<PAGE>
                                          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, 1997
                                                  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 22, 1997, 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 $1,528,463.

      As of September 22, 1997, 1,686,684 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 technology management services to businesses
         and federal government agencies.  Specializing in the fields of
         computer systems integration, software development,
         engineering/computer science and integrated logistics support,
         Hadron supplies its clients with expert technical services,
         systems and product development.

              During the last few years, the Company has implemented a
         turnaround program, including cost reductions and aggressive new
         business development, intended to return the Company to
         profitability.

              During fiscal year 1997, the Company invested approximately
         $847,000 in the development and marketing of its HeaTreatTM, 
         process management software products.  Given the anticipated
         continuing investment and management resources required, the
         Company examined various alternatives for realizing value from
         its HeaTreaT investment.  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 HeaTreat software products
         eliminated Hadron's continuing new product expenses.

              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. 
         Although ART's litigation support services had historically been
         profitable for the Company, in recent years, ART experienced
         increasing losses that negatively affected the Company's
         financial results. 

         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 of management
         teams between these subsidiaries.  Descriptions of the operations
         of the subsidiaries follow.
                                          2
<PAGE>
         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 and 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 44% 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 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.


         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 40% of the revenues of the Company.

         General Information

                                          3
<PAGE>
              The Company was incorporated in New York in 1964 under the
         name of Biorad, Inc., and commenced operations in August 1966. 
         In 1968, the Company changed its name to Hadron, Inc.

              As of June 30, 1997, the Company (including its
         subsidiaries) employed approximately 210 people.  The Company's
         employees are not members of any union, and employee relations
         are believed by management to be generally good.

              The revenues of EISI accounted for 55%, 36% and 27% of the
         Company's total consolidated revenues for the fiscal years 1997,
         1996 and 1995, respectively.  During the same fiscal years,
         SyCom's revenues respectively accounted for 44%, 43% and 30% of
         consolidated revenues. During fiscal years 1996 and 1995, ART's
         revenues accounted for 20% and 39% of the Company's total
         consolidated revenues, respectively.  

              The Company's backlog of orders believed to be firm as of
         June 30, 1997 approximates $14 million which the Company expects
         will be filled during fiscal 1998.  As of June 30, 1996, the
         Company had approximately $11 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.

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






                                          4
<PAGE>
              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.

              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 44% of the
         Company's total revenues during fiscal year 1997.  The Company's
         other U.S. government contracts and subcontracts produced
         approximately 9% of the Company's total revenues during fiscal
         year 1997.  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 has 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
         because of special professional competency or proprietary
         knowledge in specific subject areas.

         Item 2.   Properties

              The Company owns no real estate.  As of June 30, 1997, the
         Company leased or sub-leased a total of 9,991 square feet of
         office space, with approximately 700 square feet at its corporate
         headquarters location in Alexandria, Virginia.  These leases
         expire between April 1998 and February 2002. (See Note 8 of the
         Notes to Consolidated Financial Statements.)

                                          5
<PAGE>
         Item 3.   Legal Proceedings

              No material legal proceedings are currently pending.


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

              None.

                                         6
<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, 1997 and
         June 30, 1996 is shown below:

<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
              SecondQuarter
              (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>

<TABLE>
         Fiscal Year Ended June 30, 1996              High     Low
<CAPTION>
<S>                                                 <C>      <C>
              First Quarter
              (7/1 to 9/30/95)                        7/16     3/8
              Second Quarter
              (10/1 to 12/31/95)                      11/16    7/16
              Third Quarter
              (1/1 to 3/31/96)                        9/16     9/16 
              Fourth Quarter
              (4/1 to 6/30/96)                        13/16    9/16

</TABLE>

              As of September 22, 1997, there were approximately 3,914
         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
         1998.  



                                          7
<PAGE>
         Item 6.  Selected Financial Data
<TABLE>

                                              Fiscal Year Ended
                                                   June 30

                                    1997          1996        1995         1994       1993
                                   (In Thousands, except per share amounts)
<CAPTION>
<S>                               <C>          <C>         <C>          <C>         <C> 
  
      Total Revenues                $16,988      $18,306     $20,534      $18,536     $21,337

       Operating Income (Loss)          128           59        (161)      (3,799)     (1,206)
       Interest Expense, net of
        Interest income                  84          132         217          287         299

       Income (Loss)
        before income taxes &
        extraordinary item               57          194        (436)      (4,104)     (1,401)
       Income (Loss)
        before extraordinary item        13          162        (460)      (4,109)     (1,401)

       Extraordinary item -
        gain on retirement
        of debt                          -           -         2,718          -            -

       Net Income (Loss)                 13          162       2,258       (4,109)     (1,401)

       Income (Loss) per share
        of Common Stock:
       Per share data:
        Income (Loss)
        before extraordinary item       .01          .11        (.31)       (2.75)       (.94)

       Extraordinary item -
        gain on retirement
        of debt                         -            -          1.82          -            -

       Net Income (Loss)                .01          .11        1.51        (2.75)       (.94)

       At Period End:                                                                  
       Total Assets:                  2,712        2,874       4,373        5,088       7,734

       Long-term Liabilities            169          320         341          440           4

       Working Capital (deficit)       (906)        (654)       (978)      (3,541)       (298)

       Shareholders' Equity
        (deficit)                      (811)        (869)     (1,047)      (3,306)        803


</TABLE>
                                           8
<PAGE>
          Item 7.   Management's Discussion and Analysis of Financial 
                    Condition and Results of Operations

                                     The Company

               Hadron, Inc. (the "Company") provides a broad range of
          information technology management services to businesses and
          federal government agencies.  Specializing in the fields of
          computer systems integration, software development,
          engineering/computer science and integrated logistics support,
          the Company supplies its clients with expert technical services,
          systems and product development.

