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SEC Filings
10-Q
ARGON ST, INC. filed this Form 10-Q on 06/13/1995
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Contract.  The Company's long term success is also dependent on the success of
Management's growth strategy.  

Research and Development

       The majority of the Company's investment into research and development
in the first nine months of fiscal 1995 was related to the development of the
Airborne Digital Camera while the majority of the research and development
expenditures in the third quarter related to the improvement of one of the
Company's standard airborne remote sensing systems.  Research and development
expense increased by over 140% in the nine month period ended April 30, 1995
as compared to the same period one year earlier while decreasing by 31% in the
quarter then ended as compared to the same quarter of fiscal 1994.  The
substantial increase in research and development expense in the nine month
period ended April 30, 1995 over the comparable period of fiscal 1994 would
not have been possible if the Company had a significantly higher level of
customer orders and backlog during the period.  The Company expects research
and development costs to remain relatively high in fiscal 1995 as the Company
works toward accomplishing its growth plan.  See "Business Development -
Growth Plan". 

Selling and Administrative Expense

       Selling and administrative expense increased by 11% in the nine months
ended April 30, 1995 but decreased by 6% in the quarter then ended as compared
to the same periods one year earlier. The increase for the nine month period
was primarily due to increased expenditures on marketing partially offset by
a decline in commission expense resulting from a decline in international sales
and revenue.  The decline in the three month period was primarily due to a
decline in commission expense partially offset by increases in other marketing
costs.  The level of commission expense and the total of selling and
administrative expense for the remainder of fiscal 1995 will be highly
dependent upon the favorable settlement of the Defaulted Contract and are
likely to be higher than that experienced in the previous quarters of fiscal
1995.  Selling and administrative expense is likely to remain above the fiscal
1994 level if the Defaulted Contract is favorably settled in fiscal 1995, 
or if the Company receives standard product contracts as hoped.  Included in
selling and administrative expense for the nine and three month periods
ended April 30, 1994 was commission expense relating to the Defaulted
Contract of approximately $119,000 and $40,000, respectively.  See "Business
Development - New Orders and Backlog".

Interest

       Interest expense increased in fiscal 1995 as compared to fiscal 1994 due
principally to the Company's use of its line of credit.  Interest expense for
the remainder of fiscal 1995 will be dependent upon future interest rates and
the extent of the Company's utilization of its line of credit during this
fiscal year.

LIQUIDITY AND SOURCES OF CAPITAL

       The Company's primary sources of liquidity are funds from operations and
a $3,000,000 secured line of credit with availability subject to a formula. 
The line of credit expires on November 30, 1995, and borrowings thereunder
bear interest at one-half percent over the bank's prime rate (9.5% at April
30, 1995).  When necessary, the Company has used short-term borrowings to
finance cash shortfalls.  At April 30, 1995, the Company had $882,000
outstanding under the line of credit and $79,000 reserved to back up a standby
letter of credit.  The Company had approximately $370,000 of availability
remaining on its line of credit at such date.  As of April 30, 1995, the bank
has waived the Company's noncompliance with the tangible net worth  and liquid

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