SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------------
Form 10-Q
---------------------
/X/ Quarter report pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the quarterly period ended March 31, 1995 or
/ / Transition report pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the 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
incorporation or organization) Identification No.)
9990 Lee Highway
Fairfax, Virginia 22030
(Address of principal executive offices)
Registrant's Telephone number including area code
(703) 359-6201
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 twelve (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 ninety (90) days:
Yes X No
As of May 8, 1995, 1,492,625 shares of the Common Stock of the
registrant were outstanding.
HADRON, INC. AND SUBSIDIARIES
TABLE OF CONTENTS
Part I Financial Information:
Item 1. Financial Statements
Condensed Consolidated Balance Sheets
March 31, 1995 and June 30, 1994
Condensed Consolidated Statements
of Operations for the Three and Nine
Months Ended March 31, 1995 and 1994
Condensed Consolidated Statements of
Cash Flows for the Nine Months Ended
March 31, 1995 and 1994
Notes to Condensed Consolidated
Financial Statements
Item 2. Management's Discussion and Analysis
of Financial Condition and Results
of Operations
Part II Other Information:
Item 1. Legal Proceedings
SIGNATURES
<TABLE>
HADRON, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
MARCH 31, 1995 AND JUNE 30, 1994
ASSETS
<CAPTION>
Mar. 31 June 30,
1995 1994
<S> <C> <C>
Current assets:
Cash and Cash equivalents $ 188,035 $518,551
Restricted cash 120,000 120,000
Accounts receivable, net 3,623,855 3,323,295
Prepaid expenses and other 78,417 60,494
----------- ------------
Total current assets 4,010,307 4,022,340
Fixed assets, net 229,759 371,726
Other assets:
Contractual rights acquired 34,918 53,405
Restricted cash-long-term 40,000 130,000
Investments and other 82,639 120,415
----------- ------------
Total other assets 157,557 303,820
----------- ------------
Total assets $4,397,623 $4,697,886
=========== ============
</TABLE>
See Notes to Condensed Consolidated Financial Statements
(Unaudited)
<TABLE>
HADRON, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
MARCH 31, 1995 AND JUNE 30, 1994
LIABILITIES AND STOCKHOLDERS' EQUITY (Deficit)
<CAPTION>
March, 30 June 30,
1995 1994
------------ ------------
<S> <C> <C>
Current liabilities:
Notes payable - Bank $0 $3,705,969
Current maturities of long-term debt 1,196,955 137,352
Accounts payable 2,070,783 1,778,858
Other current liabilities 1,814,876 1,909,032
Deferred income 15,396 32,494
----------- ------------
Total current liabilities 5,098,010 7,563,705
----------- ------------
Note Payable - Related party 300,000 300,000
Long-term debt 40,160 37,100
Other long-term liabilities 27,248 102,963
Commitments and contingencies
Total Liabilities 5,465,418 8,003,768
----------- ------------
Shareholders' equity (deficit)
Common stock $.02 par;
authorized 20,000,000 shares
Issued:
3/31/95 - 1,505,125 shares
6/30/94 - 1,505,132 shares
Outstanding:
3/31/95 - 1,492,625 shares
6/30/94 - 1,492,632 shares 30,103 30,103
Capital in excess of par 9,767,863 9,767,863
Accumulated deficit (10,342,323) (12,580,410)
----------- ------------
Total (544,357) (2,782,444)
Less 12,500 shares of treasury stock
at cost (523,438) (523,438)
----------- ------------
Total shareholders' equity (deficit) (1,067,795) (3,305,882)
----------- ------------
Total liabilities and shareholders'
equity (deficit) $4,397,623 $4,697,886
=========== ============
</TABLE>
See Notes to Condensed Consolidated Financial Statements
(Unaudited)
<TABLE>
HADRON, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATMENTS OF OPERATIONS (UNAUDITED)
FOR THE THREE AND NINE MONTHS ENDED MARCH 31, 1995 AND 1994
<CAPTION>
Nine Months Ended Three Months Ended
March 31 March 31
1995 1994 1995 1994
----------- ------------ ----------- -----------
<S> <C> <C> <C> <C>
Revenues $ 14,754,762 $ 14,201,287 $ 5,916,917 $ 4,564,872
----------- ------------ ----------- -----------
Operating
costs/expenses:
Cost of revenue 12,933,056 12,829,706 5,179,383 3,983,640
Selling, Gen/Admin 2,089,082 2,672,506 727,763 939,564
Direct Labor -
Wage Deter. Provision 0 240,000 0 240,000
Asset Valuation Pro. 0 965,239 0 0
