Holdings, Inc., Mr. Sheppard and Ms. Marx are without merit and
are vigorously defending the action. Technest Holdings, Inc., Mr. Sheppard and
Ms. Marx have filed responses to the claims against them. The responses deny all
material allegations of the complaint and the claim asserted by the transfer
agent, and asserts a variety of defenses. We cannot make any assurances about
the litigations outcome. If the plaintiff prevails against us, we could be
adversely affected.

In September 2002 the Company was served with a Summary Judgment Motion
regarding H & H Acquisition Corp. and the Company answered the motion in
November 2002. On January 3, 2005, the court denied the motion for summary
judgment.  Trial of this matter is scheduled to begin in June 2005.

On November 22, 2002, a default Judgment in the sum of $30,106 including
interest and related costs was entered against the Company. This amount is
included in accounts payable as of December 31, 2004.

The Defense Contract Audit
Agency (DCAA) examined Genexs control environment and overall accounting
system controls as of November 23, 2004, prior to the acquisition of Genex by
Technest, to assure Genexs accountingsystem and related internal
controls comply with applicable laws and regulations and are adequate and
operating effectively.



The
DCAA concluded that Genexs accounting system is inadequate in part.  Their
examination disclosed eight significant deficiencies in Genexs accounting
system that resulted in misclassified costs.  They were:



1.

Contractor does not follow policies and procedures concerning accounting for
unallowable costs.

2.

Contractor does not follow policies and procedures concerning accounting for
material costs.

3.

Contractor lacks adequate written policies and procedures concerning
capitalization of assets.

4.

Contractor does not have adequate policies and procedures to ensure proper
segregation of duties in handling its labor costs.

5.

Contractors procedure for calculating the proposed hourly labor rate of its
employees results in overstated labor costs.

6.

Contractor fails to maintain policies and procedures for classifying the labor
categories of its employees.

7.

Employees fail to follow the contractors policies and procedures in regards to
maintaining timesheets on a current basis.

8.

Contractors policy of billing labor costs results in billing the Government for
employees that are not employees of Genex.



Since
the acquisition of Genex, the management of Technest has terminated Genex
employees responsible for this function and rapidly installed appropriate
internal controls and oversight over Genexs accounting system to ensure that
they comply with applicable laws and regulations and are adequate and operating
effectively. However, there can be no assurance that as a result of the prior
deficiencies, Genex will be allowed to complete certain previous contacts
awarded by the Department of Defense and may  be required to refund amounts
overbilled to its customers.



ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds.



On
February 8, 2005, the Company issued twenty five (25) shares of its Series A
Convertible Preferred Stock to Verdi Consulting, Inc., for the aggregate
consideration of $25,000. The Company received net proceeds of $25,000 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 (the Act).  Verdi
Consulting, Inc. is an accredited investor within the meaning of Regulation D.



On
February 8, 2005, the Company issued 99.325 shares of its Series A Preferred
Stock to Garth LLC in exchange for $25,000 in cash and the surrender of certain
of the Companys 8% Promissory Notes held by Garth LLC (the Notes). As of
December 31, 2004, the Notes had an aggregate outstanding principal balance plus
accrued interest of $74,325.  No penalties were paid in connection with the
exchange and cancellation of the Notes. The Company received net cash proceeds
of $25,000 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.



On
February 14, 2005 the Company issued 412,650,577 shares of its common stock to
Markland in exchange for 10,168,764 shares of Markland common stock.  The shares
of Markland common stock were used as partial consideration for the concurrent
acquisition of Genex Technologies, Inc., by the Company.  The offer and sale of
these securities was made in reliance on Section 4(2) of Securities Act of 1933,
as amended.



On
February 14, 2005, immediately after the acquisition by Markland of a
controlling interest in Technest, the Investors consisting of Southridge
Partners LP, Southshore Capital Fund Limited, Verdi Consulting, Inc., ipPartners,
Inc., DKR Soundshore Oasis Holding Fund, Ltd., DKR Soundshore Strategic Holding
Fund, Ltd. and Deer Creek Fund, LP (collectively, the Investors) paid
$5,000,000 in cash for 1,149,425 shares of Technest Series B Preferred Stock,
five-year warrants to purchase up to 242,735,571 shares of Technest common stock
for an exercise price of $.0307 per share (before the Reverse Split), and
1,149,425 shares of



---

Technest Series C Preferred Stock convertible into 242,735,571 shares of
Technests common stock (before the Reverse Split). After the Reverse Split, the
warrants will be exercisable for 1,149,425 shares of Technest common stock and
the Series C Preferred Stock will be convertible into 1,149,425 shares of
Technest common stock. These securities were sold in units for a price of $4.35
per unit each.  Each unit consists of one share of Series B Preferred Stock; one
share of Series C Preferred Stock and a warrant to purchase up to 211.18 shares
of Technests common stock.  The issuance and sale of the securities were not
registered under the Securities Act, but were made in reliance upon the
exemptions from the registration requirements of the Securities Act set forth in
Section 4(2) thereof and Rule 506 of Regulation D promulgated thereunder,
insofar as such securities were issued only to accredited investors within the
meaning of Rule 501 of Regulation D.



ITEM 4.  Submission of Matters to a Vote of Security Holders.

