##### Table of Contents



SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549
 FORM 10-Q (Mark One) þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the Quarter ended March 31, 2005 OR o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 Commission file number 0-23585 (SM&A LOGO) SM&A (Exact name of registrant as specified in its charter)
 California
    
    33-0080929(State or other jurisdiction of
    
    (I.R.S. Employerincorporation or organization)
    
    Identification No.)
 4695 MacArthur Court, 8th Floor, Newport Beach, California 92660
(Address of principal executive offices, including zip code) (949) 975-1550
(Registrants telephone number, including area code) Indicate by check mark whether the registrant (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12
months (or for such shorter period that the registrant was required to file such reports), and
(2) has been subject to such filing requirements for the past
90 days. Yes
þ     No o Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule
12b of the Act). Yes þ
    No o Indicate the number of shares outstanding of each of the issuers classes of common stock,
as of the latest practicable date. Class
    
    Outstanding at March 31, 2005Common stock, no par value
    
    20,321,930 shares




---



SM&A INDEX PART I. FINANCIAL INFORMATION PageCautionary Statement Related to Forward Looking Statements
    
    
    3How to Obtain SM&A SEC Filings
    
    
    3Item 1. Financial Statements:Consolidated Balance Sheets as of March 31, 2005 (unaudited) and December 31, 2004
    
    
    4Consolidated Statements of Income for the three months ended March 31, 2005 and 2004 (unaudited)
    
    
    5Consolidated Statements of Cash Flows for the nine months ended March 31, 2005 and 2004 (unaudited)
    
    
    6Notes to Consolidated Financial Statements (unaudited)
    
    
    7Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    10Item 3. Quantitative and Qualitative Disclosures About Market Risk
    
    
    15Item 4. Controls and Procedures
    
    
    15PART II. OTHER INFORMATIONItem 1. Legal Proceedings
    
    
    16Item 2. Changes in Securities, Use of Proceeds and Issuer Purchase of Equity Securities
    
    
    16Item 3. Defaults Upon Senior Securities
    
    
    16Item 4. Submission of Matters to a Vote of Security Holders
    
    
    16Item 5. Other Information
    
    
    16Item 6. Exhibits and Reports on Form 8-K
    
    
    18Signatures
    
    
    21EXHIBIT 31.1EXHIBIT 31.2EXHIBIT 32.1EXHIBIT 32.2
  2




---



##### Table of Contents



CAUTIONARY STATEMENT RELATED TO FORWARD LOOKING STATEMENTS This Quarterly Report onForm 10-Qincludes certain forward-looking statements as defined
within Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities
Exchange Act of 1934, as amended, relating to revenue, revenue composition, earnings, projected
plans, performance, contract procurement, demand trends, future expense levels, trends in average
headcount and gross margins, and the level of expected capital expenditures. Such forward-looking
statements are based on the beliefs of, estimates made by, and information currently available to
SM&A management and are subject to certain risks, uncertainties and assumptions. Any statements
contained herein (including without limitation statements to the effect that the Company or
management estimates, expects, anticipates, plans, believes, projects, continues,
may, will, could, or would or statements concerning potential or opportunity or
variations thereof or comparable terminology or the negative thereof) that are not statements of
historical fact should be construed as forward-looking statements. The actual results of SM&A may
vary materially from those expected or anticipated in these forward-looking statements. The
realization of such forward-looking statements may be impacted by certain important unanticipated
factors including those discussed in Additional Factors that may Affect Future Results under Item
2, and Managements Discussion and Analysis of Financial Condition and Results of Operations, at
pages 10-14. Because of these and other factors that may effect SM&As operating results, past
performance should not be considered as an indicator of future performance, and investors should
not use historical results to anticipate results or trends in future periods. The Company
undertakes no obligation to publicly release the results of any revisions to these forward-looking
statements that may be made to reflect events or circumstances after the date hereof or to reflect
the occurrence of unanticipated events. Readers should carefully review the risk factors described
in this and other documents that SM&A files from time to time with the Securities and Exchange
Commission (SEC), including subsequent Current Reports onForm 8-K, Quarterly Reports on Form
10-Q and Annual Reports onForm 10-K. 
 HOW TO OBTAIN SM&A SEC FILINGS All reports filed by SM&A with the SEC are available free of charge via EDGAR through the
SEC website at www.sec.gov. In addition, the public may read and copy materials filed by the
Company with the SEC at the SECs public reference room located at 450 Fifth St., N.W., Washington,
D.C. 20549. SM&A also provides copies of its Forms 8-K, 10-K, 10-Q, Proxy and Annual Report at no
charge to investors upon request and makes electronic copies of its most recently filed reports
available through its website at www.smawins.com as soon as reasonably practicable after filing
such material with the SEC.  3




---



##### Table of Contents



SM&A 
 CONSOLIDATED BALANCE SHEETS
(in thousands)
 March 31
    
    
    December 312005
    
    
    2004(Unaudited)ASSETSCurrent assets:Cash and cash equivalents
    
    $
    23,431
    
    
    $
    22,148Accounts receivable, net
    
    
    16,466
    
    
    
    13,198Prepaid expenses and other current assets
    
    
    458
    
    
    
    252Deferred income taxes
    
    
    420
    
    
    
    539Total current assets
    
    
    40,775
    
    
    
    36,137Fixed assets, net
    
    
    1,510
    
    
    
    1,037Other assets
    
    
    261
    
    
    
    209$
    42,546
    
    
    $
    37,383LIABILITIES AND SHAREHOLDERS EQUITYCurrent liabilities:Accounts payable
    
    $
    930
    
    
    $
    1,192Accrued compensation and related
benefits
    
    
    4,029
    
    
    
    1,793Income taxes payable
    
    
    834
    
    
    
    565Net liabilities of discontinued
operations
    
    
    599
    
    
    
    727Total current liabilities
    
    
    6,392
    
    
    
    4,277Deferred income taxes
    
    
    239
    
    
    
    242Other liabilities
    
    
    251
    
    
    
    173Total liabilities
    
    
    6,882
    
    
    
    4,692Commitments and contingencies
    
    
    
    
    
    
    Shareholders equity:Preferred stock
    
    
    
    
    
    
    Common stock
    
    
    51,158
    
    
    
    50,781Accumulated deficit
    
    
    (15,494
    )
    
    
    (18,090
    )Total shareholders equity
    
    
    35,664
    
    
    
    32,691$
    42,546
    
    
    $
    37,383
 See accompanying notes to consolidated financial statements   4




---



##### Table of Contents



SM&A 
 CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per share data)
 Three months ended March 31,2005
    
    
    2004(unaudited)
    
    
    (unaudited)Revenue
    
    $
    20,245
    
    
    $
    18,487Cost of revenue
    
    
    11,523
    
    
    
    10,144Gross margin
    
    
    8,722
    
    
    
    8,343Selling, general and administrative expenses
    
    
    4,922
    
    
    