----------- ------------ ----------- -----------
Total Operating
costs and expenses: 15,022,138 16,707,451 5,907,146 5,163,204
----------- ------------ ----------- -----------
Operating income (loss) (267,376) (2,506,164) 9,771 (598,332)
----------- ------------ ----------- -----------
Other income (expense):
Interest expense, net (169,069) (201,543) (62,914) (67,422)
Other expense (40,324) (14,856) (53,666) 5,158
----------- ------------ ----------- -----------
Total other expense (209,393) (216,399) (116,580) (62,264)
----------- ------------ ----------- -----------
Loss before income taxes
and extraordinary gain (476,769) (2,722,563) (106,809) (660,596)
Provision for income 3,699 1,656 813 0
taxes
----------- ------------ ----------- -----------
Loss before
extraordinary (480,468) (2,724,219) (107,622) (660,596)
gain
Extraordinary gain on
extinguishment of debt 2,718,418 0 0 0
----------- ------------ ----------- -----------
Net income (loss) $ 2,237,950 ($2,724,219) ($107,622) ($660,596)
=========== ============ =========== ===========
Per share data
Loss before
extraordinary ($0.32) ($1.83) ($0.07) (0.44)
gain
Extraordinary gain on
extinguishment of debt 1.82 0.00 0.00 0.00
----------- ------------ ----------- -----------
Net Income (loss) $1.50 ($1.83) ($0.07) ($1.44)
=========== ============ =========== ===========
Weighted average number
of common shares
outstanding during
the period 1,492,626 1,492,660 1,492,628 1,492,660
=========== ============ =========== ===========
</TABLE>
See Notes to Condensed Consolidated Financial Statements
(Unaudited)
<TABLE>
HADRON, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
FOR THE NINE MONTHS ENDED MARCH 31, 1995 AND 1994
<CAPTION>
Nine Months Ended
March 31,
1995 1994
----------- ------------
<S> <C> <C>
Cash Flow from operating activities:
Net income (loss) $ 2,237,950 $ (2,724,219)
----------- ------------
Adjustments to reconcile net loss to net
cash provided (used) by operating
activities:
Depreciation and amortization 182,937 285,645
Extraordinary gain on extinguishment of debt (2,718,418) 0
Changes in net assets and liabilities:
Accounts receivable (300,560) 243,208
Prepaid expenses (17,923) 12,878
Other assets 37,776 (36,242)
Restricted cash 90,000 0
Accounts payable 291,925 482,130
Deferred income (17,098) (27,809)
Other current liabilities 18,293 443,079
Asset valuation provision 0 965,239
Other long-term liabilities (72,518) 0
----------- ------------
Total adjustments (2,505,586) 2,368,128
----------- ------------
Net cash used by operating activities: (267,636) (356,091)
----------- ------------
Cash flows used for investing activities:
Property additions (22,483) (108,466)
----------- ------------
Net cash used for investing activities: (22,483) (108,466)
Cash flows from financing activities:
Borrowing on bank and other loans 960,000 0
Payments on bank and other loans (1,000,397) (124,624)
Principal payments udr capital lease oblig. 0 (5,700)
----------- ------------
Net cash used by financing activities (40,397) (130,324)
----------- ------------
Net decrease in cash (330,516) (594,881)
Cash and cash equivalents at beginning of prd. 518,551 927,189
----------- ------------
Cash and cash equivalents at end of prd. $ 188,035 $ 332,308
=========== ============
</TABLE>
See Notes to Condensed Consolidated Financial Statements
(Unaudited)
HADRON, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
1. Basis of Presentation
The interim condensed consolidated financial statements for
Hadron, Inc. (the "Company") are unaudited, but in the opinion of
management reflect all adjustments (consisting only of normal
recurring accruals) necessary for a fair presentation of results
for such periods. The results of operations for any interim
period are not necessarily indicative of results for the full
year. These condensed, consolidated financial statements should
be read in conjunction with the financial statements and notes
thereto included in the Company's annual report on Form 10-K for
the year ended June 30, 1994 ("1994 Form 10-K") filed with the
Securities and Exchange Commission.
2. Legal Proceedings
As disclosed in previous filings of the Company's annual and
quarterly reports, in September 1992 the Company filed a proof of
claim in the bankruptcy of United Press International ("UPI").
