UNITED
STATES


SECURITIES
AND EXCHANGE COMMISSION


WASHINGTON,
D.C.  20549





FORM
10 - Q


(Mark
      One)x
                  QUARTERLY
      REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF
      1934For
      the quarterly period ended March 31, 2010OR ̈
                  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 001-32865





KSW,
INC.


(Exact
name of registrant as specified in its charter)





Delaware
                    
                    11-3191686(State
      or other jurisdiction of
                    
                    (I.R.S.
      Employerincorporation
      or organization)
                    
                    Identification
      Number)





37-16 23rd Street, Long Island City, New
      York
                  
                  11101(Address
      of principal executive offices)
                  
                  (Zip
      Code)





718-361-6500


(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 file such reports),
and (2) has been subject to such filing requirements for the past 90
days.   Yes x  No  ̈





Indicate by check mark whether the
registrant has submitted electronically and posted on its corporate Web site, if
any, every Interactive Data File required to be submitted and posted pursuant to
Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12
months (or for such shorter period that the registrant was required to submit
and post such files).    Yes  ̈  No  ̈





Indicate by check mark whether the
Registrant is a large accelerated filer, an accelerated filer, a non-accelerated
filer or a smaller reporting company.  See definitions of “large
accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule
12b-2 of the Exchange Act. (Check one):


Large
Accelerated Filer   ̈       Accelerated
Filer   ̈      Non-Accelerated
Filer   ̈       Smaller
Reporting Company x





Indicate
by check mark whether the Registrant is a shell company (as defined in Rule
12b-2 of Exchange Act).  Yes  ̈  No x





Indicate the number of shares
outstanding of each of the issuer's classes of common stock, as of the latest
practicable date:


Outstanding
      atClass
                    
                    May 10, 2010Common
      stock, $.01 par value
                    
                    
                    6,289,725








KSW,
INC.


QUARTERLY
REPORT ON FORM 10-Q


QUARTER ENDED MARCH 31,
2010





TABLE
OF CONTENTS





Page
      No.PART
      I
                                FINANCIAL
      INFORMATIONItem
      1.
                                Financial
      StatementsConsolidated
      Balance Sheets –March
      31, 2010 (unaudited) and December 31, 2009
                                
                                3Consolidated
      Statements of Income –Three
      months ended March 31, 2010 and 2009 (unaudited)
                                
                                4Consolidated
      Statements of Comprehensive Income –Three
      months ended March 31, 2010 and 2009 (unaudited)
                                
                                5Consolidated
      Statement of Stockholders’ Equity –Three
      months ended March 31, 2010 (unaudited)
                                
                                6Consolidated
      Statements of Cash Flows–Three
      months ended March 31, 2010 and 2009 (unaudited)
                                
                                7Notes
      to Consolidated Financial Statements–
                                
                                8Item
      2.
                                Management's
      Discussion and Analysis of Financial Condition and Results of
      Operations
                                
                                14Item
      3.
                                Quantitative
      and Qualitative Disclosures about Market Risk
                                
                                18Item
      4.
                                Controls
      and Procedures
                                
                                19PART
      II
                                OTHER
      INFORMATIONItem
      1.
                                Legal
      Proceedings
                                
                                19Item
      1A.
                                Risk
      Factors
                                
                                19Item
      2.
                                Unregistered
      Sales of Equity Securities and Use of Proceeds
                                
                                19Item
      3.
                                Defaults
      Upon Senior Securities
                                
                                19Item
      4.
                                [Removed
      and Reserved]
                                
                                19Item
      5.
                                Other
      Information
                                
                                19Item
      6.
                                Exhibits
                                
                                20SIGNATURE
                                
                                21INDEX
      TO EXHIBITS
                                
                                22


2


PART
I – FINANCIAL INFORMATION


ITEM
1 – FINANCIAL
STATEMENTS


KSW,
INC. AND SUBSIDIARY


CONSOLIDATED
BALANCE SHEETS


(in
thousands, except share data)


March 31, 2010
                          
                          
                          December 31, 2009(unaudited)
                          
                          
                          (As
      Adjusted Note 4)ASSETSCurrent
      assets:Cash
      and cash equivalents
                          
                          $
                          13,044
                          
                          
                          $
                          13,738Marketable
      securities
                          
                          
                          2,142
                          
                          
                          
                          2,604Accounts
      receivable
                          
                          
                          13,952
                          
                          
                          
                          12,338Retainage
      receivable
                          
                          
                          7,015
                          
                          
                          
                          6,637Costs
      and estimated earnings in excess of billings on uncompleted
      contracts
                          
                          
                          2,206
                          
                          
                          
                          1,979Prepaid
      income taxes
                          
                          
                          40
                          
                          
                          
                          -Prepaid
      expenses and other receivables
                          
                          
                          279
                          
                          
                          
                          265Advances
      to and earnings from joint venture (Note 5)
                          
                          
                          28
                          
                          
                          
                          17Deferred
      income taxes
                          
                          
                          125
                          
                          
                          
                          141Total
      current assets
                          
                          
                          38,831
                          
                          
                          
                          37,719Property
      and equipment, net of accumulated depreciation and amortization of $2,383
      and $2,341  at 3/31/10 and 12/31/09,
respectively
                          
                          
                          2,733
                          
                          
                          
                          2,692Deferred
      income taxes and other
                          
                          
                          118
                          
                          
                          
                          126Total
      assets
                          
                          $
                          41,682
                          
                          
                          $
                          40,537LIABILITIES AND STOCKHOLDERS'
      EQUITYCurrent
      liabilities:Current
      portion of mortgage payable
                          
                          $
                          58
                          
                          
                          $
                          58Accounts
      payable
                          
                          
                          11,604
                          
                          
                          
