IONATRON, INC. (Form: 10-Q, Received: 08/09/2007 16:27:23)

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

For the quarterly period ended June 30, 2007

¨	Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period from to

Commission File Number 001-14015

IONATRON, INC.

(Exact Name of Registrant as Specified in Its Charter)


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

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

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

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):

Large Accelerated Filer ¨ Accelerated Filer x Non-Accelerated Filer ¨

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act) Yes ¨ No x

Indicate the number of shares outstanding of each of the issuer's classes of common equity, as of the latest practicable date. As of August 7, 2007 there were 79,108,150 shares of the issuer's common stock, par value $.001 per share, outstanding.

IONATRON, INC.

June 30, 2007


PART I -	FINANCIAL INFORMATION

Item 1-	Consolidated Financial Statements

	Consolidated Balance Sheets as of June 30, 2007 (Unaudited) and December 31, 2006	3

	Consolidated Statements of Operations for the three months ended June 30, 2007 and 2006 (Unaudited)	4

	Consolidated Statements of Operations for the six months ended June 30, 2007 and 2006 (Unaudited)	5

	Consolidated Statements of Cash Flows for the six months ended June 30, 2007 and 2006 (Unaudited)	6

	Notes to Consolidated Financial Statements	7

Item 2-	Management's Discussion and Analysis of Financial Condition and Results of Operations	11

Item 4-	Controls and Procedures	15

PART II -	OTHER INFORMATION

Item 2-	Unregistered Sales of Equity Securities and Use of Proceeds	16

Item 5-	Other Information	16

Item 6-	Exhibits	17

SIGNATURES		18

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PART I FINANCIAL INFORMATION

ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS

IONATRON, INC.

CONSOLIDATED BALANCE SHEETS


	June 30, 2007			December 31, 2006
	(Unaudited)
ASSETS
Current assets
Cash and cash equivalents	$	18,103,590		$	22,123,792
Accounts receivable - net		1,133,978			640,082
Inventory		4,036,521			2,832,752
Securities available-for-sale		8,500,000			8,500,000
Prepaid expenses and deposits		248,235			639,728
Other receivables		4,565			2,918

Total current assets		32,026,889			34,739,272
Property and equipment - net		1,803,337			2,205,278
Other assets		78,748			72,776
Intangible assets - net		110,700			135,300

TOTAL ASSETS	$	34,019,674		$	37,152,626

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
Accounts payable - net	$	806,980		$	570,572
Accrued expenses		386,558			638,925
Accrued compensation		555,102			818,779
Customer deposits		289,127			284,279
Current portion of capital lease obligations		20,838			46,974

Total current liabilities		2,058,605			2,359,529
Capital lease obligations		6,917			30,536
Deferred rent		128,263			112,641

Total liabilities		2,193,785			2,502,706

Commitments and contingencies

Stockholders’ equity
Series A Convertible Preferred stock, $.001 par value, 2,000,000 shares authorized and 690,000 shares issued and outstanding at June 30, 2007 and December 31, 2006.		690			690
Common stock, $.001 par value, 100,000,000 shares authorized; 79,074,900 shares issued and outstanding at June 30, 2007 and 78,171,267 shares issued and outstanding at December 31, 2006		79,074			78,171
Additional paid-in capital		62,863,226			60,488,633
Accumulated deficit		(31,117,101	)		(25,917,574	)

Total stockholders’ equity		31,825,889			34,649,920

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	34,019,674		$	37,152,626

See accompanying notes to consolidated financial statements (unaudited)

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IONATRON, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)


	For the three months ended June 30,
	2007			2006
Revenue	$	3,149,173		$	1,997,170

Cost of revenue		3,070,626			2,023,231

Gross profit (loss)		78,547			(26,061	)

Operating expenses:
General and administrative		2,382,555			3,594,220
Selling and marketing		125,015			126,291
Research and development		183,804			1,201,179

Total operating expenses		2,691,374			4,921,690

Operating loss		(2,612,827	)		(4,947,751	)

Other (expense) income
Interest expense		(489	)		(4,120	)
Interest income		354,143			111,982
Other		7,835			35

Total other		361,489			107,897

Loss before provision for income taxes		(2,251,338	)		(4,839,854	)

Provision for income taxes		—			10,603

Net loss		(2,251,338	)		(4,850,457	)
Preferred stock dividends		(295,102	)		(303,663	)

Net loss attributable to common stockholders	$	(2,546,440	)	$	(5,154,120	)

Net loss per common share – basic and diluted	$	(0.03	)	$	(0.07	)

Weighted average number of shares outstanding, basic and diluted		78,741,988			73,272,731

See accompanying notes to consolidated financial statements (unaudited)

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IONATRON, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)


	For the six months ended June 30,
	2007			2006
Revenue	$	5,219,783		$	7,071,997

Cost of revenue		5,408,620			6,790,409

Gross profit (loss)		(188,837	)		281,588

Operating expenses:
General and administrative		4,602,177			6,215,716
Selling and marketing		254,815			275,249
Research and development		307,827			2,276,246

Total operating expenses		5,164,819			8,767,211

Operating loss		(5,353,656	)		(8,485,623	)

Other (expense) income
Interest expense		(1,488	)		(9,363	)
Interest income		737,969			224,102
Other		7,847			44

Total other		744,328			214,783

Loss before provision for income taxes		(4,609,328	)		(8,270,840	)

Provision for income taxes		—			21,902

Net loss		(4,609,328	)		(8,292,742	)
Preferred stock dividends		(590,218	)		(607,323	)

Net loss attributable to common stockholders	$	(5,199,546	)	$	(8,900,065	)

Net loss per common share – basic and diluted	$	(0.07	)	$	(0.12	)

Weighted average number of shares outstanding, basic and diluted		78,458,508			72,726,740

See accompanying notes to consolidated financial statements (unaudited)

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IONATRON, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)


	For the six months ended June 30,
	2007			2006
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$	(4,609,328	)	$	(8,292,742	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		541,706			442,717
Loss (gain) on equipment disposal		4,504			(5,585	)
Deferred income tax provision		—			20,399
Provision for doubtful accounts		—			27,811
Provision for warranty and losses on projects		296,247			—
Non-cash stock based compensation expense		1,785,297			1,987,549
Changes in assets and liabilities:
Accounts receivable		(493,896	)		2,482,980
Other receivable		(1,647	)		5,221
Inventory		(1,490,016	)		(1,307,033	)
Prepaid expenses and deposits		385,521			(170,846	)
Accounts payable		236,408			(81,063	)
Billings in excess of costs		—			(29,307	)
Accrued expenses, deposits and deferred rent		(505,574	)		(118,747	)

Net cash used in operating activities		(3,850,778	)		(5,038,646	)

CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of equipment		(136,849	)		(660,329	)
Proceeds from sale of available-for-sale marketable securities		—			3,500,000
Purchases of available-for-sale marketable securities		—			(500,000	)
Proceeds from disposal of equipment		17,180			6,000

Net cash (used in) provided by investing activities		(119,669	)		2,345,671

CASH FLOWS FROM FINANCING ACTIVITIES:
Principal payments on capital lease obligations		(49,755	)		(19,987	)
Exercise of stock options and warrants		—			2,464,888

Net cash (used in) provided by financing activities		(49,755	)		2,444,901

Net decrease in cash and cash equivalents		(4,020,202	)		(248,074	)

Cash and cash equivalents, beginning of period		22,123,792			371,248

Cash and cash equivalents, end of period	$	18,103,590		$	123,174

See accompanying notes to consolidated financial statements (unaudited)

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1. BASIS OF PRESENTATION

The consolidated financial statements include the accounts of Ionatron and our wholly owned subsidiaries, Ionatron Technologies, Inc. and North Star as of June 30, 2007 (collectively, "Company," "Ionatron," "we," "our" and "us"). All intercompany balances and transactions have been eliminated. In the opinion of management, all adjustments (which include normal recurring adjustments) necessary for a fair presentation of the results for the interim periods presented have been made. The results for the six-month period ended June 30, 2007, may not be indicative of the results for the entire year. The interim unaudited condensed consolidated financial statements should be read in conjunction with the Company's audited consolidated financial statements contained in our Annual Report on Form 10-K. Certain reclassifications have been made to prior period amounts to conform to the current period presentation.