The claim for $594,621.66 owed to the Company by UPI included
unpaid building rent, administrative and legal services charges
and other expenses. The claim also reflected a possible setoff
of $500,000 then believed to be owed by the Company to UPI,
resulting in a net claim of $94,621.66.
In July 1993, UPI filed an adversarial action challenging
the Company's claim and demanded $500,000 plus interest based
upon an alleged debt due from the Company to UPI. After further
investigation, the Company determined that it was not indebted to
UPI in any amount. The Company's amended proof of claim filed in
March 1994 withdrew earlier reference to the possible setoff and
adjusted certain of its accounts receivable against UPI,
resulting in an amended claim of $512,477.87. In May 1994, the
Bankruptcy Court converted UPI's case to Chapter 7 of the U.S.
Bankruptcy Code. The litigation between the Company and UPI was
stayed pending the appointment of a Chapter 7 Trustee.
A pretrial conference in the adversary proceeding has been
rescheduled to June 6, 1995. The Company does not believe it
will ultimately incur any liability pursuant to the UPI
adversarial action and has made no provision in its financial
statements for this matter.
3. Restricted Cash/Note Payable - Related Party
The Company's $160,000 in Restricted Cash at March 31, 1995
represents funds invested in certificates of deposit as
collateral for an irrevocable letter of credit which
collateralizes certain payments due to Equitable Variable Life
Insurance Company ("Equitable") pursuant to a lease amendment
dated October 21, 1993 between Equitable, as landlord, and the
Company, as tenant, amending the Company's lease of its principal
offices in Fairfax, Virginia ("Lease Amendment"). The $300,000
Note Payable - Related Party represents a convertible promissory
note ("Note") dated October 21, 1993 in the original principal
amount of $300,000, executed by Engineering and Information
Services, Inc. ("EISI") and SyCom Services, Inc. ("SyCom"), two
wholly owned subsidiaries of the Company and payable to C.W.
Gilluly, Chairman of the Board of Directors and Chief Executive
Officer of the Company. The proceeds of the $300,000 Note were
utilized to obtain the collateral required for the issuance of
the irrevocable letter of credit. For a more detailed
description of the Lease Amendment and the Note, see the 1994
Form 10-K.
4. FDIC Settlement Agreement
On September 14, 1994, the Company entered into a Settlement
Agreement with the Federal Deposit Insurance Corporation
("FDIC"). Principally through accounts receivable funding with
Commerce Funding Corporation ("CFC"), the Company paid the FDIC
$1,100,000 as consideration for a complete release from all
indebtedness to the FDIC. Hadron owed the FDIC $3,905,093
consisting of a note payable of $3,705,969, net of cash
collateral reserve of $25,000, and accrued interest of $224,124.
Prior to this settlement the Company had been in default related
to its obligation to the FDIC.
The financial settlement with the FDIC resulted in an
extraordinary gain of $2,718,418 which was recorded in the first
quarter fiscal 1995 condensed consolidated financial statements.
In addition to the $1.1 million settlement, the Company incurred
legal and other professional fees of $86,675 to consummate the
settlement.
During September 1994, the Company entered into a one-year
renewable agreement with CFC to finance a substantial portion of
the Company's accounts receivable. On assigned invoices, the
Company generally receives 80% of the invoice amount at the time
of billing purchase and the remaining 20% less CFC fees and
interest when the invoice is paid. The Company is charged an
interest fee on the funded amount at an annualized rate of
18.25%, plus an annual commitment fee of $100,000 payable in
equal monthly installments. At March 31, 1995, the Company had
borrowings of approximately $1,060,000 from CFC.
5. Concentration of Business
The Company has historically been, and continues to be,
heavily dependent upon contracts from various U.S. government
agencies. As reported in various forums, in the area of U.S.
government procurement for goods and services, government
contractors, including the Company, have experienced and will
continue to experience, increased levels of competition as
overall government expenditures are reduced. This increased
competition will focus on both technical expertise and price.
The Company is marketing its capabilities in various civilian and
defense agencies, as well as in the commercial marketplace, in an
effort to diversify its customer base and to maintain or increase
its market share.
Item 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
COMPARISON OF THE THREE MONTHS ENDED MARCH 31, 1995
TO THE THREE MONTHS ENDED MARCH 31, 1994
During the three months ended March 31, 1995, the Company's
revenues were approximately $5,917,000, or approximately
$1,352,000 more than revenues for the three months which ended
March 31, 1994. This represents a 30% increase in revenue in the
quarter ended March 31, 1995, as compared with the quarter ended
March 31, 1994.