                                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.  


                                           9
<PAGE>
               The Company generated $128,000 of operating income during
          the fiscal year ended June 30, 1997 compared to an operating loss
          of approximately $59,000 for the fiscal year ended June 30, 1996,
          for 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.

               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. 


                                Results of Operations
                  Comparison Of Fiscal Year 1996 To Fiscal Year 1995

               During the fiscal year ended June 30, 1996, the Company's
          consolidated revenues were approximately $18,306,000 compared
          with consolidated revenues of approximately $20,534,000 for the
          fiscal year ended June 30, 1995, a net decrease of approximately
          $2,228,000 (11%).  This net decrease was primarily due to the
          sale effective December 1, 1995, by the Company's subsidiary, ART
          Holdings Corporation ("ART"), of substantially all of its assets
          and the assumption by the purchaser of contracts related to the
          ongoing performance of ART's litigation support operations for
          the U. S. Department of Justice.

               Consolidated revenues, excluding revenues attributable to
          ART for the fiscal year ended June 30, 1996, were approximately
          $14,811,000 compared with $12,486,000 for the fiscal year ended
          June 30, 1995, an increase of approximately $2,325,000 (19%). 
          The increase in revenues excluding ART is principally
          attributable to increased revenues from existing contracts with
          major government and commercial customers of EISI and SyCom, as

                                          10
<PAGE>
          well as from software development and installation on behalf of
          new commercial customers of SyCom.

               Consolidated costs of revenue were approximately $15,937,000
          for the fiscal year ended June 30, 1996 compared with
          approximately $17,842,000 for the fiscal year ended June 30,
          1995, a decrease of approximately $1,905,000 (12%).  This
          decrease is primarily attributable to the cessation of operations
          by ART at December 1, 1995 pursuant to the sale of its assets, as
          described above.  Consolidated costs of revenue excluding costs
          of revenue attributable to ART for the fiscal year ended June 30,
          1996 were approximately $12,767,000, or 86% of revenues, compared
          with $10,841,000, or 87% of revenues for the fiscal year ended
          June 30, 1995, an increase of approximately $1,926,000 (18%). 
          The relative improvement in costs of revenue as a percentage of
          revenues reflects net changes in the mix of the Company's
          contract revenues and the related margins on those contracts.  

               Consolidated selling, general and administrative expenses
          were approximately $2,309,000 for the fiscal year ended June 30,
          1996 compared with approximately $2,854,000 for the fiscal year
          ended June 30, 1995, a decrease of approximately $545,000 (19%). 
          During fiscal year 1996, the Company's management continued the
          cost reduction program that it adopted in the face of increasing
          losses in past years.  During fiscal year 1996, this program
          resulted in lower selling, general and administrative expenses
          through reductions in labor costs and the associated fringe
          benefits as a result of reductions in administrative and overhead
          personnel headcounts and reductions in facilities costs through
          consolidation and more intensive use of leased facilities.  ART's
          sale of substantially all its assets during fiscal year 1996 also
          enabled the Company to further reduce its overall selling,
          general and administrative expenses.  The Company was also able
          to reduce facilities costs by decentralizing its corporate
          offices by approximately $15,000 a month.

               The Company generated $59,000 of operating income during the
          fiscal year ended June 30, 1996 compared to an operating loss of
          approximately $162,000 for the fiscal year ended June 30, 1995,
          for an increase of approximately $221,000. The increase resulted
          primarily from reduced selling, general and administrative
          expenses, as described above.

               For the fiscal year ended June 30, 1996, net interest
          expense decreased by approximately $85,000 compared to fiscal
          year 1995 due to decreases in the Company's average debt
          outstanding during the year.

               In the twelve months ended June 30, 1996, the Company
          recognized a gain on the sale of assets of approximately $255,000
          related to the sale of substantially all of ART's assets for
          $365,000.  This gain was composed of the $365,000 transaction

                                          11
<PAGE>
          proceeds less the net book value of the assets and liabilities
          transferred and less $16,000 in related costs incurred. 

               Net income was approximately $162,000 for the fiscal year
          ended June 30, 1996, compared to approximately $2,258,000 for the
          fiscal year ended June 30, 1995, a decrease of approximately
          $2,096,000. The decrease in net income is attributable to the
          inclusion of the approximately $2,718,000 extraordinary gain in
          the twelve months ended June 30, 1995 partially offset by the
          approximately $255,000 gain on the sale of assets during the
          twelve months ended June 30, 1996.  Excluding the extraordinary
          gain and the gain on the sale of assets, the Company's net income
          improved by approximately $367,000 from a net loss of
          approximately $460,000 in the twelve months ended June 30, 1995
          to a net loss of approximately $93,000 in the twelve months ended
          June 30, 1996.  The improvement is attributable to increased
          revenues, improved margins and reduced selling, general and
          administrative expenses, as described above.