USE OF ESTIMATES

The preparation of consolidated financial statements in conformity with United States generally accepted accounting principles, which requires management to make estimates, judgments and assumptions that affect the amounts reported in the financial statements and accompanying notes. Management bases its assumptions on historical experiences and on various other assumptions that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. In addition, Management considers the basis and methodology used in developing and selecting these estimates, the trends in and amounts of these estimates, specific matters affecting the amount of and changes in these estimates, and any other relevant matters related to these estimates, including significant issues concerning accounting principles and financial statement presentation. Such estimates and assumptions could change in the future as more information becomes known which could impact the amounts reported and disclosed herein. Significant estimates include revenue recognition under the percentage of completion method of contract accounting, the valuation of inventory and stock-based compensation expense.

2. ACCOUNTS RECEIVABLE

Accounts receivable consist of the following as of June 30, 2007 and December 31, 2006:


	June 30, 2007		December 31, 2006
Contracts receivable	$	150,215		502,243
Retained		100,000		100,000
Cost and estimated earnings on uncompleted contracts		883,763		44,116

		1,133,978		646,359

Less:
Allowance for doubtful accounts		—		6,277

Total	$	1,133,978	$	640,082

Contract receivables at June 30, 2007 and December 31, 2006 are expected to be collected within a year. The retained balances represent a contract reserve for which a customer has been billed. We expect payment of this reserve pending the completion of a review by the customer of the project costs. The allowance for doubtful accounts represents an estimate for potentially uncollectible accounts receivable related to non-governmental customers which is based upon a review of the individual accounts outstanding and the Company’s prior history of uncollectible accounts receivable.

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Costs and Estimated Earnings on Uncompleted Contracts


	June 30, 2007		December 31, 2006
Cost incurred on uncompleted contracts	$	4,707,757	$	127,622
Estimated earnings		360,153		28,902

Total billable costs and estimated earnings		5,067,910		156,524
Less:
Billings to date		4,184,147		112,408

Total	$	883,763	$	44,116

Included in accompanying balance sheet under the following captions:

Unbilled costs and estimated earnings on uncompleted contracts included in accounts receivable	$	883,763	$	44,116
Billings in excess of costs and estimated earnings on uncompleted contracts		—		—

Total	$	883,763	$	44,116

3. INVENTORY

Our inventories consist of the following as of June 30, 2007 and December 31, 2006:


	June 30, 2007		December 31, 2006
Raw materials	$	1,398,679	$	1,242,146
Work-in-process		2,637,842		1,590,606

Total	$	4,036,521	$	2,832,752

The June 30, 2007 and December 31, 2006 inventory totals contain approximately $809,000 and $374,000, respectively, of allocated general and administrative costs.

4. STOCK-BASED COMPENSATION

Stock Options – Employees and Directors

Effective January 1, 2006, the Company adopted the fair value recognition provisions of Statement of Financial Accounting Standards No. 123(R), “Share Based Payment” (“SFAS No. 123(R)”), using the modified prospective transition method. Under that transition method, compensation cost recognized in the three and six months ended June 30, 2007 and 2006 includes: (a) compensation cost for all share-based payments granted prior to, but not yet vested as of January 1, 2006, based on the grant date fair value estimated in accordance with the original provisions of SFAS No. 123, and (b) compensation cost for all share-based payments granted subsequent to January 1, 2006, based on the grant date fair value estimated in accordance with the provisions of SFAS No. 123(R). The fair value for each option was estimated on the date of grant using the Black-Scholes option-pricing model.

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The following table summarizes the stock options outstanding as of June 30, 2007 as well as activity during the six months then ended:


	Shares		Weighted Average Exercise Price
Outstanding at December 31, 2006	5,562,473		$	6.10
Granted	456,500		$	4.66
Exercised	(440,000	)	$	0.63
Forfeited	(280,750	)	$	7.33

Outstanding at June 30, 2007	5,298,223		$	6.37

Exercisable at June 30, 2007	2,704,990		$	6.27

As of June 30, 2007, the weighted average remaining contractual life of options outstanding and options exercisable was 3.71 and 3.40 years, respectively. There was $5.7 million of total unrecognized compensation cost related to unvested stock option awards as of June 30, 2007. For the three months ended June 30, 2007 and 2006, stock-based compensation expense totaled $655,000 and $832,000, respectively. For the six months ended June 30, 2007 and 2006, stock-based compensation expense totaled $1.7 million and $1.9 million, respectively. As of June 30, 2007, the aggregate intrinsic value (amount by which the market value of a share of the Company’s common stock exceeds the exercise price of the option) of outstanding options was $363,000 for 1,097,375 outstanding options in-the-money, and the aggregate intrinsic value for exercisable options was $334,000 for 602,042 exercisable options in-the-money.

Stock Options and Warrants – Non Employees

At June 30, 2007 and 2006 there were outstanding warrants to purchase 1.1 million and 589,827 shares of common stock, respectively, which were either (i) issued in connection with the August 2006 financing or (ii) outstanding at the date of the merger.

Compensation expense of approximately $27,000 for each of the three months ended June 30, 2007 and 2006 and approximately $55,000 for each of the six months ended June 30, 2007 and 2006 was recorded for 100,000 option shares issued to a non-employee in August 2004, with an offsetting entry to pre-paid assets.

5. INCOME TAXES

We adopted the provisions of Financial Standards Accounting Board Interpretation No. 48 “Accounting for Uncertainty in Income Taxes” (“FIN 48”) an interpretation of FASB Statement No. 109 (“SFAS 109”) on January 1, 2007. The adoption of FIN 48 did not impact the consolidated balance sheet, results of operations or cash flows. At the adoption date of January 1, 2007 and at June 30, 2007, we had unrecognized tax benefits of $9.6 million attributable to losses that were incurred by USHG prior to the merger in March 2004. These benefits are not recognized as a result of uncertainty regarding the utilization of the net operating loss carryforwards.

We recognize interest and penalties related to unrecognized tax benefits in income tax expense. As of June 30, 2007, we had no accrued interest or penalties related to our unrecognized tax benefits.

For the three months and six months ended June 30, 2006, we recorded provisions for income taxes of approximately $11,000 and $22,000, respectively, due to an increase in deferred tax liabilities as a result of the tax amortization of our goodwill. We did not record a provision for taxes in the first or second quarter of 2007 because in the fourth quarter of 2006, we reduced the fair value of goodwill to zero.

We file income tax returns in the US Federal and various state jurisdictions. With certain exceptions, the Company is no longer subject to audit for years prior to the year ended December 31, 2003.

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6. SIGNIFICANT CUSTOMERS

The substantial majority of our customers is either the U.S. Government or contractors to the U.S. Government and represents approximately 96% of revenues for each of the six months ended June 30, 2007 and 2006, respectively.