    3,390Operating income
    
    
    3,800
    
    
    
    4,953Interest income, net
    
    
    85
    
    
    
    30Income before income taxes
    
    
    3,885
    
    
    
    4,983Income tax expense
    
    
    1,289
    
    
    
    2,043Net income
    
    $
    2,596
    
    
    $
    2,940Net income per share:Basic
    
    $
    0.13
    
    
    $
    0.14Diluted
    
    $
    0.12
    
    
    $
    0.14Shares used in calculating net income per share:Basic
    
    
    20,263
    
    
    
    20,409Diluted
    
    
    21,085
    
    
    
    21,740
 See accompanying notes to consolidated financial statements.   5




---



##### Table of Contents



SM&A 
 CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
 Three Months EndedMarch 31,2005
    
    
    2004(unaudited)
    
    
    (unaudited)CASH FLOWS FROM OPERATING ACTIVITIES:Net income
    
    $
    2,596
    
    
    $
    2,940Adjustments to reconcile net income to net cash provided by
operating activities:Depreciation
    
    
    132
    
    
    
    80Deferred income taxes
    
    
    116
    
    
    
    Income tax effect from exercise of stock options
    
    
    584
    
    
    
    Changes in operating assets and liabilities:Accounts receivable
    
    
    (3,268
    )
    
    
    (1,981
    )Prepaid expense and other assets
    
    
    (258
    )
    
    
    (37
    )Accounts payable
    
    
    (262
    )
    
    
    28Accrued compensation and related benefits
    
    
    2,236
    
    
    
    (864
    )Income taxes payable
    
    
    269
    
    
    
    1,904Other liabilities
    
    
    78
    
    
    
    (6
    )Net cash provided by operating activities
    
    
    2,223
    
    
    
    2,064CASH FLOWS FROM INVESTING ACTIVITIES:Purchases of fixed assets
    
    
    (605
    )
    
    
    (98
    )Net cash used in investing activities
    
    
    (605
    )
    
    
    (98
    )CASH FLOWS FROM FINANCING ACTIVITIES:Repurchase of common stock
    
    
    (583
    )
    
    
    Proceeds from issuance of common stock
    
    
    376
    
    
    
    668Net cash (used in) provided by financing activities
    
    
    (207
    )
    
    
    668Net increase in cash from continuing operations
    
    
    1,411
    
    
    
    2,634Net cash used in discontinued operations
    
    
    (128
    )
    
    
    (196
    )Net increase in cash
    
    
    1,283
    
    
    
    2,438Cash at beginning of period
    
    
    22,148
    
    
    
    17,712Cash at end of period
    
    $
    23,431
    
    
    $
    20,150
 See accompanying notes to consolidated financial statements   6




---



##### Table of Contents



SM&A 
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the Three Months Ended March 31, 2005 and 2004
(unaudited)
 Note 1. Basis of Presentation and Significant Accounting Policies The consolidated financial statements included herein are unaudited; however, they contain all
normal recurring accruals and adjustments that, in the opinion of management, are necessary to
present fairly the consolidated financial position of SM&A at March 31, 2005, the consolidated
results of operations for the three months ended March 31, 2005 and 2004, and cash flows for the
three months ended March 31, 2005 and 2004. Comprehensive income is equivalent to net income for
the three month period ended March 31, 2005 and 2004, respectively. It should be understood that accounting measurements at interim dates inherently involve
greater reliance on estimates than at year-end. The results of operations for the three months
ended March 31, 2005 are not necessarily indicative of the results to be expected for the full
fiscal year. The accompanying unaudited consolidated financial statements do not include footnotes and
certain financial presentations normally required under generally accepted accounting principles.
Therefore, these financial statements should be read in conjunction with our audited consolidated
financial statements and notes thereto for the year ended December 31, 2004, included in our Annual
Report on Form 10-K filed with the Securities and Exchange Commission on March 14, 2005. Recent Accounting Pronouncements In December 2004, the FASB issued SFAS No. 123 (Revised 2004) Share Based Payment (SFAS
123R), which is a revision to SFAS 123 and supersedes APB 25 and SFAS 148. This statement
requires that the cost resulting from all share-based payment transactions be recognized in the
financial statements. This statement establishes fair value as the measurement objective in
accounting for share-based payment arrangements and requires all entities to apply a fair-value
based measurement method in accounting for share-based payment transactions with employees except
for equity instruments held by employee share ownership plans. SFAS 123R applies to all awards
granted after the required effective date (the beginning of the first interim or annual reporting
period that begins after June 15, 2005) and to awards modified, repurchased, or cancelled after
that date. As of the required effective date, all public entities that used the fair-value-based
method for either recognition or disclosure under Statement 123 will apply this Statement using a
modified version of prospective application. Under that transition method, compensation cost is
recognized on or after the required effective date for the portion of outstanding awards, for which
the requisite service has not yet been rendered, based on the grant-date fair value of those awards
calculated under Statement 123 for either recognition or pro forma disclosures. For periods before
the required effective date, those entities may elect to apply a modified version of the
retrospective application under which financial statements for prior periods are adjusted on a
basis consistent with the pro forma disclosures required for those periods by Statement 123. As a
result, beginning in the third quarter of 2005, the Company will adopt SFAS 123R and begin
reflecting the stock option expense determined under fair value based methods in its statement of
operations rather than as pro-forma disclosure in the notes to the financial statements. The
Company has not yet determined whether the adoption of SFAS 123R will result in amounts that are
similar to the current pro forma disclosures under SFAS 123 and it is evaluating the requirements
under SFAS 123R. Such adoption may have a substantial impact on its consolidated statements of
income and earnings per share. Significant Accounting Policies Revenue Recognition.We recognize revenue from services rendered when the following four
revenue recognition criteria are met: persuasive evidence of an arrangement exists, delivery has
occurred or services have been rendered, the selling price is fixed or determinable, and collection
is reasonably assured. The majority of our services are provided under time and expenses billing
arrangements and revenue is recognized on the basis of hours worked, plus other reimbursable
contract costs incurred during the period. Revenue is directly related to the total number of
hours billed to clients and the associated hourly billing rates. A limited amount of revenue is
also  7




---



##### Table of Contents



Note 1. Basis of Presentation and Significant Accounting Policies  (Contd) derived from success fees, offered to clients as a pricing option, and recorded as revenue only
upon attainment of the specified incentive criteria. Success fees are not billable and revenue is
not recorded until the client wins a contract. Cash and Cash Equivalents.The Company considers all highly liquid investments with an
original maturity of three months or less to be cash equivalents. Note 2. Net Income Per Share The following table illustrates the number of shares used in the computation of basic and
diluted net income per share (in thousands): Three MonthsEndedMarch 31,2005
    
    
    2004Denominator for basic income per common share
weighted average shares outstanding during the
period
    
    
    20,263
    
    
    
    20,409Incremental common shares attributable to
dilutive outstanding stock options
    
    
    822
    
    
    
