**UNITED      STATES **

**SECURITIES      AND EXCHANGE COMMISSION **

**WASHINGTON,      D.C. 20549 **

**FORM      10-Q**

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

**OR**

**[_]      **
**Transition      Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of      1934**
** **

**Commission      File Number 001-14015**

**IONATRON,      INC.**

|  **Delaware**                                                                  | **77-0262908**                                      |
|-------------------------------------------------------------------------------------|-----------------------------------------------------|
|  (State                or Other Jurisdiction of Incorporation or Organization) | (IRS                Employer Identification Number) |

|   |  **3716 East Columbia Street,              Suite 120**  |  **85714**                             |
|--------|-------------------------------------------------------------------|---------------------------------------------|
|   |  **Tucson, Arizona**                                         |   (Zip                Code)  |
|   |  (Address of Principal Executive              Offices)       |                                        |

**Registrant’s      telephone number, including area code**
**(520)      628-7415**

----

|   | PART                  I -  | FINANCIAL                  INFORMATION                                                                                  |                                                                                                                                                        |
|--------|----------------------------|-------------------------------------------------------------------------------------------------------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                       |                                                                                                                    |                                                                                                                                                        |
|   | Item                  1-   | Consolidated                  Financial Statements                                                                      |                                                                                                                                                        |
|   |                       |                                                                                                                    |                                                                                                                                                        |   |
|   |                       |                                                                                                                    | Consolidated                  Balance Sheets as of September 30, 2006 (Unaudited) and December                  31, 2005                                    | 3 |
|   |                       |                                                                                                                    | Consolidated                  Statements of Operations for the three months ended September 30,                  2006 and                  2005 (Unaudited) | 4 |
|   |                       |                                                                                                                    | Consolidated                  Statements of Operations for the nine months ended September 30,                  2006 and                  2005 (Unaudited)  | 5 |
|   |                       |                                                                                                                    | Consolidated                  Statement of Stockholders' Equity for the nine months ended September                  30, 2006 (Unaudited)                   | 6 |
|   |                       |                                                                                                                    | Consolidated                  Statements of Cash Flows for the nine months ended September 30,                  2006 and                  2005 (Unaudited)  | 7 |
|   |                       |                                                                                                                    | Notes                  to Consolidated Financial Statements                                                                                                 | 8 |
|   |                       |                                                                                                                    |                                                                                                                                                        |   |
|   | Item                  2-   | Management's                  Discussion and Analysis of Financial Condition and Results of                  Operations | 18                                                                                                                                                          |
|   | Item                  3-   | Quantitative                  and Qualitative Disclosures About Market Risk                                             | 24                                                                                                                                                          |
|   | Item                  4-   | Controls                  and Procedures                                                                                | 24                                                                                                                                                          |
|   |                       |                                                                                                                    |                                                                                                                                                        |
|   | PART                  II - | OTHER                  INFORMATION                                                                                      | 25                                                                                                                                                          |
|   |                       |                                                                                                                    |                                                                                                                                                        |
|   | Item                  1-   | Legal                  Proceedings                                                                                      | 25                                                                                                                                                          |
|   | Item                  2-   | Unregistered                  Sales of Equity Securities and Use of Proceeds                                            | 25                                                                                                                                                          |
|   | Item                  6-   | Exhibits                                                                                                                | 26                                                                                                                                                          |
|   |                       |                                                                                                                    |                                                                                                                                                        |
|   | SIGNATURES                 | 27                                                                                                                      |

----

**PART      I FINANCIAL INFORMATION**

**ITEM      1. CONSOLIDATED FINANCIAL STATEMENTS**

| IONATRON,                  INC.              |
|----------------------------------------------|
| CONSOLIDATED                  BALANCE SHEETS |

