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<P style="margin-top:0pt; margin-bottom:10pt; font-family:Times New Roman" align=center><B>SECURITIES AND EXCHANGE COMMISSION</B></P>
<P style="margin-top:0pt; margin-bottom:30pt; font-family:Times New Roman" align=center><B>Washington, D.C. 20549</B></P>
<P style="margin-top:0pt; margin-bottom:30pt; font-family:Times New Roman" align=center><B>___________________________________________</B></P>
<P style="margin-top:0pt; margin-bottom:10pt; font-family:Times New Roman" align=center><B>FORM 8-K</B></P>
<P style="margin:0pt; font-family:Times New Roman" align=center><B>CURRENT REPORT</B></P>
<P style="margin:0pt; font-family:Times New Roman" align=center><B>PURSUANT TO SECTION 13 OR 15(D) OF THE</B></P>
<P style="margin:0pt; font-family:Times New Roman" align=center><B>SECURITIES EXCHANGE ACT OF 1934</B></P>
<P style="margin-top:0pt; margin-bottom:10pt; text-indent:36pt; font-family:Times New Roman"><BR></P>
<P style="margin-top:0pt; margin-bottom:10pt; text-indent:36pt; font-family:Times New Roman" align=center>Date of Report (Date of earliest event reported): &nbsp;August 19, 2005</P>
<P style="margin:0pt; font-family:Times New Roman" align=center><B>MARKLAND TECHNOLOGIES, INC.</B></P>
<P style="margin:0pt; font-family:Times New Roman" align=center><I>(Exact Name of Registrant as Specified in Charter)</I></P>
<P style="margin:0pt; font-family:Times New Roman"><BR></P>
<P style="margin:0pt; font-family:Times New Roman"><BR></P>
<TABLE style="font-size:10pt" cellspacing=0 align=center><TR><TD valign=top width=212.8><P style="margin:0pt; padding-bottom:3pt; font-family:Times New Roman; border-bottom:0.5pt solid #000000" align=center><B>Florida</B></P>
</TD><TD valign=top width=212.8><P style="margin:0pt; padding-bottom:3pt; font-family:Times New Roman; border-bottom:0.5pt solid #000000" align=center><B>000-28863</B></P>
</TD><TD valign=top width=212.8><P style="margin:0pt; padding-bottom:3pt; font-family:Times New Roman; border-bottom:0.5pt solid #000000" align=center><B>84-1331134</B></P>
</TD></TR>
<TR><TD valign=top width=212.8><P style="margin:0pt; font-family:Times New Roman" align=center><I>(State or other jurisdiction</I></P>
<P style="margin:0pt; font-family:Times New Roman" align=center><I>of incorporation)</I></P>
</TD><TD valign=top width=212.8><P style="margin:0pt; font-family:Times New Roman" align=center><I>(Commission</I></P>
<P style="margin:0pt; font-family:Times New Roman" align=center><I>File Number)</I></P>
</TD><TD valign=top width=212.8><P style="margin:0pt; font-family:Times New Roman" align=center><I>(IRS Employer</I></P>
<P style="margin:0pt; font-family:Times New Roman" align=center><I>Identification Number)</I></P>
</TD></TR>
</TABLE>
<P style="margin:0pt; font-family:Times New Roman"><I><BR></I></P>
<P style="margin-top:0pt; margin-bottom:10pt; font-family:Times New Roman" align=center><B><U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;88 Royal Little Drive, Providence, RI &nbsp;02904</U></B></P>
<P style="margin-top:0pt; margin-bottom:10pt; font-family:Times New Roman" align=center><I>&nbsp;(Address of principal executive offices) (Zip Code)</I></P>
<P style="margin-top:0pt; margin-bottom:10pt; font-family:Times New Roman" align=center><B><U>276 Washington Street, No. 367, &nbsp;Boston, MA 02108</U></B></P>
<P style="margin-top:0pt; margin-bottom:10pt; font-family:Times New Roman" align=center><I>(Mailing Address)</I></P>
<P style="margin:0pt; font-family:Times New Roman" align=center><B>(617) 973-5104</B></P>
<P style="margin:0pt; font-family:Times New Roman" align=center><I>(Registrant&#146;s telephone number, including area code)</I></P>
<P style="margin:0pt; font-family:Times New Roman" align=center><BR></P>
<P style="margin:0pt; font-family:Times New Roman" align=center><B><U>N/A</U></B></P>
<P style="margin:0pt; font-family:Times New Roman" align=center><I>(Former Name or Former Address, if Changed Since Last Report)</I></P>
<P style="margin:0pt; font-family:Times New Roman"><BR></P>
