##### 



UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 Form 10-Q
 þ
    
    Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of
1934
 For the Quarterly Period Ended July 2, 2006
 or
 o
    
    Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
 For the Transition period from  to
 Commission File Number 000-08193
 ARGON ST, INC.
 (Exact name of registrant as specified in its charter)
 Delaware
    
    
    
    38-1873250(State or other jurisdiction of
    
    
    
    (I.R.S. Employerincorporation or organization)
    
    
    
    Identification No.)
 12701 Fair Lakes Circle, Suite 800, Fairfax, Virginia 22033
 (703) 322-0881
  þ o
  o þ o
  o þ




---



##### 



ARGON ST, INC. AND SUBSIDIARIES
FORM 10-Q QUARTERLY REPORT
 FOR THE QUARTER ENDED JULY 2, 2006
 TABLE OF CONTENTS
 PART I. FINANCIAL INFORMATIONItem 1. Financial Statements (Unaudited)Condensed Consolidated Balance Sheets at July 2, 2006 and September 30, 2005
    
    
    3Condensed Consolidated Statements of Earnings for the
three and nine months ended July 2, 2006 and July 3, 2005
    
    
    4Condensed Consolidated Statements of Cash Flows for the
nine months ended July 2, 2006 and July 3, 2005
    
    
    5Notes to Condensed Consolidated Financial Statements
    
    
    6-12Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    13-23Item 3. Quantitative and Qualitative Disclosures about Market Risks
    
    
    23Item 4. Controls and Procedures
    
    
    23PART II. OTHER INFORMATIONItem 5. Other Information
    
    
    23Item 6. Exhibits
    
    
    23Signatures
    
    
    25Exhibits
    
    
    26-28
 2




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##### 



ARGON ST, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
 July 2, 2006
    
    
    September 30, 2005(unaudited)ASSETSCURRENT ASSETSCash and cash equivalents
    
    $
    66,514,000
    
    
    $
    4,064,000Accounts receivable, net
    
    
    86,202,000
    
    
    
    103,577,000Inventory
    
    
    1,779,000
    
    
    
    1,166,000Income taxes receivable
    
    
    537,000
    
    
    
    2,464,000Deferred income tax asset
    
    
    2,271,000
    
    
    
    1,742,000Prepaids and other
    
    
    1,303,000
    
    
    
    888,000TOTAL CURRENT ASSETS
    
    
    158,606,000
    
    
    
    113,901,000Property, equipment and software, net
    
    
    15,756,000
    
    
    
    14,896,000Advances and cash held in escrow
    
    
    
    
    
    
    10,900,000Goodwill
    
    
    115,135,000
    
    
    
    107,956,000Intangibles, net
    
    
    1,851,000
    
    
    
    1,219,000Other assets
    
    
    665,000
    
    
    
    962,000TOTAL ASSETS
    
    $
    292,013,000
    
    
    $
    249,834,000LIABILITIES AND STOCKHOLDERS EQUITYCURRENT LIABILITIESLine of Credit
    
    $
    
    
    
    $
    11,000,000Accounts payable and accrued expenses
    
    
    13,327,000
    
    
    
    26,857,000Accrued salaries and related expenses
    
    
    12,364,000
    
    
    
    8,848,000Deferred revenue
    
    
    3,928,000
    
    
    
    7,139,000Notes payable  current
    
    
    
    
    
    
    56,000Capital lease obligations  current
    
    
    20,000
    
    
    
    19,000Deferred rent
    
    
    360,000
    
    
    
    61,000TOTAL CURRENT LIABILITIES
    
    
    29,999,000
    
    
    
    53,980,000Deferred income tax liability, long term
    
    
    303,000
    
    
    
    1,979,000Deferred rent  net of current
    
    
    1,614,000
    
    
    
    1,799,000Capital lease obligations  net of current
    
    
    48,000
    
    
    
    63,000Commitments and contingencies
    
    
    
    
    
    
    STOCKHOLDERS EQUITYCommon stock:$.01 Par Value, 100,000,000 shares
authorized,
22,260,512 and 20,153,878 shares issued
at July 2, 2006 and September 30, 2005
    
    
    223,000
    
    
    
    202,000Additional paid in capital
    
    
    211,067,000
    
    
    
    158,458,000Treasury stock at cost, 126,245 shares
    
    
    (534,000
    )
    
    
    (534,000
    )Retained earnings
    
    
    49,293,000
    
    
    
    34,002,000Accumulated other comprehensive loss
    
    
    
    
    
