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

(Exact name of registrant as specified in its charter)

(703) 750-3000
(Registrant’s telephone number, including area code)

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

Common Stock, $.01 par value
(Title of Class)

American Stock Exchange
(Name of each exchange on which registered)
Securities registered pursuant to Section 12(g) of Act: NONE

     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 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. ( )

     The aggregate market value of the voting stock held by non-affiliates of the registrant as of September 3, 2002 was approximately $15,185,406.

     The number of shares of Common Stock outstanding as of September 3, 2002 was 7,226,066.

     The Exhibit Index required by 17 CFR Part 240.0-3(c) is located on Pages 18 through 21 hereof.

DOCUMENTS INCORPORATED BY REFERENCE

     Portions of the registrant’s Proxy Statement to be filed with the Securities and Exchange Commission with respect to the 2002 Annual Meeting of Stockholders are incorporated by reference into Part III hereof.

PART I

Item 1. Business

Forward-Looking Statements

     This report contains certain forward-looking statements which are based on current expectations. Actual results may differ materially. The forward-looking statements include those regarding the continued award of future work or task orders from government and private clients, cost controls and reductions, the expected resolution of delays in billing of certain projects, the possible impact of current and future claims against the Company based upon negligence and other theories of liability, and the possibility of the Company making acquisitions during the next 12 to 18 months. Forward-looking statements involve numerous risks and uncertainties that could cause actual results to differ materially, including, but not limited to, the possibilities that the demand for the Company’s services may decline as a result of possible changes in general and industry specific economic conditions and the effects of competitive services and pricing; the possibility the Company will not be able to perform work within budget or contractual limitations; one or more current or future claims made against the Company may result in substantial liabilities; the possibility that acquired entities may not perform as well as expected; the possibility the Company will not be able to attract and retain key professional employees; and such other risks and uncertainties as are described in reports and other documents filed by the Company from time to time with the Securities and Exchange Commission.

     Versar is a leading professional services firm that provides the government and the private sector with value-added, high quality and innovative solutions for their infrastructure, facilities management , environmental quality and security needs. Versar has three primary business segments: (1) Environmental Services including pollution prevention and compliance management and the environmental restoration of industrial and commercial facilities, sites and military bases, (2) Architectural Engineering and Construction Services in support of industrial, commercial, and government infrastructure and sustainable energy projects, and (3) Defense Systems including personal protection equipment and technology development efforts in support of chemical and biological agent detection, and protection in response to terrorist events involving weapons of mass destruction.

     The combination of expertise in architectural engineering/construction, environmental consulting, and chemical and biological weapons capabilities enables Versar to provide customers with a comprehensive set of services, which we believe very few companies have. In response to market demands in fiscal year 2002 following the terrorists attack on the World Trade Center, the Pentagon, and the subsequent anthrax attacks through the United States mail system, Versar has integrated these capabilities to provide a wide range of services to our customers in Homeland Defense and Threat Reduction. This new market accounted for more than 10 percent of our revenue and 15 percent of our new engagements in fiscal year 2002. For example, we added the Defense Threat Reduction Agency as a new customer and are currently providing A/E and environmental services to them in support of Russia’s program for the destruction of Solid Rocket Motors in compliance with the Start II Treaty. Versar has also responded to over 200 customers’ requests for support during and following the anthrax terrorism event. Customers included many federal agencies, most news and media firms, as well as financial services firms. Versar used its own biological laboratory facilities to test for anthrax and provided engineering and operational support to maintain business continuity and provided decontamination services using advanced sterilization technology developed in the pharmaceutical industry. Versar also performed vulnerability assessments of major municipal water supply systems as well as vulnerability assessment of military installations as part of the Department of Defense (DOD) Force Protection Program.

     Versar is continuously focusing more on large technical support contracts for the federal government that further enhance the Company’s business base. Examples of these major programs include military range management support services and broad based technical support contracts. In fiscal year 2002, Versar was selected by the Air Force as part of a team led by Dyncorp to provide range management services at Nellis AFB. Versar’s role will be to provide environmental engineering, unexploded ordinance (UXO) and range target residue disposition services. Versar has also developed a Range Management Information System, NEXMIS, which will be used to support the Navy Atlantic Fleet in managing their operations. Versar is also part of a team led by Sverdrup Engineers that will support base operation,

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logistics and weapons acquisitions for the Marine Corps at Quantico. In addition, Versar won a GSA MOBIS Contract to provide management consulting services government-wide. The contract has no dollar ceiling and a potential period of performance up to 20 years.

Environmental Services

     Environmental health and safety services include the full range of scientific, engineering and program management services addressing prevention, detection, control, management, and cleanup of toxic substances and hazardous waste releases to the environment. Versar emphasizes innovation in process and technology applications to achieve better results more quickly and at less cost in today’s highly competitive market. Versar has specialized skills in technology and the design of industrial and public infrastructure to help our clients build environmental performance into their plant operations and improve their bottom line. Our objective is to provide designs that help our clients become more active in preventing pollution by applying innovative and cost-effective approaches to achieving sustainable growth, while maintaining compliance and taking corrective actions to clean up past problems.

     Achieving Compliance through Pollution Prevention. Today’s business challenges require viewing environmental management as an integral part of customers’ day-to-day operations, so that informed decisions can be made based on the economics of alternate solutions and their impact on productivity and profitability. Versar helps its customers manage compliance as part of operations and encourages recognition that pollution prevention and waste minimization are necessary parts of the long-term solution to local and national environmental challenges. This approach recognizes that there is competition for limited resources and a need for new and better technology to eliminate waste and reduce emissions, and to implement more cost effective corrective actions. Versar’s combined strengths in regulatory policy, risk assessment, information management, pollution control, and treatment technology emphasize pollution prevention and waste reduction. Versar provides nationally recognized expert services in the areas of air and water quality, waste management, natural resources management, ecological assessments, asbestos and lead paint abatement, industrial hygiene and a wide range of corrective and remedial action technologies. Versar also provides consulting and engineering services to industry and government agencies in assessing alternative compliance strategies and their impacts on our customers operations and profits. We help develop plans for customer implementation, obtain necessary permits, evaluate performance, and take any corrective action required. In fiscal year 2002, Versar performed over $5M in environmental and energy engineering support for the Defense Energy Supply Center (DESC) bulk fuel transfer stations and military facilities world-wide. Such services are focused on compliance and pollution prevention. In addition, Versar won a re-bid of its support contract for Wright Patterson AFB and Aeronautical Systems Center. This five-year contract valued at $8.3M requires the Company to provide comprehensive environmental services to Air Force installations nationwide.