                           Capital Resources and Liquidity

               The working capital deficit at June 30, 1997 increased by
          approximately $252,000 from June 30, 1996.  The deficit increased
          due to refinancing of certain liabilities as more fully described
          in Note 5.  Currently, the Company's operations generate cash
          flow sufficient to cover its monthly expenses, and management
          believes that cash from operations will provide the Company with
          adequate cash resources to meet its obligations on an ongoing
          basis.

               During fiscal year 1997, the Company invested approximately
          $847,000 in the development and marketing of its HeaTreaT process
          management software products.  Given the anticipated continuing
          investment and management resources required, the Company
          examined various alternatives for realizing value from its
          HeaTreaT investment.  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 HeaTreaT software products
          eliminated Hadron's continuing new product expenses.

               During fiscal year 1997, the Company prepaid $25,000 of a
          Convertible Promissory Note due from the Company to Dr. C.W.

                                          12
<PAGE>
          Gilluly, (the "Note") and pursuant to its terms and conditions,
          issued warrants to Dr. Gilluly to acquire 100,000 shares of the
          Company's common stock at $.25 per share.

               On April 21, 1997, Dr. Gilluly sold $25,000 of the 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
          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 
          Note to Dr. Gilluly.  Under the terms of the Note, the Company
          issued warrants, which expire on October 21, 2003, to Dr. Gilluly
          to acquire 900,000 shares of the Company's $.02 par value common
          stock ("Common Stock") at $.25 per share.  

               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 $0.60 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 $0.60 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 $0.60.  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. 


                                          13
<PAGE>
               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;
          continued success in the Company's program of paying down its
          older accounts payable balances while simultaneously generating
          sufficient billings to cover its current obligations; the
          anticipation of growth and successful market acceptance of the
          Company's new productivity management software products, which
          could be subject to various delays, including software release
          delays; 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.



                                          14
<PAGE>
          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

               Information relating to the resignation of the Company's
          former accountants, Coopers & Lybrand L.L.P., was previously
          reported in the Company's Form 8-K filed on July 24, 1996.


                                          15
<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.



                                          16
<PAGE>
                                       PART IV

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

          (a) (1)  Financial Statements                                Page

          Reports of Independent Accountants                            F-1

          Consolidated Balance Sheets as of June 30, 1997 and 1996      F-3

          Consolidated Statements of Operations for the fiscal
           years ended June 30, 1997, 1996, and 1995                    F-5

          Consolidated Statements of Shareholders' Deficit for
           the fiscal years ended June 30, 1997, 1996, and 1995         F-6

          Consolidated Statements of Cash Flows for the 
           fiscal years ended June 30, 1997, 1996, and 1995             F-7

          Notes to Consolidated Financial Statements                    F-8

          (a) (2)  Financial Statement Schedules

          Report of Independent Accountants                            F-22

          Schedule II: Valuation and qualifying accounts and
                         reserves                                      F-23


          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.


                                          17
<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     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).

            3.3     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).

            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     Employment Agreement with George E. Fowler dated
                    October 1, 1996 (incorporated by reference to the
                    Company's Form 10-Q for the quarter ended September 30,
                    1996). 

           10.4     Employment Agreement with Donald Jewell dated October
                    1, 1996 (incorporated by reference to the Company's
                    Form 10-Q for the quarter ended September 30, 1996). 

           10.5     Employment Agreement with Donald E. Ziegler dated
                    December 30, 1996 (incorporated by reference to the
                    Company's Form 10-Q for the quarter ended December 31,
                    1996). 


                                          18
<PAGE>

           10.6     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).

           10.7     $148,606.60 Promissory Note with Tri-City Heat Treat
                    Company in favor of Hadron, Inc. dated December 16,
                    1996 (incorporated by reference to the Company's Form
                    10-Q for the quarter ended December 31, 1996). 


           10.8     $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).

           10.9     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).

           10.10    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).

           10.11    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).

           10.12    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).

           10.13    $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).

           10.14    $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).

                                          19
<PAGE>

           10.15    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).

           10.16    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).

           10.17    Asset Purchase Agreement among the 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).

           10.18    Employment Agreement with S. Amber Gordon dated June
                    10, 1997.

           21       Subsidiaries of the Company.

           27       Financial Data Schedule


                                          20
<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 29, 1997          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/ William J. Howard         Director        September 29, 1997
          William J. Howard


          /S/ Robert J. Lynch, Jr.      Director        September 29, 1997
          Robert J. Lynch, Jr.


          /S/ John D. Sanders           Director        September 29, 1997
          John D. Sanders


                                          21
<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, 1997 and 1996 and
          the related statements of operations, shareholders' deficit, and
          cash flows for the years then ended.  Our audit also included the
          financial statement schedule for the year ended June 30, 1997
          listed in the Index at Part IV Item 14(a) of this Form 10-K. 
          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 audit 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 audit provides a reasonable basis for our opinion.

          In our opinion, the financial statements referred to above
          present fairly, in all material respects, the financial position
          of Hadron, Inc. and subsidiaries at June 30, 1997 and 1996, and
          the results of their operations and their cash flow for the years
          then ended, in conformity with generally accepted accounting
          principles.  Also, in our opinion, the related financial
          statement schedule for the year ended June 30, 1997, when
          considered in relation to the basis 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
          September 5, 1997


                                         F-1
<PAGE>


                          REPORT OF INDEPENDENT ACCOUNTANTS


          To the Board of Directors and Shareholders
               of Hadron, Inc.