<P style="margin-top:0pt; margin-bottom:10pt; font-family:Times New Roman">Check the appropriate box below if the form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below).</P>
<P style="margin-top:0pt; margin-bottom:10pt; font-family:Times New Roman">[ ] &nbsp;Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)</P>
<P style="margin-top:0pt; margin-bottom:10pt; font-family:Times New Roman">[ ] &nbsp;Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)</P>
<P style="margin-top:0pt; margin-bottom:10pt; font-family:Times New Roman">[ ] &nbsp;Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))</P>
<P style="margin-top:0pt; margin-bottom:12pt; font-family:Times New Roman">[ ] &nbsp;Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))</P>
<P style="margin:0pt; font-family:Times New Roman; font-size:12pt"><BR></P>
<P style="margin:0pt; font-family:Times New Roman; font-size:12pt"><BR></P>
<P style="margin:0pt; font-family:Times New Roman; font-size:12pt"><BR>
<BR></P>
<P style="page-break-before:always; margin:0pt; font-family:Times New Roman"><B><BR></B></P>
<P style="margin-top:0pt; margin-bottom:-12pt; font-family:Times New Roman"><B>Item 1.01</B></P>
<P style="margin:0pt; text-indent:72pt; font-family:Times New Roman"><B>Entry Into a Material Definitive Agreement.</B></P>
<P style="margin-top:0pt; margin-bottom:-12pt; font-family:Times New Roman"><B>Item 3.02</B></P>
<P style="margin:0pt; text-indent:72pt; font-family:Times New Roman"><B>Unregistered Sale of Equity Securities.</B></P>
<P style="margin:0pt; font-family:Times New Roman"><BR></P>
<P style="margin:0pt; text-indent:36pt; font-family:Times New Roman">&nbsp;On August 19, 2005, we entered into a definitive exchange agreement with the Deer Creek Fund LLC, (&#147;Deer Creek&#148;) pursuant to which we exchanged 114,943 shares of Technest Series B Preferred Stock (potentially convertible into 3,799,409 shares of Markland common stock based on the closing price of Markland&#146;s common stock, $.0001 par value per share (the &#147;Common Stock&#148;) as of August 19, 2005) for 500 shares of Markland Series D Preferred Stock (the &#147;Series D&#148;; convertible into 5,008,013shares of Markland Common Stock as of August 19, 2005). &nbsp;Concurrent with the exchange agreement, we entered into a registration rights agreement with Deer Creek in which we agree to submit a registration statement to the SEC covering the shares of Common Stock underlying the Series D on or before October 17, 2005. &nbsp;&nbsp;The exchange agreement and registration rights agreement with Deer Creek are attached hereto and filed as Exhibits 10.1 and 10.2, respectively and are hereby incorporated into this current report on Form 8-K by reference.</P>
<P style="margin:0pt; font-family:Times New Roman"><BR></P>
<P style="margin:0pt; text-indent:36pt; font-family:Times New Roman" align=justify>This transaction was not registered under the Securities Act, but was made in reliance upon the exemptions from the registration requirements of the Securities Act set forth in Section 4(2) thereof and Rule 506 of Regulation D promulgated thereunder, insofar as such securities were sold only to &quot;accredited investors&quot; within the meaning of Rule 501 of Regulation D.</P>
<P style="margin:0pt; text-indent:36pt; font-family:Times New Roman" align=justify><BR></P>
<B><I><P style="margin:0pt; text-indent:36pt; font-family:Times New Roman"></I>Terms and Conditions of Markland Series D Preferred Stock.<I> </I></B>&nbsp;&nbsp;Markland Series D Preferred Stock has a stated value of $1,000 per share and is convertible at the option of the stockholder at any time. However, the Series D Preferred Stock can be converted only to the extent that the Series D stockholder will not, as a result of the conversion, hold in excess of 9.999% of the total outstanding shares of our Common Stock at any given point in time. &nbsp;The number of shares of our common stock into which each share of Series D Preferred Stock is convertible is determined by dividing $1,000 by the discounted bid price. The &quot;discounted&quot; bid price is the average closing bid price of our common stock during the five business days immediately preceding the conversion date multiplied by the applicable discount factor, as set forth below.</P>