|                                                                                                                                                                                                                                                                                                                  |   |   | **September                  30,2006**  |   |   | **December                  31, 2005** |   |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|----------------------------------------------|--------|--------|----------------------------------------|--------|
| ASSETS                                                                                                                                                                                                                                                                                                                |   |   | **(Unaudited**)****                          |   |   | **(Audited**)****                      |   |
| Current                  assets                                                                                                                                                                                                                                                                                       |   |   |                                         |   |   |                                   |   |
| Cash                  and cash equivalents                                                                                                                                                                                                                                                                            |   | $      | 23,817,395                                   |   | $      | 371,248                                |   |
| Accounts                  receivable - net                                                                                                                                                                                                                                                                            |   |   | 1,925,738                                    |   |   | 5,367,691                              |   |
| Inventory                                                                                                                                                                                                                                                                                                             |   |   | 2,682,941                                    |   |   | 1,348,700                              |   |
| Securities                  available-for-sale                                                                                                                                                                                                                                                                        |   |   | 8,500,000                                    |   |   | 12,000,000                             |   |
| Prepaid                  expenses and deposits                                                                                                                                                                                                                                                                        |   |   | 296,546                                      |   |   | 486,478                                |   |
| Other                  receivables                                                                                                                                                                                                                                                                                    |   |   | 2,690                                        |   |   | 20,085                                 |   |
| Total                  current assets                                                                                                                                                                                                                                                                                 |   |   | 37,225,310                                   |   |   | 19,594,202                             |   |
| Property                  and equipment - net                                                                                                                                                                                                                                                                         |   |   | 2,359,164                                    |   |   | 1,732,796                              |   |
| Other                  assets                                                                                                                                                                                                                                                                                         |   |   | 65,813                                       |   |   | 50,449                                 |   |
| Goodwill                                                                                                                                                                                                                                                                                                              |   |   | 1,487,884                                    |   |   | 1,487,884                              |   |
| Intangible                  assets - net                                                                                                                                                                                                                                                                              |   |   | 750,600                                      |   |   | 787,500                                |   |
| TOTAL                  ASSETS                                                                                                                                                                                                                                                                                         |   | $      | 41,888,771                                   |   | $      | 23,652,831                             |   |
|                                                                                                                                                                                                                                                                                                                  |   |   |                                         |   |   |                                   |   |
| LIABILITIES                  AND STOCKHOLDERS’ EQUITY                                                                                                                                                                                                                                                           |   |   |                                         |   |   |                                   |   |
| Current                  liabilities                                                                                                                                                                                                                                                                                  |   |   |                                         |   |   |                                   |   |
| Accounts                  payable                                                                                                                                                                                                                                                                                     |   | $      | 440,164                                      |   | $      | 997,589                                |   |
| Accrued                  expenses                                                                                                                                                                                                                                                                                     |   |   | 532,900                                      |   |   | 500,656                                |   |
| Accrued                  compensation                                                                                                                                                                                                                                                                                 |   |   | 520,488                                      |   |   | 391,867                                |   |
| Withholding                  taxes payable                                                                                                                                                                                                                                                                            |   |   | 36,762                                       |   |   | 45                                     |   |
| Insurance                  premium financing                                                                                                                                                                                                                                                                          |   |   | -                                            |   |   | 216,043                                |   |
| Billings                  in excess of costs                                                                                                                                                                                                                                                                          |   |   | -                                            |   |   | 84,208                                 |   |
| Current                  portion of capital lease obligations                                                                                                                                                                                                                                                         |   |   | 46,146                                       |   |   | 37,617                                 |   |
| Total                  current liabilities                                                                                                                                                                                                                                                                            |   |   | 1,576,460                                    |   |   | 2,228,025                              |   |
| Capital                  lease obligations                                                                                                                                                                                                                                                                            |   |   | 42,595                                       |   |   | 62,290                                 |   |
| Deferred                  tax liabilities                                                                                                                                                                                                                                                                             |   |   | 78,589                                       |   |   | 47,991                                 |   |
| Deferred                  rent                                                                                                                                                                                                                                                                                        |   |   | 105,052                                      |   |   | 82,623                                 |   |
| Total                  liabilities                                                                                                                                                                                                                                                                                    |   |   | 1,802,696                                    |   |   | 2,420,929                              |   |
|                                                                                                                                                                                                                                                                                                                  |   |   |                                         |   |   |                                   |   |
| Commitments                  and contingencies                                                                                                                                                                                                                                                                        |   |   |                                         |   |   |                                   |   |
|                                                                                                                                                                                                                                                                                                                  |   |   |                                         |   |   |                                   |   |
| Stockholders’                  equity                                                                                                                                                                                                                                                                           |   |   |                                         |   |   |                                   |   |
| Series                  A Convertible Preferred stock, $.001 par value, 2,000,000 shares                  authorized                  and 710,000 shares issued and outstanding at September 30,                  2006;                  720,000 shares issued and outstanding at December 31,                  2005. |   | 710    |                                         |   | 720    |                                   |
| Common                  stock, $.001 par value, 100,000,000 shares authorized; 78,001,825                  shares                  issued and outstanding at September 30, 2006; 71,996,111 shares                  issued                  and outstanding at December 31, 2005                                      |   |   | 78,002                                       |   |   | 71,996                                 |   |
| Additional                  paid-in capital                                                                                                                                                                                                                                                                           |   |   | 59,477,040                                   |   |   | 28,044,794                             |   |
| Accumulated                  deficit                                                                                                                                                                                                                                                                                  |   |   | (19,469,677                                  | )      |   | (6,885,608                             | )      |
| Total                  stockholders’ equity                                                                                                                                                                                                                                                                     |   |   | 40,086,075                                   |   |   | 21,231,902                             |   |
| TOTAL                  LIABILITIES AND STOCKHOLDERS’ EQUITY                                                                                                                                                                                                                                                     |   | $      | 41,888,771                                   |   | $      | 23,652,831                             |   |
|                                                                                                                                                                                                                                                                                                                  |   |   |                                         |   |   |                                   |   |

----

| IONATRON,                  INC.                        |
|--------------------------------------------------------|
| CONSOLIDATED                  STATEMENTS OF OPERATIONS |
| (Unaudited)                                            |

|                                                                                                      |   |   | **For                  the three months ended****September                  30,**  |   |
|-----------------------------------------------------------------------------------------------------------|--------|--------|-----------------------------------------------------------------------------------------|--------|
|                                                                                                      |   |   | **2006**                                                                                |   |   | **2005** |   |
|                                                                                                      |   |   |                                                                                    |   |   |   |   |
| Revenue                                                                                                   |   | $      | 1,537,314                                                                               |   | $ | 6,219,161 |   |
|                                                                                                      |   |   |                                                                                    |   |   |   |   |
| Cost                  of revenue                                                                          |   |   | 1,539,077                                                                               |   |   | 5,560,579 |   |
|                                                                                                      |   |   |                                                                                    |   |   |   |   |
| Gross                  profit (loss)                                                                      |   |   | (1,763                                                                                  | )      |   | 658,582 |   |
|                                                                                                      |   |   |                                                                                    |   |   |   |   |
| Operating                  expenses:                                                                      |   |   |                                                                                    |   |   |   |   |
| General                  and administrative                                                               |   |   | 2,492,610                                                                               |   |   | 580,042 |   |
| Selling                  and marketing                                                                    |   |   | 144,522                                                                                 |   |   | 144,928 |   |
| Research                  and development                                                                 |   |   | 967,850                                                                                 |   |   | 231,806 |   |
| Total                  operating expenses                                                                 |   |   | 3,604,982                                                                               |   |   | 956,776 |   |
|                                                                                                      |   |   |                                                                                    |   |   |   |   |
| Operating                  loss                                                                           |   |   | (3,606,745                                                                              | )      |   | (298,194 | ) |
|                                                                                                      |   |   |                                                                                    |   |   |   |   |
| Other                  (expense) income                                                                   |   |   |                                                                                    |   |   |   |   |
| Interest                  expense                                                                         |   |   | (2,122                                                                                  | )      |   | (63,897 | ) |
| Interest                  income                                                                          |   |   | 255,093                                                                                 |   |   | 9,380 |   |
| Other                                                                                                     |   |   | 500                                                                                     |   |   | 1,853 |   |
| Total                  other                                                                              |   |   | 253,471                                                                                 |   |   | (52,664 | ) |
|                                                                                                      |   |   |                                                                                    |   |   |   |   |
| Loss                  before provision for income taxes                                                   |   |   | (3,353,274                                                                              | )      |   | (350,858 | ) |
|                                                                                                      |   |   |                                                                                    |   |   |   |   |
| Provision                  for income taxes                                                               |   |   | 10,199                                                                                  |   |   | 10,477 |   |
|                                                                                                      |   |   |                                                                                    |   |   |   |   |
| Net                  loss                                                                                 |   |   | (3,363,473                                                                              | )      |   | (361,335 | ) |
|                                                                                                      |   |   |                                                                                    |   |   |   |   |
| Preferred                  stock dividends                                                                |   |   | (298,054                                                                                | )      |   | - |   |
|                                                                                                      |   |   |                                                                                    |   |   |   |   |
| Net                  loss attributable to common stockholders                                             |   | $      | (3,661,527                                                                              | )      | $ | (361,335 | ) |
|                                                                                                      |   |   |                                                                                    |   |   |   |   |
| Net                  loss per common share – basic and diluted                                      |   | $      | (0.05                                                                                   | )      | $ | (0.01 | ) |
|                                                                                                      |   |   |                                                                                    |   |   |   |   |
| Weighted                  average number of shares outstanding, basic and diluted                         |   |   | 76,084,796                                                                              |   |   | 71,354,540 |   |
|                                                                                                      |   |   |                                                                                    |   |   |   |   |
| See                  accompanying notes to consolidated financial statements                  (unaudited) |   |