7. NET LOSS PER SHARE

Basic loss per share is computed as net loss attributable to common stockholders divided by the weighted average number of common shares outstanding for the period. Diluted loss per share reflects the potential dilution that could occur from common shares issuable through exercise of stock options and warrants and common shares issuable upon the conversion of convertible instruments. Options and warrants and our Series A Convertible Preferred Stock, which were not included in the total of diluted shares because the effect was antidilutive, was 386,222 and 1,897,252 shares for the three months ended June 30, 2007 and 2006, respectively, and 383,890 and 1,741,840 for the six months ended June 30, 2007 and 2006, respectively.

8. DIVIDENDS

Under a standing Board resolution a 6.5% dividend was paid on August 1, 2007 to the holders of our Series A Redeemable Cumulative Preferred Stock and that the dividend was paid in shares of our common stock to the holders of record on July 15, 2007. Dividends on Preferred Stock are accrued when the amount of the dividend is determined. The non-cash dividend of approximately $295,000 is reflected in our June 30, 2007 balance sheet. The recording of the dividend had no effect on our cash or total equity. Dividends on our Preferred Stock are payable quarterly on the first day of February, May, August and November, in cash or shares of Common Stock, at the discretion of the Company.

9. COMMITMENTS AND CONTINGENCIES

LITIGATION

In July 2006, two class action complaints were filed by George Wood and Raymond Deedon against Ionatron and its founders. Each of the class actions was filed in the United States District Court for the District of Arizona and allege, among other things, violations of Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5, claiming that the Company issued false and misleading statements concerning the development of its counter-IED product. The court consolidated these cases, and a consolidated amended complaint was served. The Company and the individual defendants moved to dismiss the consolidated amended complaint for failure to state a cause of action. The plaintiffs have opposed the Company’s motion to dismiss. We are unable to evaluate the likelihood of an unfavorable outcome in this matter or estimate the range of potential loss, if any. However, the Company intends to defend itself vigorously in these legal proceedings.

In September 2006, a derivative action was filed by John T. Johnasen in Arizona State Court, Pima County, against certain of the Company’s officers and directors, alleging, among other things, breach of fiduciary duty. On June 29, 2007, the state court extended the stay of the derivative action until 30 days after the federal district court rules on the Company’s motion to dismiss the consolidated complaint in the class action described above.

In addition, we may from time to time be involved in legal proceedings arising from the normal course of business. As of the date of this report, we have not received notice of any other legal proceedings.

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

Our discussion and analysis of the financial condition and results of operations should be read in conjunction with the unaudited consolidated financial statements and the related disclosures included elsewhere herein and in Management’s Discussion and Analysis of Financial Condition and Results of Operations included as part of our Annual Report on Form 10-K for the year ended December 31, 2006.

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

Certain statements in this Quarterly Report on Form 10-Q constitute forward-looking statements within the meaning of the securities laws. Forward-looking statements include all statements that do not relate solely to the historical or current facts, and can be identified by the use of forward looking words such as "may", "believe", "will", "expect", "expected", "project", "anticipate", "anticipated estimates", "plans", "strategy", "target", "prospects" or "continue". These forward looking statements are based on the current plans and expectations of our management and are subject to a number of uncertainties and risks that could significantly affect our current plans and expectations, as well as future results of operations and financial condition and may cause our actual results, performances or achievements to be materially different from any future results, performances or achievements expressed or implied by such forward-looking statements. Important factors that could cause our actual results to differ materially from our expectations are described Item 1A. (Risk Factors) of our Annual Report on Form 10-K for the year ended December 31, 2006. In making these forward-looking statements, we claim the protection of the safe-harbor for forward-looking statements contained in the Private Securities Reform Act of 1995. Although we believe that the expectations reflected in such forward-looking statements are reasonable, there can be no assurance that such expectations will prove to have been correct. We do not assume any obligation to update these forward-looking statements to reflect actual results, changes in assumptions, or changes in other factors affecting such forward-looking statements.

OVERVIEW

Ionatron was formed to develop and market Directed Energy Weapon products and other products incorporating its proprietary Laser Induced Plasma Channel ("LIPC") and related technologies. Our goal is to deliver products that incorporate our proprietary technologies for sale to Government customers for specific applications and platforms as well as products for other commercial customers. Ionatron has entered into several contracts with the Government for products and services as well as Cooperative Research and Development Agreements for research on LIPC-based Directed Energy Weapons and Counter-Weapon Systems. We expect to offer Government approved versions of our products for other Government and non-government security applications in the future. Since our inception, we have engaged in research and development and business development activities. Our first Government contract was received in September of 2003. Since 2003, we demonstrated our Directed Energy technology in the laboratory; demonstrated the technology effects on a variety of targets both under Government contract and using internal research and development funding; delivered a compact laser system specifically designed to enable the technology under a Government contract; and commenced a Government contract for the development of a system on a mobile platform for field demonstration and testing. We have also, utilizing contract and internal research and development funds, developed additional laser sources, advanced high voltage systems, special-purpose optical systems, expanded target effects testing under Government contracts, furthered our understanding of the underlying physics of our systems and products and entered into teaming agreements with other defense contractors regarding cooperative development and marketing of our LIPC and Laser Guided Energy (“LGE” ^tm ) technologies and products.

Since our inception, we have pursued the development of a range of core intellectual property objectives using internal investment, and have aggressively pursued patents on such technology. The objective of this approach has been to establish a sole source role for us in customer-funded technology and product development contracts, as well as to establish potential barriers to competition. We understand that our patent applications, in tandem with our significant proprietary knowledge, can be used as justification for sole source contracts in accordance with Federal Acquisition Regulations, and thereby avoid the necessity of competitive solicitations. Presently we have four patents issued and 30 patent applications in-process. Of the 30 pending patent applications, we have received Government initiated “national security related” secrecy orders on 17 of these applications. The U.S. patent office imposes secrecy orders when disclosure of an invention by publication of a patent would be detrimental to the National Security. These patents are treated as under review unless and until they are declassified, at which time patents may be issued, with enforcement based on the original filing date. However, we received notice that two of these secrecy order patent applications have been found patentable by the patent office. These patents and patent applications relate to our core LIPC technology, counter-IED offerings, and other technologies related to LGE, laser and high voltage applications.

We have developed both major components and demonstrator systems that can counter Improvised Explosive Devices (“IEDs”) which constitute a major terrorist threat to military and security operations in several areas of military involvement around the world, and we completed a series of Government-sponsored tests of prototypes of these counter-IED systems. Variations of our counter-IED products include a remotely operated vehicle, kits

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and palletized versions of this direct discharge counter-IED technology. These variations may be implemented with other platforms and systems. Technical results of all testing are highly sensitive, but we believe the latest series of testing is consistent with previous tests and we are satisfied that these tests accurately reflect the capability of our technology in addressing this critical mission. We are actively working with the Marine Corps and other Government organizations to field this counter-IED technology. As a result of the testing conducted in January and February 2007 of our Counter-IED technology, the U.S. Marine Corps requested funding from both Congress and the Joint IED Defeat Organization (JIEDDO) for further development and testing of the technology to meet USMC urgent requirements. We expect that this activity will result in the development of multiple units for in-field testing by the USMC.

