UNITED STATES
                    SECURITIES AND EXCHANGE COMMISSION
                          WASHINGTON, D.C.  20549
                                                     
                                FORM 10-K
(Mark One)
 X   ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
     ACT OF 1934

For the fiscal year ended June 30, 1998
                                    OR
     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     0-5404    

                              HADRON, INC.
         (Exact name of registrant as specified in its charter)
         New York                                      11-2120726
(State or other jurisdiction of              (I.R.S. Employer Identification
incorporation or organization)                Number)

                      4900 Seminary Road, Suite 800
                          Alexandria, VA  22311
                (Address of principal executive offices)
            Registrant's telephone number including area code
                             (703) 824-0400

Securities registered pursuant to Section 12(b) of the Act:  None

Securities registered pursuant to Section 12(g) of the Act:

                  Common Stock, par value $0.02 per share
                             (Title of Class)

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 if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to
the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [X]

As of September 23, 1998, the aggregate market value of the common stock of
the registrant held by non-affiliates of the registrant (based upon the
average bid and asked prices of the common stock as reported by the National
Association of Securities Dealers Inc. through its Electronic OTC Bulletin
Board) was approximately $2,780,094.

As of September 23, 1998, 1,736,584 shares of the common stock of the
registrant were outstanding.
<PAGE>
                              PART I


Item 1.    Business


Introduction

 Hadron, Inc. ("Hadron" or the "Company") provides a broad
range of information, management and technical services to
businesses and federal government agencies.  The Company
specializes in the areas of trusted/secure computer systems,
computer systems support and intelligent weapons systems.  The
Company was incorporated in New York in 1964.  

Operations

 The Company's ongoing operations are formally structured
along the business lines of its two main subsidiaries, although
there is considerable cooperation and interaction between the
subsidiaries.  Descriptions of the operations of the subsidiaries
follow.

Engineering & Information Services, Inc. ("EISI")

 EISI, incorporated in Virginia as a wholly-owned subsidiary
of Hadron, provides the Department of Defense ("DoD") and related
clients with software and hardware engineering expertise that
include: systems integration; software development; local and
wide-area computer networking installation and support;
relational database development on client-server architecture;
and hardware board-level design and development.

 EISI supports the DoD environment with UNIX systems
installation and administration and development of large-scale
integrated database applications on distributed workstations in a
client-server architecture.  EISI also provides a variety of
cost-effective engineering services.

 EISI has been a long-term provider of software and hardware
expertise to The Johns Hopkins University Applied Physics
Laboratory ("APL"), located near Baltimore, Maryland. EISI's
business with APL constitutes approximately 48% of the revenues
of the Company.  EISI staff are instrumental in the design and
development of multi-platform analysis, simulation,
communications, and decision support systems for APL. EISI
applications developed for APL help ensure the accuracy and
readiness of a number of U.S. Navy defense systems that are
deployed in global operations today.

 In April 1997, the Company was awarded four follow-on
contracts by APL to continue its support activities through
September 2001.
<PAGE>

SyCom Services, Inc. ("SyCom")

 Hadron's wholly-owned subsidiary, SyCom, a Delaware
corporation, is an information management and systems development
firm.  SyCom specializes in computer-based technologies related
to complex information, communications and electronic systems. 
Headquartered near Baltimore, Maryland, SyCom performs a full
range of information and network support services for commercial
and defense-related clients working on military and civilian
electronic systems.

 SyCom has particular expertise in the development of real-
time and embedded software engineering for systems such as
civilian and military radars, airspace management systems, signal
analysis and specialized database systems.  SyCom also provides
software support, including software documentation, document
management and imaging.  SyCom's business from Northrop Grumman
constitutes approximately 43% of the revenues of the Company.

General Information

 The Company operates predominantly in one industry segment,
providing engineering, computer support services and other
professional technical services. In general, the industry segment
in which the Company operates includes a large number of
competitors of varying sizes, many of which, like the Company,
are principally located in the Washington, D.C. area. 
Competition within the information technology and government
contracting arenas is extremely intense; selection is based
primarily on a combination of the price of services and
evaluation of technical capability, as well as reputation,
quality of service and responsiveness to client requirements.

 The Company maintains a primary commitment to its direct and
indirect government clients, but is also simultaneously
intensifying its program of business development targeted toward
commercial operations.  The Company is continuing efforts to
diversify its client base.
 
 Direct and indirect contracts with government defense and
intelligence agencies comprise the majority of the Company's
business base, and increased competition for government-funded
projects continues to exert pressure on profit margins.  However,
the Company's management continues its program of cost
containment, primarily in the areas of indirect labor costs,
overhead and general and administrative expenses, and therefore
believes the Company is well positioned and competitive in its
marketplace.

 The revenues of EISI accounted for 57%, 55% and 36% of the
Company's total consolidated revenues for the fiscal years 1998,
1997 and 1996, respectively.  During the same fiscal years,
SyCom's revenues respectively accounted for 43%, 44% and 43% of
<PAGE>
consolidated revenues. During fiscal year 1996, revenues from a
former operation accounted for 20% of the Company's total
consolidated revenues.  

 The Company's backlog of orders believed to be firm as of
June 30, 1998 approximates $15 million, which the Company expects
will be filled during fiscal 1999.  As of June 30, 1997, the
Company had approximately $14 million in firm backlog orders. 
Included in the firm backlog approximation are estimates of
amounts the Company anticipates receiving under government
contracts, some of which are indefinite delivery, indefinite
quantity contracts, under which services are provided as ordered
by the government.   Not included in the backlog approximation
are amounts from future years of government contracts under which
the government has the right to exercise an option for the
Company to perform services.

 As of June 30, 1998, the Company (including its
subsidiaries) employed approximately 240 people.  The Company's
employees are not members of any union, and employee relations
are believed by management to be generally good.

 Raw materials, patents, licenses, trademarks, franchises and
concessions are not materially important to the conduct of the
Company's business and the Company's business is not seasonal.


Government Procurement

 The Company is heavily dependent on the DoD, as well as
other U.S. governmental agencies, for contract work.  Contracts
and subcontracts with the DoD produced approximately 48% of the
Company's total revenues during fiscal year 1998.  The Company's
other U.S. government contracts and subcontracts produced
approximately 7% of the Company's total revenues during fiscal
year 1998.  Contracts with the U.S. Government are subject to
audit by the Defense Contract Audit Agency.

 The Company has been a contractor or subcontractor with the
DoD continuously since 1973 with periodic renewals.  During this
time, neither the Company nor its subsidiaries have experienced
any material adjustment of profits under these contracts;
however, no assurance can be given that the DoD will not seek and
obtain an adjustment of profits in the future.  All U.S.
government contracts contain clauses which allow for the
termination of contracts at the convenience of the U.S.
government.

 The preponderance of the Company's technical and
professional service business with the DoD and other governmental
agencies is obtained through competitive procurement and through
"follow-up" services related to existing business.  In certain
instances, however, the Company acquires such service contracts
<PAGE>
because of special professional competency or proprietary
knowledge in specific subject areas.


Recent Developments

 Effective June 30, 1997, SyCom entered into an agreement to
sell the HeaTreaT software products and certain related assets to
Performance Engineering International Corp. ("PEI"), a newly
formed company owned by former Hadron and SyCom executives. 
SyCom received a ten percent interest in PEI's capital stock and
two promissory notes, in the amounts of $2,000,000 and $38,400,
respectively.  In addition, SyCom agreed to invest $20,000 a
month in PEI for a six month period beginning July 1, 1997.  The
divestiture of the HeaTreaT software products eliminated Hadron's
continuing new product expenses.

 During fiscal year 1998, PEI ceased operations.  In
accordance with the terms of the agreement, the HeaTreaT assets
reverted to SyCom.  The Company has retained a third party to
pursue the sale of these assets, which have a carrying value of
$135,900 at June 30, 1998.  

 In December 1995, the Company's Acumenics Research &
Technology, Inc. subsidiary (now named "ART Holdings Corporation"
or "ART") sold substantially all its assets and certain
liabilities related to the ongoing performance of its litigation
support operations and effected (in April 1996) a novation of its
contract with the U.S. Department of Justice to the buyer.  