----

| IONATRON,                  INC.                        |
|--------------------------------------------------------|
| CONSOLIDATED                  STATEMENTS OF OPERATIONS |
| (Unaudited)                                            |

|                                                                                                      |   |   | **For                  the nine months ended****September                  30,**  |   |
|-----------------------------------------------------------------------------------------------------------|--------|--------|----------------------------------------------------------------------------------------|--------|
|                                                                                                      |   |   | **2006**                                                                               |   |   | **2005** |   |
|                                                                                                      |   |   |                                                                                   |   |   |   |   |
| Revenue                                                                                                   |   | $      | 8,609,311                                                                              |   | $ | 12,745,954 |   |
|                                                                                                      |   |   |                                                                                   |   |   |   |   |
| Cost                  of revenue                                                                          |   |   | 8,329,486                                                                              |   |   | 11,740,891 |   |
|                                                                                                      |   |   |                                                                                   |   |   |   |   |
| Gross                  profit                                                                             |   |   | 279,825                                                                                |   |   | 1,005,063 |   |
|                                                                                                      |   |   |                                                                                   |   |   |   |   |
| Operating                  expenses:                                                                      |   |   |                                                                                   |   |   |   |   |
| General                  and administrative                                                               |   |   | 8,708,326                                                                              |   |   | 3,449,053 |   |
| Selling                  and marketing                                                                    |   |   | 419,771                                                                                |   |   | 375,590 |   |
| Research                  and development                                                                 |   |   | 3,244,096                                                                              |   |   | 723,452 |   |
| Total                  operating expenses                                                                 |   |   | 12,372,193                                                                             |   |   | 4,548,095 |   |
|                                                                                                      |   |   |                                                                                   |   |   |   |   |
| Operating                  loss                                                                           |   |   | (12,092,368                                                                            | )      |   | (3,543,032 | ) |
|                                                                                                      |   |   |                                                                                   |   |   |   |   |
| Other                  (expense) income                                                                   |   |   |                                                                                   |   |   |   |   |
| Interest                  expense                                                                         |   |   | (11,485                                                                                | )      |   | (180,076 | ) |
| Interest                  income                                                                          |   |   | 479,195                                                                                |   |   | 30,381 |   |
| Other                                                                                                     |   |   | 544                                                                                    |   |   | 2,445 |   |
| Total                  other                                                                              |   |   | 468,254                                                                                |   |   | (147,250 | ) |
|                                                                                                      |   |   |                                                                                   |   |   |   |   |
| Loss                  before provision for income taxes                                                   |   |   | (11,624,114                                                                            | )      |   | (3,690,282 | ) |
|                                                                                                      |   |   |                                                                                   |   |   |   |   |
| Provision                  for income taxes                                                               |   |   | 32,101                                                                                 |   |   | 29,347 |   |
|                                                                                                      |   |   |                                                                                   |   |   |   |   |
| Net                  loss                                                                                 |   |   | (11,656,215                                                                            | )      |   | (3,719,629 | ) |
|                                                                                                      |   |   |                                                                                   |   |   |   |   |
| Preferred                  stock dividends                                                                |   |   | (905,377                                                                               | )      |   | - |   |
|                                                                                                      |   |   |                                                                                   |   |   |   |   |
| Net                  loss attributable to common stockholders                                             |   | $      | (12,561,592                                                                            | )      | $ | (3,719,629 | ) |
|                                                                                                      |   |   |                                                                                   |   |   |   |   |
| Net                  loss per common share – basic and diluted                                      |   | $      | (0.17                                                                                  | )      | $ | (0.05 | ) |
|                                                                                                      |   |   |                                                                                   |   |   |   |   |
| Weighted                  average number of shares outstanding, basic and diluted                         |   |   | 73,858,433                                                                             |   |   | 71,187,716 |   |
|                                                                                                      |   |   |                                                                                   |   |   |   |   |
| See                  accompanying notes to consolidated financial statements                  (unaudited) |   |

----

|                                                                                                      |   |   |                                    |   |   |                                 |   |   |       |   |   |                  |   |   |       |   |
|-----------------------------------------------------------------------------------------------------------|--------|--------|-----------------------------------------|--------|--------|--------------------------------------|--------|--------|------------|--------|--------|-----------------------|--------|--------|------------|--------|
|                                                                                                      |   |   | **Common                  Stock**  |   |   | **Preferred                  Stock** |   |   |       |   |   | **Accumulated**  |   |   |       |   |
|                                                                                                      |   |   | **Shares**                         |   |   | **Amount**                           |   |   | **Shares** |   |   | **Amount**            |   |   | **APIC**   |   |   | ** Deficit** |   |   | **Total** |   |
| Balance                  as of December                  31, 2005                                         |   |   | 71,996,111                              |   | $      | 71,996                               |   |   | 720,000    |   | $      | 720                   |   | $      | 28,044,794 |   | $ | (6,885,608 | ) | $ | 21,231,902 |   |
|                                                                                                      |   |   |                                    |   |   |                                 |   |   |       |   |   |                  |   |   |       |   |   |   |   |   |   |   |
| Exercise                  of stock options and warrants                                                   |   |   | 1,276,833                               |   |   | 1,278                                |   |   | -          |   |   | -                     |   |   | 2,463,610  |   |   | - |   |   | 2,464,888 |   |
| Options                  and warrants issued for                  services performed                      |   |   | -                                       |   |   | -                                    |   |   | -          |   |   | -                     |   |   | 214,029    |   |   | - |   |   | 214,029 |   |
| Stock-based                  compensation expense                                                         |   |   | -                                       |   |   | -                                    |   |   | -          |   |   | -                     |   |   | 2,882,721  |   |   | - |   |   | 2,882,721 |   |
| Preferred                  stock converted into common stock                                              |   |   | 20,833                                  |   |   | 21                                   |   |   | (10,000    | )      |   | (10                   | )      |   | (11        | )      |   | - |   |   | - |   |
| Preferred                  stock dividend paid May                  1, 2006                               |   |   | 46,914                                  |   |   | 47                                   |   |   | -          |   |   | -                     |   |   | 624,144    |   |   | (624,191 | ) |   | - |   |
| Preferred                  stock dividend paid                  August 1, 2006                            |   |   | 44,807                                  |   |   | 44                                   |   |   | -          |   |   | -                     |   |   | 303,619    |   |   | (303,663 | ) |   | - |   |
| Sale                  of common stock and warrants                  net of offering costs                 |   |   | 4,616,327                               |   |   | 4,616                                |   |   | -          |   |   | -                     |   |   | 24,944,134 |   |   | - |   |   | 24,948,750 |   |
| Net                  loss for the nine monthsended                  September 30, 2006                    |   |   | -                                       |   |   | -                                    |   |   | -          |   |   | -                     |   |   | -          |   |   | (11,656,215 | ) |   | (11,656,215 | ) |
| Balance                  as of September                  30, 2006                                        |   |   | 78,001,825                              |   | $      | 78,002                               |   |   | 710,000    |   | $      | 710                   |   | $      | 59,477,040 |   | $ | (19,469,677 | ) | $ | 40,086,075 |   |
|                                                                                                      |   |   |                                    |   |   |                                 |   |   |       |   |   |                  |   |   |       |   |   |   |   |   |   |   |
| See                  accompanying notes to consolidated financial statements                  (unaudited) |