    1,331Denominator for diluted income per common share
    
    
    21,085
    
    
    
    21,740
 Note 3. Stock-Based Compensation The Company has elected to follow APB Opinion No. 25, Accounting for Stock Issued to
Employees, to account for options to purchase common stock of the Company issued pursuant to the
Companys stock-based compensation plans. Under APB Opinion No. 25, no compensation cost is
recognized because the exercise price of options granted under the Companys stock-based
compensation plans is at least equal to at least the market price of the underlying stock on the
date of grant. Had compensation costs for these plans been determined at the grant dates for
awards under the alternative accounting method provided for in SFAS No. 148, Accounting for
Stock-Based Compensation-Transition and Disclosure-an Amendment to FASB Statement No. 123, net
income and earnings per share, on a pro forma basis, would have been (in thousands except for per
share information): Three MonthsEnded March 31,2005
    
    
    2004Net income  as reported
    
    $
    2,596
    
    
    $
    2,940Proforma compensation expense, net of taxes
    
    
    (329
    )
    
    
    (214
    )Net income  SFAS No. 123 pro forma
    
    $
    2,267
    
    
    $
    2,726Basic income per share  as reported
    
    $
    0.13
    
    
    $
    0.14Proforma compensation expense, net of taxes
    
    
    (0.02
    )
    
    
    (0.01
    )Basic income per share  SFAS No. 123 pro forma
    
    $
    0.11
    
    
    $
    0.13Diluted income per share  as reported
    
    $
    0.12
    
    
    $
    0.14Proforma compensation expense, net of taxes
    
    
    (0.01
    )
    
    
    (0.01
    )Diluted income per share  SFAS No. 123 pro forma
    
    $
    0.11
    
    
    $
    0.13
   8




---



##### Table of Contents



Note 4. Revolving Line of Credit The Company has a revolving credit agreement which allows for borrowings up to $10.0 million
at the prime rate minus one half of one percent (-0.50%) per annum or LIBOR plus two and one
quarter percent (2.25%) per annum. The revolving credit agreement is renewable annually on April
30th of each year. Borrowings under the revolving credit agreement are unsecured. The
agreement requires the Company to comply with certain financial covenants pertaining to its
tangible net worth, ratio of total liabilities to tangible net worth, and ratio of current assets
to current liabilities (as defined in the agreement). The agreement also contains certain negative
covenants which, among other things, restricts the Companys ability to incur additional
indebtedness of more than $1.0 million in excess of the $10.0 million limit set forth in the credit
agreement and make capital expenditures in excess of $2.0 million without the prior written
approval of the lender. At March 31, 2005, we had no outstanding borrowings under the line of
credit, the bank had issued a letter of credit for $64,000 and we had $9.9 million in availability. Note 5. Income Taxes The Companys effective income tax rates for the three months ended March 31, 2005 and 2004
were 33.2% and 41.0%, respectively. In the first quarter ended March 31, 2005, the Company
completed and filed its federal and state income tax returns for the calendar year ended December
31, 2004. Based on the income returns filed, the Company recorded an adjustment to its effective
tax rate in the first quarter resulting in a reduction of income tax expense of approximately
$208,000, or $0.01 per diluted share. Note 6. Stockholders Equity In May 2004, the Companys Board of Directors authorized a plan to repurchase up to $7.0
million of the Companys common stock. The Company intends to repurchase shares from time to time,
at prevailing prices, in the open market. The timing and amount of the share repurchases will be at
the discretion of management and will be based on such factors as the stock price, general economic
and market conditions, and other factors. The share repurchase plan may be suspended or
discontinued at any time. Shares repurchased under the plan will be cancelled. As of March 31,
2005, the Company has repurchased 698,670 shares at a total cost of $5.2 million. We believe we
will be able to extend or replace the line of credit when it expires. In April 2005, the Companys Board of Directors authorized an increase to the repurchase plan
of $5.0 million increasing the total authorization to repurchase the Companys common stock to
$12.0 million. Note 7. Related Parties The Company periodically leases aircraft from SummitJets, Inc., which is owned by the
Companys Chairman and Chief Executive Officer. The lease rate was determined through a review of
prevailing market rates for such services. During the three months ended March 31, 2005 and 2004,
the Company recorded an expense of $20,000 and $48,000 respectively. The expense is included in
selling, general and administrative expenses. Of the $20,000 expensed during the three months
ended March 31, 2005, $20,000 was unpaid and included in accounts payable as of March 31, 2005. In March 2005, the Company facilitated the exercising of stock options upon the retirement
of our former member of the Board of Directors, Jack Woodhull. Upon the exercising of the
options, the Company repurchased 15,000 shares for a total discounted cost of $117,000. The
Company purchased the shares at a 3.6% discount. Note 8. Discontinued Operations In 2002 and 2001, the Company sold and dissolved one of its business segments, respectively.
The balance owed at March 31, 2005 of $599,000 represents the remaining office lease commitments,
net of subleases, over the remaining terms of the leases. During the three months ended March 31,
2005, the Company paid $128,000 net of sublease receipts, related to the leased property. The
Company continues the process of identifying sub-lessees for our remaining leased property.  9




---



##### Table of Contents



Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations SM&A is a consulting firm who is the worlds leading provider of competition management
services, and a leading provider of high-value performance assurance services. Under these two
service lines, our approximately 300 employees and consultants provide strategy, proposal
management, program management, systems engineering, expert support, program planning, and other
high-value technical support to major industrial customers in the defense, homeland security,
aerospace, information technology, architect and engineering sectors. Since 1982, we have managed
more than 900 proposals worth more than $300 billion for our clients and have achieved an 85% win
rate on awarded contracts. RESULTS OF OPERATIONS The following table sets forth certain historical operating results (in thousands): For the three months ended March 31,Change2005
    
    
    2004
    
    
    Change $
    
    
    %Revenue
    
    $
    20,245
    
    
    $
    18,487
    
    
    
    1,758
    
    
    
    9.5Cost of revenue
    
    
    11,523
    
    
    
    10,144
    
    
    
    1,379
    
    
    
    13.6Gross margin
    
    
    8,722
    
    
    
    8,343
    
    
    
    379
    
    
    
    4.5Selling, general and administrative expenses
    
    
    4,922
    
    
    
    3,390
    
    
    
    1,532
    
    
    
    45.2Operating income
    
    
    3,800
    
    
    
    4,953
    
    
    
    (1,153
    )
    
    
    (23.3
    )Income tax expense
    
    
    1,289
    
    
    
    2,043
    
    
    
    (754
    )
    
    
    (36.9
    )Net income
    
    $
    2,596
    
    
    $
    2,940
    
    
    
    (344
    )
    
