UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549



---

Form 10-QSB

Mark One

[X] Quarterly Report Under Section 13 or 15(d) of the Securities Exchange Act of 1934



| |                                         
| | ----------------------------------------
| | For Quarterly Period Ended June 30, 2001

or

[   ] Transition Report Under Section 13 or 15(d) of the Securities Exchange Act of 1934

For the Transition period from _______________ to ________________

Commission File Number 000-08193

|                                                                 
|-----------------------------------------------------------------
|SENSYTECH,
INC.                                                  
|                                                                 
|(Exact name of small business issuer as specified in its charter)

|                                                               |  |                                     
|-------------------------------------------------------------- |  | ------------------------------------
|Delaware                                                       |  | 38-1873250                          
|                                                               |  |                                     
|(State or other jurisdiction of
incorporation or organization) |  | (I.R.S. Employer
Identification No.)

8419 Terminal Road, Newington, Virginia 22122-1430
(Address of principal executive offices)

Issuers telephone number (703)550-7000

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, and (2) has been subject to such filing
requirements for the past 90 days.

YesX      No

As of July 28, 2001, there were 4,005,831 shares of the Registrants
Common Stock, par value $.01 per share, outstanding.

Transitional Small Business Disclosure Format (check one):

Yes      NoX





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SENSYTECH, INC. AND SUBSIDIARIES

INDEX



|                                                                                                                                                                  |  |  |       | 
|----------------------------------------------------------------------------------------------------------------------------------------------------------------- |  |  | ----- | 
|PART I. FINANCIAL INFORMATION                                                                                                                                    
|                                                                                                                                                                 
|                                                                                                                                                                 
|                                                                                                                                                                 
|                                                                                                                                                                 
|                                                                                                                                                                 
|Item 1. Financial Statements (Unaudited)                                                                                                                         
|                                                                                                                                                                 
|                                                                                                                                                                 
|                                                                                                                                                                 
|                                                                                                                                                                 
|                                                                                                                                                                  |  |  | Pages | 
|                                                                                                                                                                 
|Condensed Consolidated Balance Sheets at
June 30, 2001 and September 30, 2000                                                                                     |  |  | 3-4   | 
|                                                                                                                                                                 
|Condensed Consolidated Statements of Income for the
Three Months Ended June 30, 2001 and     June 30, 2000,
And Nine Months Ended June 30, 2001 and June 30, 2000 |  |  | 5-6   | 
|                                                                                                                                                                 
|Condensed Consolidated Statements of Cash Flows for the
Nine Months Ended June 30, 2001 and     June 30, 2000                                                     |  |  | 7     | 
|                                                                                                                                                                 
|Notes to Condensed Consolidated Financial Statements                                                                                                              |  |  | 8     | 
|                                                                                                                                                                 
|Item 2. Managements Discussion and Analysis of Results of
Operations and Financial Condition                                                                     |  |  | 9-11  | 
|                                                                                                                                                                 
|                                                                                                                                                                 
|PART II. OTHER INFORMATION                                                                                                                                       
|                                                                                                                                                                 
|Item 1. Legal Proceedings                                                                                                                                         |  |  | 12    | 
|                                                                                                                                                                 
|Item 6. Exhibits and Reports on Form 8-K                                                                                                                          |  |  | 12    | 
|                                                                                                                                                                 
|Signatures                                                                                                                                                        |  |  | 13    | 

2



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SENSYTECH, INC. AND SUBSIDIARY