----

| IONATRON,                INC.                        |
|------------------------------------------------------|
| CONSOLIDATED                STATEMENTS OF CASH FLOWS |
| (Unaudited)                                          |

|                                                                                                      |   |   | **For                the nine months ended****September                30,**  |   |
|-----------------------------------------------------------------------------------------------------------|--------|--------|------------------------------------------------------------------------------------|--------|
|                                                                                                      |   |   | **2006**                                                                           |   |   | **2005** |   |
| CASH                FLOWS FROM OPERATING ACTIVITIES:                                                      |   |   |                                                                               |   |   |   |   |
| Net                loss                                                                                   |   | $      | (11,656,215                                                                        | )      | $ | (3,719,629 | ) |
| Adjustments                to reconcile net loss to net cash used in operating                activities: |   |   |                                                                               |   |   |   |   |
| Depreciation                and amortization                                                              |   |   | 687,266                                                                            |   |   | 920,773 |   |
| Loss                (gain) on equipment disposal                                                          |   |   | (3,996                                                                             | )      |   | 58,825 |   |
| Deferred                income tax provision                                                              |   |   | 30,598                                                                             |   |   | 28,731 |   |
| Provision                for doubtful accounts                                                            |   |   | 98,400                                                                             |   |   | - |   |
| Provision                for losses on projects                                                           |   |   | 144,892                                                                            |   |   | - |   |
| Charge                for obsolete inventory                                                              |   |   | 825,433                                                                            |   |   | - |   |
| Non-cash                stock based compensation expense                                                  |   |   | 2,882,721                                                                          |   |   | - |   |
| Stock,                options and warrants issued for services performed                                  |   |   | 214,029                                                                            |   |   | 211,646 |   |
| (Increase)                in other assets                                                                 |   |   | (15,364                                                                            | )      |   | (28,225 | ) |
| Changes                in working capital components:                                                     |   |   |                                                                               |   |   |   |   |
| (Increase)                decrease in accounts receivable                                                 |   |   | 3,343,553                                                                          |   |   | (370,241 | ) |
| Decrease                in other receivables                                                              |   |   | 17,395                                                                             |   |   | 18,973 |   |
| (Increase)                in inventory                                                                    |   |   | (2,731,270                                                                         | )      |   | (698,391 | ) |
| Decrease                in prepaid expenses and deposits                                                  |   |   | 189,932                                                                            |   |   | 35,504 |   |
| Increase                (decrease) in accounts payable                                                    |   |   | (557,425                                                                           | )      |   | 948,685 |   |
| Increase                (decrease) in billings in excess of costs                                         |   |   | (84,208                                                                            | )      |   | 44,713 |   |
| Increase                (decrease) in accrued expenses                                                    |   |   | 3,968                                                                              |   |   | (77,808 | ) |
| Net                cash used in operating activities                                                      |   |   | (6,610,291                                                                         | )      |   | (2,626,444 | ) |
|                                                                                                      |   |   |                                                                               |   |   |   |   |
| CASH                FLOWS FROM INVESTING ACTIVITIES:                                                      |   |   |                                                                               |   |   |   |   |
| Purchase                of equipment                                                                      |   |   | (833,079                                                                           | )      |   | (889,524 | ) |
| Proceeds                from sale of available-for-sale marketable securities                             |   |   | 4,000,000                                                                          |   |   | 1,000,000 |   |
| Purchases                of available-for-sale marketable securities                                      |   |   | (500,000                                                                           | )      |   | - |   |
| Proceeds                from disposal of equipment                                                        |   |   | 6,899                                                                              |   |   | - |   |
| Net                cash provided by investing activities                                                  |   |   | 2,673,820                                                                          |   |   | 110,476 |   |
|                                                                                                      |   |   |                                                                               |   |   |   |   |
| CASH                FLOWS FROM FINANCING ACTIVITIES:                                                      |   |   |                                                                               |   |   |   |   |
| Proceeds                from sale of common stock and warrants                                            |   |   | 24,948,750                                                                         |   |   | - |   |
| Proceeds                from note payable to stockholder                                                  |   |   | -                                                                                  |   |   | 100,000 |   |
| Principal                payments on capital lease obligations                                            |   |   | (31,020                                                                            | )      |   | (16,772 | ) |
| Exercise                of stock options and warrants                                                     |   |   | 2,464,888                                                                          |   |   | 524,813 |   |
| Net                cash provided by financing activities                                                  |   |   | 27,382,618                                                                         |   |   | 608,041 |   |
|                                                                                                      |   |   |                                                                               |   |   |   |   |
| Net                increase (decrease) in cash and cash equivalents                                       |   |   | 23,446,147                                                                         |   |   | (1,907,927 | ) |
|                                                                                                      |   |   |                                                                               |   |   |   |   |
| Cash                and cash equivalents, beginning of period                                             |   |   | 371,248                                                                            |   |   | 2,495,779 |   |
|                                                                                                      |   |   |                                                                               |   |   |   |   |
| Cash                and cash equivalents, end of period                                                   |   | $      | 23,817,395                                                                         |   | $ | 587,852 |   |
|                                                                                                      |   |   |                                                                               |   |   |   |   |
| See                non-cash investing and financing activities at Note 14                                 |
| See                accompanying notes to consolidated financial statements                (unaudited)     |