On February 14, 2005 in connection
with the transactions pursuant to which we acquired Genex Technologies, Inc.,
and pursuant to which we became a majority owned subsidiary of Markland
Technologies, Inc. (see Note 1 above to our Condensed and Consolidated Financial
Statements) we submitted three matters to a vote of security holders.  Each of
these matters was approved by the holders of a majority of the then outstanding
shares of our common stock.  Specifically, the matters submitted to a vote of
security holders were as follows:

To approve and ratify the action of the Board of Directors of the
Corporation to elect Robert Tarini to the Board of Directors of the Corporation
to fill one of the vacancies.

This matter was approved by the
written consent of the holders of 21,312,405 shares of our common stock.  On
February 14, 2005 29,408,870 shares of our common stock were outstanding and
entitled to vote.

Following the passage of this
matter, our board of directors consisted of Mark Allen and Robert Tarini.



To approve and ratify the action of the Board of Directors of the
Corporation to sell to Markland Technologies, Inc., 412,650,577 shares of the
Corporations common stock.

This matter was approved by the
written consent of the holders of 21,312,405 shares of our common stock.  On
February 14, 2005 29,408,870 shares of our common stock were outstanding and
entitled to vote.



To approve the recommendation of the Board of Directors of the
Corporation to effect a recapitalization in the form of a one for two hundred
eleven and eighteen one hundredths reverse stock split of the Corporations
shares of common stock outstanding or held by the Corporation in its treasury.

This matter was approved by the
written consent of the holders of 21,312,405 shares of our common stock.  On
February 14, 2005 29,408,870 shares of our common stock were outstanding and
entitled to vote.



ITEM 6.  Exhibits.



(a) EXHIBITS



|Exhibit No. | Description                                                                                                                                                                                                                                                                                                            | Filed with this 10-QSB | Incorporated by reference
|----------- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ---------------------- | -------------------------
|Form        | Filing Date                                                                                                                                                                                                                                                                                                            | Exhibit No.           
|2.1         | Agreement and Plan of Reorganization by and among Financial Intranet,
		Inc., Technest.com, Inc., and the Stockholders of Technest.com, Inc.,
		dated March 21, 2001.                                                                                                                                                  |                        | 8-K                      
|2.2         | Securities Purchase Agreement by and among Technest Holdings, Inc. and
		Southridge Partners LP, Southshore Capital Fund Limited, ipPartners,
		Inc, Verdi Consulting, Inc., DKR Soundshore Oasis Holding Fund, Ltd.,
		DKR Soundshore Strategic Holding Fund, Ltd. and Deer Creek Fund, LP,
		dated February 14, 2005 |                        | 8-K                      
|2.3         | Securities Purchase Agreement between Markland Technologies, Inc. and
		Technest Holdings, Inc., dated February 14, 2005                                                                                                                                                                                               |                        | 8-K                      
|2.4         | Agreement and Plan of Merger by and between Technest Holdings, Inc.,
		MTECH Acquisition, Inc., Genex Technologies, Inc. and Jason Geng, dated
		February 14, 2005                                                                                                                                                     |                        | 8-K                      
|2.5         | 1998 Stock Option Plan                                                                                                                                                                                                                                                                                                 |                        | SB-2                     
|2.6         | 2000 Stock Option Plan                                                                                                                                                                                                                                                                                                 |                        | PRE 14A                  
|2.7         | 2001 Stock Option Plan                                                                                                                                                                                                                                                                                                 |                        | DEF 14A                  
|3.1         | Restated Articles of Incorporation dated December 22, 1998                                                                                                                                                                                                                                                             |                        | SB-2                     



---



|3.2 | Restated Articles of Incorporation of Registrant,  dated as of December
		14, 2000, as filed with the Secretary of State of the State of Nevada on
		March 2, 2001.                                                                                                                                                                                                                              |  | 10-KSB  | April 16, 2001    | 3.2
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ |  | ------- | ----------------- | ---
|3.3 | Certificate of Amendment to Articles of Incorporation                                                                                                                                                                                                                                                                                                                                            |  | 8-K     | August 9, 2001    | 3.1
|3.4 | Amended and Restated By-Laws dated May 21, 2001.                                                                                                                                                                                                                                                                                                                                                 |  | DEF 14A | June 14, 2001     | B  
|4.1 | Form of Common Stock Certificate                                                                                                                                                                                                                                                                                                                                                                 |  | SB-2    | February 26, 1999 | 4.1
|4.2 | Series A Convertible Preferred Stock Certificate of Designations, filed
		with the Secretary of State of Nevada on February 8, 2005.                                                                                                                                                                                                                                                             |  | 8-K     | February 14, 2005 | 4.1
|4.3 | Registration Rights Agreement between Markland Technologies, Inc. and
		Southridge Partners LP, Southshore Capital Fund Limited, ipPartners,
		Inc, Verdi Consulting, Inc., DKR Soundshore Oasis Holding Fund, Ltd.,
		DKR Soundshore Strategic Holding Fund, Ltd. and Deer Creek Fund, LP for
		Markland Common Stock, dated February 14, 2005                                                  |  | 8-K     | February 15, 2005 | 4.1
|4.4 | Registration Rights Agreement between Technest Holdings, Inc. and
		Markland Technologies, Inc., dated February 14, 2005                                                                                                                                                                                                                                                                         |  | 8-K     | February 15, 2005 | 4.2
|4.5 | Registration Rights Agreement between Technest Holdings, Inc. and
		Southridge Partners LP, Southshore Capital Fund Limited, ipPartners,
		Inc, Verdi Consulting, Inc., DKR Soundshore Oasis Holding Fund, Ltd.,
		DKR Soundshore Strategic Holding Fund, Ltd. and Deer Creek Fund, LP for
		Technest Series C Preferred Stock and Warrants for Technest common
		stock, dated February 14, 2005 |  | 8-K     | February 15, 2005 | 4.3