                          12,005Retainage
      payable
                          
                          
                          3,916
                          
                          
                          
                          3,608Accrued
      payroll and benefits
                          
                          
                          693
                          
                          
                          
                          835Accrued
      expenses
                          
                          
                          761
                          
                          
                          
                          220Billings
      in excess of costs and estimated earnings on uncompleted
      contracts
                          
                          
                          3,256
                          
                          
                          
                          1,767Income
      taxes payable
                          
                          
                          -
                          
                          
                          
                          139Total
      current liabilities
                          
                          
                          20,288
                          
                          
                          
                          18,632Mortgage
      payable, net of current portion
                          
                          
                          1,039
                          
                          
                          
                          1,054Total
      liabilities
                          
                          
                          21,327
                          
                          
                          
                          19,686Commitments
      and contingencies (Note 8)Stockholders'
      equity:Preferred
      stock, $.01 par value, 1,000,000 shares authorized, no shares issued
      and outstanding
                          
                          
                          -
                          
                          
                          
                          -Common
      stock, $.01 par value, 25,000,000 shares authorized 6,295,825 and
      6,287,825 shares issued  at 3/31/10 and 12/31/09 respectively,
      6,243,125 and 6,235,125 shares outstanding at 3/31/10  and
      12/31/09, respectively
                          
                          
                          63
                          
                          
                          
                          63Additional
      paid-in capital
                          
                          
                          13,338
                          
                          
                          
                          13,313Retained
      earnings
                          
                          
                          7,247
                          
                          
                          
                          7,788Accumulated
      other comprehensive loss:Net
      unrealized holding losses on available - for-sale
    securities
                          
                          
                          (153
                          )
                          
                          
                          (173
                          )Less
      treasury stock at cost, 52,700  shares at 3/31/10 and
      12/31/09
                          
                          
                          (140
                          )
                          
                          
                          (140
                          )Total
      stockholders' equity
                          
                          
                          20,355
                          
                          
                          
                          20,851Total
      liabilities and stockholders' equity
                          
                          $
                          41,682
                          
                          
                          $
                          40,537





See
accompanying notes to consolidated financial statements.


3





KSW,
INC. AND SUBSIDIARY





CONSOLIDATED
STATEMENTS OF INCOME


(in
thousands, except share and per share data)


(unaudited)





Three
      Months
                  Ended March 31, 2010
                
                
                Three
      Months
                  Ended March 31, 2009Revenues
                
                $
                13,460
                
                
                $
                19,706Cost
      of revenues
                
                
                12,053
                
                
                
                17,884Gross
      profit
                
                
                1,407
                
                
                
                1,822Selling,
      general and administrative expenses
                
                
                1,236
                
                
                
                1,402Operating
      income
                
                
                171
                
                
                
                420Other
      income:Interest
      income
                
                
                34
                
                
                
                34Interest
      expense
                
                
                (13
                )
                
                
                (18
                )Total
      other income
                
                
                21
                
                
                
                16Income
      before provision for income taxes
                
                
                192
                
                
                
                436Provision
      for income taxes
                
                
                105
                
                
                
                149Net
      income
                
                $
                87
                
                
                $
                287Earnings
      per common share:Basic
                
                $
                .01
                
                
                $
                .05Diluted
                
                $
                .01
                
                
                $
                .05Weighted
      average common shares outstanding:Basic
                
                
                6,238,500
                
                
                
                6,251,800Diluted
                
                
                6,285,077
                
                
                
                6,282,560





See
accompanying notes to consolidated financial statements.


4





KSW,
INC. AND SUBSIDIARY





CONSOLIDATED
STATEMENTS OF COMPREHENSIVE INCOME


(in
thousands)


(unaudited)





Three
      Months
                                          Ended
      March 31, 2010
                                        
                                        
                                        Three
      Months
                                          Ended
      March 31, 2009Net
      income
                                        
                                        $
                                        87
                                        
                                        
                                        $
                                        287Other
      comprehensive gains (loss) before income tax benefit:Unrealized
      holding gains (losses) arising during the period
                                        
                                        
                                        36
                                        
                                        
                                        
                                        (9
                                        )Less:
      reclassification adjustment for gains included in net
    income
                                        
                                        
                                        -
                                        
                                        
                                        
                                        -Other
      comprehensive income (loss) before income tax expense
      (benefit)
                                        
                                        
                                        36
                                        
                                        
                                        
                                        (9
                                        )Income
      tax expense (benefit) related to items of other comprehensive income
      (loss)
                                        
                                        
                                        16
                                        
                                        
                                        
                                        (4
                                        )Other
      comprehensive gain (loss), net of income tax expense
    (benefit)
                                        
                                        
                                        20
                                        
                                        
                                        
                                        (5
                                        )Total
      comprehensive income
                                        
                                        $
                                        107
                                        
                                        
                                        $
                                        282





See
accompanying notes to consolidated financial statements.