----

**1.  **
**NATURE      OF OPERATIONS AND BASIS OF PRESENTATION**

**NATURE      OF BUSINESS AND SUMMARY OF OPERATIONS:**

**BASIS      OF PRESENTATION**

**USE      OF ESTIMATES**

** **

**2.                 **
**RECENT      ACCOUNTING PRONOUNCEMENTS**

----

**3.**
**STOCK-BASED      COMPENSATION**

----

|                                                           |   |   |                                                                     |   |   |                                                              |   |
|----------------------------------------------------------------|--------|--------|--------------------------------------------------------------------------|--------|--------|-------------------------------------------------------------------|--------|
|                                                           |   |   | **For                  the three months ended September 30, 2005**  |   |   | **For                  the nine months ended September 30, 2005** |   |
| Net                  loss:                                     |   |   |                                                                     |   |   |                                                              |   |
| As                  reported                                   |   | $      | (361,335                                                                 | )      | $      | (3,719,629                                                        | )      |
|                                                           |   |   |                                                                     |   |   |                                                              |   |
| Pro                  forma stock compensation expense          |   |   | (380,154                                                                 | )      |   | (3,190,581                                                        | )      |
| Pro                  forma                                     |   | $      | (741,489                                                                 | )      | $      | (6,910,210                                                        | )      |
|                                                           |   |   |                                                                     |   |   |                                                              |   |
| Net                  loss per share – basic and diluted: |   |   |                                                                     |   |   |                                                              |   |
| As                  reported                                   |   | $      | (0.01                                                                    | )      | $      | (0.05                                                             | )      |
| Pro                  forma                                     |   | $      | (0.01                                                                    | )      | $      | (0.10                                                             | )      |

|                                      |   |   | **Nine                  months Ended September 30**  |   |
|-------------------------------------------|--------|--------|-----------------------------------------------------------|--------|
|                                      |   |   | **2006**                                                  |   |   | **2005** |   |
| Expected                  life (years)    |   |   | 2.5                  years                                |   |   | 5.0                  years |   |
| Dividend                  yield           |   |   | 0.0%                                                      |   |   | 0.0% |   |
|                                      |   |   |                                                      |   |   |   |   |   |   |   |   |   |   |
|                                      |   |   | From                                                 |   |   | To |   |   | From |   |   | To |   |
| Expected                  volatility      |   |   | 38.44%                                                    |   |   | 42.71% |   |   | 62.0% |   |   | 75.0% |   |
| Risk                  free interest rates |   |   | 4.57%                                                     |   |   | 4.96% |   |   | 3.29% |   |   | 4.05% |   |

|                                               |   |   | **Shares**  |   |   | **Weighted                      Average Exercise Price** |   |   | **Aggregate                      Intrinsic Value** |   |
|----------------------------------------------------|--------|--------|------------------|--------|--------|----------------------------------------------------------|--------|--------|----------------------------------------------------|--------|
|                                               |   |   |             |   |   |                                                     |   |   |                                               |   |
| Outstanding                  at December 31, 2005  |   |   | 3,481,615        |   | $      | 4.30                                                     |   |   |                                               |   |
| Granted                                            |   |   | 3,506,850        |   | $      | 7.49                                                     |   |   |                                               |   |
| Exercised                                          |   |   | (1,357,635       | )      | $      | 2.72                                                     |   |   |                                               |   |
| Forfeited                                          |   |   | (446,857         | )      | $      | 9.35                                                     |   |   |                                               |   |
| Outstanding                  at September 30, 2006 |   |   | 5,183,973        |   | $      | 6.51                                                     |   | $      | 2,494,998                                          |   |
|                                               |   |   |             |   |   |                                                     |   |   |                                               |   |
| Exercisable                  at September 30, 2006 |   |   | 1,879,652        |   | $      | 5.17                                                     |   | $      | 2,375,460                                          |   |
|                                               |   |   |             |   |   |                                                     |   |   |                                               |   |

----

**4.**
**ACCOUNTS      RECEIVABLE**

| Accounts                  receivable consist of the following at:     |   |   | September                  30,2006 |   |   | December                  31, 2005 |   |
|-----------------------------------------------------------------------|--------|--------|------------------------------------|--------|--------|------------------------------------|--------|
|                                                                  |   |   |                               |   |   |                               |   |
| Contracts                  in progress                                |   | $      | 1,172,330                          |   | $      | 3,375,104                          |   |
| Completed                  contracts                                  |   |   | 154,204                            |   |   | -                                  |   |
| Retained                                                              |   |   | 100,000                            |   |   | 100,000                            |   |
| Cost                  and estimated earnings on uncompleted contracts |   |   | 569,681                            |   |   | 1,931,434                          |   |
|                                                                  |   |   | 1,996,215                          |   |   | 5,406,538                          |   |
| Less:                                                                 |   |   |                               |   |   |                               |   |
| Allowance                  for doubtful accounts                      |   |   | 70,477                             |   |   | 38,847                             |   |
| Total                                                                 |   | $      | 1,925,738                          |   | $      | 5,367,691                          |   |

| Costs                  and Estimated Earnings on Uncompleted Contracts                                                                                  |   |   |                                      |   |   |                               |   |
|---------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|-------------------------------------------|--------|--------|------------------------------------|--------|
|                                                                                                                                                    |   |   | September                  30, 2006  |   |   | December                  31, 2005 |   |
|                                                                                                                                                    |   |   |                                      |   |   |                               |   |
| Cost                  incurred on uncompleted contracts                                                                                                 |   | $      | 23,150,413                                |   | $      | 14,457,299                         |   |
| Estimated                  earnings                                                                                                                     |   |   | 1,688,382                                 |   |   | 1,122,673                          |   |
|                                                                                                                                                    |   |   |                                      |   |   |                               |   |
| Total                  billable costs and estimated earnings                                                                                            |   |   | 24,838,795                                |   |   | 15,579,972                         |   |
| Less:                                                                                                                                                   |   |   |                                      |   |   |                               |   |
| Billings                  to date                                                                                                                       |   |   | 24,269,114                                |   |   | 13,732,746                         |   |
|                                                                                                                                                    |   |   |                                      |   |   |                               |   |
| Total                                                                                                                                                   |   | $      | 569,681                                   |   | $      | 1,847,226                          |   |
|                                                                                                                                                    |   |   |                                      |   |   |                               |   |
| Included                  in accompanying balance sheet under the following                  captions:                                                  |   |   |                                      |   |   |                               |   |
|                                                                                                                                                    |   |   |                                      |   |   |                               |   |
|                                                                                                                                                    |   |   |                                      |   |   |                               |   |
| Unbilled                  costs and estimated earnings on uncompleted contracts included                  in accounts                  receivable  |   | $      | 569,681                                   |   | $      | 1,931,434                          |   |
| Billings                  in excess of costs and estimated earnings on uncompleted                  contracts                                           |   |   | -                                         |   |   | (84,208                            | )      |
|                                                                                                                                                    |   |   |                                      |   |   |                               |   |
| Total                                                                                                                                                   |   | $      | 569,681                                   |   | $      | 1,847,226                          |   |