CONDENSED CONSOLIDATED BALANCE SHEETS

ASSETS

|                       |                                                                                                                           |                      |           |             |            |               |           |           |            | 
|---------------------- | ------------------------------------------------------------------------------------------------------------------------- | -------------------- | --------- | ----------- | ---------- | ------------- | --------- | --------- | ---------- | 
|                       |                                                                                                                           |                      |           | June 30,    |            | September 30,
|                       |                                                                                                                           |                      |           | 2001        |            | 2000         
|                       |                                                                                                                           |                      |           |             |            |              
|                       |                                                                                                                           |                      |           | (Unaudited) |            | *            
|CURRENT ASSETS        
|                      
|                      
|                      
|                      
|                       | Cash and cash equivalents                                                                                                 |                      | $         | 6,073,000   |            |               | $         | 1,512,000 |           
|                      
|                      
|                      
|                      
|                       | Accounts receivable, net of allowance for doubtful
accounts of    $215,000 at June 30, 2001 and
$190,000 at June 30, 2000 |                      |           | 2,759,000   |            |               |           | 5,460,000 |           
|                      
|                      
|                      
|                      
|                       | Unbilled contract costs, net                                                                                              |                      |           | 2,343,000   |            |               |           | 3,625,000 |           
|                      
|                      
|                      
|                      
|                       | Deferred income taxes                                                                                                     |                      |           | 598,000     |            |               |           | 459,000   |           
|                      
|                      
|                      
|                      
|                       | Prepaid income taxes                                                                                                      |                      |           | 334,000     |            |               |           | 1,057,000 |           
|                      
|                      
|                      
|                      
|                       | Other current assets                                                                                                      |                      |           | 243,000     |            |               |           | 143,000   |           
|                       |                                                                                                                           |                      |           |             |            |               |           |          
|                      
|                       |                                                                                                                           | TOTAL CURRENT ASSETS |           |             | 12,350,000 |               |           |           | 12,256,000 | 
|                      
|PROPERTY AND EQUIPMENT |                                                                                                                           |                      | 1,540,000 |             |            |               | 1,627,000 |          
|                      
|OTHER ASSETS          
|                      
|                      
|                      
|                      
|                       | Deferred income taxes                                                                                                     |                      |           | 288,000     |            |               |           | 426,000   |           
|                      
|                      
|                      
|                      
|                       | Other assets                                                                                                              |                      |           | 75,000      |            |               |           | 75,000    |           
|                       |                                                                                                                           |                      |           |             |            |               |           |          
|                      
|                       |                                                                                                                           | TOTAL ASSETS         |           | $           | 14,253,000 |               |           | $         | 14,384,000 | 
|                       |                                                                                                                           |                      |           |             |            |               |           |          



|* | The year-end balance sheet data was summarized from audited financial statements, but does not include
all disclosures required by generally accepted accounting principles.
|- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------

The accompanying notes are an integral part of these condensed consolidated financial statements.

3



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SENSYTECH, INC. AND SUBSIDIARY

