UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q/A
(Mark One)
x QUARTERLY REPORT PURSUANT TO
SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended
June 30, 3011
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 No. 000-27243
CYIOS CORPORATION
(Exact name of Registrant as
specified in its charter)
Nevada
|
03-7392107
|
(State or other jurisdiction of
incorporation or organization)
|
(I.R.S. Employer Identification
Number)
|
1300 PENNSYLVANIA AVE, SUITE 700
WASHINGTON DC
|
20004
|
(Address of principal executive
offices)
|
(Zip/Postal Code)
|
(202) 204-3006
|
(Telephone Number)
|
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. x YES ¨ 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 x 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 the definitions of “large accelerated filer,” “accelerated filer” and
“smaller reporting company” in Rule 12b-2 of the Exchange Act. Large
accelerated filer Accelerated filer
¨ Non-accelerated filer (Do not check if a smaller reporting company)
x Smaller reporting company
Indicate by check mark whether the registrant is a shell company (as defined
in Rule 12b-2 of the Exchange Act). YES x NO
State the number of shares outstanding of each of the Issuer's classes of
common equity, as of the latest practicable date. There were 36,311,640 common
stock shares and 29,713 preferred shared convertible to common at a 1:1 ratio,
par value $0.001, as of August 24, 2011.
Note Regarding FORWARD-LOOKING STATEMENTS
In addition to historical information, this Report contains forward-looking
statements. Such forward-looking statements are generally accompanied by words
such as "intends," "projects," "strategies,"
"believes," "anticipates," "plans," and similar
terms that convey the uncertainty of future events or outcomes. The
forward-looking statements contained herein are subject to certain risks and
uncertainties that could cause actual results to differ materially from those
reflected in the forward-looking statements. Factors that might cause such a
difference include, but are not limited to; those discussed in Part Item 2 of
this Report, the section entitled "MANAGEMENT'S DISCUSSION AND ANALYSIS OR
PLAN OF OPERATION and Part II Item 1a Risk Factors."
Readers are cautioned not to place undue reliance on these forward-looking
statements, which reflect management's analysis only as of the date hereof and
are in all cases subject to the Company's ability to cure its current liquidity
problems. There is no assurance that the Company will be able to generate
sufficient revenues from its current business activities to meet day-to-day
operation liabilities or to pursue the business objectives discussed herein.
The forward-looking statements contained in this Report also may be impacted
by future economic conditions. Any adverse effect on general economic
conditions and consumer confidence may adversely affect the business of the
Company. CYIOS Corporation undertakes no obligation to publicly revise these
forward-looking statements to reflect events or circumstances that arise after
the date hereof. In addition, readers should carefully review the factors
described in other documents the Company files from time to time with the
Securities and Exchange Commission.
Table of Contents
Part I - FINANCIAL INFORMATION
CYIOS Corporation and
Subsidiaries
|
Consolidated Balance Sheet
|
|
June 30,
|
December 31,
|
|
2011 (unaudited)
|
2010 (audited)
|
ASSETS
|
|
|
CURRENT ASSETS
|
|
|
Cash and Cash Equivalents
|
$ 44,568
|
$ 27,603
|
Accounts Receivable
|
191,674
|
172,937
|
Interest Receivable--Related Party
|
34,663
|
25,903
|
Prepaid and Other Current Assets
|
550
|
76,717
|
TOTAL CURRENT ASSETS
|
271,454
|
303,160
|
|
|
|
FIXED ASSETS, NET
|
-
|
1,436
|
|
|
|
OTHER ASSETS
|
|
|
Related Party Loan
|
219,284
|
219,284
|
TOTAL OTHER ASSETS
|
219,284
|
219,284
|
|
|
|
TOTAL ASSETS
|
$ 490,739
|
$ 523,880
|
|
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY
|
|
|
LIABILITIES
|
|
|
Current Liabilities:
|
|
|
Line of Credit
|
$ 41,270
|
$ 51,468
|
Convertible Note Payable
|
-
|
36,000
|
Accounts Payable
|
-
|
9,452
|
Accruals and Other Payables
|
59,190
|
60,888
|
TOTAL LIABILITIES
|
100,460
|
157,808
|
|
|
|
STOCKHOLDERS' EQUITY
|
|
|
Convertible Preferred Stock ($.001 par value, 5,000,000 authorized: 29,713
and 29,713 issued and outstanding)
|
30
|
30
|
Common Stock ($.001 par value, 100,000,000 shares authorized: 36,311,650
and 37,711,640 shares issued and outstanding)
|
36,311
|
37,711
|
Additional Paid-in-Capital
|
24,496,376
|
24,592,976
|
Accumulated Deficit
|
(24,142,438)
|
(24,264,645)
|
TOTAL STOCKHOLDERS' EQUITY
|
390,279
|
366,072
|
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
|
$ 490,739
|
$ 523,880
|
the accompanying notes are an integral part
of these unaudited consolidated financial statements
Balance Sheet (Parenthetical)
|
|
|
|
|
June 30, 2011
|
December 31, 2010
|
|
(unaudited)
|
(audited)
|
|
|
|
STOCKHOLDERS' EQUITY
|
|
|
Convertible Preferred stock par value
|
$ 0.001
|
$ 0.001
|
Convertible Preferred Stock authorized
|
5,000,000
|
5,000,000
|
Convertible Preferred Stock issued
|
29,713
|
29,713
|
Convertible Preferred Stock outstanding
|
29,713
|
29,713
|
Common Stock par value
|
$ 0.001
|
$ 0.001
|
Common Stock shares authorized
|
100,000,000
|
100,000,000
|
Common Stock shares issued
|
36,311,650
|
37,711,640
|
Common Stock shares outstanding
|
36,311,650
|
37,711,640
|
The accompanying notes are an integral part of these unaudited consolidated
financial statements
Statement of Operations 3
months
back to Table of
Contents
CYIOS
Corporation and Subsidiaries
|
Consolidated Statement of
Operations--(unaudited)
|
|
|
|
|
|
For the three months ended June
30,
|
|
2011
|
|
2010
|
SALES AND COST OF SALES
|
|
|
|
Sales
|
$ 495,049
|
|
$ 459,679
|
Cost of Sales
|
215,606
|
|
264,142
|
Gross Profit
|
279,443
|
|
195,537
|
|
|
|
|
EXPENSES
|
|
|
|
Selling, general and administrative
|
28,994
|
|
25,048
|
Payroll Expense--Indirect Labor
|
141,732
|
|
148,179
|
Consulting and Professional Fees Expense
|
34,100
|
|
18,876
|
Payroll Expense--Stock Compensation
|
-
|
|
-
|
Consulting Expense--Stock Compensation
|
2,250
|
|
21,667
|
Depreciation
|
-
|
|
196
|
TOTAL EXPENSES
|
207,076
|
|
213,966
|
|
|
|
|
Net Income/(Loss) from Operations
|
72,367
|
|
(18,429)
|
|
|
|
|
OTHER INCOME/(EXPENSE)
|
|
|
|
Interest Income--Related Party
|
4,386
|
|
4,674
|
Interest Expense
|
(2,514)
|
|
(2,635)
|
Loss on Disposal of Equipment
|
-
|
|
-
|
NET OTHER INCOME/(EXPENSE)
|
1,872
|
|
2,039
|
|
|
|
|
PROVISION FOR INCOME TAXES
|
-
|
|
-
|
|
|
|
|
NET INCOME/(LOSS) FROM CONTINUING OPERATIONS
|
74,238
|
|
(16,390)
|
|
|
|
|
Net Income/(Loss)
|
$ 74,238
|
|
$ (16,390)
|
|
|
|
|
Net income/(loss) per share--basic and fully diluted
|
$ 0.00
|
|
$ (0.00)
|
Weighted average shares outstanding--basic and fully diluted
|
36,341,353
|
|
35,728,690
|
The accompanying notes are an integral part of these
unaudited consolidated financial statements
Statement of Operations 6
months
back to Table of
Contents
Consolidated Statement of
Operations COMPREHENSIVE--(unaudited)
CYIOS
Corporation and Subsidiaries
|
Consolidated Statement of
Operations COMPREHENSIVE--(unaudited)
|
|
|
|
|
|
For the six months ended June 30
,
|
|
2011
|
|
2010
|
SALES AND COST OF SALES
|
|
|
|
Sales
|
$ 970,138
|
|
$ 905,955
|
Cost of Sales
|
487,257
|
|
530,441
|
Gross Profit
|
482,881
|
|
375,514
|
|
|
|
|
|
|
|
|
EXPENSES
|
|
|
|
Selling, general and administrative
|
44,611
|
|
53,300
|
Payroll Expense--Indirect Labor
|
283,389
|
|
306,249
|
Consulting and Professional Fees Expense
|
68,426
|
|
47,256
|
Payroll Expense--Stock Compensation
|
-
|
|
350,000
|
Consulting Expense--Stock Compensation
|
(31,833)
|
|
35,833
|
Depreciation
|
-
|
|
393
|
TOTAL EXPENSES
|
364,592
|
|
793,031
|
|
|
|
|
Net Income/(Loss) from Operations
|
118,288
|
|
(417,517)
|
|
|
|
|
OTHER INCOME/(EXPENSE)
|
|
|
|
Interest Income--Related Party
|
8,759
|
|
5,981
|
Interest Expense
|
(3,405)
|
|
(5,282)
|
Loss on Disposal of Equipment
|
(1,437)
|
|
-
|
NET OTHER INCOME/(EXPENSE)
|
3,918
|
|
699
|
|
|
|
|
PROVISION FOR INCOME TAXES
|
-
|
|
-
|
|
|
|
|
NET INCOME/(LOSS) FROM CONTINUING OPERATIONS
|
122,206
|
|
(416,818)
|
|
|
|
|
Net Income/(Loss)
|
$ 122,206
|
|
$ (416,818)
|
|
|
|
|
Net income/(loss) per share--basic and fully diluted
|
$ 0.00
|
|
$ (0.01)
|
Weighted average shares outstanding--basic and fully diluted
|
36,341,353
|
|
35,728,590
|
|
|
|
|
|
The accompanying notes are an integral part of these unaudited consolidated
financial statements
CYIOS Corporation and
Subsidiaries
|
Consolidated Statement of
Stockholders' Equity (Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Additional
|
|
|
|
Preferred Stock
|
Common Stock
|
Paid-in
|
Accumulated
|
|
|
Shares
|
Amount
|
Shares
|
Amount
|
Capital
|
Deficit
|
Totals
|
Balances, December 31, 2009
|
29,713
|
$ 30
|
30,148,877
|
$ 30,149
|
$ 24,199,038
|
$ (23,870,594)
|
