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| R      | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIESEXCHANGE ACT OF 1934                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|   | FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2010                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|   | OR                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
| £ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIESEXCHANGE ACT OF 1934                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|   | FOR THE TRANSITION PERIOD FROM                                                                                           TO                  |

| MASSACHUSETTS                                                  | 04-2211809                           |
|----------------------------------------------------------------|--------------------------------------|
| (State or other jurisdiction of Incorporation or organization) | (I.R.S. Employer Identification No.) |

| Large accelerated filer | £                                               | Accelerated filer  R              |
|-------------------------|------------------------------------------------------|---------------------------------------------|
| Non-accelerated filer   | £ (Do not check if a smaller reporting company) | Smaller reporting company  £ |

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DYNAMICS RESEARCH CORPORATION

|                          |     |                                                                                                                                                              | Page   |
|-------------------------------|----------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
| Part I. Financial Information |     |
|                          | Item 1.  | Financial Statements                                                                                                                                              |   |
|                          |     | Condensed Consolidated Balance Sheets as of June 30, 2010 (unaudited) and December 31, 2009                                                                       | 3      |
|                          |     | Condensed Consolidated Statements of Operations for the three and six months ended June 30, 2010 and 2009 (unaudited)                                             | 4      |
|                          |     | Condensed Consolidated Statements of Changes in Stockholders’ Equity and Comprehensive Income for the three months ended June 30, 2010 and 2009 (unaudited) | 5      |
|                          |     | Condensed Consolidated Statements of Changes in Stockholders’ Equity and Comprehensive Income for the six months ended June 30, 2010 and 2009 (unaudited)   | 6      |
|                          |     | Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2010 and 2009 (unaudited)                                                       | 7      |
|                          |     | Notes to Condensed Consolidated Financial Statements (unaudited)                                                                                                  | 8      |
|                          | Item 2.  | Management’s Discussion and Analysis of Financial Condition and Results of Operations                                                                       | 17     |
|                          | Item 3.  | Quantitative and Qualitative Disclosures About Market Risk                                                                                                        | 23     |
|                          | Item 4.  | Controls and Procedures                                                                                                                                           | 24     |
|                          |     |
| Part II. Other Information    |     |
|                          | Item 1.  | Legal Proceedings                                                                                                                                                 | 25     |
|                          | Item 1A. | Risk Factors                                                                                                                                                      | 25     |
|                          | Item 2.  | Unregistered Sales of Equity Securities and Use of Proceeds                                                                                                       | 25     |
|                          | Item 6.  | Exhibits                                                                                                                                                          | 26     |