Our progress in development of our LGE technologies has resulted in follow-on contracts, including recently announced sole-source development activities. In particular, the Department of Defense (“DoD”) has identified certain urgent counter-IED applications for directed energy which, we believe, will lead to the development and fielding of mission-specific LGE platforms in the foreseeable future. Current year contracted LGE development activities include vehicle stopping and counter Vehicle Borne IED (VBIED) missions, which we expect will lead to follow-on contracts for the LGE platform. As these counter-IED initiatives continue to be advanced by our customer, we will be seeking manufacturing opportunities to field the proximity-related direct discharge products, the laser-guided versions of these direct discharge products, as well as other related proprietary technologies.

Government support for our LGE and LIPC technologies continues through Congressional funding in to the U.S. Navy budget, as well as funding that is transferred to the Navy from other services. We were awarded a $9.8 million dollar contract by the U.S. Navy in April 2007.

In March 2007, the U.S. Army issued a Request-for-Information regarding Laser Guided Energy capabilities. This request was part of the customer process to validate that we have a unique capability so that a sole source contract may be awarded. The initial contract award from that posting was received for approximately $200,000 to support research lead by the Los Alamos National Laboratory for advanced applications relating to our core technology. The Army has initiated a dedicated funding line for future years to support LGE development leading to an anticipated Program of Record for LGE in the 2010 fiscal year.

In April 2007, we signed an Exclusive Supplier Agreement for high voltage electrical systems for a commercial customer. This agreement identifies Ionatron as the preferred supplier for the proprietary technology being developed. The agreement provides for a close working relationship between the organizations in developing the technology and grants us a license to use the technology, and specific subsystems developed for that technology, for applications that do not compete with the major contractor’s own technology initiative. We anticipate that the first product to be delivered under this agreement will be completed in late August. The customer has already indicated that they will be awarding a subsequent contract for delivery of a next-generation system upon the delivery of the first unit.

RESULTS OF OPERATIONS

COMPARISON OF OPERATIONS FOR THE THREE MONTHS ENDED JUNE 30, 2007 AND 2006 IS AS FOLLOWS:


	2007			2006
Revenue	$	3,149,173		$	1,997,170
Cost of revenue		3,070,626			2,023,231
General and administrative		2,382,555			3,594,220
Selling and marketing		125,015			126,291
Research and development		183,804			1,201,179
Other (expense) income:
Interest expense		(489	)		(4,120	)
Interest income		354,143			111,982
Other		7,835			35

Loss before provision for income taxes		(2,251,338	)		(4,839,854	)
Provision for income taxes		—			10,603

Net loss	$	(2,251,338	)	$	(4,850,457	)

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REVENUE

The increase of approximately $1.2 million in revenue for the three months ended June 30, 2007 compared to 2006 is attributable to the an increase in LGE revenue of approximately $1.8 million offset by a decrease of $673,000 resulting from the completion in 2006 of our 12-unit counter IED (“Improvised Explosive Device”) order.

COST OF REVENUE

Cost of revenue increased approximately $1.0 million when compared to the three months ended June 30, 2006 due to increased revenue. Cost of revenue includes an allocation of general and administrative expenses and research and development costs in accordance with the terms of our contracts. Primarily as a result of higher revenue, the amount of allowable general and administrative expenses allocated to our revenue projects also increased, which has resulted in an improved gross margin.

GENERAL AND ADMINISTRATIVE

Reported general and administrative (“G&A”) expense decreased approximately $1.2 million in the second quarter 2007 when compared to the second quarter 2006. The decrease is primarily attributable to reductions in travel related costs of $484,000, temporary help and consultants of $331,000, non-cash director and employee stock option compensation expense of $178,000, supplies of $166,000, fringe and benefits cost of $135,000 and indirect overhead costs allocated to cost of revenue on Government contracts of $258,000, offset by a $293,000 adjustment to provision for bad debts on non-government based contracts in 2006.

SELLING AND MARKETING

Selling and marketing expenses remained level at approximately $125,000 for the quarter ended June 30, 2007 and $126,000 for the same period in 2006, which reflects a minor increase in professional fees and travel related costs offset by a minor decrease in marketing material costs.

RESEARCH AND DEVELOPMENT

Research and development (“R&D”) expenses decreased approximately $1.0 million during the three months ended June 30, 2007 as compared to the same period in 2006 primarily due the re-deployment of our technical staff to our funded projects in-progress.

INTEREST INCOME AND INTEREST EXPENSE

Net interest income for the first quarter of 2007 increased approximately $242,000 from the same period of 2006 primarily as a result of additional funds being provided by the August 2006 financing invested in money market accounts.

NET LOSS

Our operations for the three months ended June 30, 2007 resulted in a net loss of approximately $2.3 million, improved by approximately $2.6 million when compared to the $4.9 million loss in the same period in 2006. This improvement is reflective of reductions in general and administrative of $1.2 million, R&D of approximately $1.0 million, and increases in our net interest income of $242,000 and an improvement in our gross margin of $105,000.

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COMPARISON OF OPERATIONS FOR THE SIX MONTHS ENDED JUNE 30, 2007 AND 2006 IS AS FOLLOWS:


	2007			2006
Revenue	$	5,219,783		$	7,071,997
Cost of revenue		5,408,620			6,790,409
General and administrative		4,602,177			6,215,716
Selling and marketing		254,815			275,249
Research and development		307,827			2,276,246
Other (expense) income:
Interest expense		(1,488	)		(9,363	)
Interest income		737,969			224,102
Other		7,847			44

Loss before provision for income taxes		(4,609,328	)		(8,270,840	)
Provision for income taxes		—			21,902

Net loss	$	(4,609,328	)	$	(8,292,742	)

REVENUE

The decrease of approximately $1.9 million in revenue for the six months ended June 30, 2007 compared to 2006 is primarily attributable to a decrease of $3.7 million from the completion of our 12-unit counter IED (“Improvised Explosive Device”) order in 2006, which was offset by an increase in revenue from our LGE project increased $2.1 million in 2007.

COST OF REVENUE

Cost of revenue decreased approximately $1.4 million when compared to the six months ended June 30, 2006 due to decreased revenue. Cost of revenue includes an allocation of general and administrative expenses and research and development costs in accordance with the terms of our contracts. Primarily as a result of lower revenue and a lower amount of allowable general and administrative expenses allocated to our revenue projects. The negative gross margin in the first six months of 2007 was primarily due to costs attributed to non-government based contracts.

GENERAL AND ADMINISTRATIVE

Reported G&A expense decreased approximately $1.6 million in the first six months of 2007 when compared to the first six months of 2006 which includes reductions in travel related expenses of $700,000, temporary help and consultants of $500,000, professional fees of $480,000, supplies of $444,000, fringe and benefits cost of $288,000 and non-cash director and employee stock option compensation expense of approximately $202,000. These expense reductions were combined with an increase in G&A expenses allocated to cost of revenue of $278,000 which was offset by a decrease of $1.4 million of indirect overhead costs allocated to material included in the costs of revenue on Government contracts.

SELLING AND MARKETING

Selling and marketing expenses of approximately $255,000 for the six months ended June 30, 2007 decreased by approximately $20,000 from the $275,000 of expenses recognized in the six months ended June 30, 2006, which is reflective of decreased marketing material costs.

RESEARCH AND DEVELOPMENT

Research and development (“R&D”) expenses decreased approximately $2.0 million during the six months ended June 30, 2007 as compared to 2006 primarily due the re-deployment of our technical staff to our funded projects in-progress.

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INTEREST INCOME AND INTEREST EXPENSE

Net interest income for the first six months of 2007 increased approximately $521,000 from the same period of 2006 primarily as a result of additional funds being provided by the August 2006 financing invested in money market accounts.