     Clean Technology. Versar is a leader in the development of clean technology to solve complex environmental problems. For example, Versar applied an alternative technology and paint formulation for coating mass transit vehicles eliminating the need to install a $6M vapor collection system. Over the last three years, Versar has assisted the U.S. military in the complete redesign of a system to clean oxygen converters and oxygen lines used by military aircraft. The system has eliminated the use of toxic materials, increased the efficiency of the cleaning process, increased the life of equipment, and saved our customers millions of dollars in maintenance costs. In fiscal year 2001, Versar patented the technology developed as part of this project.

     Ecological Restoration. Water quality is one of the emerging global environmental issues of the 21st century. Excessive nutrients and non-point source pollution is severely impacting the natural filtering capability of our aquatic ecosystem, which affects our water quality. Versar has developed specialized expertise in ecological assessment and restoration. For more than 25 years we have supported the States of Maryland, Virginia and Delaware, the U.S. Environmental Protection Agency (EPA), and U.S. Army Corps of Engineers (USACE) in the assessment of the ecological health of the Chesapeake Bay and the development of management practices to restore this endangered ecosystem and to protect it from further harm due to increased development in this region. Versar manages the Chesapeake Bay Monitoring Program that provides scientific support to state regulatory agencies in the development of guidelines for development for protecting the bay. We also have major contracts with the Philadelphia and Baltimore

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Districts of the USACE for the conduct of ecological assessments in support of the disposal of dredge material in the redevelopment of ports and harbors and the restoration of our nation’s beaches. In fiscal year 2000, Versar won the follow-on contract of our Philadelphia District USACE contract valued at $10M and also won a new contract for the Wilmington District of the USACE for similar work valued at $6M.

     Remediation of Industrial Facilities/Military Bases. Versar provides the full range of services in remediation/corrective action, from site investigation and remedial design, to construction, operation and maintenance of remedial systems. One of our major accomplishments in fiscal year 2001 was the award of a new Environmental Remediation and Construction Contract (ENRAC) for the Air Force Center for Environmental Excellence, which is a follow-on to our existing Worldwide Full Service Remedial Action Contract. This contract has an estimated value of $54M over 5 years and we believe constitutes recognition of Versar’s accomplishments as a remedial construction contractor. In fiscal year 2002, Versar received approximately $8M, under this new contract for remedial construction projects. This includes a $4.5M task order to support the Defense Threat Reduction Agency with the Russian weapons destruction program as well as force protection services for the military.

     Versar brings to its customers innovative cleanup solutions that are cost effective and permanent. For example, Versar has successfully demonstrated the effectiveness of a passive reactive barrier consisting of iron fillings placed in a trench to remove halogenated organic compounds from groundwater at Lowry Air Force Base. This eliminated the need to pump and treat the groundwater.

     Outsourcing. Versar is increasingly providing on-site and off-site professional support to help customers manage their environmental programs. Over the last seven years, the Company has provided a full range of pollution prevention, compliance management, cleanup, and O&M services for the Washington, D.C. Metropolitan Area Transit Authority (WMATA). This model project demonstrates how environmental management can be integrated with the customer’s operations on an outsourced basis. Versar has over 50 professional and administrative on-site support staff at various DoD installations and industrial facilities across the country managing a wide spectrum of customers’ environmental management functions ranging from underground storage tanks, asbestos abatement programs, air compliance/permitting, real property transfers, to on-site hazardous material pharmacies.

Architectural and Engineering Services

     Versar has successfully leveraged its environmental technology expertise in designing industrial, commercial, and government facilities for sustainable operations preserving our natural resources. Versar has grown this business from $8M in revenue in fiscal year 2000 to $15M in revenue in fiscal year 2002. This growth is driven by the demand for infrastructure and a shift toward more design build projects. Versar is making the transition from being solely an engineering services company to a general contractor to address market needs for turnkey design-build projects. Of the $15M in revenue earned by this segment in fiscal year 2002, Versar performed over $8M in infrastructure design/construction services.

     Industrial and Public Infrastructure Services is a growing part of our business. This service area includes providing a full range of architectural, engineering, and construction management services in the site development, and design of industrial/commercial facilities and public infrastructure projects. Key industrial sectors that the Company serves include the pharmaceuticals, semi-conductor/internet services, biotechnology, food processing, paper products, film, plastics and fiber industries. Services include architectural design, site development, design, construction or design-build of plant facility, and supporting utility, material handling, and waste management systems.

     Versar provides design expertise in plant structures and associated utilities, fuel handling, chemical treatment, distribution, piping systems instrumentation and controls, substations and electric power distribution systems. Systems are designed to optimize performance, environmental compliance, safety, energy use, and utilization of space. Economic evaluations of alternative designs, fuels, and operating parameters are conducted to produce bottom line savings for our customers throughout the life cycle of heating, cooling and electric power systems.

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     Services are performed for a wide range of corporate, industrial, commercial, state, federal, health care and educational customers. Specific services include:

	•		Retrofit and Renovations
	•		Energy Management Studies and Audits
	•		Fire Protection
	•		Life Safety
	•		Performance Contracting
	•		Life-Cycle Analysis
	•		Heating and Cooling Distribution Systems
	•		Electrical Power and Lighting
	•		Building HVAC Systems

     Public Infrastructure Services include industrial and commercial buildings , municipal storm water, water and wastewater design, and recreational facilities including water parks and skateboard parks.