5


KSW,
INC. AND SUBSIDIARY




CONSOLIDATED
STATEMENT OF STOCKHOLDERS’ EQUITY




THREE
MONTHS ENDED MARCH 31, 2010


(in thousands, except
share data)


(unaudited)




Common Stock
                  
                  
                  Additional
                    Paid-In
                  
                  
                  Retained
                  
                  
                  Accumulated
                    Other
                    Comprehensive
                  
                  
                  TreasuryShares
                  
                  
                  Amount
                  
                  
                  Capital
                  
                  
                  Earnings
                  
                  
                  Loss
                  
                  
                  Stock
                  
                  
                  TotalBalances,
      January 1, 2010
                  
                  
                  6,287,825
                  
                  
                  $
                  63
                  
                  
                  $
                  13,313
                  
                  
                  $
                  7,788
                  
                  
                  $
                  (173
                  )
                  
                  $
                  (140
                  )
                  
                  $
                  20,851Net
      income
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  
                  
                  
                  
                  87
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  87Amortization
      of share-based compensation
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  6
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  6Cash
      dividend - $.10 per share
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  (628
                  )
                  
                  
                  -
                  
                  
                  
                  
                  
                  
                  
                  (628
                  )Employee
      stock options exercised
                  
                  
                  8,000
                  
                  
                  
                  -
                  
                  
                  
                  12
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  12Tax
      benefits from employee stock option plans
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  7
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  7Net
      unrealized gains on available-for-sale securities
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  20
                  
                  
                  
                  -
                  
                  
                  
                  20Balances,
      March 31, 2010
                  
                  
                  6,295,825
                  
                  
                  $
                  63
                  
                  
                  $
                  13,338
                  
                  
                  $
                  7,247
                  
                  
                  $
                  (153
                  )
                  
                  $
                  (140
                  )
                  
                  $
                  20,355





See
accompanying notes to consolidated financial statements.


6


KSW,
INC. AND SUBSIDIARY


CONSOLIDATED
STATEMENTS OF CASH FLOWS


(in
thousands)


(unaudited)


Three
      Months
                        Ended March 31, 2010
                      
                      
                      Three
      Months
                        Ended March 31, 2009Cash
      flows from operating activities:Net
      income
                      
                      $
                      87
                      
                      
                      $
                      287Adjustments
      to reconcile net income to cashused
      in operating activities:Depreciation
      and amortization
                      
                      
                      43
                      
                      
                      
                      41Deferred
      income taxes
                      
                      
                      7
                      
                      
                      
                      13Tax
      benefits from exercise of stock options
                      
                      
                      (7
                      )
                      
                      
                      -Stock-based
      compensation expense related to stock option plan
                      
                      
                      6
                      
                      
                      
                      4Earnings
      from joint venture
                      
                      
                      (11
                      )
                      
                      
                      -Changes
      in operating assets and liabilities:Accounts
      receivable
                      
                      
                      (1,614
                      )
                      
                      
                      (600
                      )Retainage
      receivable
                      
                      
                      (378
                      )
                      
                      
                      273Costs
      and estimated earnings in excess of billings on uncompleted
      contracts
                      
                      
                      (227
                      )
                      
                      
                      (149
                      )Prepaid
      expenses and other receivables
                      
                      
                      (14
                      )
                      
                      
                      (300
                      )Prepaid
      income taxes
                      
                      
                      (33
                      )
                      
                      
                      (32
                      )Accounts
      payable
                      
                      
                      (401
                      )
                      
                      
                      1,000Retainage
      payable
                      
                      
                      308
                      
                      
                      
                      (480
                      )Accrued
      payroll and benefits
                      
                      
                      (142
                      )
                      
                      
                      (555
                      )Accrued
      expenses
                      
                      
                      (87
                      )
                      
                      
                      (152
                      )Billings
      in excess of costs and estimated earnings on uncompleted
      contract
                      
                      
                      1,489
                      
                      
                      
                      520Income
      taxes payable
                      
                      
                      (139
                      )
                      
                      
                      -Net cash used in operating
      activities
                      
                      
                      (1,113
                      )
                      
                      
                      (130
                      )Cash
      flows from investing activities:Purchases
      of property and equipment
                      
                      
                      (83
                      )
                      
                      
                      (6
                      )Proceeds
      from sale of marketable securities
                      
                      
                      1,045
                      
                      
                      
                      -Purchases
      of marketable securities
                      
                      
                      (547
                      )
                      
                      
                      (2
                      )Net
      cash provided by (used in) investing activities
                      
                      
                      415
                      
                      
                      
                      (8
                      )Cash
      flows from financing activities:Proceeds
      from employee stock options exercised
                      
                      
                      12
                      
                      
                      
                      -Tax
      benefits from employee stock options exercised
                      
                      
                      7
                      
                      
                      
                      -Repayment
      of mortgage payable
                      
                      
                      (15
                      )
                      
                      
                      (20
                      )Purchase
      of treasury stock
                      
                      
                      -
                      
                      
                      
                      (124
                      )Net
      cash provided by (used in) financing activities
                      
                      
                      4
                      
                      
                      
                      (144
                      )Net
      decrease in cash and cash equivalents
                      
                      
                      (694
                      )
                      
                      
                      (282
                      )Cash
      and cash equivalents, beginning of period
                      
                      
                      13,738
                      
                      
                      
                      16,611Cash
      and cash equivalents, end of period
                      
                      $
                      13,044
                      
                      
                      $
                      16,329Supplemental
      disclosure of cash flow information:Cash
      paid during the period for:Interest
                      
                      $
                      13
                      
                      
                      $
                      18Income
      taxes
                      
                      $
                      263
                      
                      
                      $
                      167





See
accompanying notes to consolidated financial statements.


7




KSW,
INC. AND SUBSIDIARY





NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS(unaudited)





1.
            Nature of Operations
      and Basis of Presentation





KSW, Inc.
and its subsidiary, KSW Mechanical Services, Inc., together the “Company”,
furnishes and installs heating, ventilating and air conditioning systems and
process piping systems for institutional, industrial, commercial, high-rise
residential and public works projects, primarily in the State of New
York.  The Company also serves as a mechanical trade manager,
performing project management services relating to the mechanical
trades.  The Company considers itself to operate as one operating
segment.