    
    (11.7
    )
 Three Months Ended March 31, 2005 Compared to Three Months Ended March 31, 2004 Revenue.Revenue increased $1.8 million, or 9.5%, to $20.2 million for the three month ended
March 31, 2005 compared to $18.5 million for the same period of the prior year. The increase in
our revenue was due primarily to revenue growth in competition management services from our
aerospace and defense customers. Through our sales and marketing efforts, we have made substantial
headway in the number of active projects with which we are providing our services. We have also
not experienced any notable delays in the planned release of request for proposals or program
starts. The percentage of revenues from competition management services and performance assurance
services was 61.0% and 39.0% for the three months ended March 31, 2005, respectively, compared to
62.0% and 38.0% for the same period of the prior year. The percentage of revenue coming from our
aerospace and defense clients was 79.0% and 77.0% for the three months ended March 31, 2005 and
2004 respectively. During the three months ended March 31, 2005, we were engaged by six new
customers who accounted for 1.4% of our total revenue. This compares to eleven new customers which
accounted for 6.5% of our total revenue during the same period of the prior year. Gross Margin.Gross margin increased $379,000, or 4.5%, to $8.7 million for the three month
ended March 31, 2005 compared to $8.3 million for the same period of the prior year. The increase
in gross margin dollars is due to the increase in sales as discussed above. As a percentage of
revenue, gross margin decreased to 43.1% for the three months ended March 31, 2005 compared to
45.1% for the same period of the prior year. The decline was planned as we recorded expenses
related to first quarter 2005 incentive programs for our top performing proposal managers and
account executives. Excluding these two first quarter incentive programs, our gross margins would
have been consistent with our full year expectations of 44.0%. Selling, General and Administrative Expenses.Selling, general and administrative expenses
consist principally of salary and benefit costs for executive, sales and administrative personnel,
professional services and other general corporate activities. Selling, general and administrative
expenses increased $1.5 million, or 45.2%, to $4.9 million for the three months ended March 31,
2005, as compared to $3.4 million for the same period of the prior year. As a percentage of
revenue, selling, general and administrative expenses increased to 24.3% for the three  10




---



##### Table of Contents



Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations 
(contd) months ended March 31, 2005, as compared to 18.3% for the same period of the prior year. As
announced in our press release dated March 29, 2005, our President and Chief Operating Officer
announced his resignation. Included in our selling, general and administrative expenses is
$330,000 in severance costs related to his resignation. Our salary, benefit and travel expense
increased $760,000 relating to the increase in the number of account executives, marketing
professionals and support staff to support and service our planned revenue growth. Our facility
lease expense increased $130,000 due to our completed expansion into an additional 11,000 square
feet of office space at our Newport Beach, California headquarters. The additional space will be
used to house our training, production and information technology functions. Other general
expenses increased $173,000 including $50,000 related to increased audit and tax fees. Operating Income.Operating income decreased $1.2 million, or 23.3% to $3.8 million for the
three months ended March 31, 2005, compared to $5.0 million for the same period of the prior year.
As a percentage of revenue, operating income decreased to 18.8% for the three months ended March
31, 2005, as compared to 26.8% for the same period of the prior year. Operating income primarily
decreased due to the increase in sales and gross profit offset by the planned increase in selling,
general and administrative expenses, as discussed above. Income Tax Expense. The Companys effective income tax rates for the three months ended
March 31, 2005 and 2004 were 33.2% and 41.0%, respectively. In the first quarter ended March 31,
2005, the Company completed and filed its federal and state income tax returns for the calendar
year ended December 31, 2004. Based on the income returns filed, the Company recorded an
adjustment to its effective tax rate in the first quarter resulting in a reduction of income tax
expense of approximately $208,000, or $0.01 per diluted share. Capital Resources and Liquidity Our working capital increased to $34.4 million at March 31, 2005 from $31.9 million at
December 31, 2004. In addition, our cash and cash equivalents increased to $23.4 million at March
31, 2005, from $22.1 million at December 31, 2004. Cash flow from operating activities provided
$2.2 million during the three months ended March 31, 2005, compared to $2.1 million for the same
period during the prior year. This increase is due primarily to the timing of our payroll cycles
at the end of the three months ended March 31, 2005 compared to the year ended December 31, 2004. The change in accounts receivable was due primarily to our increase in our sales over our
prior quarter and a slight increase in our sales outstanding (DSO) to 67 days from our historical
average of 63 days. The DSO increase was caused by the timing on receipt of payments on a couple
of our large contracts. The Company has reviewed the accounts receivable balance in detail and has
concluded that they do not reflect a credit risk issue. We expanded our office space by an additional 11,000 square feet in December 2004. In
addition, we entered into an agreement with a software vendor in March 2005 to implement an
Enterprise Resource Planning software program. We recorded purchases relating to these two
activities of approximately $478,000 during the three months ended March 31, 2005. For the
remaining nine months of this year, we expect to spend an additional $1.0 million relating to these
two activities. In May 2004, the Companys Board of Directors authorized a plan to repurchase up to $7.0
million of the Companys common stock. The Company intends to repurchase shares from time to time,
at prevailing prices, in the open market. The timing and amount of the share repurchases will be at
the discretion of management and will be based on such factors as the stock price, general economic
and market conditions, and other factors. The share


 repurchase plan may be suspended or discontinued at any time. Shares repurchased under the plan
are cancelled. As of March 31, 2005, the Company has repurchased 698,670 shares at a total cost of
$5.2 million. In April 2005, the Companys Board of Directors authorized an increase to the repurchase plan
of $5.0 million increasing the total authorization to repurchase the Companys common stock to
$12.0 million.   11




---



##### Table of Contents



Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations 
(contd) The Company has a revolving credit agreement which allows for borrowings up to
$10.0 million at the prime rate minus one half of one percent (-0.50%) per annum or LIBOR plus two
and one quarter percent (2.25%) per annum. The revolving credit agreement is renewable annually on
April 30th of each year. Borrowings under the revolving credit agreement are unsecured.
The agreement requires the Company to comply with certain financial covenants pertaining to its
tangible net worth, ratio of total liabilities to tangible net worth, and ratio of current assets
to current liabilities (as defined in the agreement). The agreement also contains certain negative
covenants which, among other things, restricts the Companys ability to incur additional
indebtedness of more than $1.0 million in excess of the $10.0 million limit set forth in the credit
agreement and make capital expenditures in excess of $2.0 million without the prior written
approval of the lender. At March 31, 2005, we had no outstanding borrowings under the line of
credit, the bank had issued a letter of credit for $64,000 and we had $9.9 million in availability.
We believe we will be able to extend or replace the line of credit when it expires. We believe we have sufficient working capital available under the line of credit and cash
generated by continuing operations will be sufficient to fund operations for at least the next
twelve months. The following table illustrates the remaining contractual obligations outstanding as of March
31, 2005: 
 Contractual Obligations Payments Due By Period as of March 31, 2005
(In thousands)
   Contractual
    
    
    
    
    