CONDENSED CONSOLIDATED BALANCE SHEETS, continued

LIABILITIES AND STOCKHOLDERS EQUITY

|                      |                                                  |                                            |            |             |            |               |            |           |            | 
|--------------------- | ------------------------------------------------ | ------------------------------------------ | ---------- | ----------- | ---------- | ------------- | ---------- | --------- | ---------- | 
|                      |                                                  |                                            |            | June 30,    |            | September 30,
|                      |                                                  |                                            |            | 2001        |            | 2000         
|                      |                                                  |                                            |            |             |            |              
|                      |                                                  |                                            |            | (Unaudited) |            | *            
|CURRENT LIABILITIES  
|                     
|                     
|                     
|                     
|                      | Accounts payable                                 |                                            | $          | 855,000     |            |               | $          | 888,000   |           
|                     
|                     
|                     
|                     
|                      | Accrued salaries, benefits, and related expenses |                                            |            | 958,000     |            |               |            | 1,185,000 |           
|                     
|                     
|                     
|                     
|                      | Accrued severance pay-current                    |                                            |            | 343,000     |            |               |            | 420,000   |           
|                     
|                     
|                     
|                     
|                      | Other accrued expenses                           |                                            |            | 155,000     |            |               |            | 325,000   |           
|                     
|                     
|                     
|                     
|                      | Billings in excess of costs                      |                                            |            | 203,000     |            |               |            | 485,000   |           
|                     
|                     
|                     
|                     
|                      | Capital leases                                   |                                            |            | 1,000       |            |               |            | 38,000    |           
|                      |                                                  |                                            |            |             |            |               |            |          
|                     
|                      |                                                  | TOTAL CURRENT LIABILITIES                  |            |             | 2,515,000  |               |            |           | 3,341,000  | 
|                     
|LONG-TERM LIABILITIES
|                     
|                     
|                     
|                     
|                      | Accrued severance pay                            |                                            |            |            |            |               |            | 289,000   |           
|                      |                                                  |                                            |            |             |            |               |            |          
|                     
|STOCKHOLDERS EQUITY 
|                     
|                     
|                     
|                     
|                      | Common stock                                     |                                            |            | 41,000      |            |               |            | 40,000    |           
|                     
|                     
|                     
|                     
|                      | Additional paid-in capital                       |                                            |            | 7,444,000   |            |               |            | 7,290,000 |           
|                     
|                     
|                     
|                     
|                      | Unearned stock-based compensation                |                                            |            | (14,000     | )          |               |            | (55,000   | )         
|                     
|                     
|                     
|                     
|                      | Treasury stock, at cost                          |                                            |            | (303,000    | )          |               |            | (285,000  | )         
|                     
|                     
|                     
|                     
|                      | Retained earnings                                |                                            |            | 4,570,000   |            |               |            | 3,764,000 |           
|                      |                                                  |                                            |            |             |            |               |            |          
|                      |                                                  |                                            | 11,738,000 |             |            |               | 10,754,000 |          
|                      |                                                  |                                            |            |             |            |               |            |          
|                      |                                                  | TOTAL LIABILITIES AND STOCKHOLDERS EQUITY |            | $           | 14,253,000 |               |            | $         | 14,384,000 | 
|                      |                                                  |                                            |            |             |            |               |            |          



|* | The year-end balance sheet data was summarized from audited financial statements, but does not include
all disclosures required by generally accepted accounting principles.
|- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------

The accompanying notes are an integral part of these condensed consolidated financial statements.

4



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SENSYTECH, INC. AND SUBSIDIARY

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

|                           |                                     |                          |          |           |           |                    |          |             |           |  |  | 
|-------------------------- | ----------------------------------- | ------------------------ | -------- | --------- | --------- | ------------------ | -------- | ----------- | --------- |  |  | 
|                           |                                     |                          |          |           |           | Three Months Ended
|                           |                                     |                          |          |           |           | June 30,          
|                           |                                     |                          |          |           |           | 2001               |          | 2000       
|                           |                                     |                          |          |           |           |                    |          |            
|                           |                                     |                          |          |           |           | (Unaudited)        |          | (Unaudited)
|REVENUE                   
|                          
|                          
|                          
|                          
|                           | Contract revenue                    |                          | $        | 4,140,000 |           |                    | $        | 6,257,000   |          
|                           |                                     |                          |          |           |           |                    |          |            
|                          
|COSTS AND EXPENSES        
|                          
|                          
|                          
|                          
|                           | Cost of revenue                     |                          |          | 2,831,000 |           |                    |          | 4,080,000   |          
|                          
|                          
|                          
|                          
|                           | General and administrative expenses |                          |          | 836,000   |           |                    |          | 1,396,000   |          
|                           |                                     |                          |          |           |           |                    |          |            
|                          
|                           |                                     | Total costs and expenses |          |           | 3,667,000 |                    |          |             | 5,476,000 | 
|                           |                                     |                          |          |           |           |                    |          |            
|                          
|INCOME FROM OPERATIONS     |                                     |                          | 473,000  |           |           |                    | 781,000  |            
|                          
|OTHER INCOME              
|                          
|                          
|                          
|                          
|                           | Interest income, net                |                          |          | 47,000    |           |                    |          | 38,000      |          
|                          
|                          
|                          
|                          
|                           | Other Income                        |                          |          | 29,000    |           |                    |          | 5,000       |          
|                           |                                     |                          |          |           |           |                    |          |            
|                          
|INCOME BEFORE INCOME TAXES |                                     |                          | 549,000  |           |           |                    | 824,000  |            
|                          
|INCOME TAX PROVISION       |                                     |                          | (225,000 | )         |           |                    | (312,000 | )          
|                           |                                     |                          |          |           |           |                    |          |            
|                          
|NET INCOME                 |                                     | $                        | 324,000  |           |           | $                  | 512,000  |            
|                           |                                     |                          |          |           |           |                    |          |            
|PER SHARE AMOUNTS (Note 2)
|                           | Basic earnings per share            |                          | $        | 0.08      |           |                    | $        | 0.13        |          
|                           |                                     |                          |          |           |           |                    |          |            
|                           | Diluted earnings per share          |                          | $        | 0.08      |           |                    | $        | 0.12        |          
|                           |                                     |                          |          |           |           |                    |          |            