The
unaudited consolidated financial statements presented herein have been prepared
in accordance with the instructions to Form 10-Q and do not include all of the
information and disclosures required by accounting principles generally accepted
in the United States of America.  These consolidated statements should
be read in conjunction with the consolidated financial statements and notes
thereto included in the Company’s Annual Report on Form 10-K for the year ended
December 31, 2009.





In the
opinion of management, the accompanying unaudited consolidated financial
statements include all adjustments of normal recurring nature necessary for a
fair presentation of the consolidated financial position of the Company as of
March 31, 2010, and its results of operations, comprehensive income and cash
flows for the three month periods ended March 31, 2010 and
2009.  Because of the possible fluctuations in the marketplace in the
construction industry, operating results of the Company on a quarterly basis may
not be indicative of operating results for the full year ending December 31,
2010.





2.
            Significant Accounting
      Policies





The
significant accounting policies followed by the Company in preparing its
consolidated financial statements are set forth in Note 2 to
the  consolidated financial statements included in the Company’s
Annual Report on Form 10-K for the year ended
December 31, 2009.  The Company has made no significant
changes to these policies during 2010.





The
Company follows accounting standards set by the Financial Accounting Standards
Board, commonly referred to as the “FASB.”  The FASB sets generally
accepted accounting principles (GAAP) that the Company follows to ensure its
consistent reporting of financial condition, results of operations, and cash
flows.





In June
2009, the FASB issued SFAS No. 166 “The Accounting for Transfers of Financial
Assets – an Amendment of FASB Statement 140”, currently included in FASB ASC
860, which clarifies circumstances under which a transferor has surrendered
control and, thus, should remove the asset together with any related liabilities
from its balance sheet.  It was effective for the Company on January
1, 2010.  The adoption of FASB ASC 860 did not have a material effect
on the Company’s consolidated financial statements and related
disclosures.


8


In June
2009, the FASB issued SFAS No. 167 “Amendments to FASB Interpretation No. 46
(R)”, currently included in FASB ASC 810, which modifies the analysis required
to identify controlling financial interest in variable interest
entities.  It was effective for the Company on January 1,
2010.  The adoption of FASB ASC 810 did not have a material effect on
the Company’s consolidated financial statements and related
disclosures.





3.
            Fair Value of
      Financial Instruments





The
following disclosures of estimated fair value were determined by management,
using available market information and appropriate valuation
methodologies.  Considerable judgment is necessary to interpret market
data and develop estimated fair values.





Accordingly,
the estimates presented herein are not necessarily indicative of the amounts the
Company could realize on disposition of the financial
instruments.  The use of different market assumptions and/or
estimation methodologies may have a material effect on the estimated fair value
amounts.





Cash
equivalents, marketable securities, receivables, payables and other amounts
arising out of normal contract activities, including retentions, which may be
settled beyond one year, reasonably approximate their fair values.





The fair
value of the Company’s mortgage payable, which is not traded in the market, is
estimated by considering the Company’s credit rating, current rates available to
the Company for debt of the same remaining maturity and the terms of the
debt.





Disclosure
about fair value of financial instruments is based on pertinent information
available to management as of March 31, 2010.





4.
            Marketable
      Securities





FASB ASC
820-10, “Fair Value Measurements”, established a broad three level fair value
hierarchy that prioritizes observable and unobservable inputs which are used to
measure fair value.





The
Company values short-term investments, mutual funds and marketable equity
securities using market prices on active markets, which is Level 1 of the FASB
ASC 820-10 fair value hierarchy.  Level 1 instrument valuations are
obtained from real-time quotes for transactions in active exchange markets
involving identical assets.





Financial
assets carried at fair value at March 31, 2010 are classified in the table below
in one of three broad categories.





Level
      1
                    
                    
                    Level
      2
                    
                    
                    Level
      3
                    
                    
                    TotalSix
      month Canadian time deposit
                    
                    $
                    542,000
                    
                    
                    $
                    -
                    
                    
                    $
                    -
                    
                    
                    $
                    542,000Mutual
      funds and marketableequity securities
                    
                    
                    1,600,000
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    1,600,000Total
                    
                    $
                    2,142,000
                    
                    
                    $
                    -
                    
                    
                    $
                    -
                    
                    
                    $
                    2,142,000


9





For
presentation purposes, $1,045,000 of short-term investments in Canadian time
deposits, that were included in cash in the Company’s December 31, 2009
consolidated balance sheet, have been reclassed to marketable
securities.





5.
            Joint
      Venture





During
the third quarter of 2009, a joint venture in which the Company and Five Star
Electric Corporation each have a 50 percent ownership interest was awarded a $46
million contract for the construction of a chiller plant at the World Trade
Center site.  The agreement provides that each partner will share
equally any gains or losses resulting from the project.  If the other
partner is unable to perform its work, the Company would be fully liable to do
so under the joint venture’s contract with the Port Authority of New York and
New Jersey.  The Company and its partner are also jointly and
severally liable to the bonding company that issued the payment and performance
bond for the joint venture.  Circumstances that could lead to a loss
under the joint venture agreement beyond the Company’s stated ownership interest
include the other partner’s inability to contribute additional funds to the
venture in the event the project incurs a loss, additional costs that the
Company could incur should the partner fail to provide the services and
resources toward project completion that it committed to provide in the joint
venture agreement, and the partner’s failure to pay its subcontractors and
suppliers.





The
Company records in its consolidated statements of income, revenue earned from
the performance of the mechanical portion of the joint venture contract, and its
proportionate share of the revenue earned from the work of the other joint
venture subcontractors, except for revenue from the electrical work performed by
its joint venture partner.





The
Company is currently billing the joint venture for its costs related to the
performance of the mechanical portion of the joint venture contract. Since these
amounts billed do not include any profit, this transaction increases amounts the
Company records in its consolidated balance sheets under the caption “Costs and
estimated earnings in excess of billings on uncompleted contracts”.