<P style="margin:0pt; font-family:Times New Roman" align=justify><BR></P>
<P style="margin-top:0pt; margin-bottom:-12pt; font-family:Times New Roman" align=justify><B><U>Average Closing Bid Price (1)</U></B></P>
<P style="margin-top:0pt; margin-bottom:-12pt; text-indent:322.05pt; font-family:Times New Roman" align=justify><B><U>Discount Factor</U></B></P>
<B><U><P style="margin:0pt; text-indent:468pt; font-family:Times New Roman" align=justify><BR></U></B></P>
<P style="margin-top:0pt; margin-bottom:-12pt; font-family:Times New Roman" align=justify>$15.00 or less</P>
<P style="margin:0pt; text-indent:322.05pt; font-family:Times New Roman" align=justify>80%</P>
<P style="margin-top:0pt; margin-bottom:-12pt; font-family:Times New Roman" align=justify>more than $15.00, but less than or equal to $30.00</P>
<P style="margin:0pt; text-indent:322.05pt; font-family:Times New Roman" align=justify>75% </P>
<P style="margin-top:0pt; margin-bottom:-12pt; font-family:Times New Roman" align=justify>more than $30.00, but less than or equal to $45.00</P>
<P style="margin:0pt; text-indent:322.05pt; font-family:Times New Roman" align=justify>70%</P>
<P style="margin-top:0pt; margin-bottom:-12pt; font-family:Times New Roman" align=justify>more than $45.00</P>
<P style="margin:0pt; text-indent:322.05pt; font-family:Times New Roman" align=justify>65%</P>
<P style="margin:0pt; font-family:Times New Roman" align=justify>__________</P>
<P style="margin-top:0pt; margin-bottom:-12pt; font-family:Times New Roman" align=justify>(1)</P>
<P style="margin:0pt; text-indent:36pt; font-family:Times New Roman" align=justify>After an adjustment for a 1-for-60 reverse stock split effective October 27, 2003.</P>
<P style="margin:0pt; font-family:Times New Roman" align=justify><BR></P>
<P style="margin:0pt; text-indent:36pt; font-family:Times New Roman" align=justify>We have the right to redeem any outstanding shares of our Series D Preferred Stock at any time. The redemption price per share is equal to $1,000 multiplied by 135%. Our Series D Preferred Stock is convertible, even after we have provided a notice of redemption, until the Series D securityholder has received full cash payment for the shares we are redeeming. &nbsp;In the event of any voluntary or involuntary liquidation, dissolution or winding up of our affairs, the Series D Preferred Stock will be treated as senior to all preferred stock and our common stock. If, upon any winding up of our affairs, our assets available to pay the holders of Series D Preferred Stock are not sufficient to permit the payment in full, then all our assets will be distributed to those holders on a pro rata basis.</P>
<P style="margin:0pt; text-indent:36pt; font-family:Times New Roman" align=justify><BR></P>
<P style="margin:0pt; text-indent:36pt; font-family:Times New Roman" align=justify><B>Relationship with Deer Creek. &nbsp;</B></P>
<P style="margin:0pt; text-indent:36pt; font-family:Times New Roman" align=justify><B><BR></B></P>
<P style="margin:0pt; text-indent:36pt; font-family:Times New Roman" align=justify>As previously reported in the Company&#146;s current report on Form 8-k filed on February 15, 2005 (SEC File no. 000-28863), Deer Creek was an investor in the transaction pursuant to which the Company acquired a controlling interest in Technest Holdings, Inc., a Nevada corporation (&#147;Technest&#148;). &nbsp;Pursuant to that transaction, Deer Creek received, among other consideration, 114,943 shares of Technest&#146;s Series B Preferred Stock, convertible into shares of Markland Common Stock.</P>
<P style="margin:0pt; font-family:Times New Roman" align=justify><BR></P>
<P style="margin:0pt; text-indent:36pt; font-family:Times New Roman" align=justify>A description of the February 15, 2005 transaction is included in the Company's current report on Form 8-K filed on February 15, 2005 (SEC File no. 000-28863). The purchase agreement and registration rights agreements executed in connection with that transaction were filed as exhibits thereto. &nbsp;These filings are public documents </P>