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Table of Contents

DYNAMICS RESEARCH CORPORATION

|                                                                                                                                                                     |   | June 30, 2010 |    |   | December 31, 2009 |   |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|---------------|---------|--------|-------------------|--------|
|                                                                                                                                                                     |   | (unaudited)   |    |   |              |   |
| Assets                                                                                                                                                                   |   |          |    |   |              |   |
| Current assets                                                                                                                                                           |   |          |    |   |              |   |
| Cash and cash equivalents                                                                                                                                                |   | $             | 7,411   |   |              | $      | 55 |   |
| Contract receivables, net                                                                                                                                                |   |          | 61,928  |   |              |   | 72,569 |   |
| Prepaid expenses and other current assets                                                                                                                                |   |          | 5,104   |   |              |   | 5,702 |   |
| Discontinued operations                                                                                                                                                  |   |          | 2,026   |   |              |   | 2,058 |   |
| Total current assets                                                                                                                                                     |   |          | 76,469  |   |              |   | 80,384 |   |
| Noncurrent assets                                                                                                                                                        |   |          |    |   |              |   |   |   |
| Property and equipment, net                                                                                                                                              |   |          | 13,053  |   |              |   | 13,915 |   |
| Goodwill                                                                                                                                                                 |   |          | 97,641  |   |              |   | 97,641 |   |
| Intangible assets, net                                                                                                                                                   |   |          | 3,303   |   |              |   | 4,074 |   |
| Deferred tax asset                                                                                                                                                       |   |          | 4,129   |   |              |   | 4,252 |   |
| Other noncurrent assets                                                                                                                                                  |   |          | 3,057   |   |              |   | 3,335 |   |
| Total noncurrent assets                                                                                                                                                  |   |          | 121,183 |   |              |   | 123,217 |   |
| Total assets                                                                                                                                                             |   | $             | 197,652 |   |              | $      | 203,601 |   |
|                                                                                                                                                                     |   |          |    |   |              |   |   |   |
| Liabilities and stockholders' equity                                                                                                                                     |   |          |    |   |              |   |   |   |
| Current liabilities                                                                                                                                                      |   |          |    |   |              |   |   |   |
| Current portion of long-term debt                                                                                                                                        |   | $             | 8,000   |   |              | $      | 8,000 |   |
| Accounts payable                                                                                                                                                         |   |          | 14,986  |   |              |   | 18,299 |   |
| Accrued compensation and employee benefits                                                                                                                               |   |          | 15,426  |   |              |   | 16,357 |   |
| Deferred taxes                                                                                                                                                           |   |          | 4,638   |   |              |   | 7,046 |   |
| Other accrued expenses                                                                                                                                                   |   |          | 4,381   |   |              |   | 3,708 |   |
| Discontinued operations                                                                                                                                                  |   |          | 300     |   |              |   | 186 |   |
| Total current liabilities                                                                                                                                                |   |          | 47,731  |   |              |   | 53,596 |   |
| Long-term liabilities                                                                                                                                                    |   |          |    |   |              |   |   |   |
| Long-term debt                                                                                                                                                           |   |          | 18,000  |   |              |   | 23,973 |   |
| Other long-term liabilities                                                                                                                                              |   |          | 30,988  |   |              |   | 31,936 |   |
| Total long-term liabilities                                                                                                                                              |   |          | 48,988  |   |              |   | 55,909 |   |
| Total liabilities                                                                                                                                                        |   |          | 96,719  |   |              |   | 109,505 |   |
| Commitments and contingencies                                                                                                                                            |   |          |    |   |              |   |   |   |
| Stockholders' equity                                                                                                                                                     |   |          |    |   |              |   |   |   |
| Preferred stock, $0.10 par value; 5,000,000 shares authorized; no shares issued and outstanding                                                                          |   |          | -       |   |              |   | - |   |
| Common stock, $0.10 par value; 30,000,000 shares authorized; 10,017,652 and 9,923,357 shares issued and outstanding at June 30, 2010 and December 31, 2009, respectively |   |          | 1,002   |   |              |   | 992 |   |
| Capital in excess of par value                                                                                                                                           |   |          | 53,789  |   |              |   | 52,580 |   |
| Accumulated other comprehensive loss, net of taxes                                                                                                                       |   |          | (20,508 | )      |              |   | (20,505 | ) |
| Retained earnings                                                                                                                                                        |   |          | 66,650  |   |              |   | 61,029 |   |
| Total stockholders' equity                                                                                                                                               |   |          | 100,933 |   |              |   | 94,096 |   |
| Total liabilities and stockholders' equity                                                                                                                               |   | $             | 197,652 |   |              | $      | 203,601 |   |

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DYNAMICS RESEARCH CORPORATION