As of
March 31, 2010, the joint venture had cash totaling approximately $586,000,
which is not included in the Company’s consolidated balance sheet as of March
31, 2010.





At March
31, 2010, the Company has recorded the following in its consolidated balance
sheets under the caption “Advances to and earnings from joint
venture”:





Advances
      to joint venture
                  
                  $
                  17,000Earnings
      from joint venture
                  
                  
                  11,000Balance
      at March 31, 2010
                  
                  $
                  28,000


10





6.
            Stockholders’
      Equity





(A)  Stock Option
Plans:





The
Company has outstanding stock options issued under two plans, the KSW, Inc. 1995
Stock Option Plan (“1995 plan”) and the KSW, Inc. 2007 Stock Option Plan (“2007
plan”).





The 1995
plan expired December 2005.  Therefore, no new options can be granted
under that plan.  At March 31, 2010, there were 137,501 outstanding
exercisable options, which were previously issued under the 1995 plan, expiring
on various dates through 2015.





The 2007
plan was adopted and approved by the Company’s Board of Directors on May 8, 2007
and was approved by the shareholders at the May 2008 Annual Meeting of
Stockholders.  Pursuant to the 2007 plan, 300,000 shares of common
stock of the Company are reserved for issuance to employees, consultants and
directors of the Company.  The primary purpose of the 2007 plan is to
reward and retain key employees and to compensate directors.  No
options have been issued to officers or employees under the 2007 plan. Under
this plan, the Company issued to a Company director options to purchase 20,000
shares of the Company’s common stock at an exercise price of $6.95 per share. On
May 7, 2009, the Company issued to a Company director options to purchase 20,000
shares of the Company’s common stock at an exercise price of $2.61 per
share.  At March 31, 2010, there were 40,000 options outstanding of
which 13,333 were vested under the 2007 plan.





During
the three months ended March 31, 2010, the Company incurred compensation expense
related to the vesting of stock options totaling approximately
$6,000.  In addition, an executive and the estate of a former
director, exercised an aggregate of 8,000 options during the three months ended
March 31, 2010.





During
the three months ended March 31, 2009, the Company incurred compensation expense
related to the vesting of stock options totaling approximately
$4,000.  There were no stock options exercised during the quarter
ended March 31, 2009.





As of
March 31, 2010, there is approximately $23,000 of unrecognized compensation
expense related to unvested stock-based compensation awards.  That
cost is expected to be recognized over the next 2.1 years.





Under
both plans, options were granted to certain employees, executives and directors
at prices equal to the market value of the stock on the dates the options were
issued.  The options granted generally have a term of 10 years from
the grant date and granted options vest ratably over a three year
period.  The fair value of each option is amortized into compensation
expense on a straight-line basis between the grant date for the option and each
vesting date.  The Company estimates the fair value of all stock
option awards as of the date of the grant by applying the Black-Scholes pricing
valuation model.  The application of this valuation model involves
assumptions that are judgmental and sensitive in the determination of
compensation expense which would include the expected stock price volatility,
risk-free interest rate, weighted-average expected life of the options and the
dividend yield.


11





Historical
information is the primary basis for the selection of the expected volatility,
expected dividend yield and the expected lives of options.  The risk
free interest rate was selected based upon yields of U.S. Treasury issues with a
term equal to the expected life of the option being valued.  Stock
option activity for the three months ended March 31, 2010 was as
follows:


Number
                                                                                      of Shares
                                                                                    
                                                                                    
                                                                                    Weighted
      Average
                                                                                      Exercise Price
                                                                                    
                                                                                    
                                                                                    Weighted
      Average
                                                                                      Remaining
      Contractual
                                                                                      Term in Years
                                                                                    
                                                                                    
                                                                                    Aggregate
                                                                                      IntrinsicValueOutstanding
      at January 1, 2010
                                                                                    
                                                                                    
                                                                                    185,501
                                                                                    
                                                                                    
                                                                                    $
                                                                                    2.27Expired/canceled
                                                                                    
                                                                                    
                                                                                    -
                                                                                    
                                                                                    
                                                                                    $
                                                                                    -Granted
                                                                                    
                                                                                    
                                                                                    -
                                                                                    
                                                                                    
                                                                                    $
                                                                                    -Exercised
                                                                                    
                                                                                    
                                                                                    (8,000
                                                                                    )
                                                                                    
                                                                                    $
                                                                                    1.53Outstanding
      at March 31, 2010
                                                                                    
                                                                                    
                                                                                    177,501
                                                                                    
                                                                                    
                                                                                    $
                                                                                    2.30
                                                                                    
                                                                                    
                                                                                    
                                                                                    2.8
                                                                                    
                                                                                    
                                                                                    $
                                                                                    337,000Exercisable
      at March 31, 2010
                                                                                    
                                                                                    
                                                                                    150,834
                                                                                    
                                                                                    
                                                                                    $
                                                                                    2.06
                                                                                    
                                                                                    
                                                                                    
                                                                                    1.7
                                                                                    
                                                                                    
                                                                                    $
                                                                                    240,000





Cash
proceeds, tax benefits and intrinsic value related to total stock options
exercised during the three months ended March 31, 2010 and 2009 are as
follows:





Three MonthsEnded
                    March 31, 2010
                  
                  
                  Three MonthsEnded
                    March 31, 2009Proceeds
      from stock options exercised
                  
                  $
                  12
                  
                  
                  $
                  -Tax
      benefits related to stock options exercised
                  
                  $
                  7
                  
                  
                  $
                  -Intrinsic
      value of stock options exercised
                  
                  $
                  16
                  
                  
                  $
                  -





(B)           Dividend





On March
9, 2010, the Company’s Board of Directors declared a cash dividend of $.10 per
share.  The dividend will be payable on May 24, 2010 to stockholders
of record as of April 26, 2010. At March 31, 2010, the Company has accrued
$628,000 for this dividend in the accompanying consolidated financial statements
under the caption “Accrued expenses”.