The accompanying notes are an integral part of these condensed consolidated financial statements.

5



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SENSYTECH, INC. AND SUBSIDIARY

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

|                           |                                     |   |           |            |                   |   |             |            |  |  | 
|-------------------------- | ----------------------------------- | - | --------- | ---------- | ----------------- | - | ----------- | ---------- |  |  | 
|                           |                                     |   |           |            | Nine Months Ended
|                           |                                     |   |           |            | June 30,         
|                           |                                     |   |           |            | 2001              |   | 2000       
|                           |                                     |   |           |            |                   |   |            
|                           |                                     |   |           |            | (Unaudited)       |   | (Unaudited)
|REVENUE                   
|                          
|                          
|                          
|                          
|                           | Contract revenue                    |   | $         | 12,593,000 |                   |   | $           | 17,752,000 | 
|                           |                                     |   |           |            |                   |   |             |           
|                          
|COSTS AND EXPENSES        
|                          
|                          
|                          
|                          
|                           | Cost of revenue                     |   |           | 9,233,000  |                   |   |             | 12,455,000 | 
|                          
|                          
|                          
|                          
|                           | General and administrative expenses |   |           | 2,195,000  |                   |   |             | 3,216,000  | 
|                           |                                     |   |           |            |                   |   |             |           
|                           | Total costs and expenses            |   |           | 11,428,000 |                   |   |             | 15,671,000 | 
|                           |                                     |   |           |            |                   |   |             |           
|                          
|INCOME FROM OPERATIONS     |                                     |   | 1,165,000 |            |                   |   | 2,081,000   |           
|                          
|OTHER INCOME              
|                          
|                          
|                          
|                          
|                           | Interest income, net                |   |           | 113,000    |                   |   |             | 80,000     | 
|                          
|                          
|                          
|                          
|                           | Other income, net                   |   |           | 90,000     |                   |   |             | 6,000      | 
|                           |                                     |   |           |            |                   |   |             |           
|                          
|INCOME BEFORE INCOME TAXES |                                     |   | 1,368,000 |            |                   |   | 2,167,000   |           
|                          
|INCOME TAX PROVISION       |                                     |   | (561,000  | )          |                   |   | (817,000    | )         
|                           |                                     |   |           |            |                   |   |             |           
|                          
|NET INCOME                 |                                     | $ | 807,000   |            |                   | $ | 1,350,000   |           
|                           |                                     |   |           |            |                   |   |             |           
|PER SHARE AMOUNTS (Note 2)
|                           | Basic earnings per share            | $ | 0.20      |            |                   | $ | 0.34        |           
|                           |                                     |   |           |            |                   |   |             |           
|                           | Diluted earnings per share          |   | $         | 0.20       |                   |   | $           | 0.32       | 
|                           |                                     |   |           |            |                   |   |             |           

The accompanying notes are an integral part of these condensed consolidated financial statements.

6



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SENSYTECH, INC. AND SUBSIDIARY

