CYIOS CORP

^{In the 3rd Quarter 2011, we showed a loss, but the loss was much smaller than the loss for the same period a year ago.  During the 3rd} quarter we had an increase in expense.  Our advertising expenses were higher due to marketing of our product CYIPRO at a telework conference.  We also incurred higher expenses due to the additional legal, administrative and fees associated with now have to file our quarterly and annual reports to the Securities and Exchange Commission in the new required XBRL format. 

Overall, for the 3 quarters of 2011 combined we still show a strong profit as compared to the 3 quarter of 2010 combined.

^{We are a leading systems integrator and knowledge management solutions provider presently with the U.S. Department of Defense and we have one of the largest knowledge management systems.  We have been working to expand into the non-governmental sector by marketing our product CYIPROTM in hopes to generate revenue.  This product is in the CKO Inc. subsidiary company and has generated no income during the process of building the product. We intend on offering the product for sale in the middle of 4th quarter in hopes that this product will make us a leading systems integrator and knowledge management solutions provider in the non-governmental market.   All of our revenue is derived from the services provided pursuant to single and multiple year awards to different U.S. Army and federal government agencies.  CKO, Inc., one of our operating subsidiaries, provides a designed online office management product which is known as CYIPRO™.  For the quarters ended September 30, 2011 and 2010, we received no revenue from CYIPRO™}.

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.  We are not aware of any known trends or demands, commitments, events or uncertainties that will result in or will reasonably likely result in our liquidity increasing or decreasing in a material way.  We do not have any material commitments for capital expenditures as of the fiscal year end December 31, 2010.  And, we are not aware of any material trends favorable/unfavorable in our capital resources that may materially change our equity or debt.  We do not believe that changes in the spending policies of the U.S. government, such as potential decreases in the budgets of federal agencies, including the Department of Defense, or delays in the passage of the U.S. Government budget to be uncertainties that are reasonably likely to have a material impact on our liquidity and results of operations.  Many budget cuts have been made since 2001 and we have not been materially impacted at all by those budget changes.

Under the supervision and with the participation of our management, including the Chief Executive Officer and Principal Financial Officer, we have evaluated the effectiveness of our disclosure controls and procedures as required by Exchange Act Rule 13a-15(b) as of the end of the period covered by this report. Based on that evaluation, the Chief Executive Officer and Chief Financial Officer have concluded that these disclosure controls and procedures are effective at the reasonable assurance level.

·         being found by a court of competent jurisdiction (in a civil action), the Securities and Exchange Commission or the Commodity Futures Trading Commission to have violated a federal or state securities or commodities law, and the judgment has not been reversed, suspended, or vacated.

·         Any judicial or administrative proceedings resulting from involvement in mail or wire fraud or fraud in connection with any business entity;