    
    (115,000
    )TOTAL STOCKHOLDERS EQUITY
    
    $
    260,049,000
    
    
    $
    192,013,000TOTAL LIABILITIES AND STOCKHOLDERS EQUITY
    
    $
    292,013,000
    
    
    $
    249,834,000
  3




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##### 



ARGON ST, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS (unaudited)
 Third Quarter Ended
    
    
    Nine Months EndedJuly 2, 2006
    
    
    July 3, 2005
    
    
    July 2, 2006
    
    
    July 3, 2005CONTRACT REVENUES
    
    $
    68,902,000
    
    
    $
    75,611,000
    
    
    $
    192,690,000
    
    
    $
    188,073,000COST OF REVENUES
    
    
    56,206,000
    
    
    
    62,555,000
    
    
    
    153,068,000
    
    
    
    151,534,000GENERAL AND ADMINISTRATIVE
EXPENSES
    
    
    4,837,000
    
    
    
    3,474,000
    
    
    
    15,617,000
    
    
    
    11,305,000INCOME FROM OPERATIONS
    
    
    7,859,000
    
    
    
    9,582,000
    
    
    
    24,005,000
    
    
    
    25,234,000OTHER INCOME (EXPENSE)Interest income
    
    
    548,000
    
    
    
    193,000
    
    
    
    1,064,000
    
    
    
    538,000Interest expense
    
    
    (4,000
    )
    
    
    (1,000
    )
    
    
    (165,000
    )
    
    
    (10,000
    )544,000
    
    
    
    192,000
    
    
    
    899,000
    
    
    
    528,000INCOME BEFORE INCOME TAXES
    
    
    8,403,000
    
    
    
    9,774,000
    
    
    
    24,904,000
    
    
    
    25,762,000PROVISION FOR INCOME TAXES
    
    
    3,237,000
    
    
    
    3,919,000
    
    
    
    9,613,000
    
    
    
    10,043,000NET INCOME
    
    $
    5,166,000
    
    
    $
    5,855,000
    
    
    $
    15,291,000
    
    
    $
    15,719,000EARNINGS PER SHARE (Basic)
    
    $
    0.23
    
    
    $
    0.30
    
    
    $
    0.71
    
    
    $
    0.80EARNINGS PER SHARE (Diluted)
    
    $
    0.23
    
    
    $
    0.28
    
    
    $
    0.69
    
    
    $
    0.76WEIGHTED-AVERAGE SHARES
OUTSTANDINGBasic
    
    
    22,120,000
    
    
    
    19,830,000
    
    
    
    21,495,000
    
    
    
    19,665,000Diluted
    
    
    22,717,000
    
    
    
    20,694,000
    
    
    
    22,127,000
    
    
    
    20,563,000
  4




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##### 



ARGON ST, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)
 Nine Months EndedJuly 2, 2006
    
    
    July 3, 2005Cash flows from operating activitiesNet income
    
    $
    15,291,000
    
    
    $
    15,719,000Adjustments to reconcile net income to net cash provided by
(used in) operating activities:Depreciation and amortization
    
    
    4,054,000
    
    
    
    3,465,000Deferred income tax benefit
    
    
    (985,000
    )
    
    
    (533,000
    )Stock-based compensation
    
    
    1,489,000
    
    
    
    Tax benefit of stock option exercises
    
    
    
    
    
    
    3,630,000Change in:Billed accounts receivable
    
    
    18,329,000
    
    
    
    3,658,000Unbilled accounts receivable
    
    
    479,000
    
    
    
    (18,038,000
    )Inventory
    
    
    (613,000
    )
    
    
    (287,000
    )Prepaids and other
    
    
    (77,000
    )
    
    
    (759,000
    )Accounts payable and accrued expenses
    
    
    (13,464,000
    )
    
    
    14,042,000Accrued salaries and related expenses
    
    
    2,734,000
    
    
    
    (4,768,000
    )Deferred revenue
    
    
    (3,211,000
    )
    
    
    (16,994,000
    )Income taxes receivable
    
    
    1,927,000
    
    
    
    (4,049,000
    )Deferred rent
    
    
    114,000
    
    
    
    333,000Net cash provided by (used in) operating activities
    
    
    26,067,000
    
    
    
    (4,581,000
    )Cash flows from investing activitiesAcquisitions of property, equipment and software
    
    
    (2,941,000
    )
    
    
    (3,852,000
    )Reduction in advances and cash held in escrow
    
    
    10,900,000
    
    
    