|                                                                |   | Three Months EndedJune 30, 2010 |       |   | Three Months EndedJune 30, 2009 |   |      | Six Months Ended June 30, 2010 |   |   | Six Months EndedJune 30, 2009 |   |
|---------------------------------------------------------------------|--------|---------------------------------|------------|--------|---------------------------------|--------|-----------|--------------------------------|--------|--------|-------------------------------|--------|
| Revenue                                                             |   | $                               | 65,308     |   |                            | $      | 68,128    |                           |   | $      | 133,892                       |   |   | $ | 135,331 |   |
| Cost of revenue                                                     |   |                            | 55,111     |   |                            |   | 57,015    |                           |   |   | 112,938                       |   |   |   | 112,958 |   |
| Gross profit                                                        |   |                            | 10,197     |   |                            |   | 11,113    |                           |   |   | 20,954                        |   |   |   | 22,373 |   |
|                                                                |   |                            |       |   |                            |   |      |                           |   |   |                          |   |   |   |   |   |
| Selling, general and administrative expenses                        |   |                            | 5,080      |   |                            |   | 6,211     |                           |   |   | 11,036                        |   |   |   | 12,522 |   |
| Amortization of intangible assets                                   |   |                            | 386        |   |                            |   | 972       |                           |   |   | 771                           |   |   |   | 1,945 |   |
| Operating income                                                    |   |                            | 4,731      |   |                            |   | 3,930     |                           |   |   | 9,147                         |   |   |   | 7,906 |   |
| Interest expense, net                                               |   |                            | (367       | )      |                            |   | (477      | )                              |   |   | (743                          | )      |   |   | (1,096 | ) |
| Other income (expense), net                                         |   |                            | (30        | )      |                            |   | 282       |                           |   |   | 83                            |   |   |   | 321 |   |
| Income from continuing operations before provision for income taxes |   |                            | 4,334      |   |                            |   | 3,735     |                           |   |   | 8,487                         |   |   |   | 7,131 |   |
| Provision for income taxes                                          |   |                            | 1,755      |   |                            |   | 1,561     |                           |   |   | 3,171                         |   |   |   | 3,000 |   |
| Income from continuing operations                                   |   |                            | 2,579      |   |                            |   | 2,174     |                           |   |   | 5,316                         |   |   |   | 4,131 |   |
| Effect of discontinued operations, net of tax                       |   |                            | 173        |   |                            |   | (124      | )                              |   |   | 305                           |   |   |   | (310 | ) |
| Net income                                                          |   | $                               | 2,752      |   |                            | $      | 2,050     |                           |   | $      | 5,621                         |   |   | $ | 3,821 |   |
|                                                                |   |                            |       |   |                            |   |      |                           |   |   |                          |   |   |   |   |   |
| Earnings per share (1)                                              |   |                            |       |   |                            |   |      |                           |   |   |                          |   |   |   |   |   |
| Basic                                                               |   |                            |       |   |                            |   |      |                           |   |   |                          |   |   |   |   |   |
| Income from continuing operations                                   |   | $                               | 0.26       |   |                            | $      | 0.23      |                           |   | $      | 0.54                          |   |   | $ | 0.43 |   |
| Effect of discontinued operations, net of tax (Note 3)              |   |                            | 0.02       |   |                            |   | (0.01     | )                              |   |   | 0.03                          |   |   |   | (0.03 | ) |
| Net income                                                          |   | $                               | 0.28       |   |                            | $      | 0.21      |                           |   | $      | 0.57                          |   |   | $ | 0.40 |   |
| Diluted                                                             |   |                            |       |   |                            |   |      |                           |   |   |                          |   |   |   |   |   |
| Income from continuing operations                                   |   | $                               | 0.26       |   |                            | $      | 0.22      |                           |   | $      | 0.53                          |   |   | $ | 0.42 |   |
| Effect of discontinued operations, net of tax (Note 3)              |   |                            | 0.02       |   |                            |   | (0.01     | )                              |   |   | 0.03                          |   |   |   | (0.03 | ) |
| Net income                                                          |   | $                               | 0.27       |   |                            | $      | 0.21      |                           |   | $      | 0.56                          |   |   | $ | 0.39 |   |
|                                                                |   |                            |       |   |                            |   |      |                           |   |   |                          |   |   |   |   |   |
| Weighted average shares outstanding                                 |   |                            |       |   |                            |   |      |                           |   |   |                          |   |   |   |   |   |
| Basic                                                               |   |                            | 9,896,738  |   |                            |   | 9,610,428 |                           |   |   | 9,858,538                     |   |   |   | 9,611,783 |   |
| Diluted                                                             |   |                            | 10,070,809 |   |                            |   | 9,729,721 |                           |   |   | 10,042,916                    |   |   |   | 9,727,387 |   |

| (1) | Totals may not add due to rounding. |
|-----|-------------------------------------|