$ 358,623
|
Shares issued for consulting services
|
-
|
-
|
1,000,000
|
1,000
|
36,500
|
-
|
37,500
|
Shares issued to executive officer as a bonus
|
-
|
-
|
5,000,000
|
5,000
|
345,000
|
-
|
350,000
|
Portion of Note Payable converted to Shares
|
-
|
-
|
1,562,763
|
1,562
|
12,438
|
-
|
14,000
|
Net Income (loss)
|
|
-
|
-
|
-
|
-
|
(394,051)
|
(394,051)
|
Balances, December 31, 2010
|
29,713
|
$ 30
|
37,711,640
|
$ 37,711
|
$ 24,592,976
|
$ (24,264,645)
|
$ 366,072
|
Return of Shares issued for consulting services
|
-
|
-
|
(1,400,000)
|
(1,400)
|
(96,600)
|
-
|
(98,000)
|
Net Income (loss)
|
-
|
-
|
-
|
-
|
-
|
122,206
|
122,206
|
Balances, June 30, 2011
|
29,713
|
$ 30
|
36,311,640
|
$ 36,311
|
$ 24,496,376
|
$ (24,142,439)
|
$ 390,278
|
The accompanying notes are an integral part of these unaudited consolidated
financial statements
Statement of Cash Flows
back to Table of
Contents
CYIOS
Corporation and Subsidiaries
|
Consolidated Statements of Cash
Flows (Unaudited)
|
|
|
|
|
|
For the six months ended
|
|
June 30,
|
|
2011
|
|
2010
|
CASH FLOWS FROM OPERATING ACTIVITIES:
|
|
|
|
|
|
|
|
Net Income/(loss)
|
$ 122,206
|
|
$ (416,818)
|
Adjustments to reconcile net loss to net cash provided by (used in)
|
|
|
|
operating activities:
|
|
|
|
Depreciation
|
-
|
|
392
|
Loss on Disposal of Computer Equipment
|
1,436
|
|
-
|
Value of Shares returned for services not performed
|
(98,000)
|
|
374,000
|
Changes in Assets and Liabilities:
|
|
|
|
(Increase)/Decrease in Accounts Receivable
|
(18,737)
|
|
9,306
|
(Increase) in Interest Receivable--Related Party
|
(8,760)
|
|
-
|
Decrease in Prepaid and Other Current Assets
|
76,167
|
|
5,854
|
Increase in Accruals and Other Payables
|
(1,698)
|
|
4,733
|
(Decrease) in Accounts Payable
|
(9,452)
|
|
(50)
|
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES
|
63,162
|
|
(22,583)
|
|
|
|
|
CASH FLOWS FROM FINANCING ACTIVITIES:
|
|
|
|
Proceeds from Issuance of Convertible Note Payable
|
-
|
|
50,000
|
Payoff of Convertible Note Payable
|
(36,000)
|
|
-
|
Principal Payments Made on line of Credit
|
(10,197)
|
|
(9,648)
|
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES
|
(46,197)
|
|
40,352
|
|
|
|
|
NET INCREASE IN CASH AND
|
|
|
|
CASH EQUIVALENTS
|
16,965
|
|
17,769
|
|
|
|
|
CASH AND CASH EQUIVALENTS:
|
|
|
|
Beginning of Period
|
27,603
|
|
76,448
|
|
|
|
|
End of Period
|
$ 44,568
|
|
$ 94,217
|
|
|
|
|
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
|
|
|
|
CASH PAID DURING THE PERIOD FOR:
|
|
|
|
Interest
|
$ 2,514
|
|
$ 2,635
|
Taxes
|
$ -
|
|
$ -
|
|
|
|
|
NON CASH INVESTING AND FINANCING ACTIVITIES:
|
|
|
|
Shares of Common Stock Returned for Consulting Services not Performed
|
$ (98,000)
|
|
$ -
|
Shares of Common Stock Issued for Prepaid Consulting Services
|
$ -
|
|
$ 18,000
|
Stock Issued for Consulting Services/Employee Bonus
|
$ -
|
|
$ 356,000
|
The accompanying notes are an integral part of these unaudited consolidated
financial statements
CYIOS CORPORATION. AND
SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS
June 30, 2011
(Unaudited)
NOTE A - ORGANIZATION, OPERATIONS AND SIGNIFICANT ACCOUNTING
POLICIES
BASIS OF PRESENTATION
The interim consolidated financial statements and summarized notes included
herein were prepared in accordance with accounting principles generally
accepted in the United States of America for interim consolidated financial
information, pursuant to rules and regulations of the Securities and Exchange
Commission. Because certain information and notes normally included in complete
consolidated financial statements prepared in accordance with accounting
principles generally accepted in the United States of America were condensed or
omitted pursuant to such rules and regulations, it is suggested that these
consolidated financial statements be read in conjunction with the Consolidated
Financial Statements and the Notes thereto, included in CYIOS Corporations 10-K
filed April 15, 2011. These interim consolidated financial statements and notes
hereto reflect all adjustments that are, in the opinion of management,
necessary for a fair statement of results for the interim periods presented.
Such financial results should not be construed as necessarily indicative of
future results
USE OF ESTIMATES
The preparation of consolidated financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the consolidated
financial statements and the reported amounts of revenue and expenses during
the reporting period. Actual results could differ from those estimates.
CASH EQUIVALENTS
All highly liquid investments purchased with an original maturity of three
months or less are considered to be cash equivalents.
FAIR VALUE OF FINANCIAL INSTRUMENTS
Financial instruments, including cash, receivables and other current assets,
are carried at amounts that approximate fair value. Accounts payable, line of
credit, loans and notes payable and other liabilities are carried at amounts
that approximate fair value.
PROPERTY AND EQUIPMENT
The Company provides for depreciation of equipment using accelerated and
straight-line methods based on estimated useful lives of five to seven years.
Depreciation expense was $0 and $196 respectively for the three months ended
June 30, 2011 and 2010. Depreciation expense was $0 and $393 respectively for
the six months ended June 30, 2011 and 2010. The Company disposed of its
computer equipment during the 1
st
Quarter 2011 and booked a loss of
$1,437.
REVENUE RECOGNITION/CONTRACTS
The Company derives revenue primarily from the sale and service of
information technology services to the government. Revenue is recognized when
persuasive evidence of an arrangement exists, delivery has occurred, the fee is
fixed and determinable, collectability is reasonably assured, contractual
obligations have been satisfied and title and risk of loss have been transferred
to the customer.
Revenue from the contracts is recognized using the specific performance
method. Revenue on fixed-price contracts pursuant to which a client pays the
Company a specified amount to provide only a particular service for a stated
time period, or so-called fee-for-service arrangement, is recognized as amounts
become billable, assuming all other criteria for revenue recognition are met.
The Company bids on governmental contracts which are generally long-term for a
fixed-price per contract. Once the company wins a contract and begins the
project, the company bills on a monthly basis for the labor hours worked at the
agreed upon price per hour—based on the contract. The company then recognizes
the revenue on those actual hours that have been billed to the customer.
Net Income/ (Loss) per Common Share
The Company‘s current earnings per share (EPS) are shown in dual
presentation of basic and diluted earnings per share (EPS) with a
reconciliation of the numerator and denominator of the EPS computations. Basic
earnings per share amounts are based on the weighted average shares of common
stock outstanding. If applicable, diluted earnings per share would assume the
conversion, exercise or issuance of all potential common stock instruments such
as options, warrants and convertible securities, unless the effect is to reduce
a loss or increase earnings per share. Accordingly, this presentation has been
adopted for the period presented. There were no adjustments required to net
loss for the period presented in the computation of diluted earnings per share.
Advertising Costs
Advertising costs are expensed as incurred. For the three months ended June
30, 2011 and 2010, the company incurred advertising expense of $3,757 and
$1,875, respectively. For the six months ended June 30, 2011 and 2010, the
company incurred advertising expense of $5,437 and $5,129, respectively.
Income Taxes
We account for income taxes using the asset and liability method, which
results in recognizing income tax expense based on the amount of income taxes
payable or refundable for the current year. Additionally, we evaluate regularly
the tax positions taken or expected to be taken resulting from financial
statement recognition of certain items. Based on our evaluation, we have concluded
that there are no significant uncertain tax positions.
Impairment of Long-Lived Assets
The Company reviews the carrying value of property, plant, and equipment for
impairment whenever events and circumstances indicate that the carrying value
of an asset may not be recoverable from the estimated future cash flows
expected to result from its use and eventual disposition. In cases where
undiscounted expected future cash flows are less than the carrying value, an
impairment loss is recognized equal to an amount by which the carrying value
exceeds the fair value of assets. The factors considered by management in
performing this assessment include current operating results, trends and
prospects, the manner in which the property is used, and the effects of obsolescence,
demand, competition, and other economic factors.