          We have audited the accompanying statements of operations,
          shareholders' deficit, and cash flows of Hadron, Inc. and
          subsidiaries for the fiscal year ended June 30, 1995.  These
          financial statements are the responsibility of the Company's
          management.  Our responsibility is to express an opinion on these
          financial statements based on our audit.

          We conducted our audit 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 audit provides a reasonable basis for our opinion.

          In our opinion, the financial statements referred to above
          present fairly, in all material respects, the consolidated
          results of operations and cash flows of Hadron, Inc. and
          subsidiaries for the fiscal year ended June 30, 1995 in
          conformity with generally accepted accounting principles.

          The accompanying financial statements have been prepared assuming
          the Company will continue as a going concern.  As discussed in
          Note 2 to the Company's 1995 financial statements, the Company
          has a net capital deficiency and has suffered recurring losses
          from operations that raise substantial doubt about it ability to
          continue as a going concern.  Management's plan in regard to
          these matters are also described in Note 2 to the Company's 1995
          financial statements.  The financial statements do not include
          any adjustments that might result from the outcome of this
          uncertainty.


          /S/ COOPERS AND LYBRAND L.L.P.


          Washington, D.C.
          September 28, 1995



                                     
                                         F-2
<PAGE>
HADRON, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
JUNE 30, 1997 AND JUNE 30, 1996
<TABLE>


                                                          JUNE 30,      JUNE 30,
     ASSETS                                                 1997          1996
<CAPTION>
<S>                                                   <C>            <C>
     Current assets:
       Cash and cash equivalents                        $    24,700  $    43,900
       Accounts receivable, net                           2,312,100    2,680,400
       Note receivable                                       90,200
       Prepaid expenses and other                            20,600       45,200
                                                          ----------   ----------

         Total current assets                             2,447,600    2,769,500
                                                          ----------   ----------

     Fixed assets                                            82,800       96,800
     Note receivable                                          8,600
     Investment in PEI and related notes receivable,
       net of deferred income of $2,000,000                 158,400
     Other                                                   14,500        8,100
                                                          ----------   ----------
         Total other assets                                 264,300      104,900
                                                          ----------   ----------

           Total assets                                 $ 2,711,900  $ 2,874,400
                                                        ===========  ============
</TABLE>

                   SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                       F-3
<PAGE>
HADRON, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
JUNE 30, 1997 AND JUNE 30, 1996
<TABLE>



                                                           JUNE 30,       JUNE 30,
     LIABILITIES AND SHAREHOLDERS' DEFICIT                   1997           1996
<CAPTION>
<S>                                                    <C>            <C>
     Current liabilities
       Accounts payable                                 $ 1,402,300    $ 1,821,500
       Note payable - line of credit                         17,300
       Other current liabilities                          1,933,800      1,602,100
                                                          ----------     ----------
         Total current liabilities                        3,353,400      3,423,600
                                                          ----------     ----------

     Note payable - related party                           120,000        275,000
     Other                                                   49,300         45,300
                                                          ----------     ----------
         Total long-term liabilities                        169,300        320,300
                                                          ----------     ----------
     Commitments and contingencies

     Total liabilities                                    3,522,700      3,743,900
                                                          ----------     ----------
     Shareholders' deficit:

     Common stock $.02 par; authorized 20,000,000
     share issued and outstanding  - 
     June 30, 1997, 1,686,685 shares,
     and  June 30, 1996, 1,503,685                           33,800         30,000

     Additional capital                                   9,302,800      9,260,800

     Accumulated deficit                                (10,147,400)   (10,160,300)
                                                          ----------     ----------
         Total shareholders' deficit                       (810,800)      (869,500)
                                                          ----------     ----------
     Total liabilities and shareholders' deficit        $ 2,711,900    $ 2,874,400
                                                        ============   ============

</TABLE>
              SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                       F-4
                                      
<PAGE>
HADRON, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE FISCAL YEARS ENDED JUNE 30, 1997, 1996 AND 1995
-------------------------------------------------------
<TABLE>


                                                       1997           1996           1995
<CAPTION>                                           -----------    -----------  -------------
<S>                                               <C>            <C>           <C>
Revenues                                           $16,987,700   $ 18,305,600   $ 20,534,300
                                                    -----------    -----------  -------------
Operating costs and expenses:
  Costs of revenue                                  14,650,600     15,937,200     17,842,000
  Development  costs of HeaTreaT                       598,900
  Selling, general and administrative                1,610,300      2,309,200      2,854,000
                                                   -----------    -----------   -------------
Total operating costs and expenses                  16,859,800     18,246,400     20,696,000
                                                   -----------    -----------   -------------
Operating income (loss)                                127,900         59,200       (161,700)
                                                   -----------    -----------   -------------
Other income (expense):
  Interest income                                        8,100         11,000         20,600
  Interest expense                                     (92,600)      (143,000)      (237,500)
  Gain on sale of assets                                              255,500
  Other income (expense)                                13,500         10,900        (57,700)
                                                    -----------    -----------  -------------
Total other income (expense)                           (71,000)       134,400       (274,600)
                                                    -----------    -----------  -------------
Income (loss) before income taxes
  and extraordinary item                                56,900        193,600       (436,300)