    1 Year
    
    
    1-3
    
    
    3-5
    
    
    After 5Obligations
    
    Total
    
    
    or Less
    
    
    Years
    
    
    Years
    
    
    YearsOperating leases
    
    $
    7,220
    
    
    $
    951
    
    
    $
    1,911
    
    
    $
    1,984
    
    
    $
    2,374Operating leases
related to
discontinued
operations, net of
subleases
    
    
    655
    
    
    
    277
    
    
    
    378
    
    
    
    
    
    
    
    Total
    
    $
    7,875
    
    
    $
    1,228
    
    
    $
    2,289
    
    
    $
    1,984
    
    
    $
    2,374
 Operating leases related to discontinued operations represent office space previously occupied
by our discontinued operations. The amounts above represent the remaining lease commitments over
the remaining terms of the leases. We have entered into subleases for each of these properties
except for approximately 20,000 square feet. These subleases cover a portion of our lease
commitments for these properties, and we expect these subleases to continue in effect for the life
of our lease obligations with respect to these properties. We are continuing the process of
identifying sub-lessees for our remaining leased property or negotiating lease buy-outs with the
lessors.  12




---



##### Table of Contents



Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations 
(contd) RISK FACTORS In addition to the other information in this Annual Report on Form 10-Q, the following factors
should be considered carefully in evaluating our business and prospects. Our business depends substantially on the defense industry. Our competition management and performance assurance services business depends substantially
on U.S. Government expenditures for defense products. Any decline in the future defense,
information technology or homeland security procurement expenditures could affect the opportunities
available to our clients and, indirectly, our business. A number of factors could contribute to
such a decline in opportunities, including:  
    Loss of political support for current or increased levels of spending;
    Changes of presidential administration, particularly changes from one political
party to another, that typically result in a mass reordering of priorities that reduce
new proposal activity for up to a year;
    Threat scenarios evolving away from global conflicts to regional conflicts;
    Spending for ongoing operations, such as the war on terrorism, the occupation of
Iraq, downward pressure on spending for procurement of new systems and research and
development spending; and
    Cancellation of programs or emphasis on government shifting programs. In the event expenditures for products of the type manufactured by our clients are reduced and
not offset by other new programs or products, there will be a reduction in the volume of contracts
or subcontracts to be bid upon by our clients and, as a result, a reduction in the volume of
proposals we manage. Unless offset, such reductions could materially and adversely affect our
business, operating results and financial condition. We rely on a relatively limited number of clients. We derive a significant portion of revenue from continuing operations from a relatively
limited number of clients. Our seven largest customers accounted for 83.5% and 91.8% of our
revenue for 2004 and 2003, respectively. Clients typically retain our services as needed on an
engagement basis rather than pursuant to long-term contracts, and a client can usually terminate
the engagement at any time without a significant penalty. Moreover, there can be no assurance that
existing clients will continue to engage us for additional assignments or do so at the same revenue
levels. The loss of any significant client could materially and adversely affect our business,
financial condition and results of operations. In addition, the level of services required by an
individual client may diminish over the life of the relationship, and there can be no assurance we
will be successful in establishing relationships with new clients as this occurs. The markets in which we operate are highly competitive. The market for competition management services in the procurement of government and commercial
contracts for aerospace and defense work is a niche market with a number of competitors. We are the
largest provider of such services and principally compete with the in-house capability of our
clients. In addition, numerous smaller proposal management companies compete in this highly
specialized industry. With sufficient resources in the form of money and excellent talent with
current security clearances, our competitors could erode our current market share and such a
reduction could materially and adversely affect our business, operating results and financial
condition. We rely heavily upon our key senior management personnel and our ability to recruit and maintain
skilled professionals. Our success is highly dependent upon the efforts, abilities, and business generation
capabilities and project execution of our strategic account managers and account executives. In
addition, Steven S. Myers, our Chief Executive Officer and Chairman of the Board, has a significant
role in our success. The loss of the services of these individuals, for any reason, could
materially and adversely affect our business, operating results and financial condition.  13




---



##### Table of Contents



Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations 
(contd) Our business involves the delivery of professional services and is highly labor-intensive.
Our success depends largely on our general ability to attract, develop, motivate and retain highly
skilled professionals. The loss of some or a significant number of our professionals or the
inability to attract, hire, develop, train and retain additional skilled personnel could have a
serious negative effect on us, including our ability to obtain and successfully complete important
engagements and thus maintain or increase our revenue. Quarterly results may fluctuate. We may experience fluctuations in future quarterly operating results due to a number of
factors, including the size, timing and duration of client engagements. Our stock price is subject to significant volatility. Our common stock was first publicly traded on January 29, 1998 after our initial public
offering at $12.00 per share. Between January 29, 1998 and March 31, 2005, the closing sale price
has ranged from a high of $31.13 per share to a low of $0.75 per share. The market price of our
common stock could continue to fluctuate substantially due to a variety of factors, including:  
    Quarterly fluctuations in results of operations;
    Adverse circumstances affecting the introduction, or market acceptance of new services we offer;
    Announcements of new services by competitors;
    Announcements of poor operating results by us or our competitors;
    Loss of key employees;
    Changes in the regulatory environment or market conditions affecting the defense and
aerospace industry;
    Changes in earnings estimates and ratings by analysts;
    Lack of market liquidity resulting from a relatively small amount of public stock float;
    Changes in generally accepted accounting principles;
    Sales of common stock by existing holders; and
    The announcement of proposed acquisitions and dispositions. Principal shareholder has significant control. At March 31, 2005, Steven S. Myers, Chief Executive Officer and Chairman of the Board,
beneficially owned or controlled approximately 24.10% of our outstanding common stock and will have
the ability to control or significantly influence the election of directors and the results of
other matters submitted to a vote of shareholders. This concentration of ownership may have the
effect of delaying or preventing a change in control and may adversely affect the ability of other
holders of our common stock to pass shareholder resolutions and control our actions.  14




---



##### Table of Contents



Item 3. Quantitative and Qualitative Disclosures About Market Risk The Company currently has no instruments that are sensitive to market risk. 
 Item 4. Controls and Procedures Evaluation of Disclosure Controls and Procedures Our management, with the participation of our principal executive officer and principal
financial officer, has evaluated the effectiveness of the design and operation of our disclosure
controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange
Act of 1934, as amended) as of the end of the period covered by this quarterly report on Form 10-Q.
Based on this evaluation, our principal executive officer and principal financial officer
concluded that these disclosure controls and procedures are effective and designed to ensure that
the information required to be disclosed in our reports filed or submitted under the Securities
Exchange Act of 1934 is recorded, processed, summarized, and reported within the requisite time
periods. While the Companys disclosure controls and procedures provide reasonable assurance that the
appropriate information will be available on a timely basis, this assurance is subject to
limitations inherent in any control system, no matter how well designed and administered. Changes in Internal Controls There was no change in our internal control over financial reporting (as defined in Rules
13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934, as amended) identified in
connection with the evaluation of our internal control performed during our last fiscal quarter
that has materially affected, or is reasonably likely to materially affect, our internal control
over financial reporting.  15