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

|                                                     |  |                                                 |           |                   |          |             |           |   |           |  
|---------------------------------------------------- |  | ----------------------------------------------- | --------- | ----------------- | -------- | ----------- | --------- | - | --------- | -
|                                                     |  |                                                 |           | Nine Months Ended
|                                                     |  |                                                 |           | June 30,         
|                                                     |  |                                                 |           | 2001              |          | 2000       
|                                                     |  |                                                 |           |                   |          |            
|                                                     |  |                                                 |           | (Unaudited)       |          | (Unaudited)
|                                                    
|Net cash provided by (used in) operating activities  |  | $                                               | 4,733,000 |                   |          | $           | (582,000  | )
|                                                     |  |                                                 |           |                   |          |             |           |  
|                                                    
|Cash flows from investing
activities:               
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     |  | Net acquisitions of property and equipment      |           |                   | (272,000 | )           |           |   | (224,000  | )
|                                                     |  |                                                 |           |                   |          |             |           |  
|                                                     |  | Net cash used in investing activities           |           |                   | (272,000 | )           |           |   | (224,000  | )
|                                                     |  |                                                 |           |                   |          |             |           |  
|                                                    
|Cash flows from financing
activities:               
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     |  | Principal payments on capital lease obligations |           |                   | (37,000  | )           |           |   | (33,000   | )
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     |  | Proceeds of stock option exercises              |           |                   | 155,000  |             |           |   | 129,000   |  
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     |  | Purchase of treasury stock                      |           |                   | (18,000  | )           |           |   | (210,000  | )
|                                                     |  |                                                 |           |                   |          |             |           |  
|Net cash provided by (used in) financing activities  |  |                                                 | 100,000   |                   |          |             | (114,000  | )
|                                                     |  |                                                 |           |                   |          |             |           |  
|Net increase (decrease) in cash and cash equivalents |  |                                                 | 4,561,000 |                   |          |             | (920,000  | )
|                                                    
|                                                    
|                                                    
|                                                    
|Cash and cash equivalents, beginning of period       |  |                                                 | 1,512,000 |                   |          |             | 3,076,000 |  
|                                                     |  |                                                 |           |                   |          |             |           |  
|Cash and cash equivalents, end of period             |  | $                                               | 6,073,000 |                   |          | $           | 2,156,000 |  
|                                                     |  |                                                 |           |                   |          |             |           |  
|Supplemental disclosure of cash flow information:   
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     |  | Cash received for income taxes                  |           | $                 | 162,000  |             |           | $ | 4,000     |  
|                                                     |  |                                                 |           |                   |          |             |           |  
|                                                     |  | Cash paid for interest                          |           | $                 | 3,000    |             |           | $ | 5,000     |  
|                                                     |  |                                                 |           |                   |          |             |           |  
|                                                     |  | Cash paid for income taxes                      |           | $                 |         |             |           | $ | 1,745,000 |  
|                                                     |  |                                                 |           |                   |          |             |           |  

The accompanying notes are an integral part of these condensed consolidated financial statements.

7



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SENSYTECH, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)





|1. |  | BASIS OF PRESENTATION
|-- |  | ---------------------

The accompanying condensed consolidated financial statements have been prepared
in accordance with generally accepted accounting principles for interim
financial information for commercial and industrial companies and with the
instructions to Form 10-QSB and Rule 10-01 of Regulation S-X. Accordingly,
they do not include all of the information and footnotes required by generally
accepted accounting principles for complete financial statements. In the
opinion of management, all adjustments (consisting of normal recurring
accruals) considered necessary for fair presentation have been included.
Operating results for the three and nine month periods ended June 30, 2001 are
not necessarily indicative of the results that may be expected for the fiscal
year ending September 30, 2001. Intercompany accounts and transactions have
been eliminated in consolidation. For further information, refer to SenSyTech,
Inc.s Annual Report on Form 10-KSB for the year ended September 30, 2000.



|2. |  | EARNINGS PER SHARE
|-- |  | ------------------

The computation of net earnings per share is based on the weighted average
number of shares of common stock outstanding during the periods presented. The
weighted average number of shares used in the basic earnings per share
calculation was 4,005,202 and 4,002,565 for the three-month periods ended June
30, 2001 and 2000, respectively, and 3,982,056 and 4,005,001 for the nine-month
periods ended June 30, 2001 and 2000, respectively. The weighted average number
of shares used in the diluted earnings per share calculation was 4,047,162 and
4,139,373 for the three-month periods ended June 30, 2001 and 2000,
respectively. The weighted average number of shares used in the diluted
earnings per share calculation was 4,036,000 and 4,181,490 for the nine-month
periods ended June 30, 2001 and 2000, respectively.