RECENT ACCOUNTING PRONOUNCEMENTS
In July 2010, the FASB issued Accounting Standard Update No. 2010-20 (ASU
No. 2010-20) “Receivables” (Topic 310). ASU No. 2010-20 provides financial
statement users with greater transparency about an entity’s allowance for
credit losses and the credit quality of its financing receivables. This update
is intended to provide additional information to assist financial statement
users in assessing an entity’s credit risk exposures and evaluating the
adequacy of its allowance for credit losses. The amendments in this update
apply to both public and nonpublic entities with financing receivables,
excluding short-term trade accounts receivable or receivables measured at fair
value or lower of cost or fair value. The objective of the amendments in ASU
No. 2010-20 is for an entity to provide disclosures that facilitate financial
statement users’ evaluation of (1) the nature of credit risk inherent in the
entity’s portfolio of financing receivables, (2) How that risk is analyzed and
assessed in arriving at the allowance for credit losses and (3) The changes and
reasons for those changes in the allowance for credit losses. The entity must
provide disclosures about its financing receivables on a disaggregated basis.
For public entities ASU No. 2010-20 is effective for interim and annual
reporting periods ending on or after December 15, 2010. For nonpublic entities
ASU No. 2010-20 will become effective for annual reporting periods ending on or
after December 15, 2011. The Company is evaluating the impact ASU No. 2010-20
will have on the financial statements.
In August 2010, the FASB issued Accounting Standard Updates No. 2010-21 (ASU
No. 2010-21) “Accounting for Technical Amendments to Various SEC Rules and
Schedules” and No. 2010-22 (ASU No. 2010-22) “Accounting for Various Topics –
Technical Corrections to SEC Paragraphs”. ASU No 2010-21 amends various SEC
paragraphs pursuant to the issuance of Release no. 33-9026: Technical Amendments
to Rules, Forms, Schedules and Codification of Financial Reporting Policies.
ASU No. 2010-22 amends various SEC paragraphs based on external comments
received and the issuance of SAB 112, which amends or rescinds portions of
certain SAB topics. Both ASU No. 2010-21 and ASU No. 2010-22 are effective upon
issuance. The amendments in ASU No. 2010-21 and No. 2010-22 will not have a
material impact on the Company’s financial statements.
Accounts Receivable
Accounts receivable are reported at net realizable value. The Company
establishes an allowance for doubtful accounts based upon factors pertaining to
the credit risk of specific customers, historical trends, and other
information. Delinquent accounts are written off when it’s determined that the
amounts are uncollectible. The Company did not have a balance in the allowance
for doubtful accounts as of June 30, 2011 and 2010.
PREFERRED STOCK
As of June 30, 2011, the outstanding shares of preferred stock are 29,713.
COMMON STOCK
The following table recaps the capital account transactions occurring during
the 1
st
and 2
nd
quarters of 2010:
Month/Description of transaction
|
Number of shares
|
Price per share
|
Total Value
|
|
|
|
|
March--Stock issued to Executive Officer as bonus
|
5,000,000
|
$ 0.07
|
$ 350,000
|
March--Stock issued for Consulting Services
|
100,000
|
$ 0.06
|
$ 6,000
|
March--Stock issued for Consulting Services
|
450,000
|
$ 0.04
|
$ 18,000
|
Total
|
5,550,000
|
|
$ 374,000
|
No activity in the 2
nd
quarter 2010.
The following table recaps the capital account transactions occurring during
the 1
st
and 2
nd
quarters 2011:
Month/Description of transaction
|
Number of shares
|
Price per share
|
Total Value
|
|
|
|
|
January--Stock issued for Consulting Services was returned
|
1,400,000
|
$ 0.07
|
$ 98,000
|
Total
|
1,400,000
|
|
$ 98,000
|
The above shares were returned to the Company as the Consultant
contracted to perform services for the company during 2010 through 2011 and
beyond did not perform the agreed upon services and was in breach of contract.
No activity in the 2
nd
quarter 2011.
STOCK-BASED COMPENSATION
Stock-based compensation cost is estimated at the grant date based on the
fair value of the award and is recognized as expense over the requisite service
period of the award. The Company has awarded stock-based compensation both as
restricted stock and stock options. Any stock options granted were immediately
exercised upon grant.
STOCK OPTIONS AND WARRANTS
As of June 30, 2011, the Company does not have any outstanding stock options
or warrants as shown in the following table:
|
Stock/Options
|
|
Weighted average price per
share
|
|
Aggregate intrinsic value
|
For the year ended December 31, 2010
|
|
|
|
|
|
Granted
|
-
|
|
-
|
|
-
|
Exercised
|
-
|
|
-
|
|
-
|
Outstanding at December 31, 2010
|
-
|
|
-
|
|
-
|
|
|
|
|
|
|
For the period ended June 30, 2011
|
|
|
|
|
|
Granted
|
-
|
|
-
|
|
-
|
Exercised
|
-
|
|
-
|
|
-
|
Outstanding at June 30, 2011
|
-
|
|
-
|
|
-
|
NOTE B—INCOME TAXES
Due to the prior years’ operating losses and the inability to recognize an
income tax benefit, there is no provision for current or deferred federal or
state income taxes for the tax year ended December 31, 2010.
Deferred income taxes reflect the net tax effects of temporary differences
between the carrying amounts of assets and liabilities for financial reporting
purposes and the amount used for federal and state income tax purposes.
The Company’s total deferred tax asset, calculated using federal and state
effective tax rates, as of December 31, 2010 is as follows:
Total Deferred Tax Asset
|
$ 2,257,748
|
Valuation Allowance
|
(2,257,748)
|
Net Deferred Tax Asset
|
-
|
The reconciliation of income taxes computed at the federal statutory income
tax rate to total income taxes for the six months ended June 30, 2011 and 2010
is as follows:
|
|
2010
|
2009
|
Income tax computed at the federal statutory rate
|
|
34%
|
34%
|
State income tax, net of federal tax benefit
|
|
0%
|
0%
|
Total
|
|
34%
|
34%
|
Valuation allowance
|
|
-34%
|
-34%
|
Total deferred tax asset
|
|
0%
|
0%
|
Because of the Company’s lack of earnings history, the deferred tax asset
has been fully offset by a valuation allowance. The valuation allowance
increased (decreased) by $(6,579) and $1,352 in 2010 and 2009, respectively. No
tax benefits have been recorded for the nondeductible (tax) expenses (including
stock for services) totaling $17,624,208.
As of December 31, 2010, the Company had federal and state net operating
loss carryforwards as follows of $6,640,437 which will expire at various times
through the year 2030.
NOTE C—CONCENTRATION
The Company is either a prime or sub contractor on contracts with the
Information Management Support Center U.S. Army and GOMO/SLD. Loss of these
contracts could have a material effect upon the Company’s financial condition
and results of operations.
NOTE D—SEGMENT REPORTING
Net sales and Profit/ (Loss) by Segment for the three months ended June
30, 2011 and 2010 are broken down as follows:
Net Sales by Segment
|
For the 3 months ended
June 30, 2011
|
|
CYIOS
|
CYIOS Group
|
CKO
|
Totals
|
Sales, net
|
$ 495,049
|
$ -
|
$ -
|
$ 495,049
|
Cost of Sales
|
215,606
|
-
|
-
|
215,606
|
Gross Profit
|
$ 279,443
|
$ -
|
$ -
|
$ 279,443
|
|
|
|
|
|
Profit/(Loss) by Segment
|
For the 3 months ended June
30, 2011
|
|
CYIOS
|
CYIOS Group
|
CKO
|
Totals
|
Net (Loss)
|
$ 76,797
|
$ (297)
|
$ (2,263)
|
$ 74,238
|
|
|
|
|
|
|
|
|
|
|
Net Sales by Segment
|
For the 3 months ended June
30, 2010
|
|
CYIOS
|
CYIOS Group
|
CKO
|
Totals
|
Sales, net
|
$ 459,679
|
$ -
|
$ -
|
$ 459,679
|
Cost of Sales
|
264,142
|
-
|
-
|
264,142
|
Gross Profit
|
$ 195,537
|
$ -
|
$ -
|
$ 195,537
|
|
|
|
|
|
Profit/(Loss) by Segment
|
For the 3 months ended June
30, 2010
|
|
CYIOS
|
CYIOS Group
|
CKO
|
Totals
|
Net (Loss)
|
$ (14,682)
|
$ -
|
$ (1,708)
|
$ (16,390)
|
Net sales and Profit/ (Loss) by Segment for the six months ended June 30,
2011 and 2010 are broken down as follows:
Net Sales by Segment
|
For the 6 months ended
June 30, 2011
|
|
CYIOS
|
CYIOS Group
|
CKO
|
Totals
|
Sales, net
|
$ 970,138
|
$ -
|
$ -
|
$ 970,138
|
Cost of Sales
|
$ 487,257
|
-
|
-
|
487,257
|
Gross Profit
|
$ 482,881
|
$ -
|
$ -
|
$ 482,881
|
|
|
|
|
|
Profit/(Loss) by Segment
|
For the 6 months ended June
30, 2011
|
|
CYIOS
|
CYIOS Group
|
CKO
|
Totals
|
Net (Loss)
|
$ 125,783
|
$ (673)
|
$ (2,903)
|
$ 122,206
|
|
|
|
|
|
|
|
|
|
|
Net Sales by Segment
|
For the 6 months ended June
30, 2010
|
|
CYIOS
|
CYIOS Group
|
CKO
|
Totals
|
Sales, net
|
$ 905,955
|
$ -
|
$ -
|
$ 905,955
|
Cost of Sales
|
530,441
|
-
|
-
|
530,441
|
Gross Profit
|
$ 375,514
|
$ -
|
$ -
|
$ 375,514
|
|
|
|
|
|
Profit/(Loss) by Segment
|
For the 6 months ended June
30, 2010
|
|
CYIOS
|
CYIOS Group
|
CKO
|
Totals
|
Net (Loss)
|
$ (413,406)
|
$ -
|
$ (3,412)
|
$ (416,818)
|
NOTE E—PENSION PLAN
The Company has a 401(k) plan which is administered by a third-party
administrator. Individuals who have been employed for one month and reached the
age of 21 years are eligible to participate. Employees may contribute up to the
legal amount allowed by law. The Company matches one quarter of the employee’s
contribution up to a maximum of 4% of the employee’s wages. Employees are
vested in the Company’s contribution 25% a year and are fully vested after four
years. The Company’s contributions for the three months ended June 30, 2011 and
2010 were $3.527 and $3,855, respectively. The Company’s contribution for the
six months ended June 30, 2011 and 2010 were $7,713 and $7,090, respectively.