Item 2.    Properties

 The Company owns no real estate.  As of June 30, 1998, the
Company leased or sub-leased a total of 9,991 square feet of
office space, plus approximately 660 square feet at its corporate
headquarters location in Alexandria, Virginia.  These leases
expire between April 1999 and February 2002. (See Note 9 of the
Notes to Consolidated Financial Statements.)

Item 3.    Legal Proceedings

 No material legal proceedings are currently pending.


Item 4.    Submission of Matters to a Vote of Security Holders

 None. 

<PAGE> 
                            PART II

Item 5.    Market for Registrant's Common Equity and Related
      Shareholder Matters

 The Company's common stock, par value $.02 per share
("Common Stock"), is traded on the National Association of
Securities Dealers' ("NASD") Electronic OTC Bulletin Board, under
the symbol HDRN.  

 The range of high and low bid quotations for the Common
Stock, as reported by the National Quotation Bureau, for each
quarterly period during the fiscal years ended June 30, 1998 and
June 30, 1997 is shown below:

<TABLE>

Fiscal Year Ended June 30, 1998                High     Low  
<CAPTION>                                    -------   --------
<S>                                          <C>      <C>
     First Quarter
     (7/1 to 9/30/97)                        1  5/32      7/8
     Second Quarter
     (10/1 to 12/31/97)                      2 11/16    1 5/32
     Third Quarter
     (1/1 to 3/31/98)                          2 1/8    1 11/16
     Fourth Quarter
     (4/1 to 6/30/98)                         2 5/16    1 3/4

</TABLE>

<TABLE>
Fiscal Year Ended June 30, 1997                High     Low  
<CAPTION>                                    -------  --------
<S>                                          <C>      <C>
     First Quarter
     (7/1 to 9/30/96)                          13/16      5/8
     Second Quarter
     (10/1 to 12/31/96)                          7/8    11/16
     Third Quarter
     (1/1 to 3/31/97)                         1 1/16    11/16 
     Fourth Quarter
     (4/1 to 6/30/97)                            7/8    11/16

</TABLE>

     As of September 23, 1998, there were approximately 3,842 
shareholders of record of the Company's Common Stock.

     No cash dividends were paid during the past two fiscal
years, and none are expected to be declared during fiscal year
1999.  

<PAGE>

Item 6.  Selected Financial Data
<TABLE>
                                                  Fiscal Year Ended
                                                         June 30
                                    1998      1997              1996          1995           1994
                                  --------  --------          --------      --------       --------
                                      (In Thousands,except per share amounts)
<CAPTION>
<S>                               <C>       <C>               <C>           <C>            <C>     
Total Revenues                    $21,134   $16,988           $18,306       $20,534        $18,536 
Operating Income (Loss)               888       128                59          (161)        (3,799)
Interest Expense, net of
 Interest income                       56        84               132           217            287 
Income (Loss)
 before income taxes &
 extraordinary item                   819        57               194          (436)        (4,104)
Income (Loss)
 before extraordinary item            761        13               162          (460)        (4,109)
Extraordinary item -
 gain on retirement
 of debt                                                                      2,718                
Net Income (Loss)                     761        13               162         2,258         (4,109)
Income (Loss) per share
 of Common Stock:
Per share data:
 Income (Loss) before
 extraordinary item
 Basic                                .45       .01               .11          (.31)         (2.75)
 Diluted                              .26       .01               .11          (.31)         (2.75)
Extraordinary item - gain on
 retirement of debt                                                            1.82                
Net Income (Loss)
 Basic                                .45       .01               .11          1.51          (2.75)
 Diluted                              .26       .01               .11          1.51          (2.75)
At Period End:
Total Assets                        3,507     2,712             2,874         4,373          5,088 
Long-term Liabilities                  53       169               320           341            440 
Working Capital (Deficit)            (186)     (906)             (654)         (978)        (3,541)
Shareholders' Equity
 (Deficit)                             22      (811)             (869)       (1,047)        (3,306)
                                          
</TABLE>                                   

                                          
<PAGE>
Item 7.    Management's Discussion and Analysis of Financial 
      Condition and Results of Operations

                                
                     Results of Operations
        Comparison Of Fiscal Year 1998 To Fiscal Year 1997
 
 Revenues for the fiscal year ended June 30, 1998 were
approximately $21,134,000, a 24% increase from the prior fiscal
year.  The increase was primarily attributable to growth on
existing contracts with major government and commercial customers
of both EISI and SyCom.

 Costs of revenue for the fiscal year ended June 30, 1998
were approximately $18,118,000, an increase of approximately 19%
from the prior fiscal year.  The increase is due to the growth in
EISI and SyCom contracts noted above, partially offset by the
elimination of the HeaTreaT product development expenses of
$599,000.  Costs of revenue as a percentage of revenues were
approximately 86% and 90% for the fiscal years ended June 30,
1998 and 1997, respectively.  This 4% decrease is due primarily
to the elimination of the HeaTreaT expenditures.

 Selling, general and administrative expenses totaled
approximately $2,128,000 for the fiscal year ended June 30, 1998,
compared with approximately $1,610,000 for the prior fiscal year.
The increase is primarily due to the Company's addition of key
administrative personnel, coupled with the implementation of a
profit-based employee incentive program, partially offset by the
absence of HeaTreaT marketing costs of $248,000.

 The Company had an operating profit of $888,000 in the
current fiscal year, compared to an operating profit of $128,000
in the prior fiscal year.  This substantial increase is primarily
attributable to the growth in EISI and SyCom, coupled with the
elimination of HeaTreaT expenses of $847,000, partially offset by
the increased general and administrative expenses noted above.

 For the twelve months ended June 30, 1998, net interest
expense decreased approximately $28,000 from the prior year
period due to decreases in the Company's average debt outstanding
during the year.

 Net income was approximately $761,000, compared to net
income of approximately $13,000 in the prior year.  The increase
resulted primarily from the improved profitability of current
operations, coupled with the elimination of HeaTreaT product
costs.
<PAGE>
                      Results of Operations
        Comparison Of Fiscal Year 1997 To Fiscal Year 1996
 
 During the fiscal year ended June 30, 1997, the Company's
revenues were approximately $16,988,000 compared with
consolidated revenues of approximately $18,306,000 for the fiscal
year ended June 30, 1996, a net decrease of approximately
$1,318,000 (7%).  Excluding revenues of ART Holdings Corporation
("ART") operations, which were sold in December 1995, fiscal 1997
revenues were approximately $16,980,000 compared with $14,811,000
for fiscal 1996, an increase of approximately $2,169,000 (15%). 
This increase in revenues is principally attributable to
increased revenues from existing contracts with major government
and commercial customers of EISI and SyCom.

 Costs of revenue were approximately $15,250,000 for the
fiscal year ended June 30, 1997 compared with approximately
$15,937,000 for the fiscal year ended June 30, 1996, a decrease
of approximately $687,000 (4%).  Costs of revenue excluding costs
of revenue attributable to ART for the fiscal year ended June 30,
1997 were approximately $15,256,000, or 90% of revenues, compared
with $12,767,000, or 86% of revenues, for the fiscal year ended
June 30, 1996, an increase of approximately $2,489,000 (19%). 
This increase is primarily due to the increased staffing levels
in performance of the existing EISI and SyCom contracts, coupled
with HeaTreaT product development costs of $599,000.

 Selling, general and administrative expenses were
approximately $1,610,000 for the fiscal year ended June 30, 1997
compared with approximately $2,309,000 for the fiscal year ended
June 30, 1996, a decrease of approximately $699,000 (30%). 
During fiscal year 1997, the Company's management continued the
cost reduction program that it adopted in the face of increasing
losses in past years.  In addition to the cost reduction program,
the Company eliminated from ongoing operations support costs of
approximately $432,000 relating to the ART operations.  These
decreases were partially offset by HeaTreaT marketing costs of
$248,000 in fiscal year 1997.