---



|4.6   | Registration Rights Agreement between Technest Holdings, Inc. and Jason
		Geng for  registration of Earnout Shares, dated February 14, 2005     |  | 8-K  | February 15, 2005 | 4.4 
|----- | ----------------------------------------------------------------------------------------------------------------------------------------------- |  | ---- | ----------------- | ----
|4.7   | Registration Rights Agreement between Markland Technologies, Inc. and
		Jason Geng, dated February 14, 2005                                     |  | 8-K  | February 15, 2005 | 4.5 
|4.8   | Form of Technest Common Stock Purchase Warrant                                                                                                  |  | 8-K  | February 15, 2005 | 4.6 
|4.9   | Technest Series B Convertible Preferred Stock Certificate of
		Designations filed with the Secretary of State of Nevada on February 14,
		2005. |  | 8-K  | February 15, 2005 | 4.7 
|4.10  | Technest Series C Convertible Preferred Stock Certificate of
		Designations filed with the Secretary of State of Nevada on February 14,
		2005  |  | 8-K  | February 15, 2005 | 4.8 
|4.11  | Promissory Note issued to Jason Geng by Genex Technologies, Inc., dated
		February 14, 2005                                                     |  | 8-K  | February 15, 2005 | 4.9 
|10.1  | Letter regarding purchase of Wee Wees, Inc. dated October 9, 1996.                                                                              |  | SB-2 | February 26, 1999 | 10.1
|10.2* | Employment Agreement dated as of September 12, 1997 between Registrant
		and Michael Sheppard.                                                  |  | SB-2 | February 26, 1999 | 10.2
|10.3* | Employment Agreement dated as of September 12, 1997 between Registrant
		and Ben B. Stein.                                                      |  | SB-2 | February 26, 1999 | 10.3
|10.4* | Employment Agreement dated as of September 12, 1997 between Registrant
		and Maura Marx.                                                        |  | SB-2 | February 26, 1999 | 10.4
|10.5* | Amendment to Employment Agreement dated as of December 15, 1998 between
		Registrant and Michael Sheppard.                                      |  | SB-2 | February 26, 1999 | 10.5



---



|10.6* | Amendment to Employment Agreement dated as of December 15, 1998 between
		Registrant and Maura Marx.                       |  | SB-2   | February 26, 1999 | 10.6 
|----- | -------------------------------------------------------------------------------------------------------------------------- |  | ------ | ----------------- | -----
|10.7* | Consulting Agreement dated as of February 27, 1997 between Registrant
		and Michael Sheppard.                              |  | SB-2   | February 26, 1999 | 10.7 
|10.8  | Promissory Note issued by Registrant to investor on December 31, 1998 in
		connection with private placement.              |  | SB-2   | February 26, 1999 | 10.8 
|10.9  | Warrant issued by Registrant to investor on December 31, 1998 in
		connection with private placement.                      |  | SB-2   | February 26, 1999 | 10.9 
|10.10 | Subscription agreement between Registrant and investor in private
		placement on December 31,1998.                         |  | SB-2   | February 26, 1999 | 10.10
|10.11 | Subscription agreement between Registrant and investor in private
		placement on February 8, 1999.                         |  | SB-2   | February 26, 1999 | 10.11
|10.12 | Warrant issued by Registrant to investor on February 8, 1999 in
		connection with private placement.                       |  | SB-2   | February 26, 1999 | 10.12
|10.13 | Form of Warrant certificate issuable by Registrant to investor upon
		subsequent installments due under private placement. |  | SB-2   | February 26, 1999 | 10.13
|10.14 | Guaranty executed by Ben B. Stein on February 8, 1999 in connection with
		private placement.                              |  | SB-2   | February 26, 1999 | 10.14
|10.15 | Stock Pledge Agreement executed by Ben B. Stein on February 8, 1999 in
		connection with private placement.                |  | SB-2   | February 26, 1999 | 10.15
|10.16 | Service Agreement between the Registrant and Siemens dated December 30,
		1998.                                            |  | SB-2/A | May 14, 1999      | 10.16



---



|10.17  | Warrant issued by Registrant to Cardinal Capital Management on December
		31, 1998 in connection with private placement. |  | SB-2   | February 26, 1999 | 10.17
|------ | ------------------------------------------------------------------------------------------------------------------------ |  | ------ | ----------------- | -----
|10.18  | Warrant issued by Registrant to Josephberg Grosz & Co. on December 31,
		1998 in connection with private placement.      |  | SB-2   | February 26, 1999 | 10.18
|10.19  | Warrant issued by Registrant to Josephberg Grosz & Co. on February 8,
		1999 in connection with private placement.       |  | SB-2   | February 26, 1999 | 10.19
|10.20  | Warrant issued by Registrant to Cardinal Capital Management on February
		8, 1999 in connection with private placement.  |  | SB-2   | February 26, 1999 | 10.20
|10.21  | Convertible Promissory Note issued by Registrant to investor on February
		8, 1999.                                      |  | SB-2   | February 26, 1999 | 10.21
|10.22  | Registration Rights Agreement executed by Registrant on February 8,
		1999.                                              |  | SB-2   | February 26, 1999 | 10.22
|10.23* | Consulting Agreement with Barry Stein dated February 27, 1997.                                                           |  | SB-2   | February 26, 1999 | 10.23
|10.24  | Registration Rights Agreement executed by Registrant on December 31,
		1998.                                             |  | SB-2   | February 26, 1999 | 10.24
|10.25* | Consulting agreement with Kevin Haggerty dated October 6, 1997.                                                          |  | SB-2/A | May 14, 1999      | 10.25
|10.26* | Consulting agreement with Maura Marx dated February 27, 1997.                                                            |  | SB-2/A | May 14, 1999      | 10.26
|10.27* | Rebiller Service Agreement with WorldCom Inc. dated June 30, 1997.                                                       |  | SB-2/A | May 14, 1999      | 10.27
|10.28* | Consulting Agreement with Barry Stein dated as of March 3, 1999.                                                         |  | SB-2/A | May 14, 1999      | 10.28
|10.29  | Agreement with Frontier Corp. dated April 1999.                                                                          |  | SB-2/A | May 14, 1999      | 10.29