|                                               |  |               |           |      |  |   |           | 
|---------------------------------------------- |  | ------------- | --------- | ---- |  | - | --------- | 
|                                               |  | Quarter Ended
|                                               |  | June 30,     
|                                               |  |              
|                                               |  | 2001          |           | 2000
|                                               |  |               |           |     
|Net income                                     |  | $             | 324,000   |      |  | $ | 512,000   | 
|                                               |  |               |           |      |  |   |           | 
|Weighted average shares outstanding  basic    |  |               | 4,005,202 |      |  |   | 4,002,565 | 
|                                              
|                                              
|                                              
|                                              
|Effect of dilutive securities:                
|                                              
|                                              
|                                              
|                                              
|Dilutive shares upon exercise of stock options |  |               | 41,960    |      |  |   | 136,808   | 
|                                               |  |               |           |      |  |   |           | 
|Weighted average shares outstanding  diluted  |  |               | 4,047,162 |      |  |   | 4,139,373 | 
|                                              
|                                              
|                                              
|                                              
|Basic earnings per share                       |  | $             | .08       |      |  | $ | .13       | 
|                                              
|                                              
|                                              
|                                              
|Diluted earnings per share                     |  | $             | .08       |      |  | $ | .12       | 

8



---



|                                               |  |                   |           |      |  |   |           | 
|---------------------------------------------- |  | ----------------- | --------- | ---- |  | - | --------- | 
|                                               |  | Nine Months Ended
|                                               |  | June 30,         
|                                               |  |                  
|                                               |  | 2001              |           | 2000
|                                               |  |                   |           |     
|Net income                                     |  | $                 | 807,000   |      |  | $ | 1,350,000 | 
|                                               |  |                   |           |      |  |   |           | 
|Weighted average shares outstanding  basic    |  |                   | 3,982,056 |      |  |   | 4,005,001 | 
|                                              
|                                              
|                                              
|                                              
|Effect of dilutive securities:                
|                                              
|                                              
|                                              
|                                              
|Dilutive shares upon exercise of stock options |  |                   | 53,944    |      |  |   | 176,489   | 
|                                               |  |                   |           |      |  |   |           | 
|Weighted average shares outstanding  diluted  |  |                   | 4,036,000 |      |  |   | 4,181,490 | 
|                                              
|                                              
|                                              
|                                              
|Basic earnings per share                       |  | $                 | .20       |      |  | $ | .34       | 
|                                              
|                                              
|                                              
|                                              
|Diluted earnings per share                     |  | $                 | .20       |      |  | $ | .32       | 

Item 2. Managements Discussion and Analysis of Results of Operations and
Financial Condition

The following discussion provides information which management believes is
relevant to an assessment and an understanding of the Companys operations and
financial condition. This discussion should be read in conjunction with the
condensed consolidated financial statements and accompanying notes.

Forward-looking Statements

Statements in this filing which are not historical facts are
forward-looking statements under the provisions of the Private Securities
Litigation Reform Act of 1995. All forward-looking statements involve risks
and uncertainties. These statements are based upon numerous assumptions about
future conditions that could prove not to be accurate. Actual events,
transactions or results may materially differ from the anticipated events,
transactions or results described in such statements. The Companys ability to
consummate such transactions and achieve such events or results is subject to
certain risks and uncertainties. In addition to those specifically mentioned
above, such risks and uncertainties include, but are not limited to, the
existence of demand for, and acceptance of, the Companys products and services,
regulatory approvals and developments, economic conditions, the impact of
competition and pricing, results of financing efforts and other factors
affecting the Companys business that are beyond the Companys control. The
Company undertakes no obligation, and does not intend, to update or revise
these forward-looking statements to reflect future events or circumstances.

Results of Operations

THREE MONTHS ENDED JUNE 30, 2001 COMPARED TO THREE MONTHS ENDED JUNE 30, 2000:

Revenue for the three months ended June 30, 2001 was $4,140,000 compared to
$6,257,000 for the three months ended June 30, 2000, resulting in a $2,117,000
or a 33.8% decrease. The decrease was primarily the result of completion of
multi-year production contracts and the delay experienced on new production
orders. The Bobcat, NSSN and PRDF contracts generated approximately 19% of the
revenue for the three months ended June 30, 2001, compared to 33% of the
revenue for the three months ended June 30, 2000.