<P style="margin:0pt; text-indent:36pt; font-family:Times New Roman" align=justify><BR>
<BR></P>
<P style="margin:0pt; text-indent:232.9pt; line-height:14pt; font-family:Times New Roman; font-size:9pt"><BIG>2</BIG></P>
<P style="margin:0pt; font-family:Times New Roman; font-size:12pt" align=center><BR></P>
<P style="page-break-before:always; margin:0pt; text-indent:36pt; font-family:Times New Roman" align=justify>available on the SEC's web site at www.sec.gov. We urge you to obtain and read carefully copies of these documents and this current report and its exhibits. </P>
<P style="margin:0pt; text-indent:36pt; font-family:Times New Roman" align=justify><BR></P>
<P style="margin:0pt; text-indent:36pt; font-family:Times New Roman" align=justify><BR></P>
<P style="margin-top:0pt; margin-bottom:-12pt; font-family:Times New Roman"><B>Item 9.01</B></P>
<P style="margin-top:0pt; margin-bottom:10pt; text-indent:72pt; font-family:Times New Roman"><B>Financial Statements and Exhibits</B></P>
<P style="margin-top:0pt; margin-bottom:10pt; font-family:Times New Roman"><B>(c) Exhibits</B></P>
<TABLE style="font-size:10pt" cellspacing=0><TR><TD style="border:0.5pt solid #000000" valign=top width=61.2 rowspan=2><P style="margin-top:0pt; margin-bottom:10pt; font-family:Times New Roman" align=center>Exhibit No.</P>
</TD><TD style="border-top:0.5pt solid #000000; border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign=top width=486><P style="margin-top:0pt; margin-bottom:10pt; font-family:Times New Roman" align=center>Description</P>
</TD></TR>
<TR><TD style="border-left:0.5pt solid #000000; border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign=top width=486>&nbsp;</TD></TR>
<TR><TD style="border-left:0.5pt solid #000000; border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign=top width=61.2><P style="margin-top:0pt; margin-bottom:10pt; font-family:Times New Roman">10.1</P>
</TD><TD style="border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign=top width=486><P style="margin-top:0pt; margin-bottom:10pt; font-family:Times New Roman">Exchange Agreement dated August 19, 2005 by and between Markland Technologies, Inc. and the Deer Creek Fund LLC.</P>
</TD></TR>
<TR><TD style="border-left:0.5pt solid #000000; border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign=top width=61.2><P style="margin-top:0pt; margin-bottom:10pt; font-family:Times New Roman">10.2</P>
</TD><TD style="border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign=top width=486><P style="margin-top:0pt; margin-bottom:10pt; font-family:Times New Roman">Registration Rights Agreement dated August 19, 2005 by and between Markland Technologies, Inc. and the Deer Creek Fund LLC.</P>
</TD></TR>
</TABLE>
<B><P style="margin-top:0pt; margin-bottom:10pt; text-indent:36pt; font-family:Times New Roman"><BR></B></P>
<P style="margin-top:0pt; margin-bottom:10pt; font-family:Times New Roman" align=center><B><BR>
<BR></B></P>
<P style="margin:0pt; text-indent:232.9pt; line-height:14pt; font-family:Times New Roman; font-size:9pt"><BIG>3</BIG></P>
<P style="margin:0pt; font-family:Times New Roman; font-size:12pt" align=center><BR></P>
<P style="page-break-before:always; margin-top:0pt; margin-bottom:10pt; font-family:Times New Roman" align=center><B>SIGNATURES</B></P>
<P style="margin-top:0pt; margin-bottom:10pt; text-indent:36pt; font-family:Times New Roman">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. </P>
<P style="margin:0pt; padding-left:216pt; font-family:Times New Roman"><B>MARKLAND TECHNOLOGIES, INC.</B></P>
<P style="margin:0pt; padding-left:216pt; font-family:Times New Roman"><BR></P>
<P style="margin:0pt; padding-left:216pt; font-family:Times New Roman"><BR></P>
<P style="margin:0pt; padding-left:216pt; font-family:Times New Roman"><BR></P>
<P style="margin:0pt; padding-left:216pt; font-family:Times New Roman">By: &nbsp;<U>&nbsp;&nbsp;&nbsp;/s/ Robert Tarini &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U></P>