NOTE F—COMMITMENTS/LEASES
The Company entered into a new lease agreement on September 20, 2010 for
office space. The lease agreement is a month to month agreement that will
automatically renew for consecutive periods of one month, for up to twelve
months. The monthly fees range between $275 and $450. Total future payments through
December 31, 2011 are $3,300.
Total rent expense for the three months ended June 30, 2011 and 2010 was
$1,047 and $4,456, respectively. Total rent expense for the six months ended
June 30, 2011 and 2010 was $2,297 and $8,852.
NOTE G—RELATED PARTIES
The Company has a Note Receivable with one of its officers and major
shareholders. The note is payable on demand and bears 8% interest per annum.
The outstanding balance as of June 30, 2011 is $219,284.
Outstanding Interest Receivable as of June 30, 2011 is $34,663.
The above Related Party Loan is secured by 8,000,000 shares of stock
owned by the related party.
NOTE H—NET INCOME/ (LOSS) PER COMMON SHARE
The Company’s reconciliation of the numerators and denominators of the basic
and fully diluted income per shares is as follows for the three months ended
June 30, 2011 and 2010 are as follows:
|
For the 3 months ended June 30,
2011
|
|
For the 3 Months Ended June 30,
2010
|
|
Income
|
Shares
|
Per-Share
|
|
Income
|
Shares
|
Per-Share
|
|
(Numerator)
|
(Denominator)
|
Amount
|
|
(Numerator)
|
(Denominator)
|
Amount
|
|
|
|
|
|
|
|
|
Net Income/(Loss)
|
$ 74,238
|
|
|
|
$ (16,390)
|
|
|
Basic EPS
|
|
|
|
|
|
|
|
Income available to common stockholders
|
74,238
|
36,311,640
|
$ 0.00
|
|
(16,390)
|
35,698,977
|
$ 0.00
|
Effect of Dilutive Securities
|
|
|
|
|
|
|
|
Warrants
|
|
|
|
|
|
|
|
Convertible preferred stock
|
|
29,713
|
|
|
|
29,713
|
|
Diluted EPS
|
|
|
|
|
|
|
|
Net Income/(Loss)
|
74,238
|
36,341,353
|
$ 0.00
|
|
(16,390)
|
35,728,690
|
$ 0.00
|
The Company’s reconciliation of the numerators and denominators of the basic
and fully diluted income per shares is as follows for the six months ended June
30, 2011 and 2010 are as follows:
|
For the 6 months ended June 30,
2011
|
|
For the 6 Months Ended June 30,
2010
|
|
Income
|
Shares
|
Per-Share
|
|
Income
|
Shares
|
Per-Share
|
|
(Numerator)
|
(Denominator)
|
Amount
|
|
(Numerator)
|
(Denominator)
|
Amount
|
|
|
|
|
|
|
|
|
Net Income/(Loss)
|
$ 122,206
|
|
|
|
$ (416,818)
|
|
|
Basic EPS
|
|
|
|
|
|
|
|
Income available to common stockholders
|
122,206
|
36,311,640
|
$ 0.00
|
|
(416,818)
|
35,698,877
|
$ 0.00
|
Effect of Dilutive Securities
|
|
|
|
|
|
|
|
Warrants
|
|
|
|
|
|
|
|
Convertible preferred stock
|
|
29,713
|
|
|
|
29,713
|
|
Diluted EPS
|
|
|
|
|
|
|
|
Net Income/(Loss)
|
122,206
|
36,341,353
|
$ 0.00
|
|
(416,818)
|
35,728,590
|
$ 0.00
|
NOTE I—LINE OF CREDIT
Two of the Company’s subsidiaries have lines of credit with Bank of America.
The line of credit for CKO is 14.75% interest and the line of credit for CYIOS
Group (China Print) is 9.25%. The outstanding balances of the line of credit by
Subsidiary as of June 30, 2011 are as follows:
CKO $ 34,989
CYIOS Group
$ 6,282
$ 41,271
NOTE J—CONVERTIBLE NOTE PAYABLE
On January 5, 2010, the company received proceeds from a Note Payable
(“Note”) due to an outside party in the amount of $50,000. A total of 4,761,905
shares have been placed in reserve if the Note Payable is converted. On August
20, 2010, $2,000 of the principal balance was converted into 133,333 common
shares of CYIOS Corporation stock. On October 19, 2010, $4,000 of the principal
balance was converted into 540,541 common shares of CYIOS Corporation stock. On
December 13, 2010, $8,000 of the principal balance was converted into 888,889
common shares of CYIOS Corporation stock. As of December 31, 2010 the total
Note Payable outstanding was $36,000.
The Company paid off the remaining principal balance of $36,000 on January
26, 2011 in full satisfaction of the outstanding Note Payable. The remaining
shares not issued for conversion in the amount of 3,199,142 were removed from
reserve.
Item 2. Management’s Discussion and Analysis
The following discussion should be read in conjunction with the consolidated
financial Statements and related notes thereto included elsewhere in this
report.
INTRODUCTION
CYIOS Corporation and its subsidiaries are collectively referred to as
CYIOS. The following Management Discussion and Analysis of Financial Condition
and Results of Operations was prepared by management and discusses material
changes in the financial condition and results of operations and cash flows for
2
nd
quarter ended June 30, 2011 and 2010 for CYIOS. Such discussion
and comments on the liquidity and capital resources should be read in
conjunction with the information contained in the accompanying unaudited
consolidated financial statements prepared in accordance with U.S. GAAP.
The discussion and comments contained hereunder include both historical
information and forward-looking information. The forward-looking information,
which generally is information stated to be anticipated, expected, or projected
by management, involves known and unknown risks, uncertainties and other
factors that may cause the actual results and performance to be materially
different from any future results and performance expressed or implied by such
forward-looking information. Potential risks and uncertainties include risks
and uncertainties set forth under the heading “Risk Factors” and elsewhere in
this Form 10-Q/A.
Corporate Overview
CYIOS Corporation operates two subsidiaries. CYIOS Corporation and CKO
Incorporated are the two vehicles where the company operates its business. The
company, through its services subsidiary, CYIOS Corporation, provides
innovative Business Transformation and Information Technology solutions to the
United States Army, Department of Defense (DoD), and other prospective U.S.
Government agencies. CYIOS Corporation supports its customers through a variety
of current contract vehicles including prime contracts, subcontracts, sole
source, blanket purchase agreements, and multiple award task orders extending
well into 2011 and beyond. CYIOS Corporation has received many commendations
for its outstanding customer service and support in systems integration and
application development, knowledge management and business transformation, and
program and project management. As a certified Small Business, CYIOS
Corporation provides its services within the following North American Industry
Classification System (NAICS) codes:
518112
|
WEB SEARCH PORTALS
|
518210
|
DATA PROCESSING, HOSTING AND RELATED SERVICES
|
519100
|
OTHER INFORMATION SERVICES
|
519190
|
ALL OTHER INFORMATION SERVICES
|
541510
|
COMPUTER SYSTEMS DESIGN AND RELATED SERVICES
|
541511
|
CUSTOM COMPUTER PROGRAMMING SERVICES
|
541512
|
COMPUTER SYSTEMS DESIGN SERVICES
|
541513
|
COMPUTER FACILITIES MANAGEMENT SERVICES
|
541519
|
OTHER COMPUTER RELATED SERVICES
|
541611
|
ADMIN. MANAGEMENT AND GENERAL MGMT CONSULTING
SERVICES
|
541618
|
OTHER MANAGEMENT CONSULTING SERVICES
|
541690
|
OTHER SCIENTIFIC AND TECHNICAL CONSULTING SERVICES
|
CKO Incorporated is CYIOS’ subsidiary, which offers the product CYIPRO; a
business transformation tool that utilizes the first project based operating
system (OS). This new project OS is the nucleus of why CYIPRO can transform
your people, processes and information into a productive, effective and rich
environment. CYIPRO securely brings the latest concepts of business
transformation and technology to fruition. CYIOS built the prototype for the
U.S. Army, named AKO, which now serves over 1.8 million Army users worldwide
and has built CYIPRO to complement knowledge management and business
transformation for agencies and commercial business. CYIPRO was developed as an
agency-level business transformation solution in response to Government
initiatives in teleworking led by OPM and GSA; the President’s Management
Agenda and its focus on retaining human capital; FISMA, HSPD-12 and PKI for
secure communications through common access cards; Lean Six Sigma to improve
workflow and reduce redundancies; and the Clinger-Cohen Act to improve
efficiencies in technology. CYIPRO has been positioned to work in conjunction
with the AKO model to sell as a customized product to Federal, State and Local
Governments. This, in turn, can lead to growth in service contracts for business
transformation and modernization solutions.