The increase in revenue between the three months ended March
31, 1995 and the three months ended March 31, 1994, was primarily
due to increases in revenues of the Company's wholly owned
subsidiaries, Acumenics Research and Technology, Inc.
("Acumenics"), Engineering and Information Services, Inc.
("EISI") and Sycom Services, Inc. ("SyCom"), offset by a revenue
decline in the Aerospace Sciences, Inc. ("ASI") subsidiary. The
increase in Acumenics' revenue is the result of obtaining new
business through an existing contract and the EISI and SyCom
revenue increases reflect increased staffing on existing
contracts and the acquisition of new contracts. The ASI revenue
decline is attributable to contracts completed during fiscal year
1994 which were not supplemented by new contracts.
Operational expenses for the quarter ended March 31,1995,
were approximately $5,907,000, as compared with operational
expenses of approximately $5,163,000 for the quarter ended March
31, 1994. This represents a 14% increase in operational expenses
for the three months ended March 31, 1995, as compared with the
corresponding period ended March 31, 1994. This increase in
expenses reflects a 30% increase in costs of revenues in
conjunction with the 30% revenue increase, offset by an
approximately $212,000 decrease in selling, general and
administrative expenses and the presence of a $240,000 direct
labor wage determination provision in the three months ended
March 31, 1994 with no corresponding one-time adjustment in the
three months ended March 31, 1995. The approximately $212,000
decrease in selling, general and administrative expenses is
attributable to aggressive cost cutting and significantly reduced
legal expenses in the three months ended March 31, 1995 as
compared with the three months ended March 31, 1994.
Costs of revenue for the three months ended March 31, 1995,
increased from 87% of revenues to 88% of revenues as compared
with the corresponding three months ended March 31, 1994. This
reflects a change in the revenue mix as distributed among
Hadron's subsidiaries in the three months ended March 31, 1995,
when compared with the revenue composition for the three months
ended March 31, 1994.
The Company earned operating income for the quarter ended
March 31, 1995 of approximately $10,000, as compared to an
operating loss of approximately $598,000 for the corresponding
quarter of the prior year. The Company's improvement from an
operating loss to operating income, an aggregate change of
approximately $608,000, was predominately due to increased
revenues, reduced selling, general and administrative expenses
and the inclusion of the $240,000 direct labor wage determination
provision in the three months ended March 31, 1994, with no
corresponding expense in the quarter ended March 31, 1995.
For the quarter ended March 31, 1995, net interest expense
of approximately $63,000 decreased by approximately $4,000
compared to the corresponding period of the prior year. This
decrease is due to a significant decrease in the Company's debt,
partially offset by higher interest rates primarily attributable
to new debt borrowings from CFC in the three months ended March
31, 1995 as compared with the three months ended March 31, 1994.
The Company recorded a net loss of approximately $108,000 in
the three months ended March 31, 1995, as compared with a net
loss of approximately $661,000 for the three months ended March
31, 1994. The net loss is attributable to continuing interest
expense and other expenses including payment by the Company of
$25,000 in settlement of a lawsuit in the ordinary course of
business. The improvement is attributable to increased revenues
and reduced expenses, including the direct labor wage
determination provision recorded in the three months ended March
31, 1994, as discussed above.
COMPARISON OF THE NINE MONTHS ENDED MARCH 31, 1995
TO THE NINE MONTHS ENDED MARCH 31, 1994
During the nine months ended March 31, 1995, the Company's
revenues were approximately $14,755,000, or approximately
$554,000 more than revenues for the nine months which ended March
31, 1994. This represents a 4% increase in revenue in the nine
months ended March 31, 1995, as compared with the nine months
ended March 31, 1994. The increase in revenue between the nine
months ended March 31, 1995 and the nine months ended March 31,
1994, was primarily due to increased revenues in EISI and SyCom
offset by revenue declines in Acumenics and ASI. The revenue
increases in EISI and SyCom reflect increased staffing on
existing contracts and the acquisition of new contracts. The
decline in Acumenics is predominately due to significantly
reduced spending levels at the U.S. Department of Justice
("DOJ"), Acumenics' main customer, pursuant to government-fiscal-
year-end budgetary constraints and a reduced case load, offset by
revenues garnered from a new customer utilizing the DOJ contract
vehicle. The ASI revenue decline is attributable to contracts
completed during fiscal year 1994 which were not supplemented by
new contracts.
