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SEC Filings
ARGON ST, INC. filed this Form 10-Q on 12/13/1995
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October 31, 1995 backlog within the next few months, the Company's
ability to retain its line of credit and maintain its current operating
capabilities depends upon receiving significant orders in the next few
months.  See "Liquidity and Sources of Capital."  Management is hopeful
that such orders will be received, although no assurances can be given.

The Company is currently engaged in discussions for several substantial
standard product orders, some of which the Company hopes to receive in
the current fiscal year.  However, such negotiations have not been
finalized and there can be no assurance that such orders will be
received.  The Company was notified that it has won two Phase II Small
Business Innovative Research (product development) contracts for
approximately $600,000 each.  Receipt of these two NASA contracts,
however, has been postponed by delays in approving a US Federal
Government budget for the current fiscal year. 

The results of operations for future periods are dependent upon the
receipt of future orders and their timing.  The Company's long term
success is also dependent upon the success of Management's growth plan. 
Should the Company continue to receive orders during fiscal 1996 below
the level necessary to achieve profits, the Company would have to reduce
its level of operations accordingly and/or obtain other sources of
financing to allow the Company to continue operations.  Many of the
Company's current 24 employees have skills and knowledge that are crucial
to the Company and difficult to replace.  As a result, the Company
believes it would be very difficult to achieve substantial savings
through further reductions in staffing without impairing the Company's
ability to perform under current and anticipated contracts.

Cost of Revenue

In the first quarter of fiscal 1996, cost of revenue increased  as a
percentage of revenue due primarily to a lower than normal margin on one
of the standard product contracts received in the last quarter of fiscal
1995.  The Company operated significantly below capacity in the first
quarter of fiscal 1996 causing overhead rates to increase substantially
which contributed to the high cost of revenue percentage for that period. 
The cost of product development revenue in the first quarter of fiscal
1996 exceeded such revenue due to these much higher than normal overhead

The cost of revenue percentage for the remainder of fiscal 1996 will be
dependent upon the timing and mix of future contracts, some of which are
currently under negotiation.  See "Business Development - New Orders and

Research and Development

Research and development expense declined in the first quarter of fiscal
1996 as compared to the same period one year earlier due primarily to the
completion of the development of the first generation ADC in fiscal 1995. 
The company is currently performing research on

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