<P style="margin:0pt; padding-left:216pt; text-indent:18pt; font-family:Times New Roman">Robert Tarini</P>
<P style="margin:0pt; padding-left:216pt; text-indent:18pt; font-family:Times New Roman">Chief Executive Officer</P>
<P style="margin:0pt; padding-left:216pt; font-family:Times New Roman"><BR></P>
<P style="margin:0pt; font-family:Times New Roman"><BR></P>
<P style="margin:0pt; font-family:Times New Roman">Date: August 25, 2005</P>
<P style="margin:0pt; font-family:Times New Roman"><BR></P>
<P style="margin-top:0pt; margin-bottom:10pt; font-family:Times New Roman"><BR>
<BR></P>
<P style="margin:0pt; text-indent:232.9pt; line-height:14pt; font-family:Times New Roman; font-size:9pt"><BIG>4</BIG></P>
<P style="margin:0pt; font-family:Times New Roman; font-size:12pt" align=center><BR></P>
<P style="page-break-before:always; margin-top:0pt; margin-bottom:10pt; font-family:Times New Roman"><B>Exhibit Index</B></P>
<TABLE style="font-size:10pt" cellspacing=0><TR><TD style="border:0.5pt solid #000000" valign=top width=61.2 rowspan=2><P style="margin-top:0pt; margin-bottom:10pt; font-family:Times New Roman" align=center>Exhibit No.</P>
</TD><TD style="border-top:0.5pt solid #000000; border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign=top width=582><P style="margin-top:0pt; margin-bottom:10pt; font-family:Times New Roman" align=center>Description</P>
</TD></TR>
<TR><TD style="border-left:0.5pt solid #000000; border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign=top width=582>&nbsp;</TD></TR>
<TR><TD style="border-left:0.5pt solid #000000; border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign=top width=61.2><P style="margin-top:0pt; margin-bottom:10pt; font-family:Times New Roman">10.1</P>
</TD><TD style="border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign=top width=582><P style="margin-top:0pt; margin-bottom:10pt; font-family:Times New Roman">Exchange Agreement dated August 19, 2005 by and between Markland Technologies, Inc. and the Deer Creek Fund LLC. Filed herewith.</P>
</TD></TR>
<TR><TD style="border-left:0.5pt solid #000000; border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign=top width=61.2><P style="margin-top:0pt; margin-bottom:10pt; font-family:Times New Roman">10.2</P>
</TD><TD style="border-right:0.5pt solid #000000; border-bottom:0.5pt solid #000000" valign=top width=582><P style="margin-top:0pt; margin-bottom:10pt; font-family:Times New Roman">Registration Rights Agreement dated August 19, 2005 by and between Markland Technologies, Inc. and the Deer Creek Fund, LLC. &nbsp;Filed herewith.</P>
</TD></TR>
</TABLE>
<B><P style="margin-top:0pt; margin-bottom:10pt; text-indent:36pt; font-family:Times New Roman"><BR></B></P>
<P style="margin-top:0pt; margin-bottom:10pt; font-family:Times New Roman"><BR>
<BR></P>
<P style="margin:0pt; text-indent:232.9pt; line-height:14pt; font-family:Times New Roman; font-size:9pt"><BIG>5</BIG></P>
<P style="margin:0pt; font-family:Times New Roman; font-size:12pt" align=center><BR></P>
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SECURITIES AND EXCHANGE COMMISSION
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
___________________________________________
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported):  August 19, 2005
MARKLAND TECHNOLOGIES, INC.
(Exact Name of Registrant as Specified in Charter)
Florida
000-28863
84-1331134
(State or other jurisdiction
of incorporation)
(Commission
File Number)
(IRS Employer
Identification Number)
88 Royal Little Drive, Providence, RI  02904
(Address of principal executive offices) (Zip Code)
276 Washington Street, No. 367,  Boston, MA 02108
(Mailing Address)
(617) 973-5104
(Registrant's telephone number, including area code)
N/A
(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below).
[ ]  Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
[ ]  Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
[ ]  Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
[ ]  Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Item 1.01
Entry Into a Material Definitive Agreement.
Item 3.02
Unregistered Sale of Equity Securities.