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DYNAMICS RESEARCH CORPORATION

|                                                     |   | Common Stock Shares |   |   | Common Stock Par Value |   |   | Capital in Excess of Par Value |   |   | Accumulated Other Comprehensive Loss |   |   | Retained Earnings |    |   | Total  |   |
|----------------------------------------------------------|--------|---------------------|--------|--------|------------------------|--------|--------|--------------------------------|--------|--------|--------------------------------------|--------|--------|-------------------|---------|--------|--------|--------|
| Balance at March 31, 2010                                |   |                | 9,924  |   |                   | $      | 992    |                           |   | $      | 52,758                               |   |   | $                 | (20,508 | )      |   | $      | 63,898 |   |   | $ | 97,140 |   |
| Comprehensive income:                                    |   |                |   |   |                   |   |   |                           |   |   |                                 |   |   |              |    |   |   |   |   |   |   |   |   |   |
| Net income                                               |   |                | -      |   |                   |   | -      |                           |   |   | -                                    |   |   |              | -       |   |   |   | 2,752 |   |   |   | 2,752 |   |
| Other comprehensive income, net of tax:                  |   |                |   |   |                   |   |   |                           |   |   |                                 |   |   |              |    |   |   |   |   |   |   |   |   |   |
| Changes in unrealized loss on derivative instruments     |   |                | -      |   |                   |   | -      |                           |   |   | -                                    |   |   |              | -       |   |   |   | - |   |   |   | - |   |
| Comprehensive income                                     |   |                |   |   |                   |   |   |                           |   |   |                                 |   |   |              |    |   |   |   |   |   |   |   | 2,752 |   |
| Issuance of common stock through stock plan transactions |   |                | 81     |   |                   |   | 9      |                           |   |   | 732                                  |   |   |              | -       |   |   |   | - |   |   |   | 741 |   |
| Issuance of restricted stock                             |   |                | 19     |   |                   |   | 2      |                           |   |   | (2                                   | )      |   |              | -       |   |   |   | - |   |   |   | - |   |
| Forfeiture of restricted stock                           |   |                | (4     | )      |                   |   | -      |                           |   |   | -                                    |   |   |              | -       |   |   |   | - |   |   |   | - |   |
| Release of restricted stock                              |   |                | (2     | )      |                   |   | (1     | )                              |   |   | (35                                  | )      |   |              | -       |   |   |   | - |   |   |   | (36 | ) |
| Share-based compensation                                 |   |                | -      |   |                   |   | -      |                           |   |   | 201                                  |   |   |              | -       |   |   |   | - |   |   |   | 201 |   |
| Tax benefit from stock plan transactions                 |   |                | -      |   |                   |   | -      |                           |   |   | 135                                  |   |   |              | -       |   |   |   | - |   |   |   | 135 |   |
| Balance at June 30, 2010                                 |   |                | 10,018 |   |                   | $      | 1,002  |                           |   | $      | 53,789                               |   |   | $                 | (20,508 | )      |   | $      | 66,650 |   |   | $ | 100,933 |   |