    Radix Technologies, Inc. acquisition, net of cash acquired
    
    
    (9,935,000
    )
    
    
    Acquisition of ProDesign Solutions, LLC net of cash acquired
    
    
    (1,712,000
    )
    
    
    Net cash used in investing activities
    
    
    (3,688,000
    )
    
    
    (3,852,000
    )Cash flows from financing activitiesRepayment on line of credit, net of borrowings
    
    
    (11,000,000
    )
    
    
    Payment on note payable
    
    
    (56,000
    )
    
    
    (169,000
    )Payments on capital leases
    
    
    (14,000
    )
    
    
    Tax benefit of stock option exercises
    
    
    1,691,000
    
    
    
    Proceeds from exercise of stock options
    
    
    2,238,000
    
    
    
    3,352,000Proceeds from employee stock purchase plan exercises
    
    
    444,000
    
    
    
    1,170,000Proceeds from secondary offering
    
    
    46,768,000
    
    
    
    Net cash provided by financing activities
    
    
    40,071,000
    
    
    
    4,353,000Net increase (decrease) in cash and cash equivalents
    
    
    62,450,000
    
    
    
    (4,080,000
    )Cash and cash equivalents, beginning of period
    
    
    4,064,000
    
    
    
    29,732,000Cash and cash equivalents, end of period
    
    $
    66,514,000
    
    
    $
    25,652,000Supplemental disclosureIncome taxes paid
    
    $
    6,982,000
    
    
    $
    10,989,000Interest expense paid
    
    $
    165,000
    
    
    
    
  5




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##### 



ARGON ST, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
 1. BASIS OF PRESENTATION
       6




---



##### 



2. EARNINGS PER SHARE
  Third Quarter Ended
    
    Nine Months EndedJuly 2, 2006
    
    July 3, 2005
    
    July 2, 2006
    
    July 3, 2005Net Income
    
    $
    5,166,000
    
    
    $
    5,855,000
    
    
    $
    15,291,000
    
    
    $
    15,719,000Weighted Average Shares Outstanding  Basic
    
    
    22,120,000
    
    
    
    19,830,000
    
    
    
    21,495,000
    
    
    
    19,665,000Basic Earnings Per Share
    
    $
    0.23
    
    
    $
    0.30
    
    
    $
    0.71
    
    
    $
    0.80Effect of Dilutive Securities:Net Shares Issuable Upon Exercise of Stock Options
    
    
    597,000
    
    
    
    864,000
    
    
    
    632,000
    
    
    
    898,000Weighted Average Shares Outstanding  Diluted
    
    
    22,717,000
    
    
    
    20,694,000
    
    
    
    22,127,000
    
    
    
    20,563,000Diluted Earnings Per Share
    
    $
    0.23
    
    
    $
    0.28
    
    
    $
    0.69
    
    
    $
    0.76
 3. STOCK-BASED COMPENSATION
     7




---



##### 



Fair Value Determination
   Expected Volatility.
 Risk-free Interest Rate.
 Dividend Yield.
 Expected Term.
 Exercise Factor.
 Post-vest Percentage.
 Stock Compensation Expense
    8




---



##### 



Stock Option Activity
   AggregateIntrinsicNumber
    
    Weighted-Average
    
    Valueof Shares
    
    Exercise Price
    
    (in thousands)Shares under option, September 30, 2005
    
    
    1,741,127
    
    
    $
    8.75Options granted
    
    
    527,300
    
    
    $
    29.48Options exercised
    
    
    (340,559
    )
    
    $
    6.57
    
    
    $
    7,920Options cancelled and expired
    
    
    (57,310
    )
    
    $
    21.66Shares under option, July 2, 2006
    
    
    1,870,558
    
    
    $
    14.60
    
    
    $
    27,946Options exercisable at July 2, 2006
    
    
    819,812
    
    
    $
    11.39
    
    
    $
    14,880Shares reserved for equity awards at
July 2, 2006
    
    
    1,011,472
  Weighted-AverageOptions
    
    Remaining
    
    Weighted-AverageRange of Exercise Price
    
    Outstanding
    
    Contractual Life
    
    Exercise Price$  0.10  $  0.90
    
    
    229,828
    
    
    

    4.8
    years
    
    $
    0.65$  2.25  $  4.63
    
    
    330,560
    
    
    
    5.9
    
    
    
    4.05$  5.00  $  6.88
    
    
    292,320
    
    
    
    7.3
    
    
    
    5.70$  7.54  $17.63
    
    
    220,500
    
    
    
