Versar : Announces Fiscal Year 2016 Financial Results

NEWS RELEASE

FOR IMMEDIATE RELEASE March 28, 2017

Offices Headquarters Springfield, VA

Inside the U.S.

Aiea, HI Atlanta, GA Boise, ID Chandler, AZ Charleston, SC Columbia, MD Denver, CO Dulles, VA

El Paso, TX Germantown, MD Newport News, VA Oceanside, CA Richardson, TX San Antonio, TX South Easton, MA

Outside the U.S. Baghdad, Iraq Kabul, Afghanistan Clark, Philippines Milton Keynes, UK VERSAR, INC. ANNOUNCES FISCAL YEAR 2016 FINANCIAL RESULTS Springfield, VA - March 28, 2017 - Versar, Inc. (NYSE MKT: VSR) today announced financial results for the fourth quarter and fiscal year ended July 1, 2016

• FY16 Gross Revenue of $167.9 Million

• Funded Backlog of $136 Million as of July 1, 2016

• FY16 Operating Loss (before taxes) of $36.6 Million

• FY16 Adjusted EBITDA of $3.6 Million1

Additionally, Versar reiterated that it expects to adhere to its previously announced timeline for completing its remaining delinquent filings. The Company continues to work towards filing its Form 10-Q for the first fiscal quarter ended September 30, 2016 and the second fiscal quarter ended December 30, 2016 by the end of April. At that time, Versar expects to return to being on-time in its filings and meeting the requirements of both the Securities and Exchange Commission and the New York Stock Exchange.

Consistent with its obligations to its lender, Bank of America, N.A., the Company continues to seek a replacement credit facility or other financial arrangement. In parallel, Versar has successfully implemented improvements to its cost structure, financial strength and business focus, making it a leaner, more focused company to maximize profitable growth at scale and optimize its funded backlog, standing at $136 million as of July 1, 2016.

Financial Results

Fiscal 2016 gross revenue increased 5% to $167.9 million, compared to revenues of $159.9 million in fiscal 2015. Versar Security Systems (VSS) and the Dover Air Force Base (DAFB) projects contributed primarily to this increase. These two elements of the Company's business also contributed to the increase in Purchased Services and Materials from $90.3 million in fiscal 2015 to $107.2 million in fiscal 2016. VSS requires the purchase of services and equipment to provide its specialized security services and the DAFB project requires significant use of subcontracted services. The increase in Purchased Services and Materials, along with a number of other non-recurring charges, resulted in a decrease in gross profit from $13.8 million in fiscal 2015 to $3.2 million in fiscal 2016. The non-recurring charges include a loss of $2.1 million in in our PPS subsidiary, which we are in the process of divesting, $0.9 million to complete the Homestead Air Force Base project, which we obtained as part of the GMI acquisition, $1.2 million for a dispute involving working capital adjustments in the acquisition of GMI, and $1.3 million in contingency accruals related to ESG projects.

Selling, General and Administrative (SG&A) expenses increased from fiscal 2015 by approximately $2.0 million to $13.0 million in fiscal 2016. This increase can be evenly attributed to: (1) acquisition and integration costs for VSS, (2) fees associated with borrowings from Bank of America, and (3) costs associated with exiting leased facilities that the Company no longer

1 Non-GAAP metric - see definition at end of this earnings release

For more information, please contact Investor Relations at:

6850 Versar Center, Suite 201 Springfield, VA 22151 703.642.6706 [e-mail] www.versar.com

required. Operating Loss in fiscal 2016 was $35.9 million, compared to operating income of $2.8 million in fiscal 2015. This swing is the result of three non-cash one-time write downs: (1) Goodwill associated with previous acquisitions, (2) Intangibles associated with previous acquisitions, and (3) the loss on a potential sale of the PPS subsidiary, since the subsidiary is currently classified as held for sale.

These non-cash one-time write downs flowed through to Net Income and Earnings/Loss Per Share. Fiscal 2016 Net Loss was $37.9 million, compared with Net Income of $1.4 million in fiscal 2015. Fiscal 2015 earnings per share were $0.14, while fiscal 2016 loss per share was

$3.84.

Versar CEO, Tony Otten, said, "We are pleased to be able to share our financial results with the public as we continue our drive to return to profitability. Versar continues to provide superb services to a wide variety of clients throughout the world and we're excited about taking the next steps in our corporate growth."

To assist our investors and other users of our financial statements, we have provided a non- GAAP metric to show company performance without the non-cash and one-time write-downs. We are calling this metric Adjusted EBITDA. More details can be found at the end of this earnings release.

Conference Call

Versar will host a conference call today, March 28, 2017 at 2:00 p.m. Eastern Time to discuss its operational performance and financial results for fourth quarter and fiscal year ended July 1, 2016.

The dial in number for the U.S. and Canada is toll free, 866-682-6100. The international dial in number is 862-255-5401. Participants should call in a few minutes before 2:00 PM Eastern Time.

For those unable to attend the conference call, a replay of the teleconference will be available until April 11, 2017 and may be accessed domestically by dialing 877-481-4010 and international callers may dial 919-882-2331. Callers must enter conference ID number 10266. Additionally, the replay will be available on Versar's Investor Relations website, http://www.versar.com/investorrelations/index.html.

VERSAR, INC., headquartered in Springfield, Virginia, is a publicly-traded global project management company providing sustainable value oriented solutions to government and commercial clients in the construction management, environmental services, and professional services market areas. VERSAR operates the following websites: www.versar.com and www.versarpps.com.

Find out more about VERSAR at

https://twitter.com/VersarInc https://www.facebook.com/VersarInc http://www.linkedin.com/company/38251

This news release contains forward-looking information. The forward-looking statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements may be significantly impacted by certain risks and uncertainties described herein and in Versar's Annual Report on Form 10-K filed with the Securities and Exchange Commission for the fiscal year ended July 1, 2016, as updated from

time to time in the Company's periodic filings. The forward-looking statements are made as of the date hereof and Versar does not undertake to update its forward-looking statements.

Contact: Karin Weber Robert Ferri

M&A, Investor Relations Manager Robert Ferri Partners Versar, Inc. [phone]

[phone] [e-mail] [e-mail]

VERSAR, INC. AND SUBSIDIARIES Consolidated Balance Sheets (In thousands, except share amounts)	As of
July 1, 2016	June 26, 2015
SSETS Current assets Cash and cash equivalents $ 1,549 $ 2,109
Accounts receivable, net	47,675	57,171
Inventory, net	221	1,188
Prepaid expenses and other current assets	1,007	1,540
Deferred income taxes	-	1,366
Income tax receivable	1,513	2,373
Total current assets	51,965	65,747
Property and equipment, net	1,328	2,084
Deferred income taxes, non-current	-	414
Goodwill	-	16,066
Intangible assets, net	7,248	4,643
Other assets	775	252
Total assets	$ 61,316	$ 89,206
IABILITIES AND STOCKHOLDERS' EQUITY Current liabilities Accounts payable $ 18,156 $ 35,852
Billings in excess of revenue	7,156	-
Accrued salaries and vacation	2,478	3,332
Bank line of credit	14,854	-
Notes payable, current	3,831	2,313
Other current liabilities	7,724	1,114
Total current liabilities	54,199	42,611
Notes payable, non-current	2,494	5,835
Other long-term liabilities	3,555	1,390
Total liabilities	60,248	49,836
Commitments and contingencies

A

L

Stockholders' equity