Provision for income taxes                              44,000         31,900         23,700
                                                    -----------    -----------  ------------

Income (loss) before extraordinary item                 12,900        161,700       (460,000)

Extraordinary item - gain on the retirement
  of FDIC debt, net                                                                2,718,400
                                                    -----------    -----------  ------------
Net income                                         $    12,900   $    161,700   $  2,258,400
                                                    ===========  =============  ============
Per share data:
Net income  (loss) before extraordinary
  item                                             $      0.01   $       0.11   $     (0.31)

Extraordinary item - gain on the retirement
  of FDIC debt, net                                                                     1.82
                                                    -----------    -----------  ------------

Net income                                         $      0.01   $       0.11   $       1.51
                                                    ===========    ===========  ============

Weighted average number of common
  shares outstanding during the period               1,529,519      1,501,841      1,492,625
                                                    ===========    ===========  ============

                   See Notes to Consolidated Financial Statements
                                        F-5            
<PAGE>
HADRON, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' DEFICIT
FOR THE FISCAL YEARS ENDED JUNE 30, 1997, 1996 AND 1995
-------------------------------------------------------

</TABLE>
<TABLE>

                                        Common Stock
                                        -----------         Additional   Accumulated
                                    Shares      Amount      Capital      Deficit            Total
                                  ----------   ---------  ------------  -------------   -------------
<CAPTION>
<S>                              <C>          <C>         <C>          <C>             <C>  
Balance - June 30, 1994           1,492,625     $29,800    $9,244,800   ($12,580,400)   ($3,305,800)

  Net income                                                               2,258,400      2,258,400
                                  ----------   ---------  -----------   -------------   -------------
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)
                                  ==========  ==========  ===========   =============   =============

</TABLE>

                   See Notes to Consolidated Financial Statements
                                        F-6
                 
<PAGE>
HADRON, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE FISCAL YEARS ENDED JUNE 30, 1997, 1996 AND 1995
-------------------------------------------------------
<TABLE>
                                                         1997            1996           1995
                                                     ------------    -----------    -----------
<CAPTION>
<S>                                                 <C>             <C>            <C>
Cash flows from operating activities:
  Net income                                         $    12,900     $   161,700    $ 2,258,400
                                                     ------------    -----------    -----------
Adjustments to reconcile net income to net
    cash provided by operating activities:
    Depreciation and amortization                         73,800         119,300        239,400
    Provision for doubtful accounts receivable          (114,600)        209,800        115,000
    Gain on retirement of FDIC debt                                                  (2,718,400)
    Gain on sale of assets                                              (255,500)
    Other                                                                 16,300
Changes in operating assets and liabilities:
    Accounts and notes receivable                        384,200         418,200        289,600
    Prepaid expenses and other                            24,600         (14,000)        29,300
    Other assets                                         (10,600)         48,700         67,700
    Restricted cash                                                      130,000        120,000
    Accounts payable                                    (419,200)       (294,400)       (52,700)
    Deferred income                                                                     (32,500)
    Other current liabilities                            211,700        (312,500)        94,100
    Change in assets and liabilities
      attributable to asset sale                                         (17,300)
    Other long-term liabilities                            4,000           4,100       (103,000)
                                                     ------------    -----------    -----------
      Total adjustments                                  153,900          52,700     (1,951,500)
                                                     ------------    -----------    -----------
Net cash provided by operating activities                166,800         214,400        306,900
                                                       
Cash flows from investing activities:
    Proceeds from sale of assets                                         365,700
    Property additions                                   (94,100)       (103,500)       (24,000)
    Proceeds from (investment in)
      certificates of deposit                                                            76,000
                                                     ------------    -----------    -----------
Net cash (used) provided by investing activities         (94,100)        262,200         52,000
                                                     ------------    -----------    -----------
Cash flows from financing activities:
    Proceeds of borrowings on bank and other loans       711,900                        964,100
    Proceeds of stock warrants exercised                  45,800
    Proceeds of convertible promissory notes             120,000
    Payments on bank and other loans                    (969,600)     (1,073,300)    (1,125,000)
                                                     ------------    -----------    -----------
Net cash used by financing activities                    (91,900)     (1,073,300)      (160,900)
                                                     ------------    -----------    -----------
Net (decrease) increase in cash and cash equivalent      (19,200)       (596,700)       198,000
Cash and cash equivalents at beginning of year            43,900         640,600        442,600
                                                     ------------    -----------    -----------
Cash and cash equivalents at end of year             $    24,700     $    43,900    $   640,600
                                                     ============    ===========    ===========
</TABLE>
                   See Notes to Consolidated Financial Statements
                                   F-7                    
<PAGE>

                            HADRON, INC. AND SUBSIDIARIES
                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


          1. The Company:

                  Hadron, Inc. (the "Company") provides a broad range of
             information technology management services to businesses and
             federal government agencies.  Specializing in the fields of
             computer systems integration, software development,
             engineering/computer science and integrated logistics
             support, the Company supplies its clients with expert
             technical services, systems and product development.