Recent Developments
In the 1st Quarter 2011, our numbers show a net income over last year at
this time. Our sales up and our expenses are low. We are a public company
without the benefits of raising capital for the company, but despite this fact,
we have been able to sustain and grow.
In the 2
nd
Quarter 2011, we continue to show a net income over
last year at this time. Sales are still steady and our expenses remain low. The
Company has been marketing our product CYIPRO. The Company recently sent out a
press release announcing that we are due to fully launch by mid August our
“Cloud based Office that supports Microsoft 365 Cloud Services.” We anticipate
that this will boost sales of our product CYIPRO to the government and
non-government users.
Our industry is over $100 billion dollar industry and we have proven our
capabilities and shown our successes. We issued an S-1 during 2010 and to date
have not used it to raise capital.
FINANCIAL CONDITION
We currently have sufficient financial resources to support our operational
(overhead) staff and to fund marketing and development of our product, CYIPRO.
We are looking for, and engaged with, investors to raise capital for growth and
to establish our advisory board, but currently we have not obtained any
additional capital.
OVERVIEW
CYIOS does business as a leading systems integrator and Knowledge Management
Solutions provider supporting the United States Army. All of CYIOS’ revenue is
derived from the services it provides for single and multiple year awards to
different US Army and US Government agencies. CKO, Inc., one of the CYIOS
subsidiaries provides a designed online office management product which is
known as CYIPRO. For the three months ended June 30, 2011 and 2010, CYIOS
received no revenue from CYIPRO.
RESULTS OF OPERATIONS
back to Table of Contents
Revenue:
Total sales for the 2
nd
quarter 2011 were
$495,029 as compared to $457,679 in sales for the 2
nd
quarter 2010,
an increase of approximately 7.69%. Total sales for the 1
st
and 2
nd
quarters 2011 were $970,138 as compared to $905,955 for the 1
st
and
2
nd
quarters 2010, an of increase of 7.08%.
Cost of Sales:
Cost of sales for the 2
nd
quarter 2011 were
$215,606, resulting in a gross profit of $279,443 (56.45% gross profit margin)
compared to cost of sales for the 2
nd
quarter 2010 of $264,142,
resulting in a gross profit of $195,537 (42.54% gross profit margin). Cost of
sales for the 1
st
and 2
nd
quarters 2011 were $487,257,
resulting in a gross profit of $482,881 (49.77% gross profit margin). Cost of
sales for the 1
st
and 2
nd
quarters 2010 were $530,441,
resulting in a gross profit of $375,514 (41.45% gross profit margin). Cost of
sales have decreased slightly for the first half of 2011 as compared to 2010 by
approximately 8% overall. Cost of sales consists solely of direct labor expense
which can best be described as contracted services being rendered. We have to
pay higher than average salaries to employ the best trained staff and we must
also offer the best benefits for these staff.
Indirect Labor:
Indirect labor expense decreased by $6,447 or
approximately 4.35% to $141,732 for the 2
nd
quarter ended 2011 from
$148,179 for the 2
nd
quarter ended 2010. Indirect labor expense
decreased by $22,860 or approximately 7.46% to $283,389 for the 1
st
and 2
nd
quarters ended 2011 from $306,249 for the 1
st
and
2
nd
quarters 2010. A stock bonus was paid to our CEO and president
during the 1
st
quarter of 2010, the company’s board authorized the
issuance of 5,000,000 shares valued at $.07 per share or $350,000 in total.
Consulting and Professional Fees:
Consulting and professional fees
for the 2
nd
quarter ended 2011 was $34,100 as compared to $18,876
for the 2
nd
quarter ended 2010, resulting in an increase of $15,224.
Consulting and professional fees for the 1
st
and 2
nd
quarters ended 2011 were $68,426 as compared to $47,256 for the 1
st
and 2
nd
quarters ended 2010, resulting in an increase of $21,170.
The overall increase from 2011 to 2010 was a result of incurring additional
expense for use of consultants’ services to assist with hiring and placing new
staff.
Depreciation and Interest Expense:
Interest expense for the 2
nd
quarter ended 2011 was $2,514, as compared to $2,635 for the 2
nd
quarter ended 2010. Interest expense for the 1
st
and 2
nd
quarters ended 2011 was $3,405, as compared to $5,282 for the 1
st
and 2
nd
quarters ended 2010. Depreciation expense for the 2
nd
quarter ended 2011 and 2010 was $0 and $196, respectively. Depreciation expense
for the 1
st
and 2
nd
quarters ended 2011 and 2010 was $0
and $393, respectively. The Company disposed of computer equipment during the 1
st
quarter 2011 resulting in a loss on disposal in the amount of $1,437.
Selling, General, and Administrative:
Selling, general and
administrative expenses for the 2
nd
quarter ended of 2011 was
$28,994 as compared to $25,048 for the 2
nd
quarter ended 2010—an
increase of $3,946 or approximately 15.75%. Selling, general and administrative
expenses for the 1
st
and 2
nd
quarters ended 2011 was
$44,611 as compared to $53,300 for the 1
st
and 2
nd
quarters ended 2010—a decrease of 8,689 or approximately 16.30%. Selling,
general, and administrative expenses consist primarily of advertising,
conference fees, fees, insurance, office supplies, rent, and travel and
entertainment expenses.
Net Income/ (Loss) from Operations:
Net income for the 2
nd
quarter ended 2011 was $74,238 as compared to a net loss of $(16,390) for the 2
nd
quarter ended 2010—an increase of $90,628. Net income for the 1
st
and 2
nd
quarters ended 2011 was 122,206 as compared to a net loss of
$(416,818) for the 1
st
and 2
nd
quarters ended 2010—an
increase of $539,024. Sales were up for the 1
st
quarter of 2011 and
expenses were down during the 1
st
quarter 2011.
LIQUIDITY AND CAPITAL RESOURCES
Liquidity:
At June 30, 2011, CYIOS had cash and cash equivalents of
$44,568, compared with $94,217 at June 30, 2010, a decrease of $49,649.
During the six months ending June 30, 2011, cash provided by operating
activities was $63,162, consisting primarily of the net income for the six
months ended June 30, 2011 of $122,206 offset by non-cash charges to:
· Loss on Disposal of Computer Equipment in the amount of 1,436;
· Value of Shares of Common Stock returned in the amount of $98,000;
· Working capital changes of $37,520, consisting of a net decrease of
$48,670 in Accounts Receivable Related Party Interest Receivable and Other
Assets and a decrease of $11,150 in Accrued Expenses, Payroll Taxes Payable,
and Accounts Payable.
Financing activities for the six months ended June 30, 2011 used cash in the
amount of $46,198, consisting of:
· Payments made on the Line of Credit in the amount of $10,198.
· Payoff of the principal on Convertible Note Payable in the amount of
$36,000.
Our long-term working capital and capital requirements will depend upon
numerous factors, including our efforts to continue to improve operational
efficiency and conserve cash.
Off-Balance Sheet Arrangements:
The Company does not have any
off-balance sheet arrangements with any party.
Critical Accounting Estimates:
There have been no material changes in
our critical accounting policies or critical accounting estimates since 2000
nor have we adopted an accounting policy that has or will have a material
impact on our consolidated financial statements.
OUTSTANDING SHARE DATA
The outstanding share data as of June 30, 2011 and 2010 is as follows:
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Number of shares
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|
|
outstanding
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|
|
2011
|
|
2010
|
Common Shares
|
|
36,311,640
|
|
35,699,877
|
Preferred Shares
|
|
29,713
|
|
29,713
|
Item 3. Quantitative and Qualitative Disclosures about Market Risk
Management does not believe that there is any material risk exposure with
respect to derivative or other financial instruments that would require
disclosure under this item.
Item 4. Controls and Procedures
We maintain disclosure controls and procedures designed to ensure that
information required to be disclosed in reports filed under the Securities
Exchange Act of 1934 (“Exchange Act”) is recorded, processed, summarized and
reported within the specified time periods. Our Chief Executive Officer and its
Principal Financial Officer (collectively, the “Certifying Officers”) are
responsible for maintaining our disclosure controls and procedures. The
controls and procedures established by us are designed to provide reasonable
assurance that information required to be disclosed by the issuer in the reports
that it files or submits under the Exchange Act is recorded, processed,
summarized and reported within the time periods specified in the Commission’s
rules and forms.
As of the end of the period covered by this report, the Certifying Officers
evaluated the effectiveness of our disclosure controls and procedures. Based on
the evaluation, the Certifying Officers concluded that our disclosure controls
and procedures were effective to provide reasonable assurance that information
required to be disclosed by us in the reports that we file or submit under the
Exchange Act is recorded, processed, summarized and reported, within the time
periods specified in the applicable rules and forms, and that it is accumulated
and communicated to our management, including the Certifying Officers, as
appropriate to allow timely decisions regarding required disclosure.
The Certifying Officers have also concluded, based on their evaluation of
our controls and procedures that as of June 30, 2011, our internal controls
over financial reporting are effective and provide a reasonable assurance of
achieving their objective.
The Certifying Officers have also concluded that there was no change in our
internal controls over financial reporting identified in connection with the
evaluation that occurred during our 2
nd
fiscal quarter that has
materially affected, or is reasonably likely to materially affect, our internal
control over financial reporting.