The total amount of negotiated backlog, including both unfilled firm orders for
the Companys products for which funding had been authorized and appropriated
by the customer, and firm orders for which funding had not been appropriated as
of June 30, 2001 and 2000 was $3,256,000 and $6,632,000, respectively. This
decrease is principally the result of delays in receiving newly negotiated
contract funding and the substantial completion of the ESM Receiver contract.
During the quarter, the Company recorded bookings of $3,148,000 of which
$2,170,000 represented one subcontract for the U.S. Navy.

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Cost of revenue, as a percentage of revenue, increased from 65.2% for the three
months ended June 30, 2000 to 68.4% for the three months ended June 30, 2001.
The Company attributes the increase to lower volume of sales during fiscal year
2001 and certain expenses such as rent, utilities and depreciation
that remained relatively fixed from year to year. These expenses
totaled $302,000 for fiscal year 2001 compared to $268,000 for fiscal
year 2000.

For the three months ended June 30, 2001, general and administrative expenses
decreased to $836,000 from $1,396,000 resulting in a $560,000 reduction or a
40.1% decrease compared to the three-month period ended June 30, 2000. The
decrease was due principally to staffing efficiencies in the Companys
administrative and support functions, and the one time accrual of severance
costs of $495,000 made in the previous year.

Net interest income was $47,000 for the three months ended June 30, 2001,
compared to net interest income of $38,000 for the three months ended June 30,
2000. The increase was due to improved cash flow from operations which afforded
higher daily invested balances.

Income tax expense consists of federal and state income tax. The Companys
effective tax rate was 41% for the three months ended June 30, 2001, compared
to an effective tax rate of 37.9% for the three months ended June 30, 2000.
The rate varied from the statutory rate primarily due to state taxes.

Net income for the three months ended June 30, 2001 decreased to $324,000,
compared to a net income of $512,000 for the three months ended June 30, 2000.
The decrease of $188,000 was the result of the items discussed above.

NINE MONTHS ENDED JUNE 30, 2001 COMPARED TO NINE MONTHS ENDED JUNE 30, 2000:

Revenue for the nine months ended June 30, 2001 was $12,593,000 compared to
$17,752,000 for the nine months ended June 30, 2000, resulting in a $5,159,000
or 29.1% decrease. The decrease was primarily the result of completion of
multi-year production contracts and the delay experienced on new production
orders. The ESM Receiver, Bobcat and PRDF contracts generated approximately 12%
of the revenue for the nine months ended June 30, 2001, compared to
approximately 29% for the nine months ended June 30, 2000.

Cost of revenue, as a percentage of revenue, increased from 70.1% for the nine
months ended June 30, 2000 to 73.3% for the nine months ended June 30, 2001.
The increase is due to certain expenses such as rent, utilities and
depreciation that remained relatively fixed from year to year. These
expenses totaled $892,000 for fiscal year 2001 compared to $916,000
for fiscal year 2000.

For the nine months ended June 30, 2001, general and administrative expenses
decreased from $3,216,000 to $2,195,000 or a 31.7% decrease due principally to
staffing efficiencies in the Companys administrative and support functions,
and the one time accrual of severance costs of $632,000 made in the previous year.

Net interest income was $113,000 for the nine months ended June 30, 2001,
compared to net interest income of $80,000 for the nine months ended June 30,
2000. The increase is due to improved cash flow from operations and
substantially improved cash collection activity which resulted in a decrease in
accounts receivables, which afforded higher daily invested balances. Other
income increased from $6,000 for the nine months ended June 30, 2000 to $90,000
for the nine months ended June 30, 2001. The increase is attributed to
lease income received during 2001 that began during the fourth quarter of
2000.