|                                                     |   | Common Stock Shares |   |   | Common Stock Par Value |   |   | Capital in Excess of Par Value |   |   | Accumulated Other Comprehensive Loss |   |   | Retained Earnings |    |   | Total  |   |
|----------------------------------------------------------|--------|---------------------|--------|--------|------------------------|--------|--------|--------------------------------|--------|--------|--------------------------------------|--------|--------|-------------------|---------|--------|--------|--------|
| Balance at March 31, 2009                                |   |                | 9,729  |   |                   | $      | 973    |                           |   | $      | 52,102                               |   |   | $                 | (22,227 | )      |   | $      | 52,628 |   |   | $ | 83,476 |   |
| Comprehensive income:                                    |   |                |   |   |                   |   |   |                           |   |   |                                 |   |   |              |    |   |   |   |   |   |   |   |   |   |
| Net income                                               |   |                | -      |   |                   |   | -      |                           |   |   | -                                    |   |   |              | -       |   |   |   | 2,050 |   |   |   | 2,050 |   |
| Other comprehensive income, net of tax:                  |   |                |   |   |                   |   |   |                           |   |   |                                 |   |   |              |    |   |   |   |   |   |   |   |   |   |
| Changes in unrealized loss on derivative instruments     |   |                | -      |   |                   |   | -      |                           |   |   | -                                    |   |   |              | 109     |   |   |   | - |   |   |   | 109 |   |
| Comprehensive income                                     |   |                |   |   |                   |   |   |                           |   |   |                                 |   |   |              |    |   |   |   |   |   |   |   | 2,159 |   |
| Issuance of common stock through stock plan transactions |   |                | 24     |   |                   |   | 2      |                           |   |   | 182                                  |   |   |              | -       |   |   |   | - |   |   |   | 184 |   |
| Issuance of restricted stock                             |   |                | 22     |   |                   |   | 2      |                           |   |   | (2                                   | )      |   |              | -       |   |   |   | - |   |   |   | - |   |
| Forfeiture of restricted stock                           |   |                | (10    | )      |                   |   | (1     | )                              |   |   | 1                                    |   |   |              | -       |   |   |   | - |   |   |   | - |   |
| Release of restricted stock                              |   |                | (3     | )      |                   |   | -      |                           |   |   | (22                                  | )      |   |              | -       |   |   |   | - |   |   |   | (22 | ) |
| Share-based compensation                                 |   |                | -      |   |                   |   | -      |                           |   |   | 163                                  |   |   |              | -       |   |   |   | - |   |   |   | 163 |   |
| Tax benefit from stock plan transactions                 |   |                | -      |   |                   |   | -      |                           |   |   | 9                                    |   |   |              | -       |   |   |   | - |   |   |   | 9 |   |
| Balance at June 30, 2009                                 |   |                | 9,762  |   |                   | $      | 976    |                           |   | $      | 52,433                               |   |   | $                 | (22,118 | )      |   | $      | 54,678 |   |   | $ | 85,969 |   |

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Table of Contents

DYNAMICS RESEARCH CORPORATION

|                                                     |   | Common Stock Shares |   |   | Common Stock Par Value |   |   | Capital in Excess of Par Value |   |   | Accumulated Other Comprehensive Loss |   |   | Retained Earnings |    |   | Total  |   |
|----------------------------------------------------------|--------|---------------------|--------|--------|------------------------|--------|--------|--------------------------------|--------|--------|--------------------------------------|--------|--------|-------------------|---------|--------|--------|--------|
| Balance at December 31, 2009                             |   |                | 9,923  |   |                   | $      | 992    |                           |   | $      | 52,580                               |   |   | $                 | (20,505 | )      |   | $      | 61,029 |   |   | $ | 94,096 |   |
| Comprehensive income:                                    |   |                |   |   |                   |   |   |                           |   |   |                                 |   |   |              |    |   |   |   |   |   |   |   |   |   |
| Net income                                               |   |                | -      |   |                   |   | -      |                           |   |   | -                                    |   |   |              | -       |   |   |   | 5,621 |   |   |   | 5,621 |   |
| Other comprehensive income, net of tax:                  |   |                |   |   |                   |   |   |                           |   |   |                                 |   |   |              |    |   |   |   |   |   |   |   |   |   |
| Changes in unrealized loss on derivative instruments     |   |                | -      |   |                   |   | -      |                           |   |   | -                                    |   |   |              | (3      | )      |   |   | - |   |   |   | (3 | ) |
| Comprehensive income                                     |   |                |   |   |                   |   |   |                           |   |   |                                 |   |   |              |    |   |   |   |   |   |   |   | 5,618 |   |
| Issuance of common stock through stock plan transactions |   |                | 98     |   |                   |   | 10     |                           |   |   | 851                                  |   |   |              | -       |   |   |   | - |   |   |   | 861 |   |
| Issuance of restricted stock                             |   |                | 25     |   |                   |   | 3      |                           |   |   | (3                                   | )      |   |              | -       |   |   |   | - |   |   |   | - |   |
| Forfeiture of restricted stock                           |   |                | (13    | )      |                   |   | (1     | )                              |   |   | 1                                    |   |   |              | -       |   |   |   | - |   |   |   | - |   |
| Release of restricted stock                              |   |                | (15    | )      |                   |   | (2     | )                              |   |   | (168                                 | )      |   |              | -       |   |   |   | - |   |   |   | (170 | ) |
| Share-based compensation                                 |   |                | -      |   |                   |   | -      |                           |   |   | 364                                  |   |   |              | -       |   |   |   | - |   |   |   | 364 |   |
| Tax benefit from stock plan transactions                 |   |                | -      |   |                   |   | -      |                           |   |   | 164                                  |   |   |              | -       |   |   |   | - |   |   |   | 164 |   |
| Balance at June 30, 2010                                 |   |                | 10,018 |   |                   | $      | 1,002  |                           |   | $      | 53,789                               |   |   | $                 | (20,508 | )      |   | $      | 66,650 |   |   | $ | 100,933 |   |