    6.8
    
    
    
    12.64$20.40  $29.87
    
    
    797,350
    
    
    
    8.6
    
    
    
    26.801,870,558
 Weighted-AverageOptions
    
    Remaining
    
    Weighted-AverageRange of Exercise Price
    
    Exercisable
    
    Contractual Life
    
    Exercise Price$  0.10  $  0.90
    
    
    153,308
    
    
    
    4.7
    years
    
    $
    0.52$  2.25  $  4.63
    
    
    115,824
    
    
    
    5.1
    
    
    
    3.94$  5.00  $  6.88
    
    
    79,680
    
    
    
    7.1
    
    
    
    5.74$  7.54  $17.63
    
    
    220,500
    
    
    
    6.8
    
    
    
    12.64$20.40  $29.87
    
    
    250,500
    
    
    
    7.4
    
    
    
    22.71819,812
 9




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##### 



Pro Forma Disclosures
  Third Quarter Ended
    
    
    Nine Months EndedJuly 3, 2005
    
    
    July 3, 2005Net Income
    
    $
    5,855,000
    
    
    $
    15,719,000Add: Stock-based employee compensation expense included
    
    
    
    
    
    
    In reported net income, net of related tax effectsLess: Total stock-based employee compensation expense
determined under fair value method of all awards, net
of related tax effects
    
    
    327,000
    
    
    
    1,012,000Pro forma net income
    
    $
    5,528,000
    
    
    $
    14,707,000Earnings per share:Basic  as reported
    
    $
    0.30
    
    
    $
    0.80Basic  pro forma
    
    $
    0.28
    
    
    $
    0.75Earnings per share:Diluted  as reported
    
    $
    0.28
    
    
    $
    0.76Diluted  pro forma
    
    $
    0.27
    
    
    $
    0.72
 4. REVOLVING LINE OF CREDIT
    5. ACQUISITIONS
 Radix Technologies, Inc.
  10




---



##### 



ProDesign Solutions, LLC
  6. RELATED PARTY TRANSACTIONS
  7. SECONDARY OFFERING
  8. COMMITMENTS AND CONTINGENCIES
  11




---



##### 



9. SUBSEQUENT EVENTS
 San Diego Research Center Incorporated
   Current Assets
    
    $
    2,053,000Property, plant and equipment
    
    
    973,000Other assets
    
    
    139,000Goodwill
    
    
    39,088,000Total assets acquired
    
    
    42,253,000Liabilities assumed
    
    
    (1,253,000
    )Purchase price
    
    $
    41,000,000
  Innovative Research, Ideas and Services Corporation
  12




---



##### 



ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
  Forward-looking Statements
  Overview
 General
  Revenues
   13




---



##### 



Third Quarter Ended
    
    Nine Months EndedContract Type
    
    July 2, 2006
    
    July 3, 2005
    
    July 2, 2006
    
    July 3, 2005Cost reimbursable contracts
    
    
    22
    %
    
    
    16
    %
    
    
    23
    %
    
    
    16
    %Fixed-price contracts
    
    
    68
    %
    
    
    79
    %
    
    
    67
    %
    
    
    79
    %Time and material contracts
    
    
    10
    %
    
    
    5
    %
    
    
    10
    %
    
    
    5
    %
  Backlog
    14




---



##### 



July 2, 2006
    
    
    July 3, 2005Funded
    
    $
    194,980,000
    
    
    $
    198,811,000Unfunded
    
    
    40,454,000
    
    
    
    69,577,000Total
    
    $
    235,434,000
    
    
    $
    268,388,000
 Cost of Revenues
  Stock-Based Compensation Expense
     General and Administrative Expenses
  15




---



##### 



Interest Income and Expense
   Research and Development
   Deferred Revenue
    Critical Accounting Practices and Estimates
 General
  16




---



##### 



Revenue and Cost Recognition
 General
 Accounting for Performance of Construction-Type and Production-Type Contracts. .
  Indirect rate variance
     17




---



##### 



Award Fee Recognition
  Goodwill
  Stock-based Compensation
  Historical Operating Results
 Fiscal quarter ended July 2, 2006 compared to fiscal quarter ended July 3, 2005
  18




