Argon ST, Inc. Announces Q1 Results.

FAIRFAX, Va. -- Argon ST, Inc. (NASDAQ:STST), today announced revenues and earnings for its first quarter ended January 2, 2005.

HISTORICAL RESULTS OF OPERATIONS

Revenues for the first quarter ended January 2, 2005 increased $29,217,000 to $56,510,000, up 107% compared to $27,293,000 for the prior year quarter.

Net income for the first quarter ended January 2, 2005 was $4,920,000, or $0.24 per diluted share, an increase of 238% compared to $1,457,000 or $0.11 per diluted share for the prior year quarter.

Terry Collins, President and CEO of Argon ST stated, "We are pleased with our first quarter financial results and they leave us on track for making our fiscal year financial objectives. The company also made significant progress in the integration of our processes and systems during the first quarter so that we can properly manage our expected growth."

Financial Highlights

--Revenue for the first quarter increased 107% over the prior year quarter to $56,510,000

--Net Income for the first quarter of $4,920,000 or $0.24 per diluted share up 238% from the prior year quarter

--Funded and unfunded backlog for the first quarter was $219,864,000 an increase of 23% from the prior year first quarter funded and unfunded backlog of $179,383,000

ARGON ST, INC.
           CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited)

                                            January 2,   September 30,
                                                2005          2004
                                           ------------- -------------
ASSETS
CURRENT ASSETS
  Cash and cash equivalents                 $42,429,000   $29,732,000
  Accounts receivable, net                   66,463,000    59,716,000
  Inventory                                   1,922,000     1,574,000
  Deferred income tax asset                   4,937,000     4,822,000
  Prepaids and other                          1,469,000     1,288,000
                                           ------------- -------------

TOTAL CURRENT ASSETS                        117,220,000    97,132,000

  Property, equipment and software, net      14,461,000    13,949,000
  Goodwill                                  107,776,000   107,776,000
  Intangibles, net                            1,947,000     2,190,000
  Other assets                                  654,000       694,000
                                           ------------- -------------

TOTAL ASSETS                               $242,058,000  $221,741,000
                                           ============= =============

LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
  Accounts payable and accrued expenses      13,897,000   $12,727,000
  Accrued salaries and related expenses       8,413,000    10,606,000
  Deferred revenue                           45,295,000    28,336,000
  Notes payable - current portion               226,000       226,000
  Income taxes payable                          705,000     5,810,000
  Deferred rent                                 200,000       200,000
                                           ------------- -------------

TOTAL CURRENT LIABILITIES                    68,736,000    57,905,000

  Deferred income tax liability, long term    1,805,000     1,901,000
  Notes payable, net of current portion              --        56,000
  Deferred rent                                 954,000       954,000
  Commitments and contingencies                      --            --

STOCKHOLDERS' EQUITY
  Common Stock:
    $.01 Par Value, 25,000,000 shares
     authorized 19,765,934 and 19,468,734
     share issued at January 2, 2005 and
     September 30, 2004                         198,000       195,000
  Additional paid-in capital                153,758,000   149,043,000
  Treasury stock at cost, 126,245 shares       (534,000)     (534,000)
  Retained earnings                          17,141,000    12,221,000
                                           ------------- -------------

TOTAL STOCKHOLDERS' EQUITY                 $170,563,000  $160,925,000
                                           ------------- -------------

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $242,058,000  $221,741,000
                                           ============= =============


                            ARGON ST, INC.
       CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS (unaudited)

                                                      For the
                                                Fiscal Quarter Ended
                                              January 2,  December 28,
                                                 2005         2003
                                             ------------ ------------

CONTRACT REVENUES                            $56,510,000  $27,293,000

COST OF REVENUES                              45,338,000   23,259,000

GENERAL AND ADMINISTRATIVE EXPENSES            3,335,000    1,734,000
                                             ------------ ------------

INCOME FROM OPERATIONS                         7,837,000    2,300,000
OTHER INCOME (EXPENSE)
  Interest income                                140,000        8,000
  Interest expense                                (2,000)          --
                                             ------------ ------------
                                                 138,000        8,000

INCOME BEFORE INCOME TAXES                     7,975,000    2,308,000
PROVISION FOR INCOME TAXES                     3,055,000      851,000
                                             ------------ ------------
NET INCOME                                    $4,920,000   $1,457,000
                                             ============ ============

PER SHARE AMOUNT
  Basic earnings per share                         $0.25        $0.12
                                             ============ ============
  Diluted earnings per share                       $0.24        $0.11
                                             ============ ============

WEIGHTED AVERAGE SHARES OUTSTANDING
  Basic average shares outstanding            19,423,000   12,267,000
                                             ============ ============
  Diluted average shares outstanding          20,415,000   13,316,000
                                             ============ ============

On September 29, 2004, a wholly owned subsidiary of Sensytech, Inc. ("Sensytech") merged with and into Argon Engineering Associates, Inc. ("Argon Engineering") in a merger whereby each outstanding share of Argon Engineering common stock was exchanged for two shares of Sensytech common stock. As a result of the merger, the former Argon Engineering stockholders acquired approximately 65.6% of the issued and outstanding shares of Sensytech common stock. In accordance with Statement of Financial Accounting Standards No. 141 "Business Combinations," the merger was accounted for as a reverse acquisition, whereby Argon Engineering was deemed to have acquired Sensytech for financial reporting purposes. Consistent with the reverse acquisition accounting treatment, the historical financial statements presented for periods prior to the acquisition date are the statements of Argon Engineering except for stockholders' equity which has been retroactively restated for the equivalent number of shares of the legal acquirer.

The following unaudited condensed pro forma results of operations reflect the pro forma combination of Argon Engineering and Sensytech as if the combination had occurred at the beginning of the period presented, compared with the actual results of operations of Argon Engineering for the same period.

Fiscal quarter ended
                                    December 28, 2003
                              ------------------------------
                                Historical      Pro forma
                              --------------- --------------

Revenue                          $27,293,000     39,958,000
Income from operations             2,300,000      3,400,000
Net income                         1,457,000      2,109,000

Basic earnings per share               $0.12          $0.11
Diluted earnings per share             $0.11          $0.11

Basic wt average shares           12,267,000     18,766,000
Diluted wt average shares         13,316,000     19,992,000

Pro forma revenues attributable to Sensytech were $12,665,000 for the fiscal quarter ended December 28, 2003. Pro forma income from operations and net income attributable to Sensytech was $1,458,000 and $873,000, respectively for the fiscal quarter ended December 28, 2003. Pro forma depreciation and amortization on the write up of tangible and intangible assets, in accordance with SFAS 141, was $115,000 and $243,000 respectively for the fiscal quarter ended and December 28, 2003 and the after tax effect was $221,000.

About Argon ST, Inc.

Argon ST designs, develops, and manufacturers systems and sensors for the Command and Control Communications, Computers, Intelligence, Surveillance, and Reconnaissance (C4ISR) markets including SIGINT (Signals Intelligence), ESM (Electronic Support Measures), EW (Electronic Warfare), imaging, and acoustic systems serving domestic and worldwide markets.

Statements in this press release which are not historical facts are forward-looking statements under the provisions of the Private Securities Litigation Reform Act of 1995. All forward-looking statements involve risks and uncertainties. The Company wishes to caution readers that certain factors can cause the Company's actual results to differ materially from those expressed in any forward-looking statements made by, or on behalf of, the Company. The Company undertakes no obligation and does not intend to update, revise or otherwise publicly release the results of any revisions to these forward-looking statements that may be made to reflect future events or circumstances.