 The Company generated approximately $128,000 of operating
income during the fiscal year ended June 30, 1997 compared to
operating income of approximately $59,000 for the fiscal year
ended June 30, 1996, an increase of approximately $69,000.  The
improvement is attributable to EISI and SyCom growth, cost
containment efforts and the absence of ART operating losses of
$64,000.  During fiscal year 1997, the Company spent
approximately $847,000 on the continuing development and
marketing of its HeaTreaT software product.
<PAGE>
For the fiscal year ended June 30, 1997, the Company
incurred other expenses of approximately $71,000 compared to the
prior year's other income of $134,000.  Net interest expense
decreased by approximately $47,000 compared to fiscal year 1996
due to decreases in the Company's average debt outstanding during
the year.  In fiscal year 1997, there was no gain on the sale of
assets as compared to the fiscal year 1996 gain of approximately
$255,000 resulting from the sale of ART assets.

 Net income was approximately $13,000 for the fiscal year
ended June 30, 1997, compared to approximately $162,000 for the
fiscal year ended June 30, 1996, a decrease of approximately
$149,000.  The decrease in net income is primarily attributable
to the inclusion of the approximately $255,000 gain on sale of
assets in the twelve months ended June 30, 1996.  Excluding the
gain on the sale of assets, the Company's net income improved by
approximately $106,000 from the prior period.  The improvement is
attributable to improved ongoing operations offset by the
investment in HeaTreaT.

                Capital Resources and Liquidity

 The working capital deficit at June 30, 1998 decreased by
approximately $720,000 from June 30, 1997.  Substantial growth in
existing contracts with EISI and SyCom, coupled with the
elimination of the HeaTreaT expenditures, enabled the Company to
generate the retained profits to fund working capital
requirements.

 The Company has a Line of Credit Agreement with Century
National Bank which provides the Company with an $800,000 line of
credit facility through November 30, 1998.  The line of credit
provides additional working capital availability to fund the
Company's growth.  The Company is currently investigating
increasing and extending the line of credit facility and expects
to execute a new agreement with a bank prior to November.

 For the twelve months ended June 30, 1998, the Company
earned net income of approximately $761,000.  The Company's
ongoing operations are expected to generate profits and cashflow
which will be utilized to improve the working capital and grow
shareholders' equity.  The Company does not anticipate
substantial capital expenditures in fiscal year 1999.

                        Year 2000 Issue

 The Year 2000 issue is the result of computer programs being
written using two digits rather than four to define the
applicable year, resulting in possible system failure or
miscalculations causing disruptions of operations.
<PAGE>

 The Company has completed an internal review and assessment
of the impact of the Year 2000 issue upon its operating,
financial and accounting systems.  At this time, the Company
believes that, with respect to its internal systems, the Year
2000 issue will not pose any significant operational problems or
costs.  The Company has commenced a program to access the impact
of the Year 2000 issue with respect to the Company's major
vendors and customers.  Letters will be sent requesting detailed,
written information concerning existing or anticipated Year 2000
compliance by their systems, insofar as the operating systems
relate to the Company's business activities with such parties. 
The Company expects to receive replies by December 31, 1998, and
will update its assessment of any impact at that time.
   
 Except for the historical information contained herein, the
matters discussed in this 10-K include forward-looking statements
that involve a number of risks and uncertainties.  There are
certain important factors and risks that could cause results to
differ materially from those anticipated by the statements
contained herein.  Such factors and risks include business
conditions and growth in the information services, engineering
services, software development and government contracting arenas
and in the economy in general; competitive factors, such as the
pressures toward consolidation of small government contracts into
larger contracts awarded to major, multi-national corporations;
the Company's ability to continue to recruit and retain highly
skilled technical, managerial and sales/marketing personnel; and
such other risks detailed from time to time in the Company's SEC
reports, including quarterly reports on Form 10-Q.

Item 8.    Financial Statements and Supplementary Data

 The information required by this item is set forth under
Item 14(a), which information is incorporated herein by
reference.


Item 9.    Changes in and Disagreements with Accountants on
      Accounting and Financial Disclosure

 None.

<PAGE>
                             PART III

Item 10.  Directors and Executive Officers of the Registrant


Item 11.  Executive Compensation


Item 12.  Security Ownership of Certain Beneficial Owners and
          Management


Item 13.  Certain Relationships and Related Transactions


 The information required by Items 10, 11, 12 and 13 of Part
III of Form 10-K have been omitted in reliance on General
Instruction G(3) to Form 10-K and are incorporated herein by
reference to the Company's definitive proxy statement to be filed
with the SEC pursuant to Regulation 14A promulgated under the
Securities Exchange Act of 1934, as amended.
<PAGE>

                             PART IV

Item 14.   Exhibits, Financial Statement Schedules, and Reports on
      Form 8-K.

(a) (1)  Financial Statements                                 Page

Report of Independent Accountants                              F-1

Consolidated Balance Sheets as of June 30, 1998 and 1997       F-2

Consolidated Statements of Operations for the fiscal
 years ended June 30, 1998, 1997, and 1996                     F-4

Consolidated Statements of Shareholders' Equity (Deficit) 
 for the fiscal years ended June 30, 1998, 1997, and 1996      F-5

Consolidated Statements of Cash Flows for the 
 fiscal years ended June 30, 1998, 1997, and 1996              F-6

Notes to Consolidated Financial Statements                     F-7

(a) (2)  Financial Statement Schedules

Schedule II: Valuation and qualifying accounts and
               reserves                                       F-22


All other schedules are omitted since the required information is
not present or is not present in amounts sufficient to require
submission of the schedule, or because the information required
is included in the consolidated financial statements and notes
thereto.




(b)  Reports on Form 8-K

None.

<PAGE>
(c)  Exhibits

Exhibit No.

  3.1 Articles of Incorporation (incorporated by reference to
      the Company's Registration Statement on Form S-1,
      Registration No. T-77699, filed May 21, 1982).

  3.2 Certificate of Amendment of Certificate of
      Incorporation of Hadron, Inc. dated August 12, 1993
      (incorporated by reference to the Company's Annual
      Report on Form 10-K for the fiscal year ended June 30,
      1993).

  3.3 Amended and Restated Bylaws (incorporated by reference
      to the Company's Annual Report on Form 10-K for the
      fiscal year ended June 30, 1991).

  4.0 The Company's warrant to purchase 250,000 shares of
      Common Stock issued to Translator Associates, L.P.
      (incorporated by reference to the Company's Annual
      Report on Form 10-K for the fiscal year ended June 30,
      1991).

 10.1 Indemnity Agreement dated October 21, 1993 between
      Hadron, Inc. and C.W. Gilluly (incorporated by
      reference to the Company's Annual Report on Form 10-K
      for the fiscal year ended June 30, 1994).

 10.2 Hadron, Inc. Employee Savings Plan (incorporated by
      reference to the Company's Annual Report on Form 10-K
      for the fiscal year ended June 30, 1990).

 10.3 Hadron, Inc. 1994 Employee Stock Option Plan, As
      Amended (incorporated by reference to the Company's
      Proxy Statement dated October 28, 1994).

 10.4 Hadron, Inc. 1997 Employee Stock Purchase Plan
      (incorporated by reference to the Company's Proxy
      Statement dated October 28,1997).

 10.5 Sublease, dated June 12, 1996, between the Company and
      COMTEX SCIENTIFIC CORPORATION, for the property
      occupied by the Company in Alexandria, Virginia
      (incorporated by reference to the Company's Annual 
      Report on Form 10-K for the fiscal year ended June 30,
      1996).
<PAGE>
 10.6 $225,000 Third Amended and Restated Convertible
      Promissory Note in favor of C.W. Gilluly, dated April
      21, 1997 (incorporated by referenced to the Company's
      Quarterly Report on Form 10-Q for the quarter ended
      March 31, 1997).

 10.7 Form of Stock Purchase Warrant issuable in connection
      with repayment of the Third Amended and Restated
      Convertible Promissory Note (incorporated by referenced
      to the Company's Quarterly Report on Form 10-Q for the
      quarter ended March 31, 1997).