Operational expenses for the nine months ended March 31,
1995, were approximately $15,022,000, as compared with
operational expenses of approximately $16,707,000 for the nine
months ended March 31, 1994. This represents an 10% decrease in
operational expenses for the nine months ended March 31, 1995, as
compared with the corresponding period ended March 31, 1994.
This reduction in expenses reflects a slight increase in costs or
revenue corresponding to increased revenues, offset by decreased
selling, general and administrative expenses and the presence of
a $240,000 direct labor wage determination provision and an
approximately $965,000 asset valuation provision in the nine
months ended March 31, 1994 with no corresponding one-time
adjustments in the nine months ended March 31, 1995.
Costs of revenue for the nine months ended March 31, 1995,
decreased from 90% of revenues to 88% of revenues as compared
with the corresponding nine months ended March 31, 1994. This
reflects a revenue mix in the nine months ended March 31, 1995,
which is weighted more highly towards labor, as opposed to other
direct costs, when compared with the revenue composition for the
nine months ended March 31, 1994 and changes in the distribution
of Hadron's revenue among its subsidiaries.
Selling, general and administrative expenses decreased by
approximately $583,000 in the nine months ended March 31, 1995,
as compared with the nine months ended March 31, 1994. This
decrease primarily results from aggressive cost cutting,
including reductions in indirect labor of approximately $222,000
and outside services, predominately legal fees, of approximately
$488,000. Facility expense in the nine months ended March 31,
1994 included an approximate $95,000 one-time adjustment related
to renegotiating the Company's main facility lease. Excluding
the one-time recovery of rental expense in the nine months ended
March 31, 1994, facility expense decreased by approximately
$130,000 in the nine months ended March 31, 1995 as compared with
the nine months ended March 31, 1994. The expense decreases
noted above were offset by aggregate expense increases in other
categories, including severance, totalling approximately
$257,000.
The Company's operating loss for the nine months ended March
31, 1995 was approximately $267,000, as compared to an operating
loss of approximately $2,506,000 for the corresponding nine
months of the prior year. The Company's operating loss decreased
by approximately $2,239,000 due to increased revenues along with
lower cost of revenue, reduced selling, general and
administrative expenses and the inclusion of the asset valuation
provision and direct labor wage determination provision in the
nine months ended March 31, 1994, with no corresponding expenses
in the nine months ended March 31, 1995.
In the nine months ended March 31, 1995, the Company
recognized an extraordinary gain of approximately $2,718,000
related to a Settlement Agreement with the Federal Deposit
Insurance Corporation ("FDIC"). In the Settlement Agreement the
Company paid the FDIC $1,100,000 in consideration for a complete
release from indebtedness of approximately $3,900,000. The
Company incurred legal and other professional fees of
approximately $87,000 to consummate the settlement.
For the nine months ended March 31, 1995, net interest
expense decreased by approximately $32,000 compared to the
corresponding period of the prior year due to a significant
decrease in the Company's debt partially offset by interest rate
increases.
The Company earned net income of approximately $2,238,000 in
the nine months ended March 31, 1995, as compared with a net loss
of approximately $2,724,000 for the nine months ended March 31,
1994. This improvement from a net loss of approximately
$2,724,000 to net income of approximately $2,238,000 is primarily
attributable to an extraordinary gain of approximately $2,718,000
from the FDIC Settlement Agreement, a decrease in the Company's
operating loss of approximately $2,239,000, including a decrease
in the asset valuation provision of approximately $965,000, and a
decrease in the direct labor wage determination provision of
$240,000.
CAPITAL RESOURCES AND LIQUIDITY
During the nine months ended March 31, 1995, the Company's
operating activities absorbed cash of approximately $268,000, as
compared to absorbing approximately $356,000 for the nine months
ended March 31, 1994. The absorption of approximately $268,000
of cash is the result of operating losses of approximately
$267,000 during the nine months ended March 31, 1995, offset by
depreciation and amortization expense of approximately $182,000,
an increase in accounts receivable of approximately $301,000 and
an increase in accounts payable and other current liabilities of
approximately $300,000 and aggregate increases in other accounts
of approximately $30,000. The absorption of approximately
$356,000 of cash during the nine months ended March 31, 1994 was
the result of operating losses, net of the asset valuation
provision and direct labor wage determination provision, which
were partially offset by the collection of accounts receivable
(see Condensed Consolidated Statements of Cash Flows).