----

**5.             INVENTORY**

|            |   |   | September                  30,2006  |   |   | December                  31, 2005 |   |
|-----------------|--------|--------|------------------------------------------|--------|--------|------------------------------------|--------|
| Materials       |   | $      | 1,884,552                                |   | $      | 815,788                            |   |
| Work-in-process |   |   | 798,388                                  |   |   | 532,912                            |   |
| Total           |   | $      | 2,682,941                                |   | $      | 1,348,700                          |   |

**6.**
**SECURITIES      AVAILABLE FOR SALE **

|                                                      |   |   | September                  30, 2006  |   |   | December                  31, 2005 |   |
|-----------------------------------------------------------|--------|--------|-------------------------------------------|--------|--------|------------------------------------|--------|
| Asset                  Backed Securities Repriced Monthly |   | $      | 3,000,000                                 |   | $      | 3,000,000                          |   |
| Municipal                  Bonds                          |   |   | 4,500,000                                 |   |   | 5,500,000                          |   |
| Total                  Debt Securities                    |   |   | 7,500,000                                 |   |   | 8,500,000                          |   |
|                                                      |   |   |                                      |   |   |                               |   |
| Preferred                  stock                          |   |   | 1,000,000                                 |   |   | 3,500,000                          |   |
| Total                  Equity Securities                  |   |   | 1,000,000                                 |   |   | 3,500,000                          |   |
|                                                      |   |   |                                      |   |   |                               |   |
| Total                  available-for-sale securities      |   | $      | 8,500,000                                 |   | $      | 12,000,000                         |   |

----

**7.            **
**ACCRUED      EXPENSES**

|                                       |   |   | September                  30, 2006  |   |   | December                  31, 2005 |   |
|--------------------------------------------|--------|--------|-------------------------------------------|--------|--------|------------------------------------|--------|
|                                       |   |   |                                      |   |   |                               |   |
| Accrued                  professional fees |   | $      | 23,900                                    |   | $      | 123,000                            |   |
| Overdraft                                  |   |   | -                                         |   |   | 87,698                             |   |
| Property                  taxes            |   |   | 34,113                                    |   |   | -                                  |   |
| Customer                  deposits         |   |   | 205,300                                   |   |   | 27,500                             |   |
| Other                  accrued             |   |   | 269,587                                   |   |   | 262,458                            |   |
| Total                  accrued expenses    |   | $      | 532,900                                   |   | $      | 500,656                            |   |

**8.             **
**STOCKHOLDERS’      EQUITY**

**9.**
**INCOME      TAXES**

**10.            **
**SIGNIFICANT      CUSTOMERS**

**11.           **
**NET      LOSS PER SHARE**

----

**12.             **
**DIVIDENDS**

**13.**
**COMMITMENTS      AND CONTINGENCIES**

**OPERATING      LEASES**

| Years                  ending December 31, |   |   | Amount    |   |
|--------------------------------------------|--------|--------|-----------|--------|
|                                       |   |   |      |   |
| 2006                                       |   | $      | 209,207   |   |
| 2007                                       |   |   | 759,728   |   |
| 2008                                       |   |   | 812,565   |   |
| 2009                                       |   |   | 777,893   |   |
| 2010                                       |   |   | 457,600   |   |
| Thereafter                                 |   |   | 711,563   |   |
| Total                                      |   | $      | 3,728,556 |   |

----

**CAPITAL      LEASES**

| Years                  ending December 31,                          |   |   | Amount |   |
|---------------------------------------------------------------------|--------|--------|--------|--------|
|                                                                |   |   |   |   |
| Remaining                  nine months of 2006                      |   | $      | 12,702 |   |
| 2007                                                                |   |   | 50,810 |   |
| 2008                                                                |   |   | 29,309 |   |
| 2009                                                                |   |   | 2,044  |   |
| Total                  payments                                     |   |   | 94,865 |   |
|                                                                |   |   |   |   |
| Less:                  interest                                     |   |   | (6,124 | )      |
|                                                                |   |   |   |   |
| Total                  principal                                    |   |   | 88,741 |   |
|                                                                |   |   |   |   |
| Less:                  Current portion of capital lease obligations |   |   | 46,146 |   |
|                                                                |   |   |   |   |
| Long-term                  capital lease obligations                |   | $      | 42,595 |   |

**GUARANTEES**

**LITIGATION**

----

**14.           **
**SUPPLEMENTAL      CASH FLOW INFORMATION**

|                                                                              |   |   | Nine                  months Ended September 30,  |   |
|-----------------------------------------------------------------------------------|--------|--------|--------------------------------------------------------|--------|
|                                                                              |   |   | 2006                                                   |   |   | 2005 |   |
| Cash                  paid during the period for:                                 |   |   |                                                   |   |   |   |   |
| Interest                                                                          |   | $      | 11,485                                                 |   | $ | 118,563 |   |
| Income                  taxes                                                     |   |   | 1,100                                                  |   |   | -- |   |
| Non-cash                  Investing and Financing Activities:                     |   |   |                                                   |   |   |   |   |
| Capital                  lease obligations incurred for use of equipment          |   |   | 19,854                                                 |   |   | 119,746 |   |
| Common                  stock issued for the payment of preferred stock dividends |   |   | 927,854                                                |   |   | -- |   |
| Assets                  transferred from inventory to property and equipment      |   |   | 426,704                                                |   |   | -- |   |