 10.8 Note Purchase Agreement among C.W. Gilluly, Hadron,
      Inc., Engineering and Information Services, Inc. and
      SyCom Services, Inc., George E. Fowler, S. Amber
      Gordon, Donald Jewell, J.Anthony Vidal and Donald
      Ziegler dated April 21, 1997 (incorporated by
      referenced to the Company's Quarterly Report on Form
      10-Q for the quarter ended March 31, 1997).

 10.9 Amended Stock Purchase Warrant granted to C.W. Gilluly
      and dated December 31, 1996 (incorporated by referenced
      to the Company's Current Report on Form 8-K filed July
      23, 1997).

10.10 Stock Purchase Warrant granted to C.W. Gilluly and
      dated June 2, 1997 (incorporated by referenced to the
      Company's Current Report on Form 8-K filed July 23,
      1997).

10.11 $800,000 Promissory Note in favor of Century National
      Bank dated June 25, 1997 (incorporated by referenced to
      the Company's Current Report on Form 8-K filed July 23,
      1997).

10.12 $800,000 Business Loan Agreement in favor of Century
      National Bank dated June 25, 1997 (incorporated by
      referenced to the Company's Current Report on Form 8-K
      filed July 23, 1997).

10.13 Form of $24,000 Convertible Promissory Note issued in
      favor of each of George E. Fowler, S. Amber Gordon,
      Donald E. Jewell, Robert J. Lynch Jr. and Donald E.
      Ziegler, dated June 20, 1997 (incorporated by
      referenced to the Company's Current Report on Form 8-K
      filed July 23, 1997).

<PAGE>

10.15 Investment Agreement among Hadron, Inc. and George E.
      Fowler, S. Amber Gordon, Donald E. Jewell, Robert J.
      Lynch Jr. and Donald E. Ziegler, dated June 20, 1997
      (incorporated by referenced to the Company's Current
      Report on Form 8-K filed July 23, 1997).

10.16 Asset Purchase Agreement among SyCom Services, Inc. and
      Performance Engineering International Corp. dated June
      30, 1997 (incorporated by referenced to the Company's
      Current Report on Form 8-K filed July 25, 1997).

10.17 Employment Agreement with S. Amber Gordon dated June
      10, 1997 (incorporated by reference to the Company's
      Annual  Report on Form 10-K for the fiscal year ended
      June 30, 1997).

10.18 Employment Agreement with George E. Fowler dated July
      1, 1998.  

10.19 Employment Agreement with Donald Jewell dated July 1,
      1998. 

10.20 Employment Agreement with Donald E. Ziegler dated July
      1, 1998. 

10.21 Employment Agreement with C.W. Gilluly dated July 1,
      1998.

21    Subsidiaries of the Company.

24.1 Consent of Independent Auditors.

27   Financial Data Schedule.

                                 
<PAGE>
                           SIGNATURES

 Pursuant to the requirements of Section 13 or 15(d) 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.

Date: September 25, 1998          HADRON, INC.


By:/S/ C. W. GILLULY             By: /S/ DONALD E. ZIEGLER 
   C. W. Gilluly                   Donald E. Ziegler
   Chief Executive Officer         Chief Financial Officer
    and Chairman                     (Principal Financial
    (Principal Executive Officer)     Officer and Principal
                                      Accounting Officer)  

 Pursuant to the requirements of the Securities Exchange Act
of 1934, this report has been signed below by the following
persons on behalf of the Company and in the capacities and on the
dates indicated.

      Signature                Title          Date



/S/ C.W. Gilluly              Chairman        September 25, 1998
C.W. Gilluly


/S/ William J. Howard         Director        September 25, 1998
William J. Howard


/S/ Robert J. Lynch, Jr.      Director        September 25, 1998
Robert J. Lynch, Jr.


/S/ John D. Sanders           Director        September 25, 1998
John D. Sanders



<PAGE>
                REPORT OF INDEPENDENT ACCOUNTANTS



Board of Directors and Shareholders


We have audited the accompanying consolidated balance sheets of
Hadron, Inc. and subsidiaries as of June 30, 1998 and 1997 and
the related consolidated statements of operations, shareholders'
equity (deficit), and cash flows for each of the three years in
the period ended June 30, 1998.  Our audits also included the
financial statement schedule listed in the Index at Item 14(a). 
These financial statements and schedule are the responsibility of
the Company's management.  Our responsibility is to express an
opinion on these financial statements and schedule based on our
audit.

We conducted our audits in accordance with generally accepted
auditing standards.  Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement.  An
audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements.  An
audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating
the overall financial statement presentation.  We believe that
our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to
above present fairly, in all material respects, the consolidated
financial position of Hadron, Inc. and subsidiaries at June 30,
1998 and 1997, and the consolidated results of their operations
and their cash flows for each of the three years in the period
ended June 30, 1998, in conformity with generally accepted
accounting principles.  Also, in our opinion, the related
financial statement schedule, when considered in relation to the
basic financial statements taken as a whole, presents fairly in
all material respects the information set forth therein.

/S/ ERNST & YOUNG, L.L.P.

Vienna, Virginia
August 28, 1998

                              F-1
<PAGE>
<TABLE>
HADRON, INC.
CONSOLIDATED BALANCE SHEETS
JUNE 30, 1998 AND JUNE 30, 1997
<CAPTION> 
 
 
                                                           JUNE 30,     JUNE 30,
     ASSETS                                                  1998         1997
     ------                                              ----------   ---------- 
<S>                                                      <C>          <C>
     Current assets:
       Cash and cash equivalents                         $   60,500   $   24,700
       Accounts receivable, net                           3,143,900    2,312,100
       Note receivable                                        8,600       90,200
       Prepaid expenses and other                            32,500       20,600
                                                          ----------   ----------
 
         Total current assets                             3,245,500    2,447,600
                                                          ----------   ----------
 
     Fixed assets                                           116,300       82,800
     Note receivable                                                       8,600
     Investment in PEI                                                   158,400
     Assets held for resale                                 135,900
     Other                                                    9,300       14,500
                                                          ----------   ----------
         Total other assets                                 261,500      264,300
                                                          ----------   ----------
 
     Total assets                                        $3,507,000   $2,711,900
                                                         ===========  ===========
</TABLE> 

 
See Notes to Consolidated Financial Statements
 
F-2
 
<PAGE> 
<TABLE>
HADRON, INC.
CONSOLIDATED BALANCE SHEETS
JUNE 30, 1998 AND JUNE 30, 1997
<CAPTION>
 
                                                                 JUNE 30,     JUNE 30,
     LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)                1998         1997
     ----------------------------------------------            ----------   ----------
     <S>                                                       <C>          <C>
     Current liabilities
       Accounts payable                                        $  948,900   $  1,402,300
       Note payable - line of credit                               80,000         17,300
       Notes payable - related party                              120,000
       Other current liabilities                                2,282,700      1,933,800
                                                                ----------   -----------
         Total current liabilities                              3,431,600      3,353,400
                                                                ----------   -----------
 
     Notes payable - related party                                               120,000
     Other                                                         53,400         49,300
                                                                ----------   -----------
         Total long-term liabilities                               53,400        169,300
                                                                ----------   -----------
 
     Total liabilities                                          3,485,000      3,522,700
                                                                ----------   -----------
     Shareholders' equity (deficit):
 
     Common stock $.02 par; authorized 20,000,000 shares;
     issued and outstanding  -  June 30, 1998, 1,731,956
     shares, and  June 30, 1997, 1,686,685                         34,700         33,800
 
     Additional capital                                         9,374,100      9,302,800
 
     Accumulated deficit                                       (9,386,800)   (10,147,400)
                                                                ----------   -----------
         Total shareholders' equity (deficit)                      22,000       (810,800)
                                                                ----------   -----------  
     Total liabilities and shareholders' equity (deficit)      $3,507,000   $  2,711,900
                                                               ===========  ============
 
</TABLE> 
 
See Notes to Consolidated Financial Statements
 
 F-3
<PAGE> 
<TABLE>
              HADRON, INC.
  CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE FISCAL YEARS ENDED JUNE 30, 1998, 1997 AND 1996