     Versar was just awarded its third consecutive contract to support the Army on public works projects at Ft. Monmouth, New Jersey and other Army installations in the mid-Atlantic region. The Company recently completed the installation of a major water main at Beale AFB.

     We believe Versar’s Arizona Office has about 95 percent of the Arizona market for designing public recreational water parks. This market also continues to grow rapidly as a result of strong population expansion in the region. Versar also designs other recreational facilities such as skateboard parks.

     Green Energy Services. Energy conservation services not only help diversify the Company’s business, they also provide an entry to new customers in the emerging energy resources management growth market. Versar provides engineering, design, and construction management expertise in the upgrade of plant infrastructure to reduce energy consumption. In addition, Versar has for many years provided demand side management support to utilities in the identification and implementation of efforts to reduce energy consumption. Versar has provided energy auditing and energy conservation services for a variety of clients.

     Major utilities in the ESPC market are driven by the opportunity to develop alliances with government and industry customers as deregulation of this industry occurs in the U.S. The current market in the federal sector is driven by Executive Order 12902 that requires government facilities to reduce energy consumption by 30% by 2005. This has been augmented by a new Executive Order 13123 issued last year requiring that government facilities reduce the amount of green house gases they generate by 50% over the next decade. While energy is still relatively inexpensive, the government will clearly set the example for cost-effective energy investment. However, it is generally believed that over the long term the larger market for energy conservation services will grow in the private and commercial sectors.

Defense Systems

     Personal Protection Equipment/Chemical Demilitarization. A specialty area for the Company is its Chemical Surety Laboratory, and the development of personal protection equipment to support counter-terrorism and the Nation’s Chemical Weapons Demilitarization programs. These programs address significant public health and safety issues and are an important business area for Versar.

     Versar’s subsidiary, GEOMET Technologies, Inc. (GEOMET) is a leader in developing, testing and manufacturing personal protection equipment (PPE). Current projects include development of two PPE ensembles for use in the depots where chemical weapons are stockpiled, and in activities where exposure to chemical agents is likely, such as laboratory work and emergency response. The ensembles include a protective suit, clean air source, radio communications, and a Personal Ice Cooling System (PICS). In July 1998, GEOMET was awarded a $29M contract for the production and fielding of the Army’s Self-Contained Toxic Environment Protection Outfit (STEPO) System

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for 73 installations through the calendar year 2002. GEOMET started production in late fiscal year 1999 and was funded the remaining balance for full-scale production in fiscal year 2000. These protective suits will be used to recover, render safe, store and dispose of unexploded chemical and biological weapons.

     GEOMET is also a commercial supplier of PPE to remedial action contractors and emergency responders, which are qualified for chemical protection. Driven in part by the sarin nerve gas attack on the Tokyo subway in 1995, Versar has significantly expanded GEOMET’s offering of services to local, state, federal, and foreign governments in support of counter-terrorism. Since fiscal year 1998, the Company has been selling protective suits to the National Guard as part of the nation’s counter-terrorism civil defense program. Management believes the opportunities for commercial application of its products and services will continue to grow in this area. In fiscal year 2000, the Company expanded its laboratory capabilities to include biological agents and to broaden our service capability in “Homeland Defense.” In addition, we have PPE products and services available through the Internet at www.nbcprotect.com and are working with foreign manufacturers and vendors to expand our capabilities in this emerging market. In fiscal year 2002, the Company further expanded the biological laboratory operations to respond to the increasing demand as a result of the terrorist biological threats to our nation.

     GEOMET is also involved in the disposal of residual chemical weapons material at sites throughout the United States. GEOMET’s program, which was rebid in fiscal year 2001, includes outfitting and operating a mobile laboratory, which will support the disposal operations, design of air monitoring and warning systems, specification of the PPE to be used, and other assignments dealing with environmental compliance, development of operational procedures, and program management. GEOMET has also recently mobilized support of a chemical demilitarization project in Japan, and we expect other overseas opportunities to result from this initiative.

     Information Technology. Versar is a leader in the architectural and engineering services industry in the application of information technology in enhancing our existing services to our customers and establishing new web-enabled services for the future. We have in place a corporate intranet to manage major projects on-line where project deliverables, drawings, minutes of meetings and threaded discussions are made accessible for the project team and customer. Versar has in-place licensing agreements where we are a reseller of application services to our customers to help them become web-enabled. This technology will allow Versar to be more competitive and provide a platform for the development of new web-based services.

     Versar is currently supporting DTRA in the management of the Russian Solid Rocket Destruction program where we are managing over 6000 documents, drawings and reports with the ability to record and search in the Russian Cyrillic language. Versar is supporting the State of Maryland in the management of the Chesapeake Bay Monitoring Program. Versar hosts the website and links to program technical databases for this program. We have also developed and manage a website for the State of Maryland that collects and displays information on ozone pollution in the atmosphere. We are currently developing a website for an industry trade group which will provide a wide range of environmental information to building managers to help them better manage their energy resources and enhance the comfort of commercial facilities.

Markets

     Versar’s services are evolving in response to clients’ changing needs, and our market opportunities are being driven by the availability of technology aimed at enhancing operating performance and profitability. We have diversified its business over the past few years with a much greater emphasis on (1) environmental services which help our customers’ bottom line, such as pollution prevention initiatives with short paybacks, redevelopment of industry properties and conversion of military bases for alternative productive uses and hands-on remediation and construction services; (2) the emerging energy conservation services markets with alliances and core capabilities to enter this new market; and (3) industrial and public infrastructure services to respond to our clients’ increasing need to expand or upgrade plant and equipment to improve their operating performance.

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     Versar also provides a wide range of services to the financial, real estate and insurance business sector, transportation and communications sector, services industries and others.