On August 19, 2005, we entered into a definitive exchange agreement with the Deer Creek Fund LLC, ("Deer Creek") pursuant to which we exchanged 114,943 shares of Technest Series B Preferred Stock (potentially convertible into 3,799,409 shares of Markland common stock based on the closing price of Markland's common stock, $.0001 par value per share (the "Common Stock") as of August 19, 2005) for 500 shares of Markland Series D Preferred Stock (the "Series D"; convertible into 5,008,013shares of Markland Common Stock as of August 19, 2005).  Concurrent with the exchange agreement, we entered into a registration rights agreement with Deer Creek in which we agree to submit a registration statement to the SEC covering the shares of Common Stock underlying the Series D on or before October 17, 2005.   The exchange agreement and registration rights agreement with Deer Creek are attached hereto and filed as Exhibits 10.1 and 10.2, respectively and are hereby incorporated into this current report on Form 8-K by reference.
This transaction was not registered under the Securities Act, but was made in reliance upon the exemptions from the registration requirements of the Securities Act set forth in Section 4(2) thereof and Rule 506 of Regulation D promulgated thereunder, insofar as such securities were sold only to "accredited investors" within the meaning of Rule 501 of Regulation D.
Terms and Conditions of Markland Series D Preferred Stock.
Markland Series D Preferred Stock has a stated value of $1,000 per share and is convertible at the option of the stockholder at any time. However, the Series D Preferred Stock can be converted only to the extent that the Series D stockholder will not, as a result of the conversion, hold in excess of 9.999% of the total outstanding shares of our Common Stock at any given point in time.  The number of shares of our common stock into which each share of Series D Preferred Stock is convertible is determined by dividing $1,000 by the discounted bid price. The "discounted" bid price is the average closing bid price of our common stock during the five business days immediately preceding the conversion date multiplied by the applicable discount factor, as set forth below.
Average Closing Bid Price (1)
Discount Factor
$15.00 or less
80%
more than $15.00, but less than or equal to $30.00
75%
more than $30.00, but less than or equal to $45.00
70%
more than $45.00
65%
__________
(1)
After an adjustment for a 1-for-60 reverse stock split effective October 27, 2003.
We have the right to redeem any outstanding shares of our Series D Preferred Stock at any time. The redemption price per share is equal to $1,000 multiplied by 135%. Our Series D Preferred Stock is convertible, even after we have provided a notice of redemption, until the Series D securityholder has received full cash payment for the shares we are redeeming.  In the event of any voluntary or involuntary liquidation, dissolution or winding up of our affairs, the Series D Preferred Stock will be treated as senior to all preferred stock and our common stock. If, upon any winding up of our affairs, our assets available to pay the holders of Series D Preferred Stock are not sufficient to permit the payment in full, then all our assets will be distributed to those holders on a pro rata basis.
Relationship with Deer Creek.
As previously reported in the Company's current report on Form 8-k filed on February 15, 2005 (SEC File no. 000-28863), Deer Creek was an investor in the transaction pursuant to which the Company acquired a controlling interest in Technest Holdings, Inc., a Nevada corporation ("Technest").  Pursuant to that transaction, Deer Creek received, among other consideration, 114,943 shares of Technest's Series B Preferred Stock, convertible into shares of Markland Common Stock.
A description of the February 15, 2005 transaction is included in the Company's current report on Form 8-K filed on February 15, 2005 (SEC File no. 000-28863). The purchase agreement and registration rights agreements executed in connection with that transaction were filed as exhibits thereto.  These filings are public documents
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available on the SEC's web site at www.sec.gov. We urge you to obtain and read carefully copies of these documents and this current report and its exhibits.
Item 9.01
Financial Statements and Exhibits
(c) Exhibits
Exhibit No.
Description
10.1
Exchange Agreement dated August 19, 2005 by and between Markland Technologies, Inc. and the Deer Creek Fund LLC.
10.2
Registration Rights Agreement dated August 19, 2005 by and between Markland Technologies, Inc. and the Deer Creek Fund LLC.
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SIGNATURES
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.
MARKLAND TECHNOLOGIES, INC.
By:
/s/ Robert Tarini
Robert Tarini
Chief Executive Officer
Date: August 25, 2005
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Exhibit Index
Exhibit No.
Description
10.1
Exchange Agreement dated August 19, 2005 by and between Markland Technologies, Inc. and the Deer Creek Fund LLC. Filed herewith.
10.2
Registration Rights Agreement dated August 19, 2005 by and between Markland Technologies, Inc. and the Deer Creek Fund, LLC.  Filed herewith.
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