                  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, certificates of deposit, 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



                                         F-8
<PAGE>

                            HADRON, INC. AND SUBSIDIARIES
                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


               United States Government agencies.  To date, the Company has
               not incurred losses related to cash and cash equivalents.

                    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


                                         F-9
<PAGE>

                            HADRON, INC. AND SUBSIDIARIES
                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


               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.


               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:

                    The Company follows the provisions of Statement of
               Financial Accounting Standards No. 109, "Accounting for
               Income Taxes" (SFAS 109).  Under this method, 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.  Income (loss) per share:

                    Income (loss) per share is based on the weighted
               average number of common shares outstanding and common stock
               equivalents, if dilutive, during each year. 



                                     
                                         F-10
<PAGE>

                            HADRON, INC. AND SUBSIDIARIES
                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


               H.   Stock-Based Compensation:

                    In October 1995, the Financial Accounting Standards
               Board issued Statement of Financial Accounting Standards No.
               123 ( SFAS No. 123 ), Accounting for Stock-Based
               Compensation, which is effective for the Company s June 30,
               1997 financial statements.  SFAS No. 123 allows companies to
               either account for stock-based compensation under the
               provisions of SFAS No. 123 or under the provisions of
               Accounting Principles Board No. 25 ( APB No. 25 ), but
               requires pro forma disclosures in the footnotes to the
               financial statements as if the measurement provisions of
               SFAS No. 123 had been adopted.  The Company accounts for its
               stock-based compensation in accordance with the provisions
               of APB No. 25.  As such, the adoption of SFAS No. 123 does
               not impact the financial condition or the results of
               operations of the Company.

             I.     Recent Pronouncements:

                        In February 1997, the Financial Accounting Standards
               Board issued Statement No. 128, Earnings per Share, which is
               required to be adopted on December 31, 1997.  At that time,
               the Company will be required to change the method currently
               used to compute earnings per share and to restate all prior
               periods.  Under the new requirements for calculating primary
               earnings per share, the dilutive effect of stock options
               will be excluded.  The impact of Statement No. 128 on the
               calculation of primary earnings per share and fully diluted
               earnings per share for the periods presented is not expected
               to be material.

                    In February 1997, the Financial Accounting Standards
               Board issued Statement of Financial Accounting Standards No.
               131 ("SFAS No. 131"), "Disclosures about Segments of an
               Enterprise and Related Information", which is required to be
               adopted for the fiscal years beginning after December 31,
               1997.   SFAS No. 131 changes the way public companies report
               segment information in annual financial statements and also
               requires those companies to report selected segment
               information in interim financial reports to shareholders. 
               SFAS No. 131 supersedes Financial Accounting Standards No.
               14, "Financial Reporting for Segments of a Business
               Enterprise".  The impact of SFAS No. 131 has not yet been
               determined.




                                     
                                         F-11
<PAGE>

                            HADRON, INC. AND SUBSIDIARIES
                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


             J.     Reclassifications:

                    Certain fiscal year 1996 and 1995 amounts have been
               reclassified to conform to the fiscal year 1997
               presentation.

          3.   Accounts receivable:

               The components of accounts receivable are as follows:
<TABLE>
                                                         June 30,          
                                                ---------------------------
                                                   1997            1996    
                                                ------------   ------------
<CAPTION>
<S>                                           <C>             <C>
               Trade accounts receivable:
               U.S. Government:
               Amounts billed                    $  538,300     $1,194,900 
               Recoverable costs and
                 profits - not billed               857,600        857,000 
                                                ------------   ------------
                 Total                            1,395,900      2,051,900 
                                                ------------   ------------
               Commercial, state and local
                governments:
               Amounts billed                       806,200      1,126,300 
               Recoverable costs and
                profits - not billed                268,800        151,000 
                                                ------------   ------------
                   Total                          1,075,000      1,277,300 
                                                ------------   ------------
               Total accounts receivable           2,470,900     3,329,200 

               Less allowance for doubtful
                accounts                           (158,800)      (648,800)
                                                ------------   ------------
               Total accounts receivable, net
                                                $2,312,100      $2,680,400 
                                               =============  =============
</TABLE>
                    The amount of customer retentions included in U.S.
               Government accounts receivable-not billed is $23,400 and
               $254,900 at June 30, 1997 and 1996, 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. 
                                   
                                         F-12
<PAGE>

                            HADRON, INC. AND SUBSIDIARIES
                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


          4.   Fixed assets:

<TABLE>
                    The components of fixed assets are as follows:

                                                           June 30,        
                                                ---------------------------
                                                    1997            1996   
                                                ------------   ------------
<CAPTION>                               
<S>                                            <C>             <C>
               Computer, hardware and 
                 software                       $   337,600    $   554,200 
               Office equipment                     131,600        253,200 
                                                ------------   ------------

               Total fixed assets                   469,200        807,400 

               Less accumulated depreciation
                 and amortization                 ( 386,400)    (  710,600)
                                                ------------   ------------
               Total fixed assets, net          $    82,800     $   96,800 
                                                ============    ===========

</TABLE>
                    During fiscal years 1997 and 1996, the Company removed
               from service fixed assets with a cost basis of approximately
               $432,000 and $711,000, respectively. The assets removed from
               service in fiscal year 1997 included those sold to
               Performance Engineering International Corp.  These assets
               had a cost basis, net of accumulated depreciation, of
               approximately $38,000 at the time of sale.  The assets
               removed from service in fiscal year 1996 included those sold
               as part of the sale by ART.  These assets had a cost basis,
               net of accumulated depreciation, of approximately $93,000 at
               the time of sale.