---



|10.30* | Consulting Agreement with Joseph Theismann dated April 30, 1999.                                                                                                                                                                                                         |  | SB-2/A | May 14, 1999   | 10.30
|------ | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ |  | ------ | -------------- | -----
|10.31  | Convertible Promissory Note dated July 20, 1999 in favor of Garth LLC                                                                                                                                                                                                    |  | SB-2/A | July 28, 1999  | 10.31
|10.32  | Pledge and Security Agreement dated July 20, 1999 executed by Messrs.
		Sheppard and Stein and Ms. Marx                                                                                                                                                                  |  | SB-2/A | July 28, 1999  | 10.32
|10.33  | Letter Agreement between H&H Acquisition Corporation and Barry Stein
		dated March 7, 1997.                                                                                                                                                                              |  | SB-2/A | July 28, 1999  | 10.33
|10.34  | Warrant dated February 20, 1999 issued to Garth LLC.                                                                                                                                                                                                                     |  | SB-2/A | July 28, 1999  | 10.34
|10.35  | Bridge Loan Financing Agreement dated as of July 20, 1999 between the
		Registrant and Garth LLC.                                                                                                                                                                        |  | SB-2/A | July 28, 1999  | 10.35
|10.36  | Asset Purchase  Agreement by and between Financial  Intranet,  Inc., and
		LongYin Network  Technology  Co., Ltd., dated March 27,  2000.                                                                                                                                |  | 8-K    | April 11, 2000 | 2    
|10.37  | Form of Purchase and Sale Agreement by and between Technest Holdings,
		Inc., and Aberdeen Avenue LLC dated March 25, 2003.                                                                                                                                              |  | 10-KSB | April 15, 2005 | 10.37
|10.38  | Form of Purchase and Sale Agreement by and among Technest Holdings,
		Inc., and Cache Capital (USA) L.P., the Rearden Trust, the Four Life
		Trust, J.P. Carey Enterprises, Inc., J.P. Carey Securities, Inc., and
		Atlantis Capital Fund Limited, dated April 1, 2003. |  | 10-KSB | April 15, 2005 | 10.38
|10.39  | Form of lease by and between Technest Holdings, Inc., and Southridge
		Holdings LLC, dated November 1, 2004.                                                                                                                                                             |  | 10-KSB | April 15, 2005 | 10.39



---



|10.40  | Securities
		Purchase Agreement between the registrant and Verdi Consulting dated
		February 8, 2005.Securities Purchase
		Agreement between the registrant and Verdi Consulting dated February 8,
		2005. |  | 8-K    | February 14, 2005 | 10.1
|------ | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------ | ----------------- | ----
|10.41  | Form of 8%
		Promissory Note between the registrant and Garth LLC.                                                                                                                                         |  | 8-K    | February 14, 2005 | 10.2
|10.42  | Exchange Agreement
		between the registrant and Garth LLC dated February 8, 2005.                                                                                                                          |  | 8-K    | February 14, 2005 | 10.3
|10.43  | Securities
		Purchase Agreement between the registrant and Garth LLC dated February
		8, 2005.                                                                                                             |  | 8-K    | February 14, 2005 | 10.4
|10.44  | Escrow Agreement
		between Markland Technologies, Inc., Technest Holdings, Inc., Genex
		Technologies, Inc., Jason Geng, and Wilmington Trust Company, dated
		February 14, 2005                           |  | 8-K    | February 15, 2005 | 10.1
|10.45  | Lock-Up Agreement
		of Jason Geng, dated February 14, 2005                                                                                                                                                 |  | 8-K    | February 15, 2005 | 10.2
|10.46  | Employment
		Agreement between Genex Technologies, Inc. and Jason Geng, dated
		February 14, 2005                                                                                                          |  | 8-K    | February 15, 2005 | 10.3
|10.47  | Lock-up Agreement
		between Technest Holdings, Inc. Garth LLC and  Southshore Capital Fund
		Ltd., dated February 14, 2005                                                                                 |  | 8-K    | February 15, 2005 | 10.4
|10.48  | Form of Option to
		be granted under the 2004 Markland Stock Incentive Plan                                                                                                                                |  | 8-K    | February 15, 2005 | 10.6
|10.49  | Agreement between
		Genex Technologies, Inc. and Ocean Tomo                                                                                                                                                |  | 8-K    | February 15, 2005 | 10.7
|10.50* | Amendment to
		Employment Agreement dated as of  March 15, 1999 between Registrant and
		Michael Sheppard.                                                                                                 |  | 10-KSB | April 16, 2001    | 10.1
|10.51* | Letter Agreement
		between Registrant and Michael Sheppard.                                                                                                                                                |  | 10-KSB | April 16, 2001    | 10.2
|10.52* | Amendment to
		Employment Agreement dated as of March  15, 1999 between Registrant and
		Maura Marx.                                                                                                       |  | 10-KSB | April 16, 2001    | 10.3
|10.53* | Letter Agreement
		between Registrant and Maura Marx.                                                                                                                                                      |  | 10-KSB | April 16, 2001    | 10.4
|10.54* | Letter Agreement
		 dated as of July 1, 2000 between Registrant and Maura Marx.                                                                                                                            |  | 10-KSB | April 16, 2001    | 10.5