     The Department of Defense (DoD) is Versar’s largest government client, making up 57 percent of its revenues. Versar is a major support contractor to DoD, offering it the same range of services as in the private sector. DoD is going through many of the same issues faced by private industry including restructuring and cost reduction in response to increasing budget limitations. DoD also has an aggressive environmental program to cleanup, realign, and close bases worldwide as it continues to restructure to a smaller force. DoD’s major focus over the next few years will be to reduce its infrastructure. Congress is considering additional base consolidation, which will drive more base realignment and closure activity, including cleanup. The EPA constitutes approximately 5 percent of Versar’s revenue, which is growing in new areas such as water quality, risk assessment, and natural resources management. Other Federal clients make up 6 percent of our revenue and include NASA, the Departments of Energy and the Interior, Federal Housing Authority, and Intelligence Agencies. State and local governments comprise 13 percent of Versar’s revenue.

Competition

     Versar traditionally has faced substantial competition in each market in which it operates and expects to continue to face substantial competition as it diversifies its business. Many times, its competitors are larger and have greater financial resources than Versar. In the past few years, there has been major consolidation in the environmental services market. A number of companies have restructured to become private. Versar has historically competed primarily on its scientific, technological, and engineering expertise. As Versar’s business mix shifts more toward providing turnkey infrastructure and resources management support services, Versar will compete with more facility operations and maintenance and engineering and construction contractors on projects that lend themselves to competition based on innovation in approach, technology application, and project financing areas where Versar’s senior management is skilled in packaging responses to new and different opportunities. The market is changing rapidly, and Versar is taking advantage of these changes to position itself for growth in new and emerging markets by providing much needed infrastructure support to industry and government as we enter the 21st century. However, no assurances can be given that Versar will be able to achieve such growth or successfully compete in such new areas.

Backlog

     As of June 30, 2002, total backlog for Versar, including unfunded government tasks and orders, was approximately $287 million, as compared to approximately $300 million as of June 30, 2001, a decrease of four percent. Funded backlog for Versar was approximately $35 million, a decrease of 17 percent compared to approximately $42 million as of June 30, 2001. The decrease is due to the winding down of the Company’s STEP contract in the Defense segment. Approximately $200 million of the contract backlog is not expected to be funded in fiscal year 2003. Funded backlog is the incremental funding authorization of contracts and task orders based on firm contractual obligations. Unfunded backlog includes contracts and contract vehicles, including option periods, in which specific work tasks and funding have not been authorized. Funded backlog amounts have historically resulted in revenues; however, no assurance can be given that all amounts included in funded backlog will ultimately be realized as revenue.

Employees

     At June 30, 2002, Versar has approximately 352 full-time employees, of which seventy-eight percent are engineers, scientists, and other professionals. Seventy percent of the Company’s professional employees have a bachelors degree, twenty-five percent have a masters degree, and five percent have a doctorate degree.

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Item 2. Properties

     The Company’s executive office is located in Springfield, Virginia; a suburb of Washington, D.C. Versar currently leases 68,934 square feet in two buildings from Sarnia Corporation. The rent is subject to a two-percent escalation per year through May 31, 2009.

     As of September 1, 2002, the Company had under lease an aggregate of approximately 185,000 square feet of office and laboratory space in the following locations: Springfield, Lynchburg, Norfolk and Williamsburg, VA; Tempe, AZ; Fair Oaks, CA; Northglenn, CO; Lombard, IL; Columbia, Gaithersburg, Germantown and Williamsport, MD; Oklahoma City, OK; San Antonio, TX; and Horsham and King of Prussia, PA.

Item 3. Legal Proceedings

     In August 1997, Versar entered into a contract with the Trustees for the Environ-Chem Superfund Site that, based upon an existing design, Versar would perform a detailed design, construct and operate a soil vapor extraction system. Subsequently, during the operation phase, Versar was terminated by the Trustees for convenience. The Trustees failed to pay certain invoices and retention due Versar.

     On March 19, 2001, Versar instituted a lawsuit against Roy O. Ball, Trustee of the Environmental Conservation and Chemical Corporation Site Trust Fund and three environmental consulting companies in the U.S. District Court of the Eastern District of Pennsylvania, entitled Versar, Inc. v. Roy O. Ball, Trustee, URS Corporation, Environmental Resources Management and Environ Corp., No. 01CV1302. Versar, in seeking to recover amounts due under a remediation contract from the Trustees of a Superfund site, claiming breach of contract, interference with contractual relationships, negligent misrepresentations, breach of good faith and fair dealing, unjust enrichment and implied contract. Mr. Ball and several defendants moved to dismiss the action or, in the alternative, transfer the action to the U.S. District Court for the Southern District of Indiana. At the same time, on April 20, 2001, the two Trustees filed suit against Versar in the U.S. District Court for the Southern District of Indiana, entitled, Roy O. Ball and Norman W. Berstein, Trustees v. Versar, Inc., Case No. IPO1-0531 C H/G. The Trustees alleged breach of contract and breach of warranty with respect to the remediation contract and asked for a declaratory judgement on a number of the previously stated claims.

     On July 12, 2001, the Federal District Court in Pennsylvania granted defendants’ motion to transfer the Pennsylvania lawsuit and consolidate the two legal actions in Indiana. The Company has filed an answer to the Indiana lawsuit and the plaintiffs and third-party defendants have filed Motions to Dismiss the Company’s counter-claim. The motion is still pending. In the meantime, plaintiffs have filed a Motion for Partial Summary Judgement to which the Company has responded. It too is pending. Written and oral discovery has commenced and is expected to be completed by the end of the year. Trial is scheduled for February 2003. Based upon discussions with outside counsel, management does not believe that any adverse determination under the Trustees’ lawsuit will have a materially adverse effect on the Company’s consolidated financial condition and results of operations.

     Versar and its subsidiaries are parties from time to time to various other legal actions arising in the normal course of business. The Company believes that any ultimate unfavorable resolution of these legal actions will not have a material adverse effect on its consolidated financial condition and results of operations.

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

     No matters were submitted to a vote of the Company’s security holders during the last quarter of fiscal year 2002.

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EXECUTIVE OFFICERS

     The current executive officers of Versar, and their ages as of September 1, 2002, their current offices or positions and their business experience for at least the past five years are set forth below.