During the year 2008, we became aware of the fact that the Shareholder Loan
outstanding to our CEO and major shareholder is considered to be a prohibited
transaction according to Section 402 of the Sarbanes-Oxley Act of 2002.
However, Section 402 does contain a grandfather clause exempting from the
prohibition any loans maintained by the issuer on July 30, 2002; provided,
however, that there are no material modifications to, or renewal of the terms
of, such loans following that date. A portion of the Shareholder Loan does meet
the exemption rules of the grandfather clause; however, after that date
additional amounts were added to the Shareholder Loan. The Company has
addressed this issue and is disclosing the matter here and has executed a new
promissory note for the full amount owed to the Company of $262,512. The terms
of the promissory note state that the payoff of the note must be made within a
reasonable amount of time and bears an interest rate of 8% per annum. The
outstanding balance of the Shareholder Loan was $219,284 as of June 30, 2011.
The Company will no longer make payments to the CEO or any other executive
officer or director that would be classified as a loan.
Item 4T. Controls and Procedures
(a)
Conclusions regarding disclosure controls and procedures
.
Disclosure controls and procedures are the Company’s controls and other procedures
that are designed to ensure that information required to be disclosed by the
Company in the reports that the Company files or submits under the Exchange Act
is recorded, processed, summarized and reported, within the time periods
specified in the Securities and Exchange Commission’s rules and forms.
Disclosure controls and procedures include, without limitation, controls and
procedures designed to ensure that information required to be disclosed by the
Company in the reports that it files under the Exchange Act is accumulated and
communicated to the Company’s management, including its Chief Executive Officer
and Principal Financial Officer, as appropriate to allow timely decisions
regarding required disclosure. Management is responsible for establishing and
maintaining adequate internal control over financial reporting.
Under the supervision and with the participation of our management,
including our principal executive officer and principal financial officer, we
conducted an evaluation of our disclosure controls and procedures; as such term
is defined under Rule 13a-15 promulgated under the Exchange Act as of
September30, 2010. Our disclosure controls and procedures were designed to
provide reasonable assurance that the information required to be disclosed in
reports filed Securities Exchange Act of 1934 is recorded, processed,
summarized and reported within the time period specified and that it is
accumulated and communicated to our management, including certifying officers,
as appropriate to allow timely decisions regarding timely disclosure. Our
management including our certifying officer concludes that our disclosure
controls and procedures are effective at the reasonable assurance level as of
the end of the period covered by the report.
(b)
Management’s Report On Internal Control Over Financial Reporting
.
It is management’s responsibilities to establish and maintain adequate internal
controls over the Company’s financial reporting. Internal control over
financial reporting is defined in Rule 13a-15(f) or 15d-15(f) promulgated under
the Exchange Act as a process designed by, or under the supervision of, the
issuer’s principal executive and principal financial officers and effected by
the issuer’s management and other personnel, to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of
financial statements for external purposes in accordance with generally
accepted accounting principles and includes those policies and procedures that:
• Pertain to the maintenance of records that in reasonable detail accurately
and fairly reflect the transactions and dispositions of the assets of the
issuer; and
• Provide reasonable assurance that transactions are recorded as necessary
to permit preparation of financial statements in accordance with generally
accepted accounting principles and that receipts and expenditures of the issuer
are being made only in accordance with authorizations of management of the
issuer; and
• Provide reasonable assurance regarding prevention or timely detection of
unauthorized acquisition, use or disposition of the issuer’s assets that could
have a material effect on the financial statements.
As of the end of the period covered by the Quarterly Report, an evaluation
was carried out under the supervision and with the participation of our
management, including our Chief Executive Officer and Principal Financial
Officer, of the effectiveness of our internal control over financial reporting.
Management assessed the effectiveness of our internal control over financial
reporting as of September 30, 2010. In making this assessment, management used
the criteria set forth by the Committee of Sponsoring Organizations of the
Treadway Commission in Internal Control-Integrated Framework.
Based on that evaluation, our Chief Executive Officer and Principal
Financial Officer have concluded that, as of the end of such period, internal
controls over financial reporting were effective as of the end of the period
covered by the Report.
Because of its inherent limitations, internal control over financial
reporting may not prevent or detect misstatements. Projections of any
evaluation of effectiveness to future periods are subject to the risk that
controls may become inadequate because of changes in conditions, or that the degree
of compliance with the policies or procedures may deteriorate. All internal
control systems, no matter how well designed, have inherent limitations.
Therefore, even those systems determined to be effective can provide only
reasonable assurance with respect to financial statement preparation and
presentation. Because of the inherent limitations of internal control, there is
a risk that material misstatements may not be prevented or detected on a timely
basis by internal control over financial reporting. However, these inherent
limitations are known features of the financial reporting process. Therefore,
it is possible to design into the process safeguards to reduce, though not
eliminate, this risk.
This Quarterly Report does not include an attestation report of our
registered public accounting firm regarding internal control over financial
reporting. Management’s report was not subject to attestation by our registered
public accounting firm pursuant to temporary rules of the Securities and
Exchange Commission that permit us to provide only management’s report in this
Quarterly Report.
(c)
Changes in internal control over financial reporting
.
There were no changes in our internal control over financial reporting
identified in connection with the evaluation required by paragraph (d) of
Exchange Act Rules 13a-15 or 15d-15 that occurred during our last fiscal
quarter that have materially affected, or are reasonably likely to materially
affect, our internal control over financial reporting.
Part II – OTHER INFORMATION
Item 1. Legal Proceedings
None
Item 1A. Risk Factors
RISK FACTORS
Our business entails a significant degree of risk and uncertainty, and an
investment in our securities should be considered highly speculative. What
follows is a general description of the material risks and uncertainties, which
may adversely affect our business, our financial condition, including liquidity
and profitability, and our results of operations, ultimately affecting the
value of an investment in shares of our common stock. In addition to other
information contained in this Form 10-Q/A, you should carefully consider the
following cautionary statements and risk factors:
General Business Risks
Our limited operating history may not serve as an adequate basis upon
which to judge our future prospects and results of operations.
We were incorporated in October 1997, but only began our present operation
in September 2005, and, as such, we have a limited operating history, and our
historical operating activities may not provide a meaningful basis upon which
to evaluate our business, financial performance or future prospects.
We may not be able to achieve similar operating results in future periods,
and, accordingly, you should not rely on our results of operation for prior
periods as indications of our future performance.
Our historical operating losses and negative cash flows from operating
activities raise an uncertainty as to our ability to continue as a going
concern.
We have a history of operating losses and negative cash flows from operating
activities. In the event that we are unable to sustain our current
profitability or are otherwise unable to secure external financing, we may not
be able to meet our obligations as they come due, raising substantial doubts as
to our ability to continue as a going concern. Any such inability to continue
as a going concern may result in our security holders losing their entire
investment. Our consolidated financial statements, which have been prepared in
accordance with generally accepted accounting principles, contemplate that we
will continue as a going concern and do not contain any adjustments that might
result if we were unable to continue as a going concern. Changes in our
operating plans, our existing and anticipated working capital needs, the
acceleration or modification of our expansion plans, lower than anticipated
revenues, increased expenses, potential acquisitions or other events will all
affect our ability to continue as a going concern.
Our liquidity and capital resources are very limited.
Our ability to fund working capital and anticipated capital expenditures
will depend on our future performance, which is subject to general economic
conditions, our ability to win government contracts, our private customers,
actions of our competitors and other factors that are beyond our control. Our
ability to fund operating activities is also dependent upon (i) the extent and
availability of bank and other credit facilities, (ii) our ability to access
external sources of financing, and (iii) our ability to effectively manage our
expenses in relation to revenues. There can be no assurance that our operations
and access to external sources of financing will continue to provide resources
sufficient to satisfy liabilities arising in the ordinary course of our
business.
Our accumulated deficit makes it more difficult for us to borrow
funds.
As of the fiscal year ended December 31, 2010, and as a result of historical
operating losses from prior years, our accumulated deficit was $24,264,645.
Lenders generally regard an accumulated deficit as a negative factor in
assessing creditworthiness, and for this reason, the extent of our accumulated
deficit coupled with our historical operating losses will negatively impact our
ability to borrow funds if and when required. Any inability to borrow funds, or
a reduction in favorability of terms upon which we are able to borrow funds,
including the amount available to us, the applicable interest rate and the
collateralization required, may affect our ability to meet our obligations as
they come due, and adversely affect on our business, financial condition, and
results of operations, raising substantial doubts as to our ability to continue
as a going concern.
Risks Associated with our Business and Industry
We depend on contracts with federal government agencies for all of our
revenue, and if our relationships with these agencies were harmed our future
revenues and growth prospects would be adversely affected.
Revenues derived from contracts with federal government agencies accounted
for all of our revenues for the 1
st
and 2
nd
quarters
ended June 30, 2011, and we believe that federal government agencies will
continue to be the source of all or substantially all of our revenues for the
foreseeable future.
For this reason, any issues that compromise our relationship with agencies
of the federal government in general, or with the Department of Defense in
particular, would have a substantial adverse effect on our business. Key among
the factors in maintaining our relationships with federal government agencies
are our performance on individual contracts, the strength of our professional
reputation and the relationships of our key executives with government
personnel. To the extent that our performance does not meet expectations, or
our reputation or relationships with one or more key personnel are impaired,
our business, financial condition and results of operations will be negatively
affected and we may not be able to meet our obligations as they come due,
raising substantial doubts as to our ability to continue as a going concern.
The federal government may modify, curtail or terminate our contracts
at any time prior to their completion, which would have a material adverse
affect on our business.