          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.                       
                                         F-13
<PAGE>


                            HADRON, INC. AND SUBSIDIARIES
                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


                    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 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 $.02 par value
               common stock ("Common Stock") at $.25 per share.  

                    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 $0.60 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 $0.60 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 $0.60.  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. 





                                     
                                         F-14
<PAGE>
                            HADRON, INC. AND SUBSIDIARIES
                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


          6.  Other current liabilities:
<TABLE>
                    Other current liabilities include the following major
               classifications:

                                                           June 30,        
                                                ---------------------------
                                                    1997           1996    
                                                ------------   ------------
<CAPTION>
<S>                                            <C>            <C>
               Payroll and related taxes        $   635,000    $   492,700
               Compensated absences                 398,000        333,000
               Accrued bonuses                       94,600        171,900
               Self-insured medical expense         223,000        115,200
               Due to subcontractors                122,400        111,500
               Other                                460,800        377,800
                                                ------------   ------------

               Total                            $ 1,933,800    $ 1,602,100
                                                ============   ============

</TABLE>

          7.   Income taxes:

                    The provision for income taxes for the years ended June
               30, 1997, 1996 and 1995 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>


                                           1997         1996         1995  
                                          -------     --------    --------
<CAPTION>
<S>                                        <C>        <C>         <C>
               Tax expense (benefit) at
                statutory rate - federal    35%          35%        (35%) 
               State tax expense (benefit) 
                net of federal taxes        77           16           5   

               Goodwill amortization         -            1           1   
               Operating losses with no
                 current tax benefit
                 (current tax benefit)     (35)         (36)         34   
                                          -------      --------    -------
               Tax expense at
                 actual rate                77%          16%          5%  
                                          =======      ========    =======

</TABLE>


<PAGE>
                    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, 1997 and 1996
               consist primarily of temporary differences from net
               operating loss carryforwards of approximately $2,351,000 and
               $2,767,000, respectively, and are fully reserved.

                                     
                                         F-15
<PAGE>

                            HADRON, INC. AND SUBSIDIARIES
                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


                    The Company has net operating loss (NOL) carryforwards
               for federal and state purposes available to offset future
               taxable income of approximately $6,186,000 as of June 30,
               1997. These NOL carryforwards expire at various dates
               through June 30, 2009.  


          8.  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, 1997 are summarized below:


                    Fiscal Year Ending            Lease   
                          June 30,             Commitments
                    ------------------         -----------

                     1998                        $ 146,000
                     1999                          139,300
                     2000                          144,000
                     2001                          148,600
                     2002                           88,300
                                               -----------
               Total minimum payments required   $ 666,200
                                               ===========

                    Included in the lease commitments is a sublease
               commitment for $11,300 with Comtex, a related party, to
               occupy 660 square feet at its principal location in
               Alexandria, Virginia through April 30, 1998.

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

                                           Rent  
                         Period           Expense  
                    ----------------    ----------
                    Fiscal Year 1997    $  114,600
                    Fiscal Year 1996    $  534,200
                    Fiscal Year 1995    $1,101,900


                                     
                                         F-16
<PAGE>

                            HADRON, INC. AND SUBSIDIARIES
                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


               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.

          9. 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 $255,000 in the consolidated statement of
               operations in fiscal year 1996.


          10.  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.

                    Gain on the sale will be recognized for financial
               reporting purposes when cash flows of PEI are sufficient to
               fund its debt service or when the Company's investment in
               PEI can be readily converted to cash.

                                     
                                         F-17
<PAGE>

                            HADRON, INC. AND SUBSIDIARIES
                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


          11.  Extraordinary item:

                    On September 14, 1994, the Company entered into a
               Settlement Agreement with the Federal Deposit Insurance
               Corporation ("FDIC") under which the Company paid the FDIC
               $1,100,000 as consideration for a complete release from all
               indebtedness to the FDIC.  At the time of settlement, the
               Company owed the FDIC $3,905,100, consisting of a note
               payable of $3,706,000, net of cash collateral reserve of
               $25,000, and accrued interest of $224,100.  In addition to
               the settlement itself, the Company incurred legal and other
               professional fees of $86,700 to consummate the settlement. 
               Prior to this settlement the Company had been in default on
               its obligation to the FDIC.  

                    The settlement with the FDIC resulted in an
               extraordinary gain of $2,718,400 in the consolidated
               statements of operations for the fiscal year ended June 30,
               1995.    

          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.  The Company's
               discretionary contributions to the Plan were $18,000,
               $19,000 and $18,000 for fiscal years 1997, 1996 and 1995,
               respectively.


          13. Stock Option Plan:

                    Under the Company's 1994 Stock Option Plan ("1994
               Plan"), up to 345,000 shares of its common stock may be
               issued to key employees, consultants and directors.  The
               1994 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.