---



##### Table of Contents



PART II  OTHER INFORMATION 
 Item 1. Legal Proceedings We are involved in routine litigation incidental to the conduct of our business. There are
currently no material pending litigation proceedings to which we are a party or to which any of our
property is subject. 
 Item 2. Changes in Securities and Use of Proceeds and Issuer Purchase of Equity Securities Issuer Purchases of Equity Securities TotalNumber of
    
    
    ApproximateShares
    
    
    $ Value ofPurchased
    
    
    Shares ThatTotal
    
    
    Average
    
    
    as Part of a
    
    
    May Yet BeNumber
    
    
    Price
    
    
    Publicly
    
    
    Purchasedof Shares
    
    
    Paid per
    
    
    Announced
    
    
    Under thePeriod
    
    Purchased
    
    
    Share
    
    
    Plan
    
    
    PlanBeginning balance
    
    
    625,500
    
    
    $
    7.39
    
    
    
    625,500
    
    
    $
    2,377,000January 1, 2005 to
January 31, 2005
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,377,000February 1, 2005 to
February 28, 2005
    
    
    45,180
    
    
    
    8.03
    
    
    
    670,680
    
    
    
    2,014,000March 1, 2005 to
March 31, 2005
    
    
    27,990
    
    
    
    7.88
    
    
    
    698,670
    
    
    
    1,794,000Total
    
    
    698,670
    
    
    $
    7.45
    
    
    
    698,670
 In May 2004, the Companys Board of Directors authorized a plan to repurchase up to $7.0
million of the Companys common stock. The Company intends to repurchase shares from time to time,
at prevailing prices, in the open market. The timing and amount of the share repurchases will be at
the discretion of management and will be based on such factors as the stock price, general economic
and market conditions, and other factors. The share repurchase plan may be suspended or
discontinued at any time. Shares repurchased under the plan will be cancelled. As of March 31,
2004, the Company has repurchased 698,670 shares at a total cost of $5.2 million. In April 2005, the Companys Board of Directors authorized an increase to the repurchase plan
of $5.0 million increasing the total authorization to repurchase the Companys common stock to
$12.0 million. 
 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 The Company periodically leases aircraft from SummitJets, Inc., which is owned by the
Companys Chairman and Chief Executive Officer. The lease rate was determined through a review of
prevailing market rates for such services. During the three months ended March 31, 2005 and 2004,
the Company recorded an expense of  16




---



##### Table of Contents



Item 5. Other Information  (contd) $20,000 and $48,000 respectively. The expense is included in selling, general and
administrative expenses. Of the $20,000 expensed during the three months ended March 31, 2005,
$20,000 was unpaid and included in accounts payable as of March 31, 2005. In March 2005, the Company facilitated the exercising of stock options upon the retirement
of our former member of the Board of Directors, Jack Woodhull. Upon the exercising of the
options, the Company repurchased 15,000 shares for a total discounted cost of $117,000. The
Company purchased the shares at a 3.6% discount.  17




---



##### Table of Contents



Item 6. Exhibits and Reports on Form 8-K INDEX TO EXHIBITS Exhibits (numbered in accordance with item 601 of Regulation S-K). 2.1
    
    Stock Purchase and Sale Agreement, by and among the Registrant, Steven Myers Holding Inc.
and L-3 Communications Corporation. (1)2.2
    
    Amendment No.1 to Stock Purchase and Sale Agreement, by and among the Registrant, Steven
Myers Holding Inc. and L-3 Communications Corporation. (2)3.1
    
    Amended and Restated Articles of Incorporation. (3)3.2
    
    Amended and Restated Bylaws of the Registrant. (4)10.1
    
    Amended and Restated 1997 Stock Option Plan and related form of Stock Option Agreement. (5)10.2
    
    Amended and Restated Employee Stock Purchase Plan. (6)10.3
    
    Office Facility Lease. (7)10.4
    
    Amendment No. 1 to Office Facility Lease. (8)10.5
    
    Employment Agreement of Steven S. Myers. (9)10.6
    
    Amendment No. 1 to Employment Agreement of Steven S. Myers. (10)10.7
    
    Amendment No. 2 to Employment Agreement of Steven S. Myers. (11)10.8
    
    Amendment No. 3 to Employment Agreement of Steven S. Myers. (12)10.9
    
    Amendment No. 4 to Employment Agreement of Steven S. Myers. (13)10.10
    
    Amendment No. 5 to Employment Agreement of Steven S. Myers. (14)10.11
    
    Employment Agreement of Cathy L. Wood. (15)10.12
    
    Amendment No. 1 to Employment Agreement of Cathy L. Wood.(16)10.13
    
    Amendment No. 2 to Employment Agreement of Cathy L. Wood. (17)10.14
    
    Amendment No. 3 to Employment Agreement of Cathy L. Wood. (18)10.15
    
    Amendment No. 4 to Employment Agreement of Cathy L. Wood. (19)10.16
    
    Employment Agreement of Bennett C. Beaudry. (20)10.17
    
    Amendment No. 1 to Employment Agreement of Bennett C. Beaudry. (21)10.18
    
    Amendment No. 2 to Employment Agreement of Bennett C. Beaudry. (22)10.19
    
    Amendment No. 3 to Employment Agreement of Bennett C. Beaudry. (23)10.20
    
    Accounts Receivable Loan Agreement dated January 10, 2002, by and between the Registrant
and City National Bank, a national banking association. (24)
   18




---



##### Table of Contents



Item 6. Exhibits and Reports on Form 8-K   (contd) 10.21
    
    Commercial Guaranty dated January 10, 2002, executed by Steven Myers & Associates, Inc.
in favor of City National Bank, a national banking association. (25)10.22
    
    Revolving Loan Agreement dated October 14, 2003, by and between the registrant and City
National Bank, a national association. (26)10.23
    
    Revolving Note dated April 10, 2003, executed by SM&A, in favor of City National Bank.
(27)10.24
    
    Renewal of Revolving Note dated April 27, 2004, executed by SM&A, in favor of City National
Bank. (28)10.25
    
    Consultant Agreement of Bowes Enterprises. (29)10.26
    
    Consultant Agreement of Joseph B. Reagan. (30)21.1
    
    Subsidiaries of the Registrant. (31)31.1
    
    Certificate of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley
Act of 2002. (32)31.2
    
    Certificate of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley
Act of 2002. (33)32.1
    
    Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. (34)32.2
    
    Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. (35)
 Footnote #   (1)
    
    Filed on November 27, 2001 as Exhibit 10.1 to the registrants Current Report on Form 8-K and
incorporated herein by reference.(2)
    
    Filed on December 14, 2001 as Exhibit 10.1 to the registrants Current Report on Form 8-K
and incorporated herein by reference.(3)
    
    Filed on March 15, 2002 as Exhibit 3.1 to the registrants Annual Report on Form 10-K and
incorporated herein by reference.(4)
    