Federal government contracts are highly regulated and federal laws and
regulations require that our contracts contain certain provisions which allow
the federal government to, among other things:
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terminate current contracts at any time for the convenience of the
government, provided such termination is made in good faith;
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cancel multi-year contracts and related orders if funds for contract
performance for any subsequent year become unavailable;
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·
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curtail or modify current contracts if requirements or budgetary
constraints change; and
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Adjust contract costs and fees on the basis of audits done by its
agencies.
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Should the federal government modify, curtail or terminate our contracts for
any reason, we may only recover our costs incurred and profit on work completed
prior to such modification, curtailment or termination. The federal government
regularly reviews our costs and performance on its contracts, as well as our
accounting and general business practices. The federal government may reduce
the reimbursement for our fees and contract-related costs as a result of such
an audit. There can be no assurance that one or more of our federal government
contracts will not be modified, curtailed or terminated under these
circumstances, or that we would be able to procure new federal government
contracts to offset the revenue lost as a result of any modification,
curtailment or termination. As our revenue is dependent on our procurement,
performance and receipt of payment under our contracts with the federal
government, the loss of one or more critical contracts could have a material
adverse effect on our business, financial condition and results of operations
and we may not be able to meet our obligations as they come due, raising
substantial doubts as to our ability to continue as a going concern.
The federal government has increasingly relied upon contracts that are
subject to a competitive bidding process. If we are unable to consistently win
new awards under these contracts our business may be adversely affected.
We obtain many of our contracts with the federal government through a
process of competitive bidding and, as the federal government has increasingly
relied upon contracts that are subject to competitive bidding, we expect that
much of the business we are awarded in the foreseeable future will be through
such a process.
There are substantial costs and a number of risks inherent in the
competitive bidding process, including the costs associated with management
time necessary to prepare bids and proposals that we may not be awarded, our
failure to accurately estimate the resources and costs required to service
contracts that we are awarded, and the risk that we may encounter unanticipated
expenses, delays or modifications to contracts previously awarded. Our failure
to effectively compete and win contracts through, or manage the costs and risks
inherent in the competitive bidding process could have a material adverse
effect on our business, financial condition and results of operations.
Our revenues and growth prospects may be adversely affected if we or
our employees are unable to obtain the requisite security clearances or other
qualifications needed to perform services for our customers.
Many federal government programs require contractors to have security
clearances. Depending on the level of required clearance, security clearances
can be difficult and time-consuming to obtain. If we or our employees are
unable to obtain or retain necessary security clearances, we may not be able to
win new business, and our existing customers could terminate their contracts
with us or decide not to renew them. To the extent we cannot obtain or maintain
the required security clearances for our employees working on a particular
contract, we may not derive the revenue anticipated from the contract. Employee
misconduct, including security breaches, or our failure to comply with laws or
regulations applicable to our business could cause us to lose customers or our
ability to contract with the federal government, which would have a material
adverse effect on our business, financial condition and results of operations
and we may not be able to meet our obligations as they come due, raising
substantial doubts as to our ability to continue as a going concern.
Because we are a federal government contractor, misconduct, fraud or
other improper activities by our employees or our failure to comply with
applicable laws or regulations could have a material adverse effect on our
business and reputation.
Because we are a federal government contractor, misconduct, fraud or other
improper activities by our employees or our failure to comply with applicable
laws or regulations could have a material adverse effect on our business and
reputation. Such misconduct could include the failure to comply with federal government
procurement regulations, regulations regarding the protection of classified
information, legislation regarding the pricing of labor and other costs in
federal government contracts and any other applicable laws or regulations. Many
of the systems we develop involve managing and protecting information relating
to national security and other sensitive government functions. A security
breach in one of these systems could prevent us from having access to such
critically sensitive systems. Other examples of potential employee misconduct
include time card fraud and violations of the Anti-Kickback Act. The
precautions we take to prevent and detect these activities may not be
effective, and we could face unknown risks or losses. Our failure to comply
with applicable laws or regulations or misconduct by any of our employees could
subject us to fines and penalties, loss of security clearance and suspension or
debarment from contracting with the federal government, any of which would have
a material adverse effect on our business, financial condition and results of
operations and we may not be able to meet our obligations as they come due,
raising substantial doubts as to our ability to continue as a going concern.
We must comply with laws and regulations relating to the formation,
administration and performance of federal government contracts
.
We must comply with laws and regulations relating to the formation,
administration and performance of federal government contracts, which affect
how we do business with our customers. Such laws and regulations may
potentially impose added costs on our business and our failure to comply with
applicable laws and regulations may lead to penalties and the termination of
our federal government contracts. Some significant regulations that affect us
include:
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the Federal Acquisition Regulations and their supplements, which regulate
the formation, administration and performance of federal government
contracts;
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the Truth in Negotiations Act, which requires certification and disclosure
of cost and pricing data in connection with contract negotiations; and
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The Cost Accounting Standards, which impose accounting requirements that
govern our right to reimbursement under certain cost-based government
contracts.
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Additionally, our contracts with the federal government are subject to
periodic review and investigation. Should such a review or investigation
identify improper or illegal activities, we may be subject to civil or criminal
penalties or administrative sanctions, including the termination of our
contracts, forfeiture of profits, the triggering of price reduction clauses,
suspension of payments, fines and suspension or debarment from doing business
with federal government agencies. We could also suffer harm to our reputation,
which would impair our ability to win awards of contracts in the future or
receive renewals of existing contracts. Although we have never had any material
civil or criminal penalties or administrative sanctions imposed upon us, it is
not uncommon for companies in our industry to have such penalties and sanctions
imposed on them. If we incur a material penalty or administrative sanction in
the future, our business, financial condition and results of operations could
be adversely affected.
Our business is subject to routine audits and cost adjustments by the
federal government, which, if resolved unfavorably to us, could adversely
affect our financial condition.
Federal government agencies routinely audit and review their contractors’
performance, cost structure and compliance with applicable laws, regulations
and standards. They also review the adequacy of, and a contractor’s compliance
with, its internal control systems and policies, including the contractor’s
purchasing, property, estimating, compensation and management information
systems. Such audits may result in adjustments to our contract costs, and any
costs found to be improperly allocated will not be reimbursed.
We incur significant pre-contract costs that if not reimbursed would
deplete our cash balances and adversely affect our financial condition.
We often incur costs on projects outside of a formal contract when customers
ask us to begin work under a new contract that has yet to be executed, or when
they ask us to extend work we are currently doing beyond the scope of the
initial contract.
We incur such costs at our risk, and it is possible that the customers will
not reimburse us for these costs if we are ultimately unable to agree on a
formal contract which could have an adverse effect on our business, financial
condition and results of operations.
Our intellectual property may not be adequately protected from
unauthorized use by others, which could increase our litigation costs and
adversely affect our business.
Our intellectual properties, including our brands, are some of the most
important assets that we possess in our ability to generate revenues and
profits and we rely significantly on these intellectual property assets in
being able to effectively compete in our markets. However, our intellectual
property rights may not provide meaningful protection from unauthorized use by
others, which could result in an increase in competing products and services
and a reduction in our own ability to generate revenue. Moreover, if we must
pursue litigation in the future to enforce or otherwise protect our
intellectual property rights, or to determine the validity and scope of the
proprietary rights of others, we may not prevail and will likely have to make
substantial expenditures and divert valuable resources in any case.
We face substantial competition in attracting and retaining qualified
senior management and key personnel and may be unable to develop and grow our
business if we cannot attract and retain as necessary, or if we were to lose
our existing, senior management and key personnel.
Our success, to a large extent, depends upon our ability to attract, hire
and retain highly qualified and knowledgeable senior management and key
personnel who possess the skills and experience necessary to execute our
business strategy. Our ability to attract and retain such senior management and
key personnel will depend on numerous factors, including our ability to offer
salaries, benefits and professional growth opportunities that are comparable
with and competitive to those offered by more established companies operating
in our industries and market segments. We may be required to invest significant
time and resources in attracting and retaining, as necessary, additional senior
management and key personnel, and many of the companies with which we will
compete for any such individuals have greater financial and other resources,
affording them the ability to undertake more extensive and aggressive hiring
campaigns, than we can. Furthermore, an important component to overall
compensation offered to senior management and key personnel may be equity. If
our stock prices do not appreciate over time, it may be difficult for us to
attract and retain senior management and key personnel. Moreover, should we
lose our key personnel, we may be unable to prevent the unauthorized disclosure
or use of our trade secrets, including our practices, procedures or client
lists. The normal running of our operations may be interrupted, and our
financial condition and results of operations negatively affected, as a result
of any inability on our part to attract or retain the services of qualified and
experienced senior management and key personnel, our existing key personnel
leaving and a suitable replacement not being found, or should any former member
of senior management or key personnel disclose our trade secrets.
The loss of our Chief Executive Officer could have a material adverse
effect on our business.
Our success depends to a large degree upon the skills, network and
professional business contacts of our Chief Executive Officer, Timothy
Carnahan. We have no employment agreement with, Timothy Carnahan, and there can
be no assurance that we will be able to retain him or, should he choose to
leave us for any reason, to attract and retain a replacement or additional key
executives. The loss of our Chief Executive Officer would have a material
adverse effect on our business, our financial condition, including liquidity
and profitability, and our results of operations, raising substantial doubts as
to our ability to continue as a going concern.
Risks Associated with an Investment in our Common Stock
Unless an active trading market develops for our securities, you may
not be able to sell your shares.