---



|10.55* | Employment
		 Agreement  dated  as  of  August 23, 1999, between Registrant and Corey
		Rinker.                               |   | 10-KSB | April 16, 2001     | 10.6 
|------ | ----------------------------------------------------------------------------------------------------------------------------- | - | ------ | ------------------ | -----
|10.56* | Letter  Agreement
		 dated  as  of  January 31, 2001, from Corey Rinker to Registrant.                                        |   | 10-KSB | April 16, 2001     | 10.7 
|10.57  | Promissory  Note
		 dated  January  12,  2000  by  and   between Registrant and Garth LLC
		in the principal sum of $150,000. |   | 10-KSB | April 16, 2001     | 10.8 
|10.58  | Promissory  Note
		 dated  February  7,  2000  by  and   between Registrant and Garth LLC
		in the principal sum of $200,000. |   | 10-KSB | April 16, 2001     | 10.9 
|10.59  | Form of Debenture
		dated May 20, 2000 by and between Registrant and Garth LLC in the
		principal sum of $600,000.            |   | 10-KSB | April 16, 2001     | 10.10
|10.60  | Promissory  Note
		 dated  October  30,  2000  by  and   between Registrant and Garth LLC
		in the principal sum of $190,000. |   | 10-KSB | April 16, 2001     | 10.11
|10.61  | Promissory  Note
		 dated  January  22,  2001  by  and between Registrant and Garth LLC in
		the principal sum of $75,000.    |   | 10-KSB | April 16, 2001     | 10.12
|16.1   | Letter Regarding
		Change in Certifying Accountant                                                                            |   | 8-K/a  | February 18, 2000  | 16.1 
|16.2   | Letter Regarding
		Change in Certifying Accountant                                                                            |   | 8-K/A  | January 31, 2001   | 16.1 
|16.3   | Letter Regarding
		Change in Certifying Accountant                                                                            |   | 8-K/A  | November 2, 2001   | 16.1 
|16.4   | Letter of Grassi &
		Co. CPAs, P.C. (Formerly Feldman Sherb & Co., P.C.)                                                      |   | 8-K    | September 23, 2002 | 16.1 
|21.1   | List of the Subsidiaries of Technest Holdings, Inc.                                                                           |   | 10-KSB | April 15, 2005     | 21.1 
|31.1   | Certification by CEO of Periodic Report Pursuant to Rule 13a-14(a) or
		Rule 15d-14(a).                                       | x |        |                    |      
|31.2   | Certification by CFO of Periodic Report Pursuant to Rule 13a-14(a) or
		Rule 15d-14(a).                                       | x |        |                    |      
|32.1   | Certification by CEO of Periodic Report Pursuant to 18 U.S.C.
		Section 1350                                                  | x |        |                    |      
|32.2   | Certification by  CFO of Periodic Report Pursuant to 18 U.S.C.
		Section 1350                                                 | x |        |                    |      



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.
							Technest Holdings,
										Inc.
										
										By/s/ Robert Tarini
										Chairman, Director and
										Chief Executive Officer
							Date:  May 23, 2005


---









---

EXHIBIT TABLE



|Exhibit No. | Description                                                                                                                                                                                                                                                                                                            | Filed with this 10-QSB | Incorporated by reference
|----------- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ---------------------- | -------------------------
|Form        | Filing Date                                                                                                                                                                                                                                                                                                            | Exhibit No.           
|2.1         | Agreement and Plan of Reorganization by and among Financial Intranet,
		Inc., Technest.com, Inc., and the Stockholders of Technest.com, Inc.,
		dated March 21, 2001.                                                                                                                                                  |                        | 8-K                      
|2.2         | Securities Purchase Agreement by and among Technest Holdings, Inc. and
		Southridge Partners LP, Southshore Capital Fund Limited, ipPartners,
		Inc, Verdi Consulting, Inc., DKR Soundshore Oasis Holding Fund, Ltd.,
		DKR Soundshore Strategic Holding Fund, Ltd. and Deer Creek Fund, LP,
		dated February 14, 2005 |                        | 8-K                      
|2.3         | Securities Purchase Agreement between Markland Technologies, Inc. and
		Technest Holdings, Inc., dated February 14, 2005                                                                                                                                                                                               |                        | 8-K                      
|2.4         | Agreement and Plan of Merger by and between Technest Holdings, Inc.,
		MTECH Acquisition, Inc., Genex Technologies, Inc. and Jason Geng, dated
		February 14, 2005                                                                                                                                                     |                        | 8-K                      
|2.5         | 1998 Stock Option Plan                                                                                                                                                                                                                                                                                                 |                        | SB-2                     
|2.6         | 2000 Stock Option Plan                                                                                                                                                                                                                                                                                                 |                        | PRE 14A                  
|2.7         | 2001 Stock Option Plan                                                                                                                                                                                                                                                                                                 |                        | DEF 14A                  
|3.1         | Restated Articles of Incorporation dated December 22, 1998                                                                                                                                                                                                                                                             |                        | SB-2                     
|3.2         | Restated Articles of Incorporation of Registrant,  dated as of December
		14, 2000, as filed with the Secretary of State of the State of Nevada on
		March 2, 2001.                                                                                                                                                    |                        | 10-KSB                   
|3.3         | Certificate of Amendment to Articles of Incorporation                                                                                                                                                                                                                                                                  |                        | 8-K                      