    Filed on May 3, 2002 as Exhibit 3.2 to the registrants Quarterly Report on Form 10-Q and
incorporated herein by reference.(5)
    
    Filed on April 17, 2001 as Exhibit 10.1 to the registrants Annual Report on Form 10-K and
incorporated herein by reference.
(6) Filed on April 29, 2002 as Exhibit C to the registrants Annual Proxy Statement on Form 14A
and incorporated herein by reference.(6)
    
    Filed on April 29, 2002 as Exhibit C to the registrants Annual Proxy Statement on Form 14A
and incorporated herein by reference.(7)
    
    Filed on November 21, 1997 as Exhibit 10.3 to the registrants Registration Statement
333-4075 on Form S-1 (Registration No. 333-4075) and incorporated herein by reference.(8)
    
    Filed on October 22, 2004 as Exhibit 10.25 to the registrants Quarterly Report on Form
10-Q and incorporated herein by reference.(9)
    
    Filed on April 17, 2001 as Exhibit 10.17 to the registrants Annual Report on Form 10-K and
incorporated herein by reference.(10)
    
    Filed on March 15, 2002 as Exhibit 10.7 to the registrants Annual Report on Form 10-K and
incorporated herein by reference.(11)
    
    Filed on May 3, 2002 as Exhibit 10.8 to the registrants Quarterly Report on Form 10-Q and
incorporated herein by reference.(12)
    
    Filed on March 11, 2003 as Exhibit 10.7 to the registrants Annual Report on Form 10-K
and incorporated herein by reference.(13)
    
    Filed on February 6, 2004 as Exhibit 10.8 to the registrants Annual Report on Form 10-K
and incorporated herein by reference.(14)
    
    Filed on October 22, 2004 as Exhibit 10.21 to the registrants Quarterly Report on Form
10-Q and incorporated herein by reference.(15)
    
    Filed on March 15, 2002 as Exhibit 10.8 to the registrants Annual Report on Form 10-K and
incorporated herein by reference.(16)
    
    Filed on November 4, 2002 as Exhibit 10.10 to the registrants Quarterly Report on Form
10-Q and incorporated herein by reference.(17)
    
    Filed on March 11, 2003 as Exhibit 10.10 to the registrants Annual Report on Form 10-K and
incorporated herein by reference..(18)
    
    Filed on February 6, 2004 as Exhibit 10.12 to the registrants Annual Report on Form
10-K and incorporated herein by reference.(19)
    
    Filed on October 22, 2004 as Exhibit 10.22 to the registrants Quarterly Report on Form
10-Q and incorporated herein by reference.   19




---



##### Table of Contents



Item 6. Exhibits and Reports on Form 8-K  (contd)  (20)
    Filed on November 4, 2002 as Exhibit 10.11 to the registrants Quarterly Report on
Form 10-Q and incorporated herein by reference.(21)
    Filed on March 11, 2003 as Exhibit 10.12 to the registrants Annual Report on Form
10-K and incorporated herein by reference.(22)
    Filed on February 6, 2004 as Exhibit 10.15 to the registrants Annual Report on Form
10-K and incorporated herein by reference.(23)
    Filed on October 8, 2004 as Exhibit 99.1 to the registrants current report on 8-K and
incorporated herein by reference.(24)
    Filed on January 25, 2002 as Exhibit 99.2 to the registrants Current Report on Form 8-K
and incorporated herein by reference.(25)
    Filed on January 25, 2002 as Exhibit 99.3 to the registrants Current Report on Form 8-K
and incorporated herein by reference.(26)
    Filed on February 6, 2004 as Exhibit 10.18 to the registrants Annual Report on Form
10-K and incorporated herein by reference.(27)
    Filed on July 31, 2003 as Exhibit 10.16 to the registrants Quarterly Report on Form 10-Q
and incorporated herein by reference.(28)
    Filed on July 21, 2004 as Exhibit 10.20 to the registrants Quarterly Report on Form
10-Q and incorporated herein by reference.(29)
    Filed on October 22, 2004 as Exhibit 10.23 to the registrants Quarterly Report on Form
10-Q and incorporated herein by reference.(30)
    Filed on October 22, 2004 as Exhibit 10.24 to the registrants Quarterly Report on Form
10-Q and incorporated herein by reference.(31)
    Filed on March 11, 2003 as Exhibit 21.1 to the registrants Annual Report on Form 10-K
and incorporated herein by reference.(32)
    Filed herewith.(33)
    Filed herewith.(34)
    Filed herewith.(35)
    Filed herewith. (a) Reports on Form 8-K: Form 8-K dated and filed on January 25, 2005, to report the appointment of Robert
Robin to the Companys Board of Directors and to announce the retirement of John R.
Woodull from the Companys Board of Directors. Form 8-K dated and filed on February 17, 2005, to report the issuance of a press
release announcing financial results for the fiscal quarter and full year ended
December 31, 2004. Form 8-K dated and filed on March 30, 2005 to report the resignation of Bennett C.
Beaudry, the Companys President and Chief Operating Officer and to announce the
preliminary financial results for the quarter ending March 31, 2005.   20




---



##### Table of Contents



SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the Company has duly
caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. SM&A By:
    
    /s/ CATHY L. WOODDated: April 12, 2005
    
    
    
    Cathy L. WoodExecutive Vice President, Chief Financial Officer and SecretaryBy:
    
    /s/ STEVEN S. MYERSDated: April 12, 2005
    
    
    
    Steven S. MyersChairman and Chief Executive Officer
   21




---



##### Table of Contents



INDEX TO EXHIBITS Exhibits (numbered in accordance with item 601 of Regulation S-K). 2.1
    
    Stock Purchase and Sale Agreement, by and among the Registrant, Steven Myers Holding Inc.
and L-3 Communications Corporation. (1)2.2
    
    Amendment No.1 to Stock Purchase and Sale Agreement, by and among the Registrant, Steven
Myers Holding Inc. and L-3 Communications Corporation. (2)3.1
    
    Amended and Restated Articles of Incorporation. (3)3.2
    
    Amended and Restated Bylaws of the Registrant. (4)10.1
    
    Amended and Restated 1997 Stock Option Plan and related form of Stock Option Agreement. (5)10.2
    