NET LOSS

Our operations for the six months ended June 30, 2007 resulted in a net loss of approximately $4.6 million, an improvement of approximately $3.7 million when compared to the same period in 2006. This improvement is reflective of reductions in R&D expense of approximately $2.0 million and G&A expense of $1.6 million and an increase of our net interest income of $521,000, offset by a decrease in our gross margin of $470,000.

LIQUIDITY AND CAPITAL RESOURCES

At June 30, 2007, we had approximately $26.6 million of cash, cash equivalents and securities available-for-sale. Our cash position decreased during the first six months of 2007 by approximately $4.0 million. During the first six months of 2007, we used approximately $3.9 million of cash in operating activities. This amount is comprised primarily of our net loss of approximately $4.6 million and increases in inventory of $1.5 million, a decrease in accrued expenses, deposits and deferred rent of $506,000 and an increase in accounts receivable of $494,000, reduced by non-cash stock option compensation expense of approximately $1.8 million, depreciation and amortization expense of $542,000, a decrease in prepaid expenses and deposits of $386,000, a provision for warranty and loss on projects of $296,000 and an increase of accounts payable of $236,000. During the first six months of 2007, investment activities used approximately $120,000 from the acquisition and disposal of equipment while financing activities used approximately $50,000.

In the course of normal business, we customarily have approximately $500,000 of purchase obligations outstanding which typically settle within 12 months of incurrence.

We anticipate that short-term and long-term funding needs will be provided from cash and cash equivalents and available-for-sale marketable securities and cash flow from Government contracts. We believe that we have sufficient working capital to fulfill existing contracts and expected contracts in 2007 and 2008. The transportable demonstrator contract and at least two of the other Ionatron contracts, that presently represent a major portion of our current activity, are on a cost plus fixed fee basis. This means all work performed is done at our Government-approved rates, which include general and administrative costs, overhead, labor and materials, fees and profit. These costs are accrued as incurred and billed monthly. Other contracts are at fixed prices which have commercial type gross margins associated with them.

BACK-LOG OF ORDERS

At June 30, 2007, we had a backlog (that is, work load remaining on signed contracts) of approximately $9.3 million to be completed within the next twelve months. The backlog does not include proposals and contracts under negotiation at June 30, 2007.

ITEM 4. CONTROLS AND PROCEDURES

EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES

Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures as of June 30, 2007. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures are effective to ensure that information required to be disclosed by us in reports that we file or submit under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules and forms. During the six months ended June 30, 2007, there was no significant change in our internal controls over financial reporting that has materially affected, or which is reasonably likely to materially affect our internal controls over financial reporting.

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PART II – OTHER INFORMATION

ITEM 2 UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

During the three months ended June 30, 2006, the Company issued 437,013 shares of common stock upon exercise of outstanding options and warrants to former pre-merger USHG employees. The securities were issued pursuant to an exemption from registration pursuant to Section 3(a)(9) of the Securities Act of 1933.

ITEM 5 OTHER INFORMATION

On August 7, 2007, the Board of Directors approved amendments to the Company’s By-Laws by which stockholders may recommend nominees to the Board of Directors. The amended By-Laws are in Exhibit 3. The amendments to the By-laws include the following:

(i)

Article III, Section 8 was amended to provide that the only business which shall be conducted at any meeting of the stockholders shall (i) have been specified in the written notice of the meeting (or any supplement thereto) given as provided by the Certificate in accordance with the By-laws, (ii) be brought before the meeting at the direction of the Board of Directors or the chairman of the meeting or (iii) have specified in a written notice (a “Stockholder Meeting Notice”) given to the Corporation, in accordance with all of the following requirements, by or on behalf of any stockholder who shall have been a stockholder of record on the record date for such meeting and who shall continue to be entitled to vote there at. Each Stockholder Meeting Notice must be delivered personally to, or be mailed to and received by, the Secretary of the Corporation, at the principal executive offices of the Corporation, not less than 50 days nor more than 75 days prior to the meeting; provided, however, that in the event that less than 65 days’ notice or prior public disclosure of the date of the meeting is given or made to stockholders, notice by the shareholder to be timely must be received not later than the close of business on the tenth day following the earlier of (i) day on which such notice of the date of the meeting was mailed or (ii) such public disclosure was made. Each Stockholder Meeting Notice to the Secretary shall set forth as to each matter the stockholder proposes to bring before the meeting: (i) a description of each item of business proposed to be brought before the meeting and the reasons for conducting such business at the meeting; (ii) the name and address, as they appear on the Corporation’s books, of the stockholder proposing to bring such item of business before the meeting; (iii) the class and number of shares of stock held of record, owned beneficially and represented by proxy by such stockholder as of the record date for the meeting (if such date then shall have been made publicly available) and as of the date of such Stockholder Meeting Notice; and (iv) all other information which would be required to be included in a proxy statement filed with the Securities and Exchange Commission if, with respect to any such item of business, such stockholder were a participant in a solicitation subject to Section 14 of the Securities Exchange Act of 1934.

(ii)

Article III, Section 8 was also added to provide that any proposal by stockholders which has not previously received the approval of the Board of Directors shall require for its adoption the affirmative vote of holders of more than fifty percent (50%) of the votes which all stockholders are entitled to cast thereon, in addition to any other approval which is required by law, the Certificate of Incorporation, these By-laws or otherwise.

(iii)

A new Article IV, Section 4 was added to add the following:

Subject to the rights of the holders of any class or series of stock having a preference over the Common Stock as to dividends or upon liquidation, nominations for the election of directors may be made by the Board of Directors or a committee appointed by the Board of Directors or any stockholder entitled to vote in the election of directors. However, any stockholder entitled to vote in the election of directors may nominate one or more persons for election as directors at a meeting only if written notice of such stockholder’s intent to make such nomination or nominations has been delivered personally to, or been mailed to and received by the Secretary of the Corporation at, the principal executive offices of the Corporation, not less than 50 days nor more than 75 days prior to the meeting; provided, however, that, in the event that less than 65 days’ notice or prior public disclosure of the date of the meeting is given or made to stockholders, notice by the stockholder to be timely must be so received not later than the close of business on the tenth day following the day on which such notice of the date of the meeting was mailed or such public disclosure was made. Each such notice shall set forth: (i) the name and address of the stockholder, as they appear on the Corporation’s books, who intends to make the nomination and of the person or persons to be nominated; (ii) the class and number of shares of stock held of record, owned beneficially and represented by proxy by such stockholder as of the record date for the meeting (if such date shall then have been made publicly available) and of the date of such notice; (iii) a representation that the stockholder intends to appear in person or by proxy at the meeting to nominate the person or persons specified in the notice; (iv) a description of all arrangements or understandings between such shareholder and

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each nominee and any other person or persons (naming such person or persons) pursuant to which the nomination or nominations are to be made by such stockholder; (v) such other information regarding each nominee proposed by such stockholder as would be required to be included in a proxy statement filed pursuant to the proxy rules of the Commission, had each nominee been nominated, or intended to be nominated by the Board of Directors; and (vi) the consent of each nominee to serve as a director of the corporation if so elected.

The foregoing is a description of only certain of the amendments to the By-laws described in this Form 10-Q and does not purport to be complete and is qualified in its entirety by the language in the amended By-laws, a copy of which is filed as Exhibit 3 to this Form 10-Q and is incorporated herein by reference to such exhibit.