Management believes the cash from operations and the
existing cash balances and borrowings through Commerce Funding
Corporation ("CFC") will provide the Company with adequate cash
resources to meet its obligations on a short-term basis, provided
the Company is able to generate sufficient billings to be
utilized in the Company's financing agreement with CFC. To
supplement CFC, C.W. Gilluly, Chairman of the Board of Directors
and Chief Executive Officer of the Company, has obtained a
personal line of credit in the amount of $300,000 which may be
utilized by the Company as short-term financing. Borrowings from
Dr. Gilluly would be at interest at the rate of three percent per
annum over the prime rate per annum published from time to time
in The Wall Street Journal. The Company had borrowings of
approximately $1,060,000 from CFC at March 31, 1995 and had no
amounts outstanding from Dr. Gilluly.
Currently, the Company's operations do not generate cash
flow sufficient to cover its monthly interest and fee obligations
to CFC. The Company's ability to meet its liquidity needs on a
long-term basis is dependent on the Company generating sufficient
billings to utilize as a borrowing base for accounts receivable
financing with CFC. No assurance may be given, however, that the
Company will be able to maintain this billing base.
One of the conditions of Hadron's settlement with Equitable
(See also 1994 Form 10-K) was that the Company provide Equitable
with an irrevocable letter of credit ("Letter of Credit") in the
amount of $320,000 to collateralize certain payments due
Equitable pursuant to the Lease Amendment. The Company was not
able to obtain the letter of credit using only internally
generated or bank-borrowed funds. C.W. Gilluly, Chairman of the
Board of Directors and Chief Executive Officer of the Company,
agreed to make a personal loan in the principal amount of
$300,000 ("Gilluly Loan") to collateralize the Letter of Credit.
The Gilluly Loan is evidenced by a convertible promissory
note ("Note") dated October 21, 1993, executed by EISI and SyCom
and payable to C.W. Gilluly. The Note may, at the option of Dr.
Gilluly, be converted into 1,200,000 restricted shares of the
Company's Common Stock in accordance with agreements dated
October 21, 1993 and amended September 14, 1994. (See 1994 Form
10-K).
As reported in the Company's Form 10-K for the year ended
June 30, 1992, the Company had applied amounts owed by UPI to the
Company for unpaid office rental and administrative services
expenses against a previously reported $500,000 claimed
obligation to UPI. The $500,000 claimed obligation to UPI had
been previously reported, beginning in the Company's annual
report on Form 10-K for the year ended June 30, 1990, as a "note
payable" to UPI (see Note 2 to the Condensed Consolidated
Financial Statements).
In the course of examining its records in connection with
the UPI bankruptcy and the adversary proceeding, the Company
concluded that the remaining claim against the Company by UPI for
$500,000, which had been accounted for in fiscal year 1990 by
Hadron as an indebtedness due to UPI evidenced by a note payable,
in fact had not been borrowed from UPI nor had any note been
given to UPI. The Company believes that in no event would the
$500,000 be owed to UPI. Accordingly, on or about March 11,
1994, Hadron filed an amended proof of claim in UPI's bankruptcy
case to reflect that no monies are owed by the Company to UPI and
asserted a claim against UPI in the aggregate amount of
$512,477.87.
The Company has historically been, and continues to be,
heavily dependent upon contracts from various U.S. government
agencies. As reported in various forums, in the area of U.S.
government procurement for goods and services, government
contractors, including the Company, have experienced and will
continue to experience, increased levels of competition as
overall government expenditures are reduced. This increased
competition will focus on both technical expertise and price.
The Company is marketing its capabilities in various civilian and
defense agencies, as well as in the commercial marketplace, in an
effort to diversify its customer base and to maintain or increase
its market share.
Part II. Other Information
Item 1. Legal Proceedings
The information provided in Note 2 of the Notes to Condensed
Consolidated Financial Statements is incorporated herein by
reference.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act
of 1934, the Registrant has duly caused this report to be signed
on its behalf by the undersigned thereunto duly authorized.
Date: May 15, 1995 HADRON, INC.
(Registrant)
By:/S/ C.W. Gilluly By:/S/ C.W. Gilluly
C. W. Gilluly Ed.D. C.W. Gilluly Ed.D.
Chief Executive Officer Acting Chief Financial Officer
and Chairman (Principal Financial
(Principal Executive Officer) Officer and Principal
Accounting Officer)
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<FISCAL-YEAR-END> JUN-30-1995
<PERIOD-END> MAR-31-1995
<CASH> 308035
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<RECEIVABLES> 3623855
<ALLOWANCES> 0
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