<CAPTION>
                                              1998         1997         1996
                                           -----------  -----------  -----------
<S>                                       <C>          <C>          <C>
Revenues                                  $21,133,900  $16,987,700  $18,305,600
                                           -----------  -----------  -----------
Operating costs and expenses:
  Costs of revenue                         18,118,100   14,650,600   15,937,200
  Development  costs of HeaTreaT                           598,900
  Selling, general and administrative       2,127,500    1,610,300    2,309,200
                                           -----------  -----------  -----------
Total operating costs and expenses         20,245,600   16,859,800   18,246,400
                                           -----------  -----------  -----------
Operating income                              888,300      127,900       59,200
                                           -----------  -----------  -----------
Other income (expense):
  Interest income                               5,500        8,100       11,000
  Interest expense                            (61,700)     (92,600)    (143,000)
  Gain on sale of assets                                                255,500
  Other income (expense)                      (13,000)      13,500       10,900
                                           -----------  -----------  -----------
Total other income (expense)                  (69,200)     (71,000)     134,400
                                           -----------  -----------  -----------
 
Income before income taxes                    819,100       56,900      193,600
 
Provision for income taxes                     58,500       44,000       31,900
                                           -----------  -----------  -----------
 
Net income                                $   760,600  $    12,900  $   161,700
                                           ============ ============ ===========
 
Per share data:
 
Net income per share
  Basic                                   $        .45 $        .01 $        .11
                                           ============ ============ ===========
  Diluted                                 $        .26 $        .01 $        .11
                                           ============ ============ ===========
 
Weighted average number of shares
  Basic                                     1,686,808    1,529,519    1,501,841
                                           ============ ============ ===========
  Diluted                                   2,990,897    1,535,074    1,501,841
                                           ============ ============ ===========
 
</TABLE>
 
See Notes to Consolidated Financial Statements
 
                   F-4

<PAGE>
<TABLE>  

HADRON, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (DEFICIT)
FOR THE FISCAL YEARS ENDED JUNE 30, 1998, 1997 AND 1996
--------------------------------------------------------------------------------------
<CAPTION> 
                                            Common Stock
                                            -----------        Additional     Accumulated
                                          Shares    Amount       Capital        Deficit       Total
                                        --------- ----------   -----------  -------------  ------------
<S>                                     <C>        <C>         <C>          <C>             <C>  

Balance - June 30, 1995                 1,492,625    $29,800    $9,244,800  ($10,322,000)  ($1,047,400)
 
 Shares issued to officers, directors,
 and consultants                           11,060        200        16,000                      16,200
 
 Net income                                                                      161,700       161,700
                                        ---------   ---------   ----------  ------------   ------------
Balance - June 30, 1996                 1,503,685     30,000     9,260,800   (10,160,300)    (869,500)
 
 Shares issued to officers who
 exercised warrants                       183,000      3,800        42,000                     45,800
 
 Net income                                                                      12,900        12,900
                                        ---------   ---------   ----------  -----------    ------------
Balance - June 30, 1997                 1,686,685     33,800     9,302,800  (10,147,400)     (810,800)
 
 Shares purchased pursuant
 to the Employee Stock Purchase Plan       45,271        900        71,300                     72,200
 
 Net income                                                                      760,600      760,600
                                        ---------   ---------   ----------  -------------   ------------
Balance - June 30, 1998                 1,731,956    $34,700    $9,374,100   ($9,386,800)     $22,000
                                        =========   =========   ==========   ============   ============
  
 </TABLE>
 
 See Notes to Consolidated Financial Statements
 
 F-5

<PAGE>
<TABLE>
                  HADRON, INC.
      CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE FISCAL YEARS ENDED JUNE 30, 1998, 1997 AND 1996
---------------------------------------------------------------------------------------
<CAPTION>
 
                                                                    1998        1997        1996
                                                                 ----------- ----------- -----------
<S>                                                             <C>          <C>         <C>
Cash flows from operating activities:
  Net income                                                    $   760,600   $  12,900   $ 161,700
                                                                    --------    -------     -------
Adjustments to reconcile net income to net
    cash provided (used) by operating activities:
    Depreciation and amortization                                    34,500      73,800     119,300
    Provision for doubtful accounts receivable                                 (114,600)    209,800
    Gain on sale of assets                                                                 (255,500)
    Other                                                                                    16,300
Changes in operating assets and liabilities:
    Accounts and notes receivable                                  (741,600)    384,200     418,200
    Prepaid expenses and other                                      (11,900)     24,600     (14,000)
    Other assets                                                      5,200     (10,600)     48,700
    Accounts payable                                               (453,400)   (419,200)   (294,400)
    Other current liabilities                                       348,900     211,700    (312,500)
    Change in assets and liabilities attributable to asset sale                             (17,300)
    Other long-term liabilities                                       4,100       4,000       4,100
                                                                     --------    -------     -------
      Total adjustments                                            (814,200)    153,900     (77,300)
                                                                     --------    -------     -------
Net cash provided (used) by operating activities                    (53,600)    166,800      84,400
                                                                     --------    -------     -------
Cash flows from investing activities:
    Proceeds from sale of assets                                                            365,700
    Property additions                                              (29,600)    (94,100)   (103,500)
    Investment in PEI                                               (15,900)
                                                                     --------    -------     -------
Net cash provided (used) by investing activities                    (45,500)    (94,100)    262,200
                                                                     --------    -------     -------
Cash flows from financing activities:
    Proceeds of borrowings on bank and other loans                  796,700     711,900
    Proceeds of stock warrants exercised                                         45,800
    Proceeds of employee stock purchases                             72,200
    Proceeds of convertible promissory notes                                    120,000
    Payments on bank and other loans                               (734,000)   (969,600) (1,073,300)
                                                                     --------    -------     -------
Net cash provided (used) by financing activities                    134,900     (91,900) (1,073,300)
                                                                     --------    -------     -------
Net increase (decrease) in cash and cash equivalent                  35,800     (19,200)   (726,700)
 
Cash and cash equivalents at beginning of year                       24,700      43,900     770,600
                                                                     --------    -------     -------
 
Cash and cash equivalents at end of year                        $    60,500    $ 24,700    $ 43,900
                                                                   ==========  ==========  ==========
</TABLE>
See Notes to Consolidated Financial Statements
F-6
<PAGE>

1. The Company:
          
          Hadron, Inc. ("Hadron" or the "Company") provides a
   broad range of information, management and technical services
   to businesses and federal government agencies.  The Company
   specializes in the areas of trusted/secure computer systems,
   computer systems support and intelligent weapons systems.  

          Revenues from services performed under direct and
   indirect long-term contracts and subcontracts with government
   defense, justice and intelligence agencies comprise the
   majority of the Company's business.  The majority of the
   Company's technical and professional service business with
   governmental departments and agencies is obtained through
   competitive procurement and through "follow-up" services
   related to existing contracts.  In certain instances,
   however, the Company acquires such service contracts because
   of special professional competency or proprietary knowledge
   in specific subject areas.

2. Summary of significant accounting policies:

     A. Principles of consolidation:

          The consolidated financial statements include the
     accounts of Hadron, Inc. and its two wholly-owned
     subsidiaries, Engineering & Information Services, Inc.
     ("EISI") and SyCom Services, Inc. ("SyCom") (the "Company"). 
     All significant intercompany transactions have been
     eliminated.

     B.  Risks and uncertainties:

          Financial instruments which potentially subject the
     Company to concentrations of credit risk consist principally
     of cash and cash equivalents, and accounts receivable.  The
     Company maintains its cash and cash equivalents principally
     in two United States commercial banks. Cash in excess of
     daily requirements is invested by the banks in one-day
     repurchase agreements of securities of United States
     Government agencies.  To date, the Company has not incurred
     losses related to cash and cash equivalents.

<PAGE>    The Company's accounts receivable consist principally
     of accounts receivable from prime contractors to agencies
     and departments of the United States Government.  The
     Company extends credit in the normal course of operations
     and does not require collateral from its customers.

          The Company has historically been, and continues to be,
     heavily dependent upon direct and indirect contracts from
     various U.S. government agencies.  Contracts and
     subcontracts with the U.S. Government are subject to audit
     by audit agencies of the government.  Such audits determine,
     among other things, whether an adjustment of invoices
     rendered to the government is appropriate under the
     underlying terms of the contracts.  All U.S. government
     contracts contain clauses which allow for the termination of
     contracts at the convenience of the government.
  