ITEM 6 EXHIBITS


EXHIBIT NUMBER		DESCRIPTION
3		Ionatron, Inc. Amended and Restated By-Laws

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

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


IONATRON, INC.

By		/s/ Dana A, Marshall
		Dana A. Marshall
		Chief Executive Officer and President

Date: August 9, 2007

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EXHIBIT 3

IONATRON, INC.

AMENDED AND RESTATED BY-LAWS

ARTICLE I

OFFICES

1. The location of the registered office of the Corporation is 2711 Centerville Road, Suite 400, in the City of Wilmington, County of New Castle, Delaware 19808, and the name of its registered agent at such address is Corporation Service Company.

2. The Corporation shall in addition to its registered office in the State of Delaware establish and maintain an office or offices at such place or places as the Board of Directors may from time to time find necessary or desirable.

ARTICLE II

CORPORATE SEAL

The corporate seal of the Corporation shall have inscribed thereon the name of the Corporation and may be in such form as the Board of Directors may determine. Such seal may be used by causing it or a facsimile thereof to be impressed, affixed or otherwise reproduced.

ARTICLE III

MEETINGS OF STOCKHOLDERS

1. All meetings of the stockholders shall be held at the registered office of the Corporation in the State of Delaware or at such other place as shall be determined from time to time by the Board of Directors.

2. The annual meeting of stockholders shall be held on such day and at such time as may be determined from time to time by resolution of the Board of Directors, when they shall elect by plurality vote, a Board of Directors to hold office until the annual meeting of stockholders held next after their election and their successors are respectively elected and qualified or until their earlier resignation or removal. Any other proper business may be transacted at the annual meeting.

3. The holders of a majority of the stock issued and outstanding and entitled to vote thereat, present in person or represented by proxy, shall constitute a quorum at all meetings of the stockholders for the transaction of business, except as otherwise expressly provided by statute, by the Certificate of Incorporation or by these By-laws.

4. At all meetings of the stockholders each stockholder having the right to vote shall be entitled to vote in person, or by proxy appointed by an instrument in writing subscribed by such stockholder and bearing a date not more than three years prior to said meeting, unless such instrument provides for a longer period.

5. At each meeting of the stockholders each stockholder shall have one vote for each share of capital stock having voting power, registered in his name on the books of the Corporation at the record date fixed in accordance with these By-laws, or otherwise determined, with respect to such meeting. Except as otherwise expressly provided by statute, by the Certificate of Incorporation or by these By-laws, all matters coming before any meeting of the stockholders shall be decided by the vote of a majority of the number of shares of stock present in person or represented by proxy at such meeting and entitled to vote thereat, a quorum being present.

6. Notice of each meeting of the stockholders shall be mailed to each stockholder entitled to vote thereat not less than 10 nor more than 60 days before the date of the

meeting. Such notice shall state the place, date and hour of the meeting and, in the case of a special meeting, the purposes for which the meeting is called.

7. Special meetings of the stockholders, for any purpose or purposes, unless otherwise prescribed by statute, may be called by the Board of Directors.

8. At any annual or special meeting of the stockholders, only such business shall be conducted as shall have been brought before the meeting (i) pursuant to the Corporation’s notice of meeting, (ii) by or at the direction of the Board of Directors, or (iii) by any stockholder who complies with the procedures set forth in this Article III Section 8.

The only business which shall be conducted at any meeting of the stockholders shall (i) have been specified in the written notice of the meeting (or any supplement thereto) given as provided in Article III Section 6, (ii) be brought before the meeting at the direction of the Board of Directors or the chairman of the meeting or (iii) have specified in a written notice (a “Stockholder Meeting Notice”) given to the Corporation, in accordance with all of the following requirements, by or on behalf of any stockholder who shall have been a stockholder of record on the record date for such meeting and who shall continue to be entitled to vote there at. Each Stockholder Meeting Notice must be delivered personally to, or be mailed to and received by, the Secretary of the Corporation, at the principal executive offices of the Corporation, not less than 50 days nor more than 75 days prior to the meeting; provided, however, that in the event that less than 65 days’ notice or prior public disclosure of the date of the meeting is given or made to stockholders, notice by the shareholder to be timely must be received not later than the close of business on the tenth day following the earlier of (i) day on which such notice of the date of the meeting was mailed or (ii) such public disclosure was made. Each Stockholder Meeting Notice to the Secretary shall set forth as to each matter the stockholder proposes to bring before the

meeting: (i) a description of each item of business proposed to be brought before the meeting and the reasons for conducting such business at the meeting; (ii) the name and address, as they appear on the Corporation’s books, of the shareholder proposing to bring such item of business before the meeting; (iii) the class and number of shares of stock held of record, owned beneficially and represented by proxy by such stockholder as of the record date for the meeting (if such date then shall have been made publicly available) and as of the date of such Stockholder Meeting Notice; and (iv) all other information which would be required to be included in a proxy statement filed with the Securities and Exchange Commission (the “Commission”) if, with respect to any such item of business, such stockholder were a participant in a solicitation subject to Section 14 of the Securities Exchange Act of 1934.

Any proposal by stockholders which has not previously received the approval of the Board of Directors shall require for its adoption the affirmative vote of holders of more than fifty percent (50%) of the votes which all stockholders are entitled to cast thereon, in addition to any other approval which is required by law, the Certificate of Incorporation, these By-laws or otherwise.

Notwithstanding anything in these By-laws to the contrary, no business shall be conducted at any meeting of the stockholders except in accordance with the procedures set forth in these By-laws. The Chairman of the meeting shall, if the facts warrant, determine and declare to the meeting that business was not properly brought before the meeting and in accordance with the procedures prescribed by these By-laws, and if he or she should so determine, he or she shall so declare to the meeting and any such business not properly brought before the meeting shall not be transacted.

9. When a meeting is adjourned to another time or place, notice of the adjourned meeting need not be given if the time and place thereof are announced at the meeting at which the adjournment is taken, unless the adjournment is for more than 30 days, or unless after the adjournment a new record date is fixed for the adjourned meeting, in which case notice of the adjourned meeting shall be given to each stockholder of record entitled to vote at the meeting. At the adjourned meeting, any business may be transacted that might have been transacted at the original meeting.

10. The order of business at each meeting of stockholders shall be determined by the presiding officer.

ARTICLE IV

DIRECTORS

1. The business and affairs of the Corporation shall be managed under the direction of a Board of Directors, which may exercise all such powers and authority for and on behalf of the Corporation as shall be permitted by law, the Certificate of Incorporation or these By-laws.

2. The Board of Directors may hold their meetings within or outside of the State of Delaware, at such place or places as it may from time to time determine.

3. The number of directors comprising the Board of Directors shall be such number as may be from time to time fixed by resolution of the Board of Directors. If the number of directors is changed, any increase or decrease shall be apportioned among the classes so as to maintain the number of directors in each class as nearly equal as possible, and any additional director of any class elected to fill a vacancy resulting from an increase in such class shall hold office for a term that shall coincide with the remaining term of that class, but in no case will a decrease in the number of directors shorten the term of any incumbent director. A director shall

hold office until the annual meeting for the year in which his term expires and until the successor shall be elected and shall qualify, subject, however to prior death, resignation, retirement, disqualification or removal from office. Any vacancy occurring in the Board of Directors, including any vacancy created by reason of an increase in the number of directors, shall be filled for the unexpired term by the concurring vote of a majority of the directors then in office, whether or not a quorum, and any director so chosen shall hold office for the remainder of the full term of the class of directors in which the new directorship was created or the vacancy occurred and until such director’s successor shall have been elected and qualified.