---



##### 



Third Quarter Ended
    
    Increase (Decrease)July 2, 2006
    
    July 3, 2005
    
    2006 Compared To 2005Contract revenues
    
    $
    68,902,000
    
    
    $
    75,611,000
    
    
    $
    (6,709,000
    )Cost of revenues
    
    $
    56,206,000
    
    
    $
    62,555,000
    
    
    $
    (6,349,000
    )General and administrative expenses
    
    $
    4,837,000
    
    
    $
    3,474,000
    
    
    $
    1,363,000Interest income and interest expense
    
    $
    544,000
    
    
    $
    192,000
    
    
    $
    352,000Provision for income taxes
    
    $
    3,237,000
    
    
    $
    3,919,000
    
    
    $
    (682,000
    )Net income
    
    $
    5,166,000
    
    
    $
    5,855,000
    
    
    $
    (689,000
    )
 Contract Revenues:
  Cost of Revenues:
  General and Administrative Expenses:
  Interest Income and Interest Expense:
  Provision for Income Taxes:
  Net Income:
  19




---



##### 



Nine Months Ended July 2, 2006 compared to Nine Months Ended July 3, 2005
  Nine Months Ended
    
    Increase 2006July 2, 2006
    
    July 3, 2005
    
    Compared to 2005Contract revenues
    
    $
    192,690,000
    
    
    $
    188,073,000
    
    
    $
    4,617,000Cost of revenues
    
    
    153,068,000
    
    
    
    151,534,000
    
    
    
    1,534,000General and
administrative expenses
    
    
    15,617,000
    
    
    
    11,305,000
    
    
    
    4,312,000Interest income and
interest expense
    
    
    899,000
    
    
    
    528,000
    
    
    
    371,000Provision for income taxes
    
    
    9,613,000
    
    
    
    10,043,000
    
    
    
    (430,000
    )Net income
    
    
    15,291,000
    
    
    
    15,719,000
    
    
    
    (428,000
    )
 Contract Revenues:
  Cost of Revenues:
  General and Administrative Expenses:
  20




---



##### 



Interest Income and Interest Expense:
  Provision for Income Taxes:
  Net Income:
  Analysis of Liquidity and Capital Resources
 Cash
  Line of Credit
    21




---



##### 



Cash Flows
    Contractual Obligations and Commitments
  Due in
    
    
    Due in
    
    
    Due in
    
    
    Due in
    
    
    Due inTotal
    
    
    2006
    
    
    2007
    
    
    2008
    
    
    2009
    
    
    2010
    
    
    ThereafterCapital leases
    
    $
    67,000
    
    
    $
    5,000
    
    
    $
    20,000
    
    
    $
    20,000
    
    
    $
    20,000
    
    
    $
    2,000
    
    
    
    Operating leases
    
    
    24,853,000
    
    
    
    1,518,000
    
    
    
    6,190,000
    
    
    
    6,242,000
    
    
    
    4,034,000
    
    
    
    1,887,000
    
    
    
    4,982,000Total
    
    $
    24,920,000
    
    
    $
    1,523,000
    
    
    $
    6,210,000
    
    
    $
    6,262,000
    
    
    $
    4,054,000
    
    
    $
    1,889,000
    
    
    $
    4,982,000
  Total
    
    Less Than 1 Year
    
    1-3 YearsLetters of credit
    
    $
    1,898,000
    
    
    $
    1,898,000
    
    
    
    
  Market Risks
  Cash and Cash Equivalents:
  22




---



##### 



Interest Rates:
  Foreign Currency:
  ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS
  ITEM 4. CONTROLS AND PROCEDURES
 (a)
    
    Our management has evaluated, with the participation of our Chief Executive
Officer and Chief Financial Officer, the effectiveness of our disclosure controls and
procedures as of the end of the period covered by this Quarterly Report on Form 10-Q.
Based on this evaluation, our Chief Executive Officer and Chief Financial Officer have
concluded that our disclosure controls and procedures are effective to ensure that
information we are required to disclose in reports that we file or submit under the
Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and
reported within the time periods specified in Securities and Exchange Commission rules
and forms.(b)
    
    During the last quarter, there were no significant changes in our internal
controls over financial reporting (as defined in Rule 13a-15(f) and 15d-15(f) under the
Securities Exchange Act of 1934, as amended) that have materially affected these
controls, or are reasonably likely to materially affect these controls subsequent to
the evaluation of these controls.
 PART II  OTHER INFORMATION
 ITEM 5. OTHER INFORMATION
  ITEM 6. EXHIBITS
 ExhibitNumber
    
    Description of Exhibit2.1
    
    Agreement and Plan of Merger dated as of June 7,
2004, by and between Sensytech, Inc. and Argon
Engineering Associates, Inc. (incorporated by
reference to Exhibit 2.1 of the Companys
Registration Statement on Form S-4 filed on July
16, 2004, Registration Statement No. 333-117430)3.1
    