(C)           Treasury
Stock





During
December 2008, the Company’s Board of Directors authorized the purchase, through
June 2009, of up to $1,000,000 of the Company’s common stock on the open
market.  As of March 31, 2010, the Company purchased 52,700 shares of
the Company’s common stock at a total cost of $140,000.


12





7.
            Earnings per
      Share





Three
      Months Ended
                              March 31, 2010
                            
                            
                            Three
      Months Ended
                              March 31, 2009Net
      income
                            
                            $
                            87,000
                            
                            
                            $
                            287,000Earnings per share – basic:Weighted
      average shares outstanding during the period
                            
                            
                            6,238,500
                            
                            
                            
                            6,251,800Earnings
      per share – basic
                            
                            $
                            .01
                            
                            
                            $
                            .05Earnings  per share –
      diluted:Weighted
      average shares outstanding during the period
                            
                            
                            6,238,500
                            
                            
                            
                            6,251,800Effect
      of stock option dilution
                            
                            
                            46,577
                            
                            
                            
                            30,760Total
      shares outstanding for purposes of calculating diluted earnings per
      share
                            
                            
                            6,285,077
                            
                            
                            
                            6,282,560Earnings  per
      share – diluted
                            
                            $
                            .01
                            
                            
                            $
                            .05





8.
            Commitment and
      Contingencies





Proposals and
Claims.  During the course of its work on construction
projects, the Company may incur expenses for work outside the scope of its
contractual obligations, for which no acknowledgment of liability exists from
the owner or general contractor for such additional work.  These
claims may include change proposals for extra work or requests for an equitable
adjustment to the Company’s contract price due to unforeseen disruptions to its
work. In accordance with accounting principles generally accepted in the United
States of America for the construction industry, until written acknowledgments
of the validity of the claims are received, the claims are not recognized in the
accompanying consolidated financial statements.  No accruals have been
made in the accompanying consolidated financial statements related to these
proposals for which no acknowledgment of liability exists.  While the
Company has been generally successful in obtaining a favorable resolution of
such claims, there is no assurance that the Company will be successful in the
future.





9.
            Recently Issued
      Accounting Pronouncements




There are
no recently issued accounting pronouncements which will affect the
Company.


13





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





Results of
Operations





Revenues





Total
revenues for the quarter ended March 31, 2010 decreased by $6,246,000, or 31.7%
to $13,460,000, as compared to $19,706,000 for the quarter ended March 31,
2009.





As of
March 31, 2010, the Company had backlog of approximately
$118,100,000.





Approximately
$60,000,000 of the March 31, 2010 backlog is not reasonably expected to be
completed within the year ended December 31, 2010. New contracts secured during
2010 will increase 2010 revenues.  The amount of backlog not
reasonably expected to be completed in the current fiscal year is subject to
various uncertainties and risks. The Company is actively seeking new projects to
add to its backlog.





The
economic recession has impacted the number of private projects, which the
Company may pursue.  Therefore, the Company is aggressively pursuing
opportunities in the public sector, where the Company has been successful in the
past.  During the 2009 third quarter, the Company received awards for
chiller plants at the new World Trade Center (awarded to the Company’s Joint
Venture) and at the Brookhaven National Laboratory.





Cost
of Revenues





Cost of
revenues for the quarter ended March 31, 2010 decreased by $5,831,000, or 32.6%
to $12,053,000, as compared to $17,884,000 for the quarter ended March 31,
2009.  The decrease in cost of revenues for the quarter ended March
31, 2010, as compared to March 31, 2009, was primarily associated with the
decreased revenues.





Gross
Profit





Gross
profit for the quarter ended March 31, 2010 was $1,407,000, or 10.5% of
revenues, as compared to a gross profit of $1,822,000, or 9.2% of revenues, for
the quarter ended March 31, 2009.





Selling,
General and Administrative Expenses





Selling,
general and administrative expenses (“SG&A”) for the quarter ended
March 31, 2010 decreased by $166,000, or 11.8% to $1,236,000, as
compared to $1,402,000 for the quarter ended March 31, 2009.





This
change was primarily a result of a decrease in employment costs, offset by
increases in costs associated with the Company’s public filings, auto expenses
and maintenance of its corporate offices.


14





Other
Income





Other
income for the quarter ended March 31, 2010 was $21,000, as compared to $16,000
for the quarter ended March 31, 2009.  This increase in other income
was a result of a decrease in interest expense during the quarter ended March
31, 2010, as compared to the same period in 2009.





Provision
for Income Taxes





The
provision for income taxes for the quarter ended March 31, 2010 was $105,000, as
compared to the provision for income taxes of $149,000 for the quarter ended
March 31, 2009.  The effective tax rate during the quarter ended March
31, 2010, as compared to the same period in 2009, was higher than the Company’s
statutory tax rate as a result of the Company paying state tax which is based on
capital and not based on the Company’s net income. The effective tax rate for
the quarter ended March 31, 2009 was also reduced as a result of a reversal of a
prior year over accrual of taxes.





Net
Income





As a
result of the above mentioned items, the Company reported net income of $87,000,
or $.01 per share-basic and diluted, for the quarter ended March 31, 2010, as
compared to reported net income of $287,000, or $.05 per share-basic and
diluted, for the quarter ended March 31, 2009.