Although, we are a reporting company and our common shares are quoted on the
OTC Bulletin Board (owned and operated by the NASDAQ Stock Market, Inc.) under
the symbol “CYIO”, there is not currently an active trading market for our
common stock and an active trading market may never develop or, if it does
develop, may not be maintained. Failure to develop or maintain an active
trading market will have a generally negative effect on the price of our common
stock, and you may be unable to sell your common stock or any attempted sale of
such common stock may have the effect of lowering the market price and
therefore your investment could be a partial or complete loss.
Since our common stock is thinly traded it is more susceptible to
extreme rises or declines in price, and you may not be able to sell your shares
at or above the price paid.
Since our common stock is thinly traded its trading price is likely to be
highly volatile and could be subject to extreme fluctuations in response to
various factors, many of which are beyond our control, including:
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the trading volume of our shares;
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the number of securities analysts, market-makers and brokers following our
common stock;
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changes in, or failure to achieve, financial estimates by securities
analysts;
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new products or services introduced or announced by us or our competitors;
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actual or anticipated variations in quarterly operating results;
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conditions or trends in our business industries;
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announcements by us of significant contracts, acquisitions, strategic
partnerships, joint ventures or capital commitments;
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additions or departures of key personnel;
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sales of our common stock; and
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General stock market price and volume fluctuations of publicly-traded, and
particularly microcap, companies.
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You may have difficulty reselling shares of our common stock, either at or
above the price you paid, or even at fair market value.
The stock markets often experience significant price and volume changes that
are not related to the operating performance of individual companies, and
because our common stock is thinly traded it is particularly susceptible to
such changes. These broad market changes may cause the market price of our
common stock to decline regardless of how well we perform as a company. In addition,
securities class action litigation has often been initiated following periods
of volatility in the market price of a company’s securities. A securities class
action suit against us could result in substantial legal fees, potential
liabilities and the diversion of management’s attention and resources from our
business. Moreover, and as noted below, our shares are currently traded on the
OTC Bulletin Board and, further, are subject to the penny stock regulations.
Price fluctuations in such shares are particularly volatile and subject to
manipulation by market-makers, short-sellers and option traders.
Trading in our common stock on the OTC Bulletin Board may be limited
thereby making it more difficult for you to resell any shares you may own.
Our common stock is quoted on the OTC Bulletin Board (owned and operated by
the NASDAQ Stock Market, Inc). The OTC Bulletin Board is not an exchange and,
because trading of securities on the OTC Bulletin Board is often more sporadic
than the trading of securities listed on a national exchange or on the NASDAQ
National Market, you may have difficulty reselling any of the shares of our
common stock that you may own.
Our common stock is subject to the “penny stock” regulations, which
are likely to make it more difficult to sell.
Our common stock is considered a “penny stock,” which generally is a stock
trading under $5.00 and not registered on a national securities exchange or
quoted on the NASDAQ National Market. The SEC has adopted rules that regulate
broker-dealer practices in connection with transactions in penny stocks. These
rules generally have the result of reducing trading in such stocks, restricting
the pool of potential investors for such stocks, and making it more difficult
for investors to sell their shares once acquired. Prior to a transaction in a
penny stock, a broker-dealer is required to:
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deliver to a prospective investor a standardized risk disclosure document
that provides information about penny stocks and the nature and level of
risks in the penny stock market;
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provide the prospective investor with current bid and ask quotations for
the penny stock;
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explain to the prospective investor the compensation of the broker-dealer
and its salesperson in the transaction;
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provide investors monthly account statements showing the market value of
each penny stock held in the their account; and
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Make a special written determination that the penny stock is a suitable
investment for the purchaser and receive the purchaser’s written agreement to
the transaction.
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These requirements may have the effect of reducing the level of trading
activity in the secondary market for a stock that is subject to the penny stock
rules. Since our common stock is subject to the penny stock rules, investors in
our common stock may find it more difficult to sell their shares.
Future issuances by us or sales of our common stock by our officers or
directors may dilute your interest or depress our stock price.
We may issue additional shares of our common stock in future financings or
may grant stock options to our employees, officers, directors and consultants
under our 2006 Employee Stock Option Plan and 2007 Equity Incentive Plan. Any
such issuances could have the effect of depressing the market price of our
common stock and, in any case, would dilute the interests of our common
stockholders. Such a depression in the value of our common stock could reduce
or eliminate amounts that would otherwise have been available to pay dividends
on our common stock (which are unlikely in any case) or to make distributions
on liquidation. Furthermore, shares owned by our officers or directors which
are registered in a registration statement, or which otherwise may be
transferred without registration pursuant to an applicable exemptions under the
Securities Act of 1933, as amended, may be sold. Because of the perception by
the investing public that a sale by such insiders may be reflective of their
own lack of confidence in our prospects, the market price of our common stock
could decline as a result of a sell-off following sales of substantial amounts
of common stock by our officers and directors into the public market, or the
mere perception that these sales could occur.
We do not intend to pay any common stock dividends in the foreseeable
future.
We have never declared or paid a dividend on our common stock and, because
we have very limited resources and a substantial accumulated deficit, we do not
anticipate declaring or paying any dividends on our common stock in the
foreseeable future. Rather, we intend to retain earnings, if any, for the
continued operation and expansion of our business. It is unlikely, therefore,
that the holders of our common stock will have an opportunity to profit from
anything other than potential appreciation in the value of our common shares
held by them. If you require dividend income, you should not rely on an
investment in our common stock.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
None to report
Item 3. Defaults Upon Senior Securities.
Not Applicable
Item 4. Submission of Matters to a Vote of Security Holders.
Not Applicable
Item 5. Other Information.
Not Applicable
Item 6. Exhibits
The exhibits to this form are listed in the attached Exhibit Index.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
CYIOS Corporation
(Registrant)
/s/ Timothy Carnahan
Date: August 24, 2011 __________________________
Timothy Carnahan
Chairman of the Board,
Chief Executive Officer and Principal
Financial Officer
INDEX TO EXHIBITS
Exhibit No.
|
Description
|
|
|
|
|
31.1
|
Certification of Timothy Carnahan, Chairman, Chief Executive Officer and
Principal Financial Officer.*
|
|
|
|
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32
|
Statement required by 18 U.S.C. Section 1350, as adopted pursuant to
section 906 of the Sarbanes-Oxley Act of 2002.*
|
* filed herein
Exhibit 31.1
Certification Pursuant to Section 13a-14 of the Securities Exchange Act
of 1934 of Timothy Carnahan (CYIOS Corporation Chairman of the Board, Chief
Executive Officer, and Principal Financial Officer)
I, Timothy Carnahan, certify that:
-
I have reviewed this report on Form 10-Q/A for the quarter
ended June 30, 2011 of CYIOS Corporation (“registrant”);
-
Based on my knowledge, the report does not contain any
untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances under
which such statements were made, not misleading with respect to the period
covered by this report;
-
Based on my knowledge, the financial statements, and other
financial information included in this report, fairly present in all
material respects the financial condition, results of operations and cash
flows of the registrant as of, and for, the periods presented in this
report;
-
I am responsible for establishing and maintaining
disclosure controls and procedures (as defined in Exchange Act Rules
13a-15(e) and 15d-15(e)) and internal control over financial reporting (as
defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant
and have:
a) Designed such disclosure controls and procedures, or caused such disclosure
controls and procedures to be designed under our supervision, to ensure that
material information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities, particularly
during the period in which this report is being prepared;
b) Designed such internal control over financial reporting, or caused such
internal control over financial reporting to be designed under our supervision,
to provide reasonable assurance regarding the reliability of financial
reporting and the preparation of financial statements for external purposes in
accordance with generally accepted accounting principles;
c) Evaluated the effectiveness of the registrant's disclosure controls and
procedures and presented in this report our conclusions about the effectiveness
of the disclosure controls and procedures, as of the end of the period covered
by this report based on such evaluation; and
d) Disclosed in this report any change in the registrant's internal control
over financial reporting that occurred during the registrant's most recent
fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual
report) that has materially affected, or is reasonably likely to materially
affect, the registrant's internal control over financial reporting; and
-
I have disclosed, based on our most recent evaluation of
internal control over financial reporting, to the registrant's auditors
and board of directors (or persons performing the equivalent functions):
a) All significant deficiencies and material weaknesses in the design or
operation of internal control over financial reporting which are reasonably
likely to adversely affect the registrant’s ability to record, process,
summarize and report financial information; and
b) Any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal control over
financial reporting.
Date: August 24, 2011
/s/ Timothy Carnahan
Chairman of the Board, Chief Executive Officer, and
Principal Financial Officer
Exhibit 32
STATEMENT REQUIRED BY 18 U.S.C. SECTION 1350, AS ADOPTED
PURSUANTTO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 In connection with the
Quarterly Report on Form 10-Q/A of CYIOS Corporation for the six months ended
June 30, 2011, as filed with the Securities and Exchange Commission on the date
hereof (the "Report"), I, Timothy Carnahan, our Chairman of the
Board, Chief Executive Officer and Principal Financial Officer, certify that: *
the Report fully complies with the requirements of Section 13(a) or 15(d) of
the Securities Exchange Act of 1934; and * information contained in the Report
fairly presents, in all material respects, our consolidated financial condition
and results of operations.
/s/ Timothy Carnahan
Timothy CarnahanChairman
of the Board, Chief Executive Officer, and Principal Financial Officer 10:47 AM
07/27/11, 2011 This certification accompanies this Report pursuant to Section
906 of the Sarbanes-Oxley Act of 2002 and shall not, except to the extent
required by the Sarbanes-Oxley Act of 2002, be deemed filed by us for purposes
of Section 18 of the Securities Exchange Act of 1934, as amended.
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