    Amended and Restated Certificate of Incorporation
of the Company (incorporated by reference to
Exhibit 3.1 of the Companys Registration Statement
on Form S-1(Registration Statement No. 333-98757)
filed on August 26, 2002)
 23




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##### 



ExhibitNumber
    
    Description of Exhibit3.1.1
    
    Amendment to the Companys Amended and Restated
Certificate of Incorporation (incorporated by
reference to Exhibit 3.1 the Companys Current
Report on Form 8-K filed October 5, 2004 covering
Items 2.01, 5.01, 5.02, 8.01 and 9.01 of Form 8-K)3.1.2
    
    Amendment, dated March 15, 2005 to the Companys
Amended and Restated Certificate of Incorporation
(incorporated by reference to Exhibit 3.1.2 to the
Companys Quarterly Report on Form 10-Q for the
quarterly period ended July 5, 2005, filed May 11,
2005)3.2
    
    Amended and Restated Bylaws of the Company
(incorporated by reference to Exhibit 13(a)(i) of
the Companys Annual Report on Form 10-KSB for the
fiscal year ended September 30, 2001)4.1
    
    Form of Common Stock Certificate (incorporated by
reference to Exhibit 4.3 to the Companys
Registration Statement on Form S-3 (Registration
Statement No. 333-128211) filed on September 9,
2005)10.1
    
    Amended and Restated Line of Credit Agreement with
Bank of America (incorporated by reference to
Exhibit 10.1 of the Companys Registration
Statement on Form S-1 (Registration Statement No.
333-98757) filed on August 26, 200210.1.1
    
    Fifth Amendment to Second Amended and Restated
Financing and Security Agreement (incorporated by
reference to Exhibit 10.1 of the Companys Current
Report on Form 8-K dated March 31, 2006 and filed
July 6, 200610.2+
    
    Argon ST, Inc. 2002 Stock Incentive Plan
(incorporated by reference to Appendix A to the
Companys Definitive Proxy Statement on Schedule
14A filed January 27, 2006)10.2.1
    
    Form of Stock Option Agreement under Argon ST 2002
Stock Incentive Plan (incorporated by reference to
Exhibit 10.2.1 to the Companys Annual Report on
Form 10-K for fiscal year ended September 30, 2005,
filed December 14, 2005)10.3+
    
    Argon Engineering Associates, Inc. Stock Plan
(incorporated by reference to Exhibit 10.3 to the
Companys Annual Report on Form 10-K for the fiscal
year ended September 30, 2004, filed December 14,
2004)10.5+
    
    Retention Agreement dated February 17, 2004, by and
between the Company and S. Kent Rockwell
(incorporated by reference to Exhibit 10.4 of the
Companys Registration Statement on Form S-4
(Registration Statement No. 333-117430) filed on
July 16, 2004)16.1
    
    Letter of PricewaterhouseCoopers LLP regarding
change in certifying accountant (incorporated by
reference to Exhibit 16.1 to the Companys Current
Report on Form 8-K covering Items 4.01 and 9.01 of
Form 8-K, filed October 5, 2004)16.2
    
    Letter of Watkins, Meegan, Drury & Company, L.L.C.
regarding change in certifying accountant
(incorporated by reference to Exhibit 16.2 to the
Companys Current Report on Form 8-K covering Items
4.01 and 9.01 of Form 8-K, filed October 5, 2004)31.1*
    
    Certification of the Companys Chief Executive
Officer pursuant to Rule 13a-14(a)/15d-14(a) under
the Securities Exchange Act31.2*
    
    Certification of the Companys Chief Financial
Officer pursuant to Rule 13a-14(a)/15d-14(a) under
the Securities Exchange Act32.1**
    
    Certification pursuant to Rule 13a-14(b)/15d-14(b)
under the Securities Exchange Act and Section 1350
of Chapter 63 of Title 8 of the United States Code
 
 *
    
    Filed herewith**
    
    Furnished herewith+
    
    Indicates management contract or compensatory plan or arrangement 24




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##### 



SIGNATURES
  ARGON ST, INC.
(Registrant)By:
    /s/ Terry L. CollinsTerry L. Collins, Ph.D.Chairman, Chief Executive Officer and PresidentBy:
    /s/ Victor F. SellierVictor F. SellierVice President - Business Operations, Chief Financial
Officer, Secretary and Treasurer  25