----

**15.           **
**INDUSTRY      SEGMENTS**

| **Selected                  Financial Data for the Three Months Ended September 30,                  2006** |   |   |   |   |   |   |   |   |
|-------------------------------------------------------------------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|

|                  Business                  Segment |   |   | Revenues  |   |   | Depreciationand                  Amortization  |   |   | Interest                  Income  |   |   | InterestExpense |   |   | Net                  (Loss)  |   |   | CapitalExpenditures  |   |   | IdentifiableAssets  |   |
|---------------------------------------------------------|--------|--------|----------------|--------|--------|-----------------------------------------------------|--------|--------|----------------------------------------|--------|--------|-----------------|--------|--------|-----------------------------------|--------|--------|---------------------------|--------|--------|--------------------------|--------|
| Ionatron                                                |   | $      | 1,360,298      |   | $      | 215,554                                             |   | $      | 254,939                                |   | $      | 1,803           |   | $      | (3,071,375                        | )      | $      | 49,414                    |   | $      | 43,375,359               |   |
| North                  Star                             |   |   | 177,016        |   |   | 28,995                                              |   |   | 154                                    |   |   | 319             |   |   | (292,098                          | )      |   | 123,336                   |   |   | 2,937,719                |   |
| Total                  Company                          |   |   | 1,537,314      |   |   | 244,549                                             |   |   | 255,093                                |   |   | 2,122           |   |   | (3,363,473                        | )      |   | 172,750                   |   |   | 46,313,078               |   |
| Intersegment                                            |   |   | -              |   |   | -                                                   |   |   | -                                      |   |   | -               |   |   | -                                 |   |   | -                         |   |   | (2,009,307               | )      |
| Investment                  in Sub                      |   |   | -              |   |   | -                                                   |   |   | -                                      |   |   | -               |   |   | -                                 |   |   | -                         |   |   | (2,415,000               | )      |
|  Consolidated                  Company             |   | $      | 1,537,314      |   | $      | 244,549                                             |   | $      | 255,093                                |   | $      | 2,122           |   | $      | (3,363,473                        | )      | $      | 172,750                   |   | $      | 41,888,771               |   |

| **Selected                  Financial Data for the Nine Months Ended September 30,                  2006** |   |   |   |   |
|------------------------------------------------------------------------------------------------------------|--------|--------|--------|--------|

|                  Business                  Segment |   |   | Revenues  |   |   | Depreciationand                  Amortization  |   |   | Interest                  Income  |   |   | InterestExpense  |   |   | Net                  (Loss)  |   |   | Capital                  Expenditures  |   |
|---------------------------------------------------------|--------|--------|----------------|--------|--------|-----------------------------------------------------|--------|--------|----------------------------------------|--------|--------|-----------------------|--------|--------|-----------------------------------|--------|--------|---------------------------------------------|--------|
| Ionatron                                                |   | $      | 8,032,522      |   | $      | 607,168                                             |   | $      | 478,579                                |   | $      | 10,789                |   | $      | (10,041,687                       | )      | $      | 670,236                                     |   |
| North                  Star                             |   |   | 951,018        |   |   | 80,098                                              |   |   | 616                                    |   |   | 696                   |   |   | (1,614,528                        | )      |   | 182,697                                     |   |
| Total                  Company                          |   |   | 8,983,540      |   |   | 687,266                                             |   |   | 479,195                                |   |   | 11,485                |   |   | (11,656,215                       | )      |   | 852,933                                     |   |
| Intersegment                                            |   |   | (374,229       | )      |   | -                                                   |   |   | -                                      |   |   | -                     |   |   | -                                 |   |   | -                                           |   |
| Consolidated                  Company                   |   | $      | 8,609,311      |   | $      | 687,266                                             |   | $      | 479,195                                |   | $      | 11,485                |   | $      | (11,656,215                       | )      | $      | 852,933                                     |   |

| **Selected                  Financial Data for the Three Months Ended September 30,                  2005** |   |   |   |   |   |   |   |   |   |   |
|-------------------------------------------------------------------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|

|                  Business                  Segment |   |   | Revenues  |   |   | Depreciation                  and                  Amortization  |   |   | Interest                  Income  |   |   | InterestExpense  |   |   | Net                  Income (Loss)  |   |   | Capital                  Expenditures  |   |   | Identifiable                  Assets  |   |
|---------------------------------------------------------|--------|--------|----------------|--------|--------|-----------------------------------------------------------------------|--------|--------|----------------------------------------|--------|--------|-----------------------|--------|--------|------------------------------------------|--------|--------|---------------------------------------------|--------|--------|--------------------------------------------|--------|
| Ionatron                                                |   | $      | 5,904,014      |   | $      | 295,285                                                               |   | $      | 8,913                                  |   | $      | 63,594                |   | $      | (510,030                                 | )      | $      | 313,202                                     |   | $      | 10,390,958                                 |   |
| North                  Star                             |   |   | 1,035,671      |   |   | 29,775                                                                |   |   | 467                                    |   |   | 303                   |   |   | 148,695                                  |   |   | -                                           |   |   | 2,874,105                                  |   |
| Total                  Company                          |   |   | 6,939,685      |   |   | 325,060                                                               |   |   | 9,380                                  |   |   | 63,897                |   |   | (361,335                                 | )      |   | 313,202                                     |   |   | 13,265,063                                 |   |
| Intersegment                                            |   |   | (720,524       | )      |   | -                                                                     |   |   | -                                      |   |   | -                     |   |   | -                                        |   |   | -                                           |   |   | (85,380                                    | )      |
| Investment                  in Sub                      |   |   | -              |   |   | -                                                                     |   |   | -                                      |   |   | -                     |   |   | -                                        |   |   | -                                           |   |   | (2,415,000                                 | )      |
| Consolidated                  Company                   |   | $      | 6,219,161      |   | $      | 325,060                                                               |   | $      | 9,380                                  |   | $      | 63,897                |   | $      | (361,335                                 | )      | $      | 313,202                                     |   | $      | 10,764,683                                 |   |

| **Selected                  Financial Data for the Nine Months Ended September 30,                  2005** |   |   |   |   |   |   |   |   |   |   |
|------------------------------------------------------------------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|

| Business                  Segment     |   |   | Revenues  |   |   | Depreciationand                  Amortization  |   |   | Interest                  Income  |   |   | Interest                  Expense  |   |   | Net                  Income (Loss)  |   |   | Capital                  Expenditures |   |
|---------------------------------------|--------|--------|----------------|--------|--------|-----------------------------------------------------|--------|--------|----------------------------------------|--------|--------|-----------------------------------------|--------|--------|------------------------------------------|--------|--------|---------------------------------------|--------|
| Ionatron                              |   | $      | 11,785,933     |   | $      | 831,619                                             |   | $      | 29,132                                 |   | $      | 179,190                                 |   | $      | (3,767,329                               | )      | $      | 968,060                               |   |
| North                  Star           |   |   | 1,995,996      |   |   | 89,154                                              |   |   | 1,249                                  |   |   | 886                                     |   |   | 47,700                                   |   |   | 41,210                                |   |
| Total                  Company        |   |   | 13,781,929     |   |   | 920,773                                             |   |   | 30,381                                 |   |   | 180,076                                 |   |   | (3,719,629                               | )      |   | 1,009,270                             |   |
| Intersegment                          |   |   | (1,035,975     | )      |   | -                                                   |   |   | -                                      |   |   | -                                       |   |   | -                                        |   |   | -                                     |   |
| Consolidated                  Company |   | $      | 12,745,954     |   | $      | 920,773                                             |   | $      | 30,381                                 |   | $      | 180,076                                 |   | $      | (3,719,629                               | )      | $      | 1,009,270                             |   |