---



|3.4 | Amended and Restated By-Laws dated May 21, 2001.                                                                                                                                                                                                                                                                                                                                                 |  | DEF 14A | June 14, 2001     | B  
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ |  | ------- | ----------------- | ---
|4.1 | Form of Common Stock Certificate                                                                                                                                                                                                                                                                                                                                                                 |  | SB-2    | February 26, 1999 | 4.1
|4.2 | Series A Convertible Preferred Stock Certificate of Designations, filed
		with the Secretary of State of Nevada on February 8, 2005.                                                                                                                                                                                                                                                             |  | 8-K     | February 14, 2005 | 4.1
|4.3 | Registration Rights Agreement between Markland Technologies, Inc. and
		Southridge Partners LP, Southshore Capital Fund Limited, ipPartners,
		Inc, Verdi Consulting, Inc., DKR Soundshore Oasis Holding Fund, Ltd.,
		DKR Soundshore Strategic Holding Fund, Ltd. and Deer Creek Fund, LP for
		Markland Common Stock, dated February 14, 2005                                                  |  | 8-K     | February 15, 2005 | 4.1
|4.4 | Registration Rights Agreement between Technest Holdings, Inc. and
		Markland Technologies, Inc., dated February 14, 2005                                                                                                                                                                                                                                                                         |  | 8-K     | February 15, 2005 | 4.2
|4.5 | Registration Rights Agreement between Technest Holdings, Inc. and
		Southridge Partners LP, Southshore Capital Fund Limited, ipPartners,
		Inc, Verdi Consulting, Inc., DKR Soundshore Oasis Holding Fund, Ltd.,
		DKR Soundshore Strategic Holding Fund, Ltd. and Deer Creek Fund, LP for
		Technest Series C Preferred Stock and Warrants for Technest common
		stock, dated February 14, 2005 |  | 8-K     | February 15, 2005 | 4.3
|4.6 | Registration Rights Agreement between Technest Holdings, Inc. and Jason
		Geng for  registration of Earnout Shares, dated February 14, 2005                                                                                                                                                                                                                                                      |  | 8-K     | February 15, 2005 | 4.4
|4.7 | Registration Rights Agreement between Markland Technologies, Inc. and
		Jason Geng, dated February 14, 2005                                                                                                                                                                                                                                                                                      |  | 8-K     | February 15, 2005 | 4.5



---



|4.8   | Form of Technest Common Stock Purchase Warrant                                                                                                  |  | 8-K  | February 15, 2005 | 4.6 
|----- | ----------------------------------------------------------------------------------------------------------------------------------------------- |  | ---- | ----------------- | ----
|4.9   | Technest Series B Convertible Preferred Stock Certificate of
		Designations filed with the Secretary of State of Nevada on February 14,
		2005. |  | 8-K  | February 15, 2005 | 4.7 
|4.10  | Technest Series C Convertible Preferred Stock Certificate of
		Designations filed with the Secretary of State of Nevada on February 14,
		2005  |  | 8-K  | February 15, 2005 | 4.8 
|4.11  | Promissory Note issued to Jason Geng by Genex Technologies, Inc., dated
		February 14, 2005                                                     |  | 8-K  | February 15, 2005 | 4.9 
|10.1  | Letter regarding purchase of Wee Wees, Inc. dated October 9, 1996.                                                                              |  | SB-2 | February 26, 1999 | 10.1
|10.2* | Employment Agreement dated as of September 12, 1997 between Registrant
		and Michael Sheppard.                                                  |  | SB-2 | February 26, 1999 | 10.2
|10.3* | Employment Agreement dated as of September 12, 1997 between Registrant
		and Ben B. Stein.                                                      |  | SB-2 | February 26, 1999 | 10.3
|10.4* | Employment Agreement dated as of September 12, 1997 between Registrant
		and Maura Marx.                                                        |  | SB-2 | February 26, 1999 | 10.4
|10.5* | Amendment to Employment Agreement dated as of December 15, 1998 between
		Registrant and Michael Sheppard.                                      |  | SB-2 | February 26, 1999 | 10.5
|10.6* | Amendment to Employment Agreement dated as of December 15, 1998 between
		Registrant and Maura Marx.                                            |  | SB-2 | February 26, 1999 | 10.6
|10.7* | Consulting Agreement dated as of February 27, 1997 between Registrant
		and Michael Sheppard.                                                   |  | SB-2 | February 26, 1999 | 10.7