     Benjamin M. Rawls, M.B.A., joined Versar as President and Chief Executive Officer in April 1991. He became Chairman of the Board in November 1993. Mr. Rawls relinquished the position of President in November 1999 and Chief Executive Officer in July 2000.

     Theodore M. Prociv, Ph.D., joined Versar as President on November 1, 1999 and was elected Chief Executive Officer on July 1, 2000. From 1995 to August 1998, Dr. Prociv served as the Deputy Assistant to the Secretary of Defense for Chemical and Biological Matters, and subsequently as the Deputy Assistant Secretary of Army for Chemical Demilitarization. Before joining the Department of Defense, Dr. Prociv was Corporate Vice President of Environmental Business at Science Applications International Corporation, (SAIC) 1993-1994, and served as the Vice President for Government Systems at Battelle Memorial Institute 1979-1993.

     Robert L. Durfee, Ph.D., is a co-founder of Versar and has been President of GEOMET Technologies, Inc., a subsidiary of the Company, since 1991.

     Gayaneh Contos, B.S., joined Versar in 1974, was elected Vice President in 1985 and Senior Vice President in 1989. Since 1980, she has been responsible for supervising the majority of the Company’s contracts with EPA. In 2000, she was promoted to Executive Vice President in charge of the Environmental Pillar.

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     Lawrence A. White, P.E., M.E.A., joined Versar in 1992 as Executive Vice President, Corporate Development. From 1990 to 1992, Mr. White was the Senior Vice President, Corporate Development for Dynamac Corporation in the firm’s marketing, sales, proposals, and client development areas and between 1983 and 1990 was Group Vice President of Roy F. Weston, Inc., where he managed major programs and served as principal consultant to numerous government and industrial clients.

     George J. Anastos, Ph.D., P.E. joined Versar in 1996 as a Vice President in charge of Northeast Operations. In 2000, he was promoted to Executive Vice President in charge of the Company’s Architect and Engineering Pillar. From 1992 to 1996, Dr. Anastos was Senior Vice President of Environmental Science & Engineering of Gainesville, Florida responsible for Southeast Group Operations, Laboratories and Remedial Technology & Construction Group. Between 1984 and 1992, he was Vice President of Roy F. Weston, Inc. in charge of Weston Services (Construction Group) and Engineering Group Operations Manager, in West Chester, Pennsylvania.

     Lawrence W. Sinnott, CPA, B.S., joined Versar in 1991 as Assistant Controller. In 1992, he became Corporate Controller. In 1993, he was elected Treasurer and Corporate Controller. In 1994, he became Vice President, Chief Financial Officer and Treasurer. In October 1999, he was elected Senior Vice President. From 1989 to 1991, he was Controller of a venture capital company, Defense Group, Inc.

     James C. Dobbs, J.D., L.L.M., joined Versar in 1992 as Vice President, General Counsel, and Secretary. In October 1999, he was elected Senior Vice President. From 1984 to 1992, Mr. Dobbs was employed by Metcalf & Eddy, Inc. as Vice President and General Counsel where he was responsible for providing legal and regulatory advice to senior management.

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PART II

Item 5. Market for Registrant’s Common Stock and Related Stockholder Matters

Common Stock

     The Company’s common stock is traded on the American Stock Exchange (AMEX), under the symbol VSR. At June 30, 2002, the Company had 838 stockholders of record, excluding stockholders whose shares were held in nominee name. The quarterly high and low sales prices as reported on the AMEX during fiscal years 2002 and 2001 are presented below.

     No cash dividends have been paid by Versar since it began public trading of its stock in 1986. The Board of Directors intends to retain any future earnings for use in the Company’s business and does not anticipate paying cash dividends in the foreseeable future. Under the terms of the Company’s revolving line of credit, approval would be required from the Company’s primary bank for the payment of any dividends.

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Item 6. Selected Financial Data (unaudited)

     The selected consolidated financial data set forth below should be read in conjunction with Versar’s consolidated financial statements and notes thereto beginning on page F-2 of this report. The financial data is as follows:

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Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

     This report contains certain forward-looking statements which are based on current expectations. Actual results may differ materially. The forward-looking statements include those regarding the continued award of future work or task orders from government and private clients, cost controls and reductions, the expected resolution of delays in billing of certain projects, the possible impact of current and future claims against the Company based upon negligence and other theories of liability, and the possibility of the Company making acquisitions during the next 12 to 18 months. Forward-looking statements involve numerous risks and uncertainties that could cause actual results to differ materially, including, but not limited to, the possibilities that the demand for the Company’s services may decline as a result of possible changes in general and industry specific economic conditions and the effects of competitive services and pricing; the failure of the Federal Government to fund certain defense, homeland defense, and environmental programs; a general economic slowdown; the ability to perform work within budget or contractual limitations; one or more current or future claims made against the Company may result in substantial liabilities; the possibility that acquired entities may not perform as well as expected; the ability to attract and retain key professional employees; and such other risks and uncertainties as are described in reports and other documents filed by the Company from time to time with the Securities and Exchange Commission.

     Versar’s gross revenue for fiscal year 2002 totaled $67,988,000, a $2,172,000 (3%) increase compared to gross revenue of $65,816,000 for fiscal year 2001. Gross revenue for fiscal year 2001 increased by $9,667,000 (17%) over that reported in fiscal year 2000. The increase in gross revenues in fiscal year 2002 is due to increased revenues in the Company’s Defense segment of approximately $2,600,000 and increased revenues of approximately $3,300,000 in the Company’s Architecture and Engineering segment offset by a reduction in gross revenues in the Company’s Environmental segment of approximately $3,800,000. The decrease is due to the completion of remedial construction work that had no follow on replacement work for that customer. The increase in the Defense segment is attributable to the growth in the Company’s Homeland Defense business activities. The increase in the Architecture and Engineering segment is attributable to increased design and construction work. The increase in gross revenue in fiscal year 2001 was primarily in the environmental segment due to increases in remedial construction and U.S. Environmental Protection Agency work.