|                                                     |   | Common Stock Shares |   |   | Common Stock Par Value |   |   | Capital in Excess of Par Value |   |   | Accumulated Other Comprehensive Loss |   |   | Retained Earnings |    |   | Total  |   |
|----------------------------------------------------------|--------|---------------------|--------|--------|------------------------|--------|--------|--------------------------------|--------|--------|--------------------------------------|--------|--------|-------------------|---------|--------|--------|--------|
| Balance at December 31, 2008                             |   |                | 9,675  |   |                   | $      | 967    |                           |   | $      | 51,919                               |   |   | $                 | (22,268 | )      |   | $      | 50,857 |   |   | $ | 81,475 |   |
| Comprehensive income:                                    |   |                |   |   |                   |   |   |                           |   |   |                                 |   |   |              |    |   |   |   |   |   |   |   |   |   |
| Net income                                               |   |                | -      |   |                   |   | -      |                           |   |   | -                                    |   |   |              | -       |   |   |   | 3,821 |   |   |   | 3,821 |   |
| Other comprehensive income, net of tax:                  |   |                |   |   |                   |   |   |                           |   |   |                                 |   |   |              |    |   |   |   |   |   |   |   |   |   |
| Changes in unrealized loss on derivative instruments     |   |                | -      |   |                   |   | -      |                           |   |   | -                                    |   |   |              | 150     |   |   |   | - |   |   |   | 150 |   |
| Comprehensive income                                     |   |                |   |   |                   |   |   |                           |   |   |                                 |   |   |              |    |   |   |   |   |   |   |   | 3,971 |   |
| Issuance of common stock through stock plan transactions |   |                | 36     |   |                   |   | 3      |                           |   |   | 262                                  |   |   |              | -       |   |   |   | - |   |   |   | 265 |   |
| Issuance of restricted stock                             |   |                | 77     |   |                   |   | 8      |                           |   |   | (8                                   | )      |   |              | -       |   |   |   | - |   |   |   | - |   |
| Forfeiture of restricted stock                           |   |                | (12    | )      |                   |   | (1     | )                              |   |   | 1                                    |   |   |              | -       |   |   |   | - |   |   |   | - |   |
| Release of restricted stock                              |   |                | (14    | )      |                   |   | (1     | )                              |   |   | (104                                 | )      |   |              | -       |   |   |   | - |   |   |   | (105 | ) |
| Share-based compensation                                 |   |                | -      |   |                   |   | -      |                           |   |   | 354                                  |   |   |              | -       |   |   |   | - |   |   |   | 354 |   |
| Tax benefit from stock plan transactions                 |   |                | -      |   |                   |   | -      |                           |   |   | 9                                    |   |   |              | -       |   |   |   | - |   |   |   | 9 |   |
| Balance at June 30, 2009                                 |   |                | 9,762  |   |                   | $      | 976    |                           |   | $      | 52,433                               |   |   | $                 | (22,118 | )      |   | $      | 54,678 |   |   | $ | 85,969 |   |