                                     
                                         F-18
<PAGE>

                            HADRON, INC. AND SUBSIDIARIES
                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


                    In fiscal year 1997, an amendment to the 1994 Stock
               Option Plan was adopted to increase the number of shares
               reserved for issuance thereunder from 290,000 to 345,000. 
               Information with respect to incentive and non-qualified
               stock options issued under the 1994 Amended Plan are as
               follows:

<TABLE>
                                                  Incentive       Non-
                                                    Stock      Qualified
                                                   Option     Stock Option
                                                 -----------  ------------

<CAPTION>
<S>                                            <C>           <C>
                Outstanding at June 30, 1994          -            -
                     Granted                        183,500        12,500 
                     Expired                        (13,000)
                                                 -----------  ------------
                Outstanding at June 30, 1995        170,500        12,500 
                     Granted                         89,500        12,500 
                     Expired                        (49,500)      (15,000)
                                                 -----------  ------------
                Outstanding at June 30, 1996        210,500        10,000 
                     Granted                        112,500         5,000 
                     Exercised                       (3,000)
                     Expired                        (19,500)
                                                 -----------  ------------
                Outstanding at June 30, 1997        300,500        15,000 
                                                 ===========  ============
                Exercisable at end of year          203,831         9,998 
                                                 ===========  ============
                Exercise price at June 30,1997   $.25 - $.90   $.25 - $.69 

                Exercise price of shares
             exercised during fiscal year 1997          $.25
              
</TABLE>

                    The weighted average exercise price of options
               outstanding at June 30, 1997 was $.49.  The weighted average
               remaining contractual life of options outstanding at June
               30, 1997 was 8.24 years.  The weighted average fair value of
               options granted during 1997 and 1996 was $.44 and $.62,
               respectively.

                    During fiscal year 1997, the Company adopted the
               disclosure-only provisions of 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

                                     
                                         F-19
<PAGE>

                            HADRON, INC. AND SUBSIDIARIES
                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


               awards under the plan consistent with the methodology
               prescribed under SFAS No. 123, the Company s net
               income/(loss) in fiscal years 1997 and 1996 would have been
               approximately $(19,100) and $154,900, or $(.01) and $.10 per
               share, respectively.  The effect of applying SFAS No. 123 on
               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.

                    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; expected life of the option term of 7 to 9 years
               and risk-free interest rate of 6.9% for the years 1997 and
               1996.

                    Because SFAS No. 123 is applicable only to options
               subsequent to December 31, 1994, its pro forma effect will
               not be fully reflected until later years.


          14.  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 60,000 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.


                                     
                                         F-20
<PAGE>

                            HADRON, INC. AND SUBSIDIARIES
                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


          15. Statement of cash flows - supplemental disclosures:

                    During fiscal years 1997, 1996 and 1995, the Company
               paid income taxes of $40,000, $18,000 and $4,000,
               respectively.  The Company also paid interest of $54,000,
               $142,000 and $221,000 during those same periods.


          16. 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 $9,101,000, $10,066,000 and
               $13,732,000, respectively, in fiscal years 1997, 1996 and
               1995.

                    Revenues from one commercial customer totaled
               $7,424,000, $7,112,000 and $5,924,000 in the fiscal years
               1997, 1996 and 1995, respectively.

                    Revenues earned on sales to the Company's major
               customers are as follows:

                                        United States                       
                                        Department of        Commercial     
                                     Defense      Justice    Customer 
                                  -----------    --------- ----------- 
               Fiscal Year 1997   $ 7,508,000   $    8,000 $ 7,424,000
               Fiscal Year 1996     5,364,000    3,426,000   7,112,000
               Fiscal Year 1995     5,443,000    7,370,000   5,924,000













                                     
                                         F-21
<PAGE>
HADRON, INC. AND SUBSIDIARIES
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS AND RESERVES

<TABLE>
                                           Additions
                                           -----------------
                              Balance at   Charged (Credited)   Charged to                      Balance
                              Beginning    to costs and        other accounts   Deductions      at end
        Description           of Period     expenses           (describe)       describe)      of Period


<CAPTION>
<S>                        <C>            <C>               <C>               <C>             <C>
Year ended June 30, 1997
Accounts receivable         $   648,806   $  (114,637)       $   ---            375,345 <F1>   158,824
                              ==========    ==========        ===========      ========        =======

Year ended June 30, 1996
Accounts receivable         $   507,960   $   209,757        $    10,268 <F2>    79,179 <F3>   648,806
                              ==========    ==========        ===========      ========        =======


Year ended June 30, 1995
Accounts receivable         $   453,308   $   115,000        $   149,463 <F4>   209,811 <F5>   507,960
                              ==========    ==========        ==========       =========       =======

<FN>
<F1>  Represents, primarily, the writeoff of uncollectible billed and
        unbilled receivables, rate variances and fee retentions.
<F2>  Represents charges of $10,268 to unbilled receivables to correct
        unbilled accounts receivable balances.
<F3>  Represents, primarily, the writeoff of uncollectible, fully reserved
        unbilled accounts receivable balances.
<F4>  Represents a charge of $122,051 to unbilled receivables to correct
        unbilled accounts receivable balances, a charge of $3,660 to 
        miscellaneous expense and the collection of receivables previously
        written off in the amount of $23,750.
<F5>  Represents, primarily, the writeoff of uncollectible unbilled
        receivables, rate variances and fee retentions.

</TABLE>

                                     
                                         F-22
<PAGE>