---



|10.8  | Promissory Note issued by Registrant to investor on December 31, 1998 in
		connection with private placement.              |  | SB-2   | February 26, 1999 | 10.8 
|----- | -------------------------------------------------------------------------------------------------------------------------- |  | ------ | ----------------- | -----
|10.9  | Warrant issued by Registrant to investor on December 31, 1998 in
		connection with private placement.                      |  | SB-2   | February 26, 1999 | 10.9 
|10.10 | Subscription agreement between Registrant and investor in private
		placement on December 31,1998.                         |  | SB-2   | February 26, 1999 | 10.10
|10.11 | Subscription agreement between Registrant and investor in private
		placement on February 8, 1999.                         |  | SB-2   | February 26, 1999 | 10.11
|10.12 | Warrant issued by Registrant to investor on February 8, 1999 in
		connection with private placement.                       |  | SB-2   | February 26, 1999 | 10.12
|10.13 | Form of Warrant certificate issuable by Registrant to investor upon
		subsequent installments due under private placement. |  | SB-2   | February 26, 1999 | 10.13
|10.14 | Guaranty executed by Ben B. Stein on February 8, 1999 in connection with
		private placement.                              |  | SB-2   | February 26, 1999 | 10.14
|10.15 | Stock Pledge Agreement executed by Ben B. Stein on February 8, 1999 in
		connection with private placement.                |  | SB-2   | February 26, 1999 | 10.15
|10.16 | Service Agreement between the Registrant and Siemens dated December 30,
		1998.                                            |  | SB-2/A | May 14, 1999      | 10.16
|10.17 | Warrant issued by Registrant to Cardinal Capital Management on December
		31, 1998 in connection with private placement.   |  | SB-2   | February 26, 1999 | 10.17
|10.18 | Warrant issued by Registrant to Josephberg Grosz & Co. on December 31,
		1998 in connection with private placement.        |  | SB-2   | February 26, 1999 | 10.18



---



|10.19  | Warrant issued by Registrant to Josephberg Grosz & Co. on February 8,
		1999 in connection with private placement.      |  | SB-2   | February 26, 1999 | 10.19
|------ | ----------------------------------------------------------------------------------------------------------------------- |  | ------ | ----------------- | -----
|10.20  | Warrant issued by Registrant to Cardinal Capital Management on February
		8, 1999 in connection with private placement. |  | SB-2   | February 26, 1999 | 10.20
|10.21  | Convertible Promissory Note issued by Registrant to investor on February
		8, 1999.                                     |  | SB-2   | February 26, 1999 | 10.21
|10.22  | Registration Rights Agreement executed by Registrant on February 8,
		1999.                                             |  | SB-2   | February 26, 1999 | 10.22
|10.23* | Consulting Agreement with Barry Stein dated February 27, 1997.                                                          |  | SB-2   | February 26, 1999 | 10.23
|10.24  | Registration Rights Agreement executed by Registrant on December 31,
		1998.                                            |  | SB-2   | February 26, 1999 | 10.24
|10.25* | Consulting agreement with Kevin Haggerty dated October 6, 1997.                                                         |  | SB-2/A | May 14, 1999      | 10.25
|10.26* | Consulting agreement with Maura Marx dated February 27, 1997.                                                           |  | SB-2/A | May 14, 1999      | 10.26
|10.27* | Rebiller Service Agreement with WorldCom Inc. dated June 30, 1997.                                                      |  | SB-2/A | May 14, 1999      | 10.27
|10.28* | Consulting Agreement with Barry Stein dated as of March 3, 1999.                                                        |  | SB-2/A | May 14, 1999      | 10.28
|10.29  | Agreement with Frontier Corp. dated April 1999.                                                                         |  | SB-2/A | May 14, 1999      | 10.29
|10.30* | Consulting Agreement with Joseph Theismann dated April 30, 1999.                                                        |  | SB-2/A | May 14, 1999      | 10.30
|10.31  | Convertible Promissory Note dated July 20, 1999 in favor of Garth LLC                                                   |  | SB-2/A | July 28, 1999     | 10.31
|10.32  | Pledge and Security Agreement dated July 20, 1999 executed by Messrs.
		Sheppard and Stein and Ms. Marx                 |  | SB-2/A | July 28, 1999     | 10.32



---



|10.33 | Letter Agreement between H&H Acquisition Corporation and Barry Stein
		dated March 7, 1997.                                                                                                                                                                              |  | SB-2/A | July 28, 1999     | 10.33
|----- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ |  | ------ | ----------------- | -----
|10.34 | Warrant dated February 20, 1999 issued to Garth LLC.                                                                                                                                                                                                                     |  | SB-2/A | July 28, 1999     | 10.34
|10.35 | Bridge Loan Financing Agreement dated as of July 20, 1999 between the
		Registrant and Garth LLC.                                                                                                                                                                        |  | SB-2/A | July 28, 1999     | 10.35
|10.36 | Asset Purchase  Agreement by and between Financial  Intranet,  Inc., and
		LongYin Network  Technology  Co., Ltd., dated March 27,  2000.                                                                                                                                |  | 8-K    | April 11, 2000    | 2    
|10.37 | Form of Purchase and Sale Agreement by and between Technest Holdings,
		Inc., and Aberdeen Avenue LLC dated March 25, 2003.                                                                                                                                              |  | 10-KSB | April 15, 2005    | 10.37
|10.38 | Form of Purchase and Sale Agreement by and among Technest Holdings,
		Inc., and Cache Capital (USA) L.P., the Rearden Trust, the Four Life
		Trust, J.P. Carey Enterprises, Inc., J.P. Carey Securities, Inc., and
		Atlantis Capital Fund Limited, dated April 1, 2003. |  | 10-KSB | April 15, 2005    | 10.38
|10.39 | Form of lease by and between Technest Holdings, Inc., and Southridge
		Holdings LLC, dated November 1, 2004.                                                                                                                                                             |  | 10-KSB | April 15, 2005    | 10.39
|10.40 | Securities
		Purchase Agreement between the registrant and Verdi Consulting dated
		February 8, 2005.Securities Purchase
		Agreement between the registrant and Verdi Consulting dated February 8,
		2005.                                                               |  | 8-K    | February 14, 2005 | 10.1 
|10.41 | Form of 8%
		Promissory Note between the registrant and Garth LLC.                                                                                                                                                                                                       |  | 8-K    | February 14, 2005 | 10.2 
|10.42 | Exchange Agreement
		between the registrant and Garth LLC dated February 8, 2005.                                                                                                                                                                                        |  | 8-K    | February 14, 2005 | 10.3 
|10.43 | Securities
		Purchase Agreement between the registrant and Garth LLC dated February
		8, 2005.                                                                                                                                                                           |  | 8-K    | February 14, 2005 | 10.4 