    Amended and Restated Employee Stock Purchase Plan. (6)10.3
    
    Office Facility Lease. (7)10.4
    
    Amendment No. 1 to Office Facility Lease. (8)10.5
    
    Employment Agreement of Steven S. Myers. (9)10.6
    
    Amendment No. 1 to Employment Agreement of Steven S. Myers. (10)10.7
    
    Amendment No. 2 to Employment Agreement of Steven S. Myers. (11)10.8
    
    Amendment No. 3 to Employment Agreement of Steven S. Myers. (12)10.9
    
    Amendment No. 4 to Employment Agreement of Steven S. Myers. (13)10.10
    
    Amendment No. 5 to Employment Agreement of Steven S. Myers. (14)10.11
    
    Employment Agreement of Cathy L. Wood. (15)10.12
    
    Amendment No. 1 to Employment Agreement of Cathy L. Wood.(16)10.13
    
    Amendment No. 2 to Employment Agreement of Cathy L. Wood. (17)10.14
    
    Amendment No. 3 to Employment Agreement of Cathy L. Wood. (18)10.15
    
    Amendment No. 4 to Employment Agreement of Cathy L. Wood. (19)10.16
    
    Employment Agreement of Bennett C. Beaudry. (20)10.17
    
    Amendment No. 1 to Employment Agreement of Bennett C. Beaudry. (21)10.18
    
    Amendment No. 2 to Employment Agreement of Bennett C. Beaudry. (22)10.19
    
    Amendment No. 3 to Employment Agreement of Bennett C. Beaudry. (23)10.20
    
    Accounts Receivable Loan Agreement dated January 10, 2002, by and between the Registrant
and City National Bank, a national banking association. (24)




---



##### Table of Contents



INDEX TO EXHIBITS  (contd) 10.21
    
    Commercial Guaranty dated January 10, 2002, executed by Steven Myers & Associates, Inc.
in favor of City National Bank, a national banking association. (25)10.22
    
    Revolving Loan Agreement dated October 14, 2003, by and between the registrant and City
National Bank, a national association. (26)10.23
    
    Revolving Note dated April 10, 2003, executed by SM&A, in favor of City National Bank.
(27)10.24
    
    Renewal of Revolving Note dated April 27, 2004, executed by SM&A, in favor of City National
Bank. (28)10.25
    
    Consultant Agreement of Bowes Enterprises. (29)10.26
    
    Consultant Agreement of Joseph B. Reagan. (30)21.1
    
    Subsidiaries of the Registrant. (31)31.1
    
    Certificate of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley
Act of 2002. (32)31.2
    
    Certificate of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley
Act of 2002. (33)32.1
    
    Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. (34)32.2
    
    Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. (35)
 Footnote #   (1)
    
    Filed on November 27, 2001 as Exhibit 10.1 to the registrants Current Report on Form 8-K and
incorporated herein by reference.(2)
    
    Filed on December 14, 2001 as Exhibit 10.1 to the registrants Current Report on Form 8-K
and incorporated herein by reference.(3)
    
    Filed on March 15, 2002 as Exhibit 3.1 to the registrants Annual Report on Form 10-K and
incorporated herein by reference.(4)
    
    Filed on May 3, 2002 as Exhibit 3.2 to the registrants Quarterly Report on Form 10-Q and
incorporated herein by reference.(5)
    
    Filed on April 17, 2001 as Exhibit 10.1 to the registrants Annual Report on Form 10-K and
incorporated herein by reference.
(6) Filed on April 29, 2002 as Exhibit C to the registrants Annual Proxy Statement on Form 14A
and incorporated herein by reference.(6)
    
    Filed on April 29, 2002 as Exhibit C to the registrants Annual Proxy Statement on Form 14A
and incorporated herein by reference.(7)
    
    Filed on November 21, 1997 as Exhibit 10.3 to the registrants Registration Statement
333-4075 on Form S-1 (Registration No. 333-4075) and incorporated herein by reference.(8)
    
    Filed on October 22, 2004 as Exhibit 10.25 to the registrants Quarterly Report on Form
10-Q and incorporated herein by reference.(9)
    
    Filed on April 17, 2001 as Exhibit 10.17 to the registrants Annual Report on Form 10-K and
incorporated herein by reference.(10)
    
    Filed on March 15, 2002 as Exhibit 10.7 to the registrants Annual Report on Form 10-K and
incorporated herein by reference.(11)
    
    Filed on May 3, 2002 as Exhibit 10.8 to the registrants Quarterly Report on Form 10-Q and
incorporated herein by reference.(12)
    
    Filed on March 11, 2003 as Exhibit 10.7 to the registrants Annual Report on Form 10-K
and incorporated herein by reference.(13)
    
    Filed on February 6, 2004 as Exhibit 10.8 to the registrants Annual Report on Form 10-K
and incorporated herein by reference.(14)
    
    Filed on October 22, 2004 as Exhibit 10.21 to the registrants Quarterly Report on Form
10-Q and incorporated herein by reference.(15)
    
    Filed on March 15, 2002 as Exhibit 10.8 to the registrants Annual Report on Form 10-K and
incorporated herein by reference.(16)
    
    Filed on November 4, 2002 as Exhibit 10.10 to the registrants Quarterly Report on Form
10-Q and incorporated herein by reference.(17)
    
    Filed on March 11, 2003 as Exhibit 10.10 to the registrants Annual Report on Form 10-K and
incorporated herein by reference..(18)
    
    Filed on February 6, 2004 as Exhibit 10.12 to the registrants Annual Report on Form
10-K and incorporated herein by reference.(19)
    
    Filed on October 22, 2004 as Exhibit 10.22 to the registrants Quarterly Report on Form
10-Q and incorporated herein by reference.




---



##### Table of Contents



INDEX TO EXHIBITS  (contd)  (20)
    Filed on November 4, 2002 as Exhibit 10.11 to the registrants Quarterly Report on
Form 10-Q and incorporated herein by reference.(21)
    Filed on March 11, 2003 as Exhibit 10.12 to the registrants Annual Report on Form
10-K and incorporated herein by reference.(22)
    Filed on February 6, 2004 as Exhibit 10.15 to the registrants Annual Report on Form
10-K and incorporated herein by reference.(23)
    Filed on October 8, 2004 as Exhibit 99.1 to the registrants current report on 8-K and
incorporated herein by reference.(24)
    Filed on January 25, 2002 as Exhibit 99.2 to the registrants Current Report on Form 8-K
and incorporated herein by reference.(25)
    Filed on January 25, 2002 as Exhibit 99.3 to the registrants Current Report on Form 8-K
and incorporated herein by reference.(26)
    Filed on February 6, 2004 as Exhibit 10.18 to the registrants Annual Report on Form
10-K and incorporated herein by reference.(27)
    Filed on July 31, 2003 as Exhibit 10.16 to the registrants Quarterly Report on Form 10-Q
and incorporated herein by reference.(28)
    Filed on July 21, 2004 as Exhibit 10.20 to the registrants Quarterly Report on Form
10-Q and incorporated herein by reference.(29)
    Filed on October 22, 2004 as Exhibit 10.23 to the registrants Quarterly Report on Form
10-Q and incorporated herein by reference.(30)
    Filed on October 22, 2004 as Exhibit 10.24 to the registrants Quarterly Report on Form
10-Q and incorporated herein by reference.(31)
    Filed on March 11, 2003 as Exhibit 21.1 to the registrants Annual Report on Form 10-K
and incorporated herein by reference.(32)
    Filed herewith.(33)
    Filed herewith.(34)
    Filed herewith.(35)
    Filed herewith.