Liquidity and Capital
Resources





General





The
Company’s principal capital requirement is to fund its work on construction
projects.  Projects are billed monthly based on the work performed to
date.  These project billings, less a withholding of retention, which
is received as the project nears completion, are collectible based on their
respective contract terms.  The Company has historically relied
primarily on internally generated funds and bank borrowings to finance its
operations.  The Company has a line of credit which is subject to
certain conditions.  The Company has not relied on bank borrowings to
finance its operations since July 2003.





As of
March 31, 2010, total cash and cash equivalents was $13,044,000, a $3,285,000
decrease from the $16,329,000 reported as of March 31, 2009. As of March 31,
2010, the Company’s joint venture had cash totaling approximately $586,000,
which is not included in the Company’s consolidated balance sheet as of March
31, 2010. As of March 31, 2010, marketable securities were $2,142,000, as
compared to $1,216,000 reported as of March 31, 2009.





Cash
used in operations





Net cash
used in operations was $1,113,000 for the quarter ended March 31, 2010, as
compared to $130,000 for the quarter ended March 31, 2009.  Both
periods were affected by the funding of projects, the payment of corporate
income taxes and executive bonuses.


15





In order
to ensure that the Company’s unconsolidated joint venture is properly
capitalized, the Company and its partner are billing the joint venture only for
the costs incurred on their respective portions of the joint venture contract.
As the job progresses, the joint venture partners will bill the joint venture
for their profits, and these amounts will  then be
disbursed.





Cash
provided by/ used in investing activities





Net cash
provided by investing activities was $415,000 for the quarter ended March 31,
2010. Net cash used in investing activities was $8,000 for the quarter ended
March 31, 2009.  The Company purchased property and equipment
totaling $83,000 and $6,000 and marketable securities totaling $547,000 and
$2,000 during the quarters ended March 31, 2010 and 2009, respectively.
During the quarter ended March 31, 2010, the Company had proceeds from the
maturing of short-term investments totaling $1,045,000.





Cash
provided by/ used in financing activities





Net cash
provided by financing activities during the quarter ended March 31, 2010 was
$4,000.





Net cash
used by financing activities during the quarter ended March 31, 2009 was
$144,000.





During
the quarter ended March 31, 2010, an executive and the estate of a former
director exercised options to purchasean aggregate of 8,000
shares contributing cash proceeds of $12,000 to the Company.





The
Company presents excess tax benefits resulting from the exercise of stock
options as part of cash flows from financing activities.  Excess tax
benefits represent tax benefits related to exercised options in excess of the
associated deferred tax assets for such options.  For the quarter
ended March 31, 2010, $7,000 of excess tax benefits have been classified as an
operating cash outflow and a financing cash inflow.





During
the quarter ended March 31, 2009, the Company purchased 46,100 shares of
treasury stock at a cost of $124,000.





In
addition, the Company repaid principal payments on its mortgage payable totaling
$15,000 and $20,000 during the quarters ended March 31, 2010 and 2009,
respectively.





On March
9, 2010, the Company’s Board of Directors declared a cash dividend of $.10 per
share.  At March 31, 2010, the Company has accrued $628,000 for this
dividend.  This amount will be paid on May 24, 2010 and therefore no
amounts were included in the cash flows from financing activities in the
accompanying consolidated statement of cash flows for the period ended March 31,
2010.





Credit
Facility





The
Company has a line of credit facility from Bank of America, N.A., which provides
borrowings for working capital purposes up to $2,000,000.  This
facility expires on


16


March 31,
2011, is secured by the Company’s assets, and is guaranteed by the Company’s
subsidiary, KSW Mechanical Services, Inc.  There have been no
borrowings against this line of credit.





Advances
bear interest, at the Company’s option, at either the bank’s prime lending rate
(3.25% at March 31, 2010) or the London Inter-Bank Offered Rate (“LIBOR”) (.26%
at March  31, 2010) plus two percent per annum.





Payment
may be accelerated by certain events of default such as unfavorable credit
factors, the occurrence of a material adverse change in the Company’s business,
properties or financial condition, a default in payment on the line, impairment
of security, bankruptcy, or the Company ceasing operations or being unable to
pay its debts.  The line of credit must be paid in full at the end of
the term.





Commitments





The
Company currently has no significant capital expenditure
commitments.





Surety





On some
of its projects, the Company is required to provide a surety
bond.  The Company obtains its surety bonds from Federal Insurance
Company, a member of Chubb Group of Insurance Companies.  The
Company’s ability to obtain bonding, and the amount of bonding required, is
solely at the discretion of the surety and is primarily based upon the Company’s
net worth, working capital, the number and size of projects under construction
and the surety’s relationship with management.  The Company is
contingently liable to the surety under a general indemnity
agreement.  The Company agrees to indemnify the surety for any
payments made on contracts of suretyship, guaranty or indemnity that might
result from the Company not having the financial capacity to complete
projects.  Management believes the likelihood of the surety having to
complete projects is remote.  The contingent liability is the cost of
completing all bonded projects, which is an undeterminable amount because it is
subject to bidding by third parties.  Management believes that all
contingent liabilities will be satisfied by the Company’s performance on the
specific bonded contracts involved.  The surety provides bonding
solely at its discretion and the arrangement with the surety is an at-will
arrangement subject to termination.





The
Company’s bonding limits have been sufficient given the volume and size of the
Company’s contracts.  The Company’s surety may require that the
Company maintain certain tangible net worth levels, and may require additional
guarantees if the Company should desire increased bonding limits.  At
March 31, 2010, approximately $51,200,000 of the Company’s backlog of
$118,100,000 is anticipated to be bonded.