     Purchased services and materials for fiscal year 2002 totaled $29,799,000 (13%) higher than fiscal year 2001 purchased services. Purchased services and materials for fiscal year 2001 increased by $7,973,000 (43%) over fiscal year 2000. The increase in purchased services in fiscal year 2002 is attributable to the increased construction activities in the Architecture and Engineering segment during the year. The increase in fiscal year 2001 was primarily due to increased environmental remedial construction work during the year.

     Net service revenue is derived by deducting the costs of purchased services from gross revenue. Versar considers it appropriate to analyze operating margins and other ratios in relation to net service revenue, because such revenues reflect the actual work performed by the Company’s labor force. Net service revenues decreased by 3% in fiscal year 2002 due to the decrease in gross revenue as mentioned above in the Company’s Environmental segment, which carried higher profits on purchased services.

     Direct costs of service and overhead include the cost to Versar of direct and overhead staff, including recoverable and unallowable costs that are directly attributable to contracts. The percentage of these costs to net service revenue increased to 81.8% in fiscal year 2002 compared to 81.2% in fiscal year 2001 and 81.4% in fiscal year 2000. The increase in the percentage in fiscal year 2002 is due to additional project reserves that were required due to disputed receivables and worsening economic conditions in the commercial sector. These reserves caused the Company to incur a loss in the fourth quarter of fiscal year 2002. The decrease in direct costs of services and overhead in fiscal year 2002 was due to the higher net service revenues from fiscal year 2001.

13

     Selling, general and administrative expenses approximated 16.5% of net service revenue in fiscal year 2002, compared to 16.3% in fiscal year 2001 and 16.7% in fiscal year 2000. The slight increase in 2002 is attributable to the reduction of net service revenue in fiscal year 2002 as mentioned above. The decrease in fiscal year 2001 was attributable to the 4% increase in net service revenue in fiscal year 2001. Selling, general and administrative expenses have been relatively stable for the past three fiscal years and have had minimal fluctuations with the Company’s business volume.

     In fiscal year 2001, the Company recorded a non-recurring charge against income of $1,320,000 as a result of a settlement of a lawsuit with TAMS Consultants, Inc. The non-recurring charge consists of a $1,000,000 settlement and legal costs of $320,000. (Refer to Note K of the Notes to Financial Statements for further information).

     Operating income for fiscal year 2002 was $619,000, compared to an operating loss of $352,000 in fiscal year 2001. Without the non-recurring charge, operating income for fiscal year 2001 would have been $968,000. The decrease in fiscal year 2002 operating income when compared to fiscal year 2001, as adjusted, is attributable to lower net service revenue and higher percentage of direct costs of services and overhead in fiscal year 2002 as mentioned above. Adjusted fiscal year 2001 operating income of $968,000 was $240,000 higher than operating income of $728,000 in fiscal year 2000 as a result of higher net service revenue in fiscal year 2001.

     Interest expense during fiscal year 2002 was $203,000, a decrease of $235,000 from fiscal year 2001. The decrease is attributable to lower interest rates, decreased utilization of the Company’s line of credit during the year and proceeds the Company received from the exercise of stock options and new equity. (Refer to Note G of the Notes to Financial Statements). In fiscal year 2001, interest expense decreased by $88,000 compared to fiscal year 2000. The decrease is due to lower interest rates in fiscal year 2001.

     Versar’s tax expense for fiscal year 2002 was $257,000 compared to $240,000 for the prior fiscal year. The company’s effective tax rate for fiscal year 2002 was 46.7%. In fiscal year 2001, the Company increased its tax valuation allowance by approximately $557,000 as a result of the reduced financial performance for the past two fiscal years. The Company carries a substantial valuation allowance of approximately $3,105,000, on deferred tax assets. The Company had released $200,000 of the valuation allowance in fiscal year 2000, when the Company’s earnings were at higher levels. (Refer to Note I of the Notes to Financial Statements for further information).

     In fiscal year 2002, the Company recorded a loss from discontinued operations of $80,000, net of tax of $50,000 due to a requirement for additional accruals in order to wind down a benefit plan of Science Management Corporation (SMC), former subsidiary of the Company. In fiscal year 2001, the Company reversed $243,000 (net of tax of $150,000) of reserves that had been set up in fiscal year 1998 associated with the discontinuance of SMC.

     In summary, Versar’s net income for fiscal year 2002 was $79,000, compared to a net loss of $787,000 in fiscal year 2001 and net income of $340,000 in fiscal year 2000.

14

REVENUE

     Versar provides professional services to various industries, government and commercial clients. A summary of revenue generated from the Company’s client base is as follows:

Liquidity and Capital Resources

     The Company’s continuing operations generated $1,176,000 in cash in fiscal year 2002. In addition, the Company received aggregate proceeds from the issuance of stock due to the exercise of options and a private placement of common stock of $1,875,000. Of the $3,051,000 aggregate cash, approximately $724,000 was used to invest in property, plant and equipment with a majority of the balance used to pay down the Company’s line of credit by $1,904,000.

     During fiscal year 2002, the Company used long-term bank financing to supplement its day to day operating cash requirements. At June 30, 2002, the Company had $6,600,000 of working capital, compared to $7,073,000 in fiscal year 2001. Working capital decreased primarily due to improved collections of receivables, which proceeds were used to reduce the Company’s long-term line of credit.

     Versar’s line of credit with the Bank of America (Bank) provides for advances up to $6,500,000 based on qualifying receivables. Interest on the borrowings is based on the lower of the 30 day London Interbank Offered Rate (LIBOR) plus two hundred and seventy-five basis points (4.59% at June 28, 2002). A commitment fee of 1/4% on the unused portion of the line of credit is also charged. The line is guaranteed by the Company and each subsidiary individually and is collectively secured by accounts receivable, equipment and intangibles, plus all insurance policies on property constituting collateral. Unused borrowing availability at June 30, 2002 was approximately $4,641,000. Advances under the line are due upon demand or on November 30, 2003. The loan has certain covenants related to maintenance of financial ratios. In June 2002, the Company had to obtain a waiver of its financial covenants under its line of credit as a result of a loss incurred in the fourth quarter of fiscal year 2002. Management believes that cash generated by operations and borrowings available from the Bank line of credit will be adequate to meet the working capital needs for fiscal year 2003.