4. Subject to the rights of the holders of any class or series of stock having a preference over the Common Stock as to dividends or upon liquidation, nominations for the election of directors at which directors are elected may be made by the Board of Directors or a committee appointed by the Board of Directors or any stockholder entitled to vote in the election of directors. However, any stockholder entitled to vote in the election of directors may nominate one or more persons for election as directors at a meeting only if written notice of such stockholder’s intent to make such nomination or nominations has been delivered personally to, or been mailed to and received by the Secretary of the Corporation at, the principal executive offices of the Corporation, not less than 50 days nor more than 75 days prior to the meeting; provided, however, that, in the event that less than 65 days’ notice or prior public disclosure of the date of the meeting is given or made to stockholders, notice by the stockholder to be timely must be so received not later than the close of business on the tenth day following the day on which such notice of the date of the meeting was mailed or such public disclosure was made. Each such notice shall set forth: (i) the name and address of the stockholder, as they appear on the Corporation’s books, who intends to make the nomination and of the person or persons to be nominated; (ii) the class and number of shares of

stock held of record, owned beneficially and represented by proxy by such stockholder as of the record date for the meeting (if such date shall then have been made publicly available) and of the date of such notice; (iii) a representation that the stockholder intends to appear in person or by proxy at the meeting to nominate the person or persons specified in the notice; (iv) a description of all arrangements or understandings between such shareholder and each nominee and any other person or persons (naming such person or persons) pursuant to which the nomination or nominations are to be made by such stockholder; (v) such other information regarding each nominee proposed by such stockholder as would be required to be included in a proxy statement filed pursuant to the proxy rules of the Commission, had each nominee been nominated, or intended to be nominated by the Board of Directors; and (vi) the consent of each nominee to serve as a director of the corporation if so elected.

5. Any director may resign at any time by giving written notice of his resignation to the Board of Directors. Any such resignation shall take effect upon receipt thereof by the Board, or at such later date as may be specified therein. Any such notice to the Board shall be addressed to it in care of the Secretary.

ARTICLE V

COMMITTEES OF DIRECTORS

1. The Board may designate an Executive Committee and one or more other committees, each such committee to consist of one or more directors of the Corporation. The Executive Committee shall have and may exercise all the powers and authority of the Board in the management of the business and affairs of the Corporation (except as otherwise expressly limited by statute), including the power and authority to declare dividends and to authorize the issuance of stock, and may authorize the seal of the corporation to be affixed to all papers which may require it. Each such committee shall have such of the powers and authority of the Board (except as otherwise

expressly limited by statute) as may be provided from time to time in resolutions adopted by a majority of the whole Board.

2. The requirements with respect to the manner in which the Executive Committee and each such other committee shall hold meetings and take actions shall be set forth in the resolutions of the Board of Directors designating the Executive Committee or such other committee.

ARTICLE VI

COMPENSATION OF DIRECTORS

The directors shall receive such compensation for their services as may be authorized by resolution of the Board of Directors, which compensation may include an annual fee and a fixed sum for expense of attendance at regular or special meetings of the Board or any committee thereof. Nothing herein contained shall be construed to preclude any director from serving the Corporation in any other capacity and receiving compensation therefor.

ARTICLE VII

MEETINGS OF DIRECTORS; ACTION WITHOUT A MEETING

1. Regular meetings of the Board of Directors may be held without notice at such time and place, either within or without the State of Delaware, as may be determined from time to time by resolution of the Board.

2. Special meetings of the Board of Directors shall be held whenever called by the Chairman, the President of the Corporation or the Board of Directors on at least 24 hours’ notice to each director. Except as may be otherwise specifically provided by statute, by the Certificate of Incorporation or by these By-laws, the purpose or purposes of any such special meeting need not be stated in such notice, although the time and place of the meeting shall be stated.

3. At all meetings of the Board of Directors, the presence in person of a majority of the total number of directors shall be necessary and sufficient to constitute a quorum for the transaction of business, and, except as otherwise provided by statute, by the Certificate of Incorporation or by these By-laws, if a quorum shall be present the act of a majority of the directors present shall be the act of the Board.

4. Any action required or permitted to be taken at any meeting of the Board of Directors or of any committee thereof may be taken without a meeting if all the members of the Board or such committee, as the case may be, consent thereto in writing and the writing or writings are filed with the minutes of proceedings of the Board of committee. Any director may participate in a meeting of the Board, or any committee designated by the Board, by means of a conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other, and participation in a meeting pursuant to this sentence shall constitute presence in person at such meeting.

ARTICLE VIII

OFFICERS

1. The officers of the Corporation shall be chosen by the Board of Directors and shall be a Chief Executive Officer, a President, a Chief Financial Officer, one or more Vice Presidents, a Secretary and a Treasurer. The Board may also choose one or more Assistant Secretaries and Assistant Treasurers, and such other officers as it shall deem necessary. Any number of offices may be held by the same person.

2. The salaries of all officers of the Corporation shall be fixed by the Board of Directors, or in such manner as the Board may prescribe.

3. The officers of the Corporation shall hold office until their successors are elected and qualified, or until their earlier resignation or removal. Any officer may be at any time

removed from office by the Board of Directors, with or without cause. If the office of any officer becomes vacant for any reason, the vacancy may be filled by the Board of Directors.

4. Any officer may resign at any time by giving written notice of his resignation to the Board of Directors. Any such resignation shall take effect upon receipt thereof by the Board or at such later date as may be specified therein. Any such notice to the Board shall be addressed to it in care of the Secretary.

ARTICLE IX

THE CHIEF EXECUTIVE OFFICER

The Chief Executive Officer shall have general supervision and direction of the business and affairs of the Corporation, subject, however, to the direction and control of the Board. The Chief Executive Officer may sign and execute in the name of the Corporation deeds, mortgages, bond, contracts or other instruments. He shall perform all duties incident to the office of the Chief Executive Officer and shall, when requested, counsel with and advise the other officers of the Corporation and shall perform such other duties as the Board of Directors may from time to time determine.

ARTICLE X

THE PRESIDENT

The President shall have general and active supervision and direction over the day to day business operations and affairs of the Corporation and over its several officers, agents and employees, subject, however, to the direction and control of the Board. The President may sign and execute in the name of the Corporation deeds, mortgages, bond, contracts or other instruments. He shall perform all duties incident to the office of the President and shall, when requested, counsel with and advise the other officers of the Corporation and shall perform such other duties as the Board of Directors may from time to time determine.

ARTICLE XI

CHIEF FINANCIAL OFFICER AND TREASURER

The Chief Financial Officer shall have the custody of the corporate funds and securities, and shall deposit or cause to be deposited under his direction all moneys and other valuable effects in the name and to the credit of the Corporation in such depositories as may be designated by the Board of Directors or pursuant to authority granted by it. He shall render to the Board of Directors, the Chief Executive Officer, and the President whenever they may require it an account of all his transactions as Chief Financial Officer. He shall have such other powers and duties as may be delegated to him by the Board of Directors, the Chief Executive Officer, or the President.

The Treasurer shall, in case of the absence of the Chief Financial Officer, perform the duties and exercise the powers of the Chief Financial Officer, and shall have such other powers and duties as may be delegated to him by the Board of Directors, the Chief Executive Officer, the Chief Operating Officer, the President or the Chief Financial Officer.