Critical Accounting Policies
and Estimates





There
have been no material changes in the accounting policies and estimates that the
Company considers to be “critical” from those disclosed in the Company’s Annual
Report on Form 10-K for the year ended December 31, 2009.


17





Recently Issued Accounting
Pronouncements





See Note
(9) to the consolidated financial statements for a summary of recently issued
accounting pronouncements and their impact on the Company.





Forward-Looking
Statements





Certain
statements contained in this report are not historical facts and constitute
“forward-looking statements” (as such term is defined in the Private Securities
Litigation Reform Act of 1995).  These forward looking statements
generally can be identified as statements that include words such as “believe”,
“expect”, “anticipate”, “intend”, “plan”, “foresee”, “likely”, “will” or other
similar words or phrases.  Such forward-looking statements concerning
management’s expectations, strategic objectives, business prospects, anticipated
economic performance and financial condition, and other similar matters involve
known and unknown risks, uncertainties and other important factors that could
cause the actual results, performance or achievements of results to differ
materially from any future results, performance or achievements discussed or
implied by such forward-looking statements.  This document describes
factors that could cause actual results to differ materially from expectations
of the Company.  All written and oral forward-looking statements
attributable to the Company or persons acting on behalf of the Company are
qualified in their entirety by such factors.  Such risks,
uncertainties, and other important factors include, among
others:  inability to obtain bonding, inability to retain senior
management, low labor productivity and shortages of skilled labor, a rise in the
price of steel products, economic downturn, cancellation, suspension or delay of
projects by customers, reliance on certain customers, competition, inflation,
the adverse effect of terrorist concerns and activities on public budgets and
insurance costs, the unavailability of private funds for construction, and other
various matters, many of which are beyond the Company’s control and other
factors as are described in “ Part I, Item 1A.  Risk Factors” in the
Company’s Annual Report on Form 10-K for the fiscal year ended December 31,
2009.  Forward-looking statements speak only as of the date of the
document in which they are made.  Other than required by applicable
law, the Company disclaims any obligation or undertaking to provide any updates
or revisions to any forward-looking statements to reflect any changes in the
Company’s expectations or any changes in events, conditions or circumstances on
which the forward-looking statements are based.





ITEM
      3.
            QUANTITITATIVE AND
      QUALITATIVE DISCLOSURES ABOUT MARKET
RISK





The
Company does not utilize futures, options or other derivative instruments other
than a completed interest rate swap on its mortgage payable with Bank of
America, N.A.  Because the mortgage is a variable rate mortgage, the
Company used an interest rate swap instrument to fix the interest rate that the
Company pays at 5% over the term of the mortgage.





In
addition, as of March 31, 2010, the Company had $2,142,000 of marketable
securities.


18


ITEM
      4.
            CONTROLS AND
      PROCEDURES





As of
March 31, 2010, our management, including our Chief Executive Officer and our
Chief Financial Officer, conducted an evaluation of the effectiveness of our
disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e)
under the Exchange Act). Based on this assessment, management determined that,
as of March 31, 2010, the Company’s disclosure controls and procedures were
effective.





There
have been no changes in the Company’s internal control over financial reporting
(as defined in Rules 13a-15(f) and 15d- 15(f) under the Exchange Act), during
the quarter ended March 31, 2010, that have materially affected or are
reasonably likely to materially affect the Company’s internal control over
financial reporting.





PART II - OTHER
INFORMATION





ITEM
      1.
            LEGAL
      PROCEEDINGS





None.





ITEM
      1A.
            RISK
      FACTORS





There
have been no material changes in or additions to the risk factors disclosed in
the Company’s December 31, 2009 Annual Report on Form 10-K.





ITEM
      2.
            UNREGISTERED SALES OF
      EQUITY SECURITIES AND USE OF
PROCEEDS





None.





ITEM
      3.
            DEFAULTS UPON SENIOR
      SECURITIES





None.





ITEM
      4.
            [REMOVED
      AND RESERVED]





ITEM
      5.
            OTHER
      INFORMATION





None.


19





ITEM
      6.
            EXHIBITS





Exhibit
11 – Statement Regarding Computation of Earnings per Share (see Note 7 to the
Consolidated Financial Statements included elsewhere in this
Report)





Exhibit
31.1 - Certification of Chief Executive Officer required by Rule
13a-14(a)





Exhibit
31.2 – Certification of Chief Financial Officer required by Rule
13a-14(a)





Exhibit
32.1 – Certification of Chief Executive Officer required by Rule 13a-14(b) and
18 U.S.C. Section 1350





Exhibit
32.2 – Certification of Chief Financial Officer required by Rule 13a-14(b) and
18 U.S.C. Section 1350


20





SIGNATURE





Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant has
duly caused this report to be signed on its behalf by the undersigned, thereunto
duly authorized.





KSW,
      INC.Date:  May
      10, 2010/s/Richard W. LucasRichard
      W. LucasChief
      Financial Officer(Principal
      Financial and Accounting Officerand
      Duly Authorized Officer)


21





KSW,
INC.





INDEX
TO EXHIBITS





Exhibit
      Number
                      
                      Description11
                      
                      Statement
      Regarding Computation of Earnings per Share(see Note 7 to the Consolidated
      Financial Statements included elsewhere in this Report)31.1
                      
                      Certification
      of Chief Executive Officer required by Rule 13a-14(a)31.2
                      
                      Certification
      of Chief Financial Officer required by Rule 13a-14(a)32.1
                      
                      Certification
      of Chief Executive Officer required by Rule 13a-14(b) and 18 U.S.C.
      §135032.2
                      
                      Certification
      of Chief Financial Officer required by Rule 13a-14 (b) and 18 U.S.C.
      §1350


22