Impact of Inflation

     Versar seeks to protect itself from the effects of inflation. The majority of contracts the Company performs are for a period of a year or less or are cost plus fixed-fee type contracts and, accordingly, are less susceptible to the effects of inflation. Multi-year contracts provide for projected increases in labor and other costs.

15

Business Segments

     Versar currently has three business segments: environmental services, architecture and engineering, and defense. The details on these segments is in Note B of the Notes to the Consolidated Financial Statements.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

     The Company has not entered into any transactions using derivative financial instruments or derivative commodity instruments and believes that its exposure to interest rate risk and other relevant market risk is not material.

Item 8. Financial Statements and Supplementary Data

     The consolidated financial statements and supplementary data begin on page F-2 of this report.

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

     Form 8-K, which terminated the Company’s audit relationship with Arthur Andersen LLP and appointed Grant Thornton LLP as the Company’s auditors filed on June 14, 2002.

PART III

Item 10. Directors and Executive Officers of the Registrant

     Information required by this item with respect to directors of the Company will be contained in the Company’s Proxy Statement for its 2002 Annual Meeting of Stockholders, which is expected to be filed with the Commission not later than 120 days after the Company’s 2002 fiscal year end and is incorporated herein by reference.

     Information required by this item with respect to executive officers of the Company is included in Part I of this report and is incorporated herein by reference.

     For the purpose of calculating the aggregate market value of the voting stock of Versar held by non-affiliates as shown on the cover page of this report, it has been assumed that the directors and executive officers of the Company and the Company’s Employee Savings and Stock Ownership Plan are the only affiliates of the Company. However, this is not an admission that all such persons are, in fact, affiliates of the Company.

Item 11. Executive Compensation

Item 12. Security Ownership of Certain Beneficial Owners and Management

Item 13. Certain Relationships and Related Transactions

     Information required by these items is incorporated herein by reference to the Company’s Proxy Statement for its 2002 Annual Meeting of Stockholders which is expected to be filed with the Commission not later than 120 days after the end of the Company’s 2002 fiscal year.

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PART IV

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

(A)(1) Financial Statements:

             The consolidated financial statements and financial statement schedules of Versar, Inc. and Subsidiaries are filed as part of this report and begin on page F-1.

	a)		Report of Independent Public Accountants
	b)		Consolidated Balance Sheets as of June 30, 2002 and 2001
	c)		Consolidated Statements of Operations for the Years Ended June 30, 2002, 2001, and 2000
	d)		Consolidated Statements of Changes in Stockholders’ Equity for the Years Ended June 30, 2002, 2001, and 2000
	e)		Consolidated Statements of Cash Flows for the Years Ended June 30, 2002, 2001, and 2000
	f)		Notes to Consolidated Financial Statements

(2)  Financial Statement Schedules:

a)

Schedule II — Valuation and Qualifying Accounts for the Years Ended June 30, 2002, 2001, and 2000

	All other schedules, except those listed above, are omitted because they are not applicable or the required information is shown         in the consolidated financial statements or notes thereto.

(3)  Exhibits:

	The exhibits to this Form 10-K are set forth in a separate Exhibit Index which is included on pages 18 through 21 of this report.

(B)  Reports on Form 8-K

     Form 8-K, which reported the termination of the Company’s audit relationship with Arthur Andersen LLP and the appointment of Grant Thornton LLP as the Company’s auditors filed on June 14, 2002.

17

Exhibit Index

18

19

(A)		Incorporated by reference to the similarly numbered exhibit to the Registrant’s Form S-1 Registration Statement (“Registration Statement”) effective November 20, 1986 (File No. 33-9391).
(B)		Incorporated by reference to the similarly numbered exhibit to the Registrant’s Form 10-K Annual Report for the Fiscal Year Ended June 30, 1987 (“FY 1987 Form 10-K”) filed with the Commission on September 28, 1987.
(C)		Incorporated by reference to the similarly numbered exhibit to the Registrant’s Form 10-K Annual Report for the Fiscal Year Ended June 30, 1988 (“FY 1988 Form 10-K”) filed with the Commission on September 28, 1988.
(D)		Incorporated by reference to the similarly numbered exhibit to the Registrant’s Form 10-K Annual Report for the Fiscal Year Ended June 30, 1989 (“FY 1989 Form 10-K”) filed with the Commission on September 28, 1989.
(E)		Incorporated by reference to the similarly numbered exhibit to the Registrant’s Form 10-K Annual Report for the Fiscal Year Ended June 30, 1990 (“FY 1990 Form 10-K”) filed with the Commission on September 28, 1990.
(F)		Incorporated by reference to the similarly numbered exhibit to the Registrant’s Form 10-Q for the quarter ended September 30, 1989 (“1st Quarter FY 1990 Form 10-Q”).
(G)		Incorporated by reference to the similarly numbered exhibit to the Registrant’s Form 10-K Annual Report for the Fiscal Year Ended June 30, 1991 (“FY 1991 Form 10-K”) filed with the Commission on October 15, 1991.
(H)		Incorporated by reference to the similarly numbered exhibit to the Registrant’s Form 10-K Annual Report for Fiscal Year Ended June 30, 1992 (“FY 1992 Form 10-K”) filed with the Commission on September 28, 1992.