ARTICLE XII

VICE PRESIDENTS

The Vice Presidents shall have such powers and duties as may be delegated to them by the Board of Directors, the Chairman, the Chief Executive Officer or the President.

ARTICLE XIII

SECRETARY AND ASSISTANT SECRETARY

1. The Secretary shall attend all meetings of the Board of Directors and of the stockholders, and shall record the minutes of all proceedings in a book to be kept for that purpose. He shall perform like duties for the committees of the Board when required.

2. The Secretary shall give, or cause to be given, notice of meetings of the stockholders, of the Board of Directors and of the committees of the Board. He shall keep in safe custody the seal of the Corporation, and when authorized by the Chairman, the Chief Executive Officer or the President, shall affix the same to any instrument requiring it, and when so affixed it shall be attested by his signature or by the signature of an Assistant Secretary. He shall have such other powers and duties as may be delegated to him by the Chairman, the Chief Executive Officer or the President.

3. The Assistant Secretary shall, in case of the absence of the Secretary, perform the duties and exercise the powers of the Secretary, and shall have such other powers and duties as may be delegated to them by the Chairman, the Chief Executive Officer or the President.

ARTICLE XIV

CERTIFICATES OF STOCK

The certificates of stock of the Corporation shall be numbered and shall be entered in the books of the Corporation as they are issued. They shall exhibit the holder’s name and number of shares and shall be signed by the Chairman or the President or a Vice President, and by the Treasurer or the Secretary or an Assistant Secretary.

ARTICLE XV

CHECKS

All checks, drafts and other orders for the payment of money and all promissory notes and other evidences of indebtedness of the Corporation shall be signed by such officer or officers or such other person as may be designated by the Board of Directors or pursuant to authority granted by it.

ARTICLE XVI

FISCAL YEAR

The fiscal year of the Corporation shall be as determined from time to time by resolution duly adopted by the Board of Directors.

ARTICLE XVII

NOTICES AND WAIVERS

1. Whenever by statute, by the Certificate of Incorporation or by these By-laws it is provided that notice shall be given to any director or stockholder, such provision shall not be construed to require personal notice, but such notice may be given in writing, by mail, by depositing the same in the United States mail, postage prepaid, directed to such stockholder or director at his address as it appears on the records of the Corporation, and such notice shall be deemed to be given at the time when the same shall be thus deposited. Notice of regular or special meetings of the Board of Directors may also be given to any director by telephone, facsimile transmission or electronic transmission. For purposes of this Article XVII “electronic transmission” means any form of communication, not directly involving the physical transmission of paper, that creates a record that may be retained, retrieved and reviewed by a recipient thereof, and that may be directly reproduced in paper form by such a recipient through an automated process.

2. Whenever by statute, by the Certificate of Incorporation or by these By-laws a notice is required to be given, a written waiver thereof, signed by the person entitled to notice, whether before or after the time stated therein, shall be deemed equivalent to notice. Attendance of any stockholder or director at any meeting thereof shall constitute a waiver of notice of such meeting by such stockholder or director, as the case may be, except as otherwise provided by statute.

ARTICLE XVIII

INDEMNIFICATION

1. All persons who the Corporation is empowered to indemnify pursuant to the provisions of Section 145 of the GCL (or any similar provision or provisions of applicable law at the time in effect) shall be indemnified by the Corporation to the full extent permitted thereby. The foregoing right of indemnification shall not be deemed to be exclusive of any other such rights to which those seeking indemnification from the Corporation may be entitled, including, but not limited to, any rights of indemnification to which they may be entitled pursuant to any agreement, insurance policy, other by-law or charter provision, vote of stockholders or directors, or otherwise. No repeal or amendment of this Article shall adversely affect any rights of any person pursuant to this Article which existed at the time of such repeal or amendment with respect to acts or omissions occurring prior to such repeal or amendment.

2. For purposes of this Section, references to “the Corporation” shall include, in addition to the Corporation, any constituent corporation (including any constituent of a constituent) absorbed in a consolidation or merger which, if its separate existence had continued, would have had power and authority to indemnify its directors, officers, and employees or agents, so that any person who is or was a director, officer, employee or agent of such constituent corporation, or is or was serving at the request of such constituent corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, shall stand in the same position under the provisions of this Article XIX with respect to the resulting or surviving corporation as he would have with respect to such constituent corporation if its separate existence had continued.

3. For purposes of this section, references to “other enterprises” shall include employee benefit plans; references to “fines” shall include any excise taxes assessed on a person

with respect to any employee benefit plans; and references to “serving at the request of the Corporation” shall include any service as a director, officer, employee or agent of the Corporation which imposes duties on, or involves services by, such director, officer, employee or agent with respect to an employee benefit plan, its participants or beneficiaries; and a person who acted in good faith and in a manner he reasonably believed to be in the best interest of the participants and beneficiaries of an employee benefit plan shall be deemed to have acted in a manner “not opposed to the best interests of the Corporation” as referred to in this Article XIX.

4. No repeal or amendment of this Article shall adversely affect any rights of any person pursuant to this Article which existed at the time of such repeal or amendment with respect to acts or omissions occurring prior to such repeal or amendment.

ARTICLE XIX

ALTERATION OF BY-LAWS

The By-laws of the Corporation may be altered, amended or repealed, and new By-laws may be adopted, by the stockholders or by the Board of Directors.

EXHIBIT 31.1

CERTIFICATION OF PRINCIPAL EXECUTIVE

PURSUANT TO 18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO SECTION 302

OF THE SARBANES-OXLEY ACT OF 2002

I, Dana A. Marshall, the Chief Executive Officer of Ionatron, Inc., certify that:

I have reviewed this report on Form 10-Q of Ionatron Inc.;

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal controls over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

/s/ Dana A. Marshall

Dana A. Marshall

Chief Executive Officer

Date: August 9, 2007

EXHIBIT 31.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER

PURSUANT TO 18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO SECTION 302

OF THE SARBANES-OXLEY ACT OF 2002

I, Kenneth M. Wallace, the Chief Financial Officer of Ionatron, Inc., certify that:

I have reviewed this report on Form 10-Q of Ionatron Inc.;

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

/s/ Kenneth M. Wallace

Kenneth M. Wallace

Chief Financial Officer

Date: August 9, 2007

EXHIBIT 32.1

CERTIFICATION OF PRINCIPAL EXECUTIVE

PURSUANT TO 18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO SECTION 906

OF THE SARBANES-OXLEY ACT OF 2002

In connection with the filing by Ionatron, Inc. (the “Company”) of its Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2007 (the “Report”) I, Dana A. Marshall, Chief Executive Officer of the Company certify pursuant to 18 U.S.C. Section. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 that:

(i)

the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(ii)

the information contained in the Report fairly presents, in all material respects, the financial condition and results of operation of the Company.

/s/ Dana A. Marshall

Dana A. Marshall

Chief Executive Officer

Date: August 9, 2007

EXHIBIT 32.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER

PURSUANT TO 18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO SECTION 906

OF THE SARBANES-OXLEY ACT OF 2002

In connection with the filing by Ionatron, Inc. (the “Company”) of its Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2007 (the “Report”) I, Kenneth M. Wallace, Chief Financial Officer of the Company certify pursuant to 18 U.S.C. Section. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 that:

(i)

the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(ii)

the information contained in the Report fairly presents, in all material respects, the financial condition and results of operation of the Company.

/s/ Kenneth M. Wallace

Kenneth M. Wallace

Chief Financial Officer

Date: August 9, 2007

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