---



|10.44  | Escrow Agreement
		between Markland Technologies, Inc., Technest Holdings, Inc., Genex
		Technologies, Inc., Jason Geng, and Wilmington Trust Company, dated
		February 14, 2005 |  | 8-K    | February 15, 2005 | 10.1
|------ | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------ | ----------------- | ----
|10.45  | Lock-Up Agreement
		of Jason Geng, dated February 14, 2005                                                                                                                       |  | 8-K    | February 15, 2005 | 10.2
|10.46  | Employment
		Agreement between Genex Technologies, Inc. and Jason Geng, dated
		February 14, 2005                                                                                |  | 8-K    | February 15, 2005 | 10.3
|10.47  | Lock-up Agreement
		between Technest Holdings, Inc. Garth LLC and  Southshore Capital Fund
		Ltd., dated February 14, 2005                                                       |  | 8-K    | February 15, 2005 | 10.4
|10.48  | Form of Option to
		be granted under the 2004 Markland Stock Incentive Plan                                                                                                      |  | 8-K    | February 15, 2005 | 10.6
|10.49  | Agreement between
		Genex Technologies, Inc. and Ocean Tomo                                                                                                                      |  | 8-K    | February 15, 2005 | 10.7
|10.50* | Amendment to
		Employment Agreement dated as of  March 15, 1999 between Registrant and
		Michael Sheppard.                                                                       |  | 10-KSB | April 16, 2001    | 10.1
|10.51* | Letter Agreement
		between Registrant and Michael Sheppard.                                                                                                                      |  | 10-KSB | April 16, 2001    | 10.2
|10.52* | Amendment to
		Employment Agreement dated as of March  15, 1999 between Registrant and
		Maura Marx.                                                                             |  | 10-KSB | April 16, 2001    | 10.3
|10.53* | Letter Agreement
		between Registrant and Maura Marx.                                                                                                                            |  | 10-KSB | April 16, 2001    | 10.4
|10.54* | Letter Agreement
		 dated as of July 1, 2000 between Registrant and Maura Marx.                                                                                                  |  | 10-KSB | April 16, 2001    | 10.5
|10.55* | Employment
		 Agreement  dated  as  of  August 23, 1999, between Registrant and Corey
		Rinker.                                                                                  |  | 10-KSB | April 16, 2001    | 10.6
|10.56* | Letter  Agreement
		 dated  as  of  January 31, 2001, from Corey Rinker to Registrant.                                                                                           |  | 10-KSB | April 16, 2001    | 10.7
|10.57  | Promissory  Note
		 dated  January  12,  2000  by  and   between Registrant and Garth LLC
		in the principal sum of $150,000.                                                    |  | 10-KSB | April 16, 2001    | 10.8
|10.58  | Promissory  Note
		 dated  February  7,  2000  by  and   between Registrant and Garth LLC
		in the principal sum of $200,000.                                                    |  | 10-KSB | April 16, 2001    | 10.9



---



|10.59 | Form of Debenture
		dated May 20, 2000 by and between Registrant and Garth LLC in the
		principal sum of $600,000.            |   | 10-KSB | April 16, 2001     | 10.10
|----- | ----------------------------------------------------------------------------------------------------------------------------- | - | ------ | ------------------ | -----
|10.60 | Promissory  Note
		 dated  October  30,  2000  by  and   between Registrant and Garth LLC
		in the principal sum of $190,000. |   | 10-KSB | April 16, 2001     | 10.11
|10.61 | Promissory  Note
		 dated  January  22,  2001  by  and between Registrant and Garth LLC in
		the principal sum of $75,000.    |   | 10-KSB | April 16, 2001     | 10.12
|16.1  | Letter Regarding
		Change in Certifying Accountant                                                                            |   | 8-K/a  | February 18, 2000  | 16.1 
|16.2  | Letter Regarding
		Change in Certifying Accountant                                                                            |   | 8-K/A  | January 31, 2001   | 16.1 
|16.3  | Letter Regarding
		Change in Certifying Accountant                                                                            |   | 8-K/A  | November 2, 2001   | 16.1 
|16.4  | Letter of Grassi &
		Co. CPAs, P.C. (Formerly Feldman Sherb & Co., P.C.)                                                      |   | 8-K    | September 23, 2002 | 16.1 
|21.1  | List of the Subsidiaries of Technest Holdings, Inc.                                                                           |   | 10-KSB | April 15, 2005     | 21.1 
|31.1  | Certification by CEO of Periodic Report Pursuant to Rule 13a-14(a) or
		Rule 15d-14(a).                                       | x |        |                    |      
|31.2  | Certification by CFO of Periodic Report Pursuant to Rule 13a-14(a) or
		Rule 15d-14(a).                                       | x |        |                    |      
|32.1  | Certification by CEO of Periodic Report Pursuant to 18 U.S.C.
		Section 1350                                                  | x |        |                    |      
|32.2  | Certification by  CFO of Periodic Report Pursuant to 18 U.S.C.
		Section 1350                                                 | x |        |                    |      





---