          The preparation of financial statements in conformity
     with generally accepted accounting principles requires
     management to make estimates and assumptions that affect the
     reported amounts of assets, liabilities and contingent
     liabilities at the date of the financial statements and the
     reported amounts of revenues and expenses during the
     reporting periods.  Actual results could differ from those
     estimates.

     C.  Cash equivalents:

          Cash equivalents represent amounts invested in highly
     liquid short-term investments with original maturities of
     three months or less.

     D.  Fixed assets:

          Furniture and equipment and leasehold improvements are
     stated at cost.  The Company uses the straight-line method
     of depreciation and amortization over the estimated useful
     lives of the furniture and equipment (principally three to
     ten years) and over the lease term for leasehold
     improvements, if shorter. 

          Maintenance and repairs are charged to expense as
     incurred, and the cost of additions and betterment are
     capitalized.  When assets are retired or sold, the cost and
     related accumulated depreciation are removed from the
     accounts and the gain or loss is included in operations.

          Purchased software is capitalized at cost.  Such costs
     are amortized using the straight-line method for a period of
     up to five years.  Internally developed software costs are
     expensed until technological feasibility is achieved.

<PAGE>

     E.  Accounting for contracts:

          Revenues on time and material contracts are recorded at
     the contracted rates as the labor hours and out-of-pocket
     expenses are incurred.  Revenues from fixed-price and cost-
     plus-fixed-fee contracts are generally recorded on the
     percentage-of-completion method, determined by the
     percentage that incurred costs bear to estimated total costs
     or on engineering estimates.  As soon as it is determined
     that it is probable a contract will result in a loss and the
     loss can be reasonably estimated, the entire estimated loss
     is charged to operations.

          In accordance with industry practice, accounts
     receivable relating to long-term contracts are classified as
     current assets although an indeterminable portion of these
     amounts is not expected to be realized within one year.  

     F.  Income taxes:

          Deferred tax liabilities and assets are determined
     based on the difference between the financial statement and
     tax bases of assets and liabilities using enacted tax rates
     in effect for the year in which the differences are expected
     to reverse. 
  
     G.  Stock-based compensation:

          The Company grants stock options for a fixed number of
     shares to employees with an exercise price equal to the
     fair value of the shares at the date of the grant.  The
     Company accounts for stock option grants in accordance with
     APB Opinion No. 25, "Accounting for Stock Issued to
     Employees", and accordingly recognizes no compensation
     expense for the stock option grants.

<PAGE>
     H.  Recent pronouncements:

          In February 1997, the Financial Accounting Standards
     Board issued Statement No. 128, "Earnings per Share", which
     has been adopted as of December 31, 1997.  The Company was
     required to change the method currently used to compute
     earnings per share and to restate all prior periods.  Under
     the new requirements for calculating basic earnings per
     share, the dilutive effect of stock options has been
     excluded.  In calculating diluted earnings per share, the
     dilutive effect of options, warrants and convertible debt
     is considered.

          In June 1997, the Financial Accounting Standards Board
     issued Statement No. 130, "Comprehensive Income", and
     Statement No. 131, "Disclosures about Segments of an
     Enterprise and Related Information", which are required to
     be adopted for fiscal years beginning after December 15,
     1997.  Upon the effective date of each of the new
     statements, the Company will make the necessary changes to
     comply with the provisions of each statement.  The Company
     des not expect the adoption of these statements to have a
     material impact on the Company's financial condition or
     results of operations.

     I.  Reclassifications:

          Certain fiscal year 1997 and 1996 amounts have been
     reclassified to conform to the fiscal year 1998
     presentation.

<PAGE>

3.   Accounts receivable:

     The components of accounts receivable are as follows:
<TABLE>

                                                      June 30,          
                                            --------------------------
                                                  1998         1997  
                                            ---------------  -----------
<S>                                           <C>            <C>        
     Trade accounts receivable:
     U.S. Government:
     Amounts billed                           $  1,170,600  $   538,300 
     Recoverable costs and
       profits - not billed                        793,300      857,600 
                                            ---------------  -----------
       Total                                     1,963,900    1,395,900 
                                            ---------------  -----------

     Commercial, state and local
      governments:
     Amounts billed                              1,015,700     806,200 
     Recoverable costs and
      profits - not billed                         374,100     268,800 
                                            ---------------  -----------
         Total                                   1,389,800   1,075,000 
                                            ---------------  -----------
     Total accounts receivable                   3,353,700   2,470,900 

     Less allowance for doubtful
      accounts                                    (209,800)   (158,800)
                                            --------------- ------------
     Total accounts receivable, net             $3,143,900  $2,312,100 
                                            ==============  =============

</TABLE>
          The amount of customer retentions included in U.S.
     Government accounts receivable-not billed is $17,500 and
     $23,400 at June 30, 1998 and 1997, respectively.
  
          Unbilled accounts receivable can be invoiced upon
     completion of contractual billing cycles, attaining certain
     milestones under fixed-price contracts, attaining a
     stipulated level of effort on cost-type contracts for
     government agencies, upon completion of federal government
     overhead audits and upon final approval of design plans for
     engineering services. 

<PAGE>

4.  Fixed assets:

          The components of fixed assets are as follows:
<TABLE>
                                                        June 30,  
                                              --------------------------      
                                                   1998        1997   
                                              ------------ -------------
<S>                                            <C>         <C>
     Computer hardware and 
       software                                $   400,500 $   337,600 
     Office equipment                              136,700     131,600 
                                              ------------ ------------- 
     Total fixed assets                            537,200     469,200 

     Less accumulated depreciation
       and amortization                          ( 420,900) (  386,400)
                                              ------------ -------------
     Total fixed assets, net                  $    116,300  $   82,800 
                                              ============ =============
</TABLE>
          During fiscal year 1997, the Company removed from
     service fixed assets with a cost basis of approximately
     $432,000.    

5.  Debt:

          During fiscal year 1997, the Company prepaid $25,000 of
     a Convertible Promissory Note due from the Company to Dr.
     C.W. Gilluly, and pursuant to its terms and conditions,
     issued warrants to Dr. Gilluly to acquire 100,000 shares of
     the Company's common stock.

          On April 21, 1997, Dr. Gilluly sold $25,000 of the
     Convertible Promissory Note to five officers of the Company. 
     Concurrently, the Company elected to prepay the $25,000 of
     Notes held by the officers, and in accordance with terms of
     the Notes, issued warrants to the officers to acquire
     100,000 shares of the Company's common stock.  The officers
     exercised the warrants and acquired the 100,000 shares at
     the Conversion Price of $.25 per share.

          In June 1997, the Company entered into a Line of Credit
     Agreement with Century National Bank pursuant to which
     Century National Bank provided the Company with a $800,000
     line of credit facility through November 30, 1998, replacing
     a $300,000 facility set to expire in December 1997. 
     Borrowings under the facility bear interest at the prime
     rate plus two percent and are personally guaranteed by Dr.
     Gilluly and his wife.  Century National Bank and the Company
     agreed that, in addition to providing working capital, the
     line of credit would be used to fund the Company's
     prepayment on June 2, 1997 of its $225,000 Promissory Note
     to Dr. Gilluly.  Under the terms of the original Promissory
     Note dated October 21, 1993, which had been extended and
     amended as of April 21, 1997, the Company issued 900,000
     warrants, which expire on October 21, 2003, to Dr. Gilluly
     to acquire the Company's common stock ("Common Stock") at
     $.25 per share.  
<PAGE>
          The Company was indebted in the approximate amount of
     $288,000 to a vendor under the terms of a November 1, 1996
     promissory note secured by certain assets.  In order to
     facilitate the bank line of credit, the vendor agreed to
     accept $250,000 in full satisfaction of the promissory note. 
     Such payment was made in June 1997.