20

(I)		Incorporated by reference to the similarly numbered exhibit to the Registrant’s Form 10-K Annual Report for Fiscal Year Ended June 30, 1993 (“FY 1993 Form 10-K”) filed with the Commission on September 22, 1993.
(J)		Incorporated by reference Sarnia Corporation Information Statement for distribution to shareholders of Versar, Inc. of the outstanding shares of its wholly-owned subsidiary, Sarnia Corporation, dated June 30, 1994.
(K)		Incorporated by reference to the similarly numbered exhibit to the Registrant’s Form 10-K Annual Report for Fiscal Year Ended June 30, 1994 (“FY 1994 Form 10-K”) filed with the Commission on September 27, 1994.
(L)		Incorporated by reference to the similarly numbered exhibit to the Registrant’s Form 10-K/A Annual Report for Fiscal Year Ended June 30, 1994 (“FY 1994 Form 10-K/A”) filed with the Commission on May 31, 1995.
(M)		Incorporated by reference to the similarly numbered exhibit to the Registrant’s Form 10-K Annual Report for Fiscal Year Ended June 30, 1995 (“FY 1995 Form 10-K”) filed with the Commission on September 28, 1995.
(N)		Incorporated by reference to the similarly numbered exhibit to the Registrant’s Form 10-K Annual Report for Fiscal Year Ended June 30, 1996 (“FY 1996 Form 10-K”) filed with the Commission on September 24, 1996.
(O)		Incorporated by reference to the similarly numbered exhibit to the Registrant’s Form S-4 registration number 333-33167.
(P)		Incorporated by reference to similarly numbered exhibit to the Registrant’s Form 10-K Annual Report for Fiscal Year Ended June 30, 1997 (“FY 1997 Form 10-K”) filed with the Commission on September 29, 1997.
(Q)		Incorporated by reference to similarly numbered exhibit to the Registrant’s Form 10-K Annual Report for Fiscal Year Ended June 30, 1998 (“FY1998 Form 10-K”) filed with the Commission on September 28, 1998.
(R)		Incorporated by reference to similarly numbered exhibit to the Registrant’s Form 10-K Annual Report for Fiscal Year Ended June 30, 1999 (“FY1999 Form 10-K”) filed with the Commission on September 17, 1999.
(S)		Incorporated by reference to similarly numbered exhibit to the Registrant’s Form 10-K/A Annual Report for Fiscal Year Ended June 30, 1999 (“FY1999 Form 10K/A”) filed with the Commission on September 1, 2000.
(T)		Incorporated by reference to similarly numbered exhibit to the Registrant’s Form 10-K Annual Report for Fiscal Year Ended June 30, 2000 (“FY2000 Form 10-K”) filed with the Commission on September 26, 2000.
(U)		Incorporated by reference to similarly numbered exhibit to the Registrant’s Form 10-K Annual Report for Fiscal Year Ended June 30, 2001 (“FY2001 Form 10-K”) filed with the Commission on September 28, 2001.

21

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.

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 registrant in the capacities and on the dates indicated.

22

23

Section 302 Certification

I, Theodore M. Prociv, certify that:

1.     I have reviewed this annual report on Form 10-K of Versar, Inc.;

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

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

September 6, 2002

24

Section 302 Certification

I, Lawrence W. Sinnott, certify that:

1.     I have reviewed this annual report on Form 10-K of Versar, Inc.;

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

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

September 6, 2002

25

Report of Independent Certified Public Accountants

Board of Directors
Versar, Inc.

We have audited the accompanying consolidated balance sheet of Versar, Inc. (a Delaware corporation) and subsidiaries as of June 30, 2002, and the related consolidated statements of operations, changes in stockholders’ equity and cash flows for the year then ended. 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. The consolidated financial statements of Versar, Inc. and subsidiaries as of June 30, 2001, and for the years ended June 30, 2001 and 2000, were audited by other auditors whose report dated September 7, 2001, expressed an unqualified opinion on those statements.

We conducted our audit in accordance with auditing standards generally accepted in the United States of America. 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 consolidated 2002 financial statements referred to above present fairly, in all material respects, the consolidated financial position of Versar, Inc. and subsidiaries as of June 30, 2002, and the consolidated results of their operations and their cash flows for the year then ended, in conformity with accounting principles generally accepted in the United States of America.

We have also audited Schedule II for the year ended June 30, 2002. In our opinion, this schedule, when considered in relation to the basic consolidated financial statements taken as a whole, presents fairly, in all material respects, the information therein.

Vienna, Virginia
September 6, 2002

F-1

Report of Independent Public Accountants

To the Board of Directors and Stockholders of Versar, Inc.:

We have audited the accompanying consolidated balance sheets of Versar, Inc. (a Delaware corporation) and its subsidiaries as of June 30, 2001 and 2000, and the related consolidated statements of operations, changes in stockholders’ equity, and cash flows for the three years ended June 30, 2001. 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 audits.

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

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Versar, Inc. and its subsidiaries as of June 30, 2001 and 2000, and the results of their operations and their cash flows for the three years ended June 30, 2001, in conformity with accounting principles generally accepted in the United States.

Our audit was made for the purpose of forming an opinion on the basic financial statements taken as a whole. Schedule II, as listed in Item 14 of the Form 10-K, is presented for purposes of complying with the Securities and Exchange Commission’s rules and is not part of the basic financial statements. This schedule has been subjected to the auditing procedures applied in our audit of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole and the financial data required to be set forth therein.

Vienna, Virginia
September 7, 2001

This Report of Independent Certified Public Accountants is a copy of a previously issued Arthur Andersen LLP (“Andersen”) report and has not been reissued by Andersen. The inclusion of this previously issued Andersen report is pursuant to the “Temporary Final Rule and Final Rule: Requirements for Arthur Andersen LLP Auditing Clients,” issued by the U.S. Securities and Exchange Commission in March 2002. Note that this previously issued Andersen report includes references to certain fiscal years, which are not required to be presented in the accompanying consolidated financial statements as of and for the fiscal years ended March 31, 2002.

F-2

VERSAR, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
(In thousands, except share and per share amounts)

The accompanying notes are an integral part of these consolidated financial statements.

F-3

VERSAR, INC. AND SUBSIDIARIES
Consolidated Statements of Operations
(In thousands, except per share amounts)

The accompanying notes are an integral part of these consolidated inancial statements.

F-4

VERSAR, INC. AND SUBSIDIARIES
Consolidated Statements of Changes in Stockholders’ Equity
(In thousands)

The accompanying notes are an integral part of these consolidated financial statements.

F-5

VERSAR, INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows
(In thousands)