Income tax expense consists of federal and state income tax. The Companys
effective tax rate was 41% for the nine months ended June 30, 2001, compared to
an effective tax rate of 37.7% for the nine months ended June 30, 2000. The
rate varied from the statutory rate primarily due to state taxes.

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Net income for the nine months ended June 30, 2001 decreased to $807,000,
compared to a net income of $1,350,000 for the nine months ended June 30, 2000.
The decrease of $543,000 was the result of the items discussed above.

Liquidity and Sources of Capital

Cash flows provided by operating activities were $4,733,000 for the nine months
ended June 30, 2001, compared to cash flows used by operating activities of
$582,000 during the comparable nine-month period of fiscal year 2000. This
increase was principally due to improved billing and collections for the
period offset by lower income levels.

The net cash used for investing activities during the nine-month period ended
June 30, 2001 was $272,000, compared to net cash used by the Company for its
investing activities of $224,000 during the first nine months of fiscal year
2000. The current period expenditures were related to the acquisition of
property and equipment. The Company anticipates that it will continue to incur
capital expenditures at this approximate rate through the end of the fourth
quarter of fiscal year 2001.

The net cash provided by the Company in financing activities during the
nine-month period ended June 30, 2001 was $100,000, compared to net cash used
by the Company in financing activities of $114,000 during the comparable
nine-month period of fiscal year 2000. The 2001 activity was principally the
result of the proceeds of stock option exercised offset by the payment of
capital lease obligations and purchase of treasury stock. At June 30, 2001, the
Company was in compliance with the covenants contained in the line of credit
agreement, and there were no amounts outstanding thereunder.

As of June 30, 2001, the Company held 77,245 shares of treasury
stock valued at $303,000. The shares may be used for various purposes
including stock options and potential acquisitions.

The Company currently believes that its existing funds, amounts generated by
operations, and amounts available for borrowings under its line of credit will
be sufficient to meet its working capital needs through the next 12 months.

Quantitative and Qualitative Disclosures About Market Risk

The Company's current investment policy limits its investment in
financial instruments to cash and cash equivalents. The use of
financial derivatives and preferred  and common stock is strictly
prohibited. The Company believes it minimizes its risk by investing
in a money market fund that provides proper diversification along
with a "AAA" rating by Standard & Poor's and Moody's. The Company
believes that its earnings and cash flows are not materially affected
by changes in interest rates, due to the short-term investment
horizon for which these securities are invested.

Segment Reporting

The Company is organized into three groups: Electronic Warfare, Communications
and Imaging Group for which all three groups are engaged in passive
surveillance markets. The Company is currently evaluating its segment reporting
structure, although it currently believes it is operating in only one segment.
Separate financial statement information for each group is not currently
prepared or available. As the Company continues to evaluate changes in its
reporting structure, other segments may be reported.

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PART II. OTHER INFORMATION

Item 1. Legal Proceedings

The Company is not a party to, nor is any of its property the subject of, any
pending legal proceedings other than that which is incidental to the ordinary
course of business.

Item 6. Exhibits and Reports on Form 8-K

Exhibits. The Company has no exhibits during this period.

Reports on Form 8-K. The Company did not file any Reports on Form 8-K during
this period.

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SIGNATURES

In accordance with the requirements of the Securities Exchange Act of 1934, the
registrant has caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.

|                |                |     |  |                                     
|--------------- | -------------- | --- |  | ------------------------------------
|                | SENSYTECH, INC
|               
|August 14, 2001 |                | By: |  | /s/ S. Kent Rockwell                
|                |                |     |  |                                     
|                |                |     |  | S. Kent Rockwell                    
|               
|               
|               
|               
|                |                |     |  | Chairman, Chief Executive Officer   
|               
|               
|               
|               
|                |                |     |  | & President                         
|               
|               
|               
|               
|               
|                |                | By: |  | /s/ Donald F. Fultz                 
|                |                |     |  |                                     
|                |                |     |  | Donald F. Fultz                     
|               
|               
|               
|               
|                |                |     |  | Treasurer, Chief Financial Officer &
|               
|               
|               
|               
|                |                |     |  | Director of Business Operations     
|               
|               
|               

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