          Century National Bank and the Company determined that
     payment of such amount to the vendor would reduce the
     Company's available working capital to a level below that
     which each contemplated the Company would have as a result
     of the line of credit. As a consequence, certain members of
     the Company's management or Board of Directors (the
     "Investors") each agreed to invest $24,000 in the Company in
     the form of five separate two-year promissory notes, the
     principal of which is convertible at $.60 per share at each
     of his or her respective option, into restricted shares of
     the Company's common stock.  Such notes also provide that
     upon prepayment by the Company of principal outstanding
     under the notes, the Company shall issue to the note holder
     a warrant to acquire Common Stock at $.60 per share.  The
     number of shares each warrant shall entitle the holder
     thereof to acquire shall equal the principal prepaid giving
     rise to the warrant divided by $.60.  The Company and each
     of the Investors entered into an Investment Agreement dated
     June 20, 1997 setting forth the terms of his or her
     investment in the Company. 

<PAGE>

6.    Other current liabilities:

          Other current liabilities include the following major
     classifications:
<TABLE>                                                June 30,        
                                               ------------------------
                                                   1998        1997 
                                               ----------- ------------  
<S>                                            <C>         <C>
     Payroll and related taxes                 $   850,800 $   635,000
     Accrued vacation                              498,900     398,000
     Accrued bonuses                               159,200      94,600
     Self-insured medical expense                  275,700     223,000
     Due to subcontractors                         134,900     122,400
     Other                                         363,200     460,800
                                               ----------- ------------  
     Total                                     $ 2,282,700 $ 1,933,800
                                               =========== ============
</TABLE>
7.   Net income per share:

          The following table sets forth the computation of
     basic and diluted earnings per share:
<TABLE>
                                            1998         1997        1996 
                                         ---------- -----------   -----------
<S>                                      <C>        <C>           <C>      
 Numerator:
  Net Income                             $  760,600  $   12,900   $ 161,700

 Effect of dilutive securities:
  Convertible debt                           12,000         300            
                                         ---------- -----------   -----------
 Numerator for diluted earnings
  per share - income available
  to common shareholders after
  assumed conversion                     $  772,600  $   13,200   $ 161,700
                                         ========== ===========   =========== 
  Denominator:
  Denominator for basic 
   earnings per share: 
   weighted average shares
   outstanding                            1,686,808   1,529,519   1,501,841

  Effect of dilutive securities:
   Warrants                                 855,064            
   Employee stock options                   249,025            
   Convertible debt                         200,000       5,555            
                                         ---------- -----------   -----------
 Denominator for diluted 
  earnings per share                      2,990,897   1,535,074   1,501,841
                                         ========== ===========   =========== 
 Basic earnings per share                 $     .45   $     .01   $     .11
                                         ========== ===========   =========== 
 Diluted earnings per share               $     .26   $     .01   $     .11
                                         ========== ===========   =========== 
</TABLE>
<PAGE>
     Shares issuable upon the exercise of stock options or
warrants have been excluded from the computation for 1997 and
1996 because the effect of their inclusion would be anti-
dilutive.

8.   Income taxes:

          The provision for income taxes for the years ended June
     30, 1998, 1997 and 1996 is for state income taxes currently
     due.

          The tax provision differs from the amounts computed
     using the statutory federal income tax rate as follows:

<TABLE>
                                          1998        1997          1996  
                                         ------      -------       -------
<S>                                      <C>          <C>          <C>     
     Tax expense at
      statutory rate - federal              35%          35%          35% 
     State tax expense 
      net of federal taxes                   7           77           16  

     Goodwill amortization                                             1  
     Operating losses with no
       current tax benefit
       (current tax benefit)               (35)         (35)         (36) 
                                         ------      -------       -------
      Tax expense at
       actual rate                           7%          77%          16% 
                                         ======      =======       =======
</TABLE>

         Deferred income taxes reflect the net tax effects of
     temporary differences between the carrying amounts of assets
     and liabilities for financial reporting and income tax
     purposes.  Deferred tax assets at June 30, 1998 and 1997
     consist primarily of temporary differences from net
     operating loss carryforwards of approximately $1,920,000 and
     $2,351,000, respectively, and are fully reserved.

         The Company has net operating loss (NOL) carryforwards
     for federal and state purposes available to offset future
     taxable income of approximately $4,800,000 as of June 30,
     1998. These NOL carryforwards expire at various dates
     through June 30, 2009.  

9.  Commitments and contingencies:

     Operating leases:

          The Company leases real property and personal property
     under various long-term operating leases and sublease
     agreements expiring at various dates through fiscal year
     2002.  Certain of the leases contain renewal options and
     require payment of property taxes, insurance and maintenance
     costs.  The Company's future minimum operating lease
     commitments inclusive of property taxes, insurance and
     maintenance costs at June 30, 1998 are summarized below:

<PAGE>
<TABLE>
          Fiscal Year Ending                     Lease   
                June 30,                      Commitments
          ------------------                  ------------
          <S>                                 <C>        
           1999                                 $ 151,000
           2000                                   144,000
           2001                                   148,600
           2002                                    88,300
                                              -----------
     Total minimum payments required            $ 531,900
                                              ===========
</TABLE>
          Included in the lease commitments is a sublease
     commitment for $11,700 with Comtex, a related party, to
     occupy 660 square feet at its principal location in
     Alexandria, Virginia through April 30, 1999.

          Rent expense, net of sublease income, included in the
     consolidated statements of operations is as follows:

<TABLE>
                                Rent  
               Period          Expense 
          ----------------   ---------- 
          <S>                <C>
          Fiscal Year 1998   $  141,800
          Fiscal Year 1997   $  114,600
          Fiscal Year 1996   $  534,200

</TABLE>
     U.S. Government contract audits:

          The Company's revenues and costs related to contracts
     with the agencies and departments of the U.S. Government are
     subject to audit by the Defense Contract Audit Agency, which
     has completed the majority of its audits for the Company's
     fiscal years through fiscal year 1994.  It is the opinion of
     management that the results of such audits will not have a
     material effect on the financial condition or results of
     operations of the Company.
     
10.   Sale of assets - ART: 

          Effective December 1, 1995, ART sold substantially all
     of its assets (excluding accounts receivable as of the date
     of sale) for $365,000 and the assumption by the buyer of
     certain leases, agreements and contracts related to the
     ongoing performance of ART's litigation support operations
     for the U.S. Department of Justice.  Both ART and the
     Company also agreed that for a period of 10 years, neither
     of them or any entity controlled by them would own, manage,
     operate or control, or participate in the ownership,
     management, operation or control of any entity providing
     litigation support services, including legal document
     coding.  As a result of this transaction, the Company
     recorded a gain of $255,500 in the consolidated statement of
     operations in fiscal year 1996.
<PAGE>

11.  Sale of assets - PEI:

          Effective June 30, 1997, Hadron's wholly-owned
     subsidiary, SyCom Services, Inc. ("SyCom") entered into an
     agreement to sell the HeaTreaT software products and certain
     related assets to Performance Engineering International
     Corp. ("PEI"), a newly formed company owned by former Hadron
     and SyCom executives.

          SyCom received a ten percent interest in PEI's capital
     stock and two promissory notes, in the amounts of $2,000,000
     and $38,400, respectively.  In addition, SyCom agreed to
     invest $20,000 a month in PEI for a six month period
     beginning July 1, 1997.  The divestiture of the HeatTreaT
     software products eliminated Hadron's continuing new product
     expenses.

          During fiscal year 1998, PEI ceased operations.  In
     accordance with the terms of the agreement, the HeaTreaT
     assets reverted to SyCom.  The Company has retained a third
     party to pursue the sale of these assets, which have a
     carrying value of $135,900 at June 30, 1998.

12. Employee savings plan:

          The Company sponsors a defined contribution savings
     plan under section 401(k) of the Internal Revenue Code.  The
     Company's contributions to the 401(k) plan are based upon a
     percentage of employee contributions.  During 1998, the
     matching contribution ceiling per employee was increased
     from $125 to $1,000.   The Company's discretionary
     contributions to the Plan were $101,500, $18,000 and $19,000
     for fiscal years 1998, 1997 and 1996, respectively. 

