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SEC Filings
10-Q
ARGON ST, INC. filed this Form 10-Q on 12/13/1995
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enhancements to the system, but this research requires less material and
labor than did the development of the original system.

Selling and Administrative Expense  

Selling and administrative expenses were lower in the first quarter of
fiscal 1996 as compared to the first quarter of fiscal 1995 as a result
of non-recurring marketing expenses which were incurred in the first
quarter of fiscal 1995.   

Interest

Interest expense increased in the first quarter of fiscal 1996 over the
same period one year earlier primarily due to the Company's increased use
of its line of credit.

LIQUIDITY AND SOURCES OF CAPITAL

The Company's primary sources of liquidity were funds from operations and
borrowings under a secured line of credit.  On October 30, 1995, the
Company and its bank entered into an agreement on a new line of credit
and a new mortgage. The interest rate on both the new line of credit and
the mortgage are one and one-half percent over the bank's prime rate,
10.25% at October 31, 1995.  The new mortgage requires the Company to
make monthly payments of $3,583 for both principal and interest and
requires a balloon payment on November 1, 2000.  The new line of credit
agreement, under which availability is subject to a formula, had a
ceiling of $1,700,000 which decreased to $1,500,000, with availability
subject to a formula, on December 1, 1995.

As of October 31, 1995, borrowings under the line of credit were limited
to approximately $1,476,000 pursuant to the availability formula.  At
that date, the Company had an outstanding balance of $405,000 under the
line of credit and approximately $1,029,000 of the line reserved to cover
two standby letters of credit.  On November 21, 1995, one of the standby
letters of credit, for $950,000, was canceled increasing availability by
a like amount.  The Company is currently in compliance with the covenants
of its financing agreements but the Company may fall into default in the
second quarter of fiscal 1996 if it fails to obtain a significant amount
of new business very soon.

The Company's bank has expressed concern over the Company's recent
losses. The Company must receive a substantial amount of new business in
the second quarter of fiscal 1996 in order for it to maintain compliance
with the financial covenants in its financing agreements.  The Company
also requires additional new business in the next few months to allow it
to retain its current line of credit.  The Company's ability to implement
its growth plan as a means of generating new business has been impaired
by the Company's low level of working capital.  See "Business
Development."  Management is currently exploring various alternatives to
acquire additional cash resources.  


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