----

**ITEM      2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF      OPERATIONS**

** **

**CAUTIONARY      NOTE REGARDING FORWARD-LOOKING STATEMENTS**

**OVERVIEW**

----

**OPERATING      SEGMENTS**

----

**RESULTS      OF OPERATIONS**

**COMPARISON      OF OPERATIONS FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2006 AND 2005 IS AS      FOLLOWS:**

|                                                    |   |   | 2006        |   |   | 2005      |   |
|---------------------------------------------------------|--------|--------|-------------|--------|--------|-----------|--------|
| Revenue                                                 |   | $      | 1,537,314   |   | $      | 6,219,161 |   |
| Cost                  of revenue                        |   |   | 1,539,077   |   |   | 5,560,579 |   |
| General                  and administrative             |   |   | 2,492,610   |   |   | 580,042   |   |
| Selling                  and marketing                  |   |   | 144,522     |   |   | 144,928   |   |
| Research                  and development               |   |   | 967,850     |   |   | 231,806   |   |
| Other                  (expense) income:                |   |   |        |   |   |      |   |
| Interest                  expense                       |   |   | (2,122      | )      |   | (63,897   | )      |
| Interest                  income                        |   |   | 255,093     |   |   | 9,380     |   |
| Other                                                   |   |   | 500         |   |   | 1,853     |   |
| Loss                  before provision for income taxes |   |   | (3,353,274  | )      |   | (350,858  | )      |
| Provision                  for income taxes             |   |   | 10,199      |   |   | 10,477    |   |
|                                                    |   |   |        |   |   |      |   |
| Net                  loss                               |   |   | ($3,363,473 | )      |   | ($361,335 | )      |

**REVENUE**

**COST      OF REVENUE**

**GENERAL      AND ADMINISTRATIVE**

**SELLING      AND MARKETING**

----

**RESEARCH      AND DEVELOPMENT**

**INTEREST      EXPENSE AND INTEREST INCOME**

**NORTH      STAR OPERATIONS**

**NET      LOSS**

----

**COMPARISON      OF OPERATIONS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2006 AND 2005 IS AS      FOLLOWS:**

|                                                    |   |   | 2006         |   |   | 2005        |   |
|---------------------------------------------------------|--------|--------|--------------|--------|--------|-------------|--------|
| Revenue                                                 |   | $      | 8,609,311    |   | $      | 12,745,954  |   |
| Cost                  of revenue                        |   |   | 8,329,486    |   |   | 11,740,891  |   |
| General                  and administrative             |   |   | 8,708,326    |   |   | 3,449,053   |   |
| Selling                  and marketing                  |   |   | 419,771      |   |   | 375,590     |   |
| Research                  and development               |   |   | 3,244,096    |   |   | 723,452     |   |
| Other                  (expense) income:                |   |   |         |   |   |        |   |
| Interest                  expense                       |   |   | (11,485      | )      |   | (180,076    | )      |
| Interest                  income                        |   |   | 479,195      |   |   | 30,381      |   |
| Other                                                   |   |   | 544          |   |   | 2,445       |   |
| Loss                  before provision for income taxes |   |   | (11,624,114  | )      |   | (3,690,282  | )      |
| Provision                  for income taxes             |   |   | 32,101       |   |   | 29,347      |   |
|                                                    |   |   |         |   |   |        |   |
| Net                  loss                               |   |   | ($11,656,215 | )      |   | ($3,719,629 | )      |

**REVENUE**

**COST      OF REVENUE**

**GENERAL      AND ADMINISTRATIVE**

----

**SELLING      AND MARKETING**

**RESEARCH      AND DEVELOPMENT**

**INTEREST      EXPENSE AND INTEREST INCOME**

**NORTH      STAR OPERATIONS**

**NET      LOSS**

**LIQUIDITY      AND CAPITAL RESOURCES**

----

**BACK-LOG      OF ORDERS**

**ITEM      3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET      RISK**

**ITEM      4. CONTROLS AND PROCEDURES**

**EVALUATION      OF DISCLOSURE CONTROLS AND PROCEDURES**

----

**PART      II - OTHER INFORMATION**

**ITEM      1**
**LEGAL      PROCEEDINGS**

**ITEM      2**
**UNREGISTERED      SALES OF EQUITY SECURITIES AND USE OF PROCEEDS**

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**ITEM      6**
**EXHIBITS**

| EXHIBIT                NUMBER |   | DESCRIPTION                                                                                                                                                                                                                                          |
|-------------------------------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                          |   |                                                                                                                                                                                                                                                 |
| 31.1                          |   | Certification                of Chief Executive pursuant to Rule 13a-14 or 15d-14 of the Securities                Exchange Act of 1934, as adopted pursuant to Section 302 of the                Sarbanes-Oxley Act of 2002.                        |
|                          |   |                                                                                                                                                                                                                                                 |
| 31.2                          |   | Certification                of Chief Financial Officer pursuant to Rule 13a-14 or 15d-14 of the                Securities Exchange Act of 1934, as adopted pursuant to Section 302                of the                Sarbanes-Oxley Act of 2002. |
|                          |   |                                                                                                                                                                                                                                                 |
| 32.1                          |   | Chief                Executive Officer Certification pursuant to 18 U.S.C. Section 1350,                as                adopted pursuant to Section 906 of the Sarbanes-Oxley Act of                2002.                                          |
|                          |   |                                                                                                                                                                                                                                                 |
| 32.2                          |   | Chief                Financial Officer Certification pursuant to 18 U.S.C. Section 1350,                as                adopted pursuant to Section 906 of the Sarbanes-Oxley Act of                2002.                                          |

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**SIGNATURES      **

|         |                                               |                                        |
|--------------|----------------------------------------------------|---------------------------------------------|
|         | **IONATRON,              INC.**                    |
|    |                                          |                                   |
|         | By:                                      | **/s/              Dana A, Marshall**  |
|         | Dana A. Marshall                                   |
|         | Chief              Executive Officer and President |

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