13. Stock option plan:

          Under the Company's 1994 Stock Option Plan, as amended,
     (the "Plan"), shares of its common stock may be issued to
     key employees, consultants and directors.  In fiscal year
     1998, an amendment to the 1994 Stock Option Plan was adopted
     to increase the number of shares reserved for issuance
     thereunder from 345,000 to 645,000.  The Plan provides for
     both incentive stock options within the meaning of Section
     422 of the Internal Revenue Code and non-qualified stock
     options.  The exercise price of the incentive stock options
     is required to be at least equal to 100% of the fair market
     value of the Company's common stock on the date of grant
     (110% of the fair market value in the case of options
     granted to employees who are 10% shareholders).  The options
     vest in three equal annual installments beginning with the
     date of grant.  The exercise price of the non-qualified
     stock options is required to be not less than the par value
     of a share of the Company's common stock on the date of
     grant.

<PAGE>
           Information with respect to incentive and non-qualified
     stock options issued under the Plan is as follows:

<TABLE>
                               1998                      1997                  1996
                        ------------------------  -------------------- -------------------
                                        Weighted              Weighted            Weighted
                                        Average               Average             Average
                        Shares          Price     Shares      Price    Shares     Price
<S>                     <C>             <C>       <C>         <C>      <C>        <C>
Outstanding at
 beginning of year       315,500         $ .49    220,500     $ .36     183,000   $ .25
Granted                   87,100           .98    117,500       .73     102,000     .50
Exercised                                          (3,000)      .25                
Expired                  (4,532)           .88    (19,500)      .35     (64,500)    .39
                        ------------------------  -------------------- -------------------
Outstanding at 
 end of year            398,068          $ .59    315,500     $ .49     220,500   $ .36
                        ========================  ==================== ===================
Options exercisable
 at year-end            305,374          $ .50    213,829     $ .39     121,164   $ .30

Weighted average 
fair value of 
options granted
during the year          $ .94                    $  .44                 $  .62 
                                         
</TABLE>
          The weighted average remaining contractual life of
     options outstanding at June 30, 1998 was 7.7 years.  The 
     range of exercise prices of options outstanding at June 30, 
     1998 was $.25 to $1.92.

         During fiscal year 1997, the Company adopted the
     disclosure-only provisions of Statement of Financial
     Accounting Standards No. 123, "Accounting for Stock
     Compensation" (SFAS No. 123).  Had compensation cost for the
     Company's stock option plan been determined based upon the
     fair value at the grant date for awards under the plan
     consistent with the methodology prescribed under SFAS No.
     123, the Company's net income/(loss) in fiscal years 1998,
     1997 and 1996 would have been approximately $700,200,
     $(19,100) and $154,900, or $.25, $(.01) and $.10 per share
     on a diluted basis, respectively.  The effect of applying
     SFAS No. 123 on 1998, 1997 and 1996 pro forma net
     income/loss as stated above is not necessarily
     representative of the effects on reported net income or loss
     for future years due to, among other things, (1) the vesting
     period of the stock options and (2) the fair value of
     additional stock options in future years.
<PAGE>
          The fair value of each option grant is estimated on the
     date of grant using the Black-Scholes option-pricing fair
     value model. The following weighted-average assumptions were
     used for grants: dividend yield of 0%; expected volatility
     of 1.11 to 1.22; expected life of the option term of 7 to 10
     years and risk-free interest rate of 5.5% to 6.9% for the
     years 1998, 1997 and 1996.


14.  Employee stock purchase plan

          In December 1997, shareholders approved the Hadron,
     Inc. 1997 Employee Stock Purchase Plan (the "Plan").  The
     purpose of the Plan is to secure for the Company and its
     shareholders the benefits of the incentive inherent in the
     ownership of Common Stock by present and future employees of
     the Company.  The Plan is intended to comply with the terms
     of Section 423 of the Internal Revenue Code of 1986, as
     amended, and Rule 16b-3 of the Securities Exchange Act of
     1934.  The Plan is non-compensatory as defined by APB 25. 
     Under the terms of the Plan, individual employees may pay up
     to $10,000 for the purchase of the Company's common shares
     at 85% of the determined market price.  During fiscal year
     1998, employees paid approximately $72,000 for the purchase
     of common stock under the Plan.

15.  Related party transactions:

          AMASYS Corporation ("AMASYS"), a publicly held company
     as successor to Infotechnology, Inc., beneficially owns
     202,739 shares, or 12%, of the Company's outstanding common
     stock.  Dr. C.W. Gilluly is Chairman of the Board and Chief
     Executive Officer of the Company and of AMASYS.  Dr. Gilluly
     has warrants to acquire beneficial ownership of 1,020,000
     shares of common stock.  Dr. Gilluly also owns options to
     acquire 72,000 shares of the Company's common stock. 
     Exercise of Dr. Gilluly's warrants and options at a
     subsequent date may result in a change of control in the
     Company.  Mr. Robert Lynch, an independent outside director
     of the Company, is also a director of AMASYS.  Dr. Gilluly
     is also Chairman of the Board of Directors of Comtex
     Scientific Corporation ("Comtex").  AMASYS holds a majority
     interest in Comtex.

          The Company routinely provides, or is provided with,
     corporate relations and other administrative services and
     headquarters space to or by, AMASYS and Comtex.  Such
     services are not significant to the Company's operating
     activities or balance sheet.
<PAGE>

16. Statement of cash flows - supplemental disclosures:

          During fiscal years 1998, 1997 and 1996, the Company
     paid income taxes of $76,000, $40,000 and $18,000,
     respectively.  The Company paid interest of $55,000, $54,000
     and $142,000 during those same periods.

17. Business segment and major customers:

     Business segment:

          The Company operates predominantly in one industry
     segment, providing engineering, computer support services
     and other professional technical services. 

     Major customers:

          Gross revenue from contracts and subcontracts with U.S.
     government agencies amounted to $11,628,000, $9,101,000 and
     $10,066,000, respectively, in fiscal years 1998, 1997 and
     1996.

          Revenues from one commercial customer totaled
     $9,067,000, $7,424,000 and $7,112,000 in the fiscal years
     1998, 1997 and 1996, respectively.

          Revenues earned on sales to the Company's major
     customers are as follows:
<TABLE>                               United States                       
                                      Department of  
                                 ------------------------   Commercial     
                                     Defense     Justice    Customer 
                                 ------------  ---------- ------------
<S>                              <C>           <C>        <C>
     Fiscal Year 1998             $10,242,000  $          $ 9,067,000
     Fiscal Year 1997               7,508,000       8,000   7,424,000
     Fiscal Year 1996               5,364,000   3,426,000   7,112,000

</TABLE>
<PAGE>
HADRON, INC.
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
 
<TABLE> 
                                               Additions
                                             ------------
<CAPTION> 
                                             Charged
                             Balance at    (Credited)    Charged to                          Balance at
                            Beginning of  to costs and  Other accounts     Deductions          end of
       DESCRIPTION             Period       expenses     (describe)        (describe)          Period
-------------------------   ------------  ------------  ------------      ------------      ------------
<S>                      <C>            <C>           <C>               <C>                <C>   
Year ended June 30, 1998
Accounts receivable       $     158,824   $    --       $    50,942 <F1>  $    --            $   209,766
                            ============  ============  ============      ============      ============
Year ended June 30, 1997
Accounts receivable       $     648,806   $  (114,637)  $    --           $   375,345 <F2>   $   158,824
                            ============  ============  ============      ============      ============
Year ended June 30, 1996
Accounts receivable       $     507,960   $   209,757   $    10,268 <F3>  $    79,179 <F4>   $   648,806
                            ============  ============  ============      ============      ============
 
 
<FN>
 
<F1>  Represents, primarily, the billing and subsequent collection of accounts receivable in excess of
       their book value.
<F2>  Represents, primarily, the writeoff of uncollectible billed and unbilled receivables, rate
        variances and fee retentions.
<F3>  Represents charges to unbilled receivables to correct unbilled account receivable balances.
<F4>  Represents, primarily, charges to unbilled receivables to reserve unbilled accounts receivable
        balance.


</TABLE>
<PAGE>                        F-22