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DYNAMICS RESEARCH CORPORATION

|                                                                |   | Six Months EndedJune 30, 2010 |    |   | Six Months EndedJune 30, 2009 |   |
|---------------------------------------------------------------------|--------|-------------------------------|---------|--------|-------------------------------|--------|
| Cash flows from operating activities:                               |   |                          |    |   |                          |   |
| Net income                                                          |   | $                             | 5,621   |   |                          | $      | 3,821 |   |
| Effect of discontinued operations, net of tax (Note 3)              |   |                          | 305     |   |                          |   | (310 | ) |
| Income from continuing operations                                   |   |                          | 5,316   |   |                          |   | 4,131 |   |
| Adjustments to reconcile net cash provided by operating activities: |   |                          |    |   |                          |   |   |   |
| Depreciation                                                        |   |                          | 1,764   |   |                          |   | 1,440 |   |
| Amortization of intangible assets                                   |   |                          | 771     |   |                          |   | 1,945 |   |
| Share-based compensation                                            |   |                          | 364     |   |                          |   | 354 |   |
| Investment income from equity investment                            |   |                          | (139    | )      |                          |   | (223 | ) |
| Tax benefit from stock plan transactions                            |   |                          | (164    | )      |                          |   | (9 | ) |
| Deferred income taxes                                               |   |                          | (2,283  | )      |                          |   | 578 |   |
| Other operating activity adjustments                                |   |                          | (254    | )      |                          |   | (391 | ) |
| Change in operating assets and liabilities:                         |   |                          |    |   |                          |   |   |   |
| Contract receivables, net                                           |   |                          | 10,641  |   |                          |   | (1,552 | ) |
| Prepaid expenses and other current assets                           |   |                          | 598     |   |                          |   | (387 | ) |
| Accounts payable                                                    |   |                          | (646    | )      |                          |   | (1,544 | ) |
| Accrued compensation and employee benefits                          |   |                          | (931    | )      |                          |   | 2,438 |   |
| Other accrued expenses                                              |   |                          | 667     |   |                          |   | 1,829 |   |
| Other long-term liabilities                                         |   |                          | (654    | )      |                          |   | (77 | ) |
| Net cash provided by continuing operations                          |   |                          | 15,050  |   |                          |   | 8,532 |   |
| Net cash provided by (used in) discontinued operations              |   |                          | 518     |   |                          |   | (424 | ) |
| Net cash provided by operating activities                           |   |                          | 15,568  |   |                          |   | 8,108 |   |
| Cash flows from investing activities:                               |   |                          |    |   |                          |   |   |   |
| Purchase of business, net of cash acquired                          |   |                          | -       |   |                          |   | (4,250 | ) |
| Additions to property and equipment                                 |   |                          | (3,581  | )      |                          |   | (768 | ) |
| Proceeds from sale of investments and long-lived assets             |   |                          | 19      |   |                          |   | 3 |   |
| Dividends from equity investment                                    |   |                          | 74      |   |                          |   | 289 |   |
| Increase in other assets                                            |   |                          | 291     |   |                          |   | (86 | ) |
| Net cash used in continuing operations                              |   |                          | (3,197  | )      |                          |   | (4,812 | ) |
| Net cash used in discontinued operations                            |   |                          | (67     | )      |                          |   | (59 | ) |
| Net cash used in investing activities                               |   |                          | (3,264  | )      |                          |   | (4,871 | ) |
| Cash flow from financing activities:                                |   |                          |    |   |                          |   |   |   |
| Repayments under term loan                                          |   |                          | (4,000  | )      |                          |   | (4,000 | ) |
| Borrowings under revolving credit agreement                         |   |                          | 34,156  |   |                          |   | 28,024 |   |
| Repayments under revolving credit agreement                         |   |                          | (36,129 | )      |                          |   | (28,024 | ) |
| Proceeds from the exercise of stock plan transactions               |   |                          | 861     |   |                          |   | 265 |   |
| Tax benefit from stock plan transactions                            |   |                          | 164     |   |                          |   | 9 |   |
| Net cash used in financing activities                               |   |                          | (4,948  | )      |                          |   | (3,726 | ) |
| Net increase (decrease) in cash and cash equivalents                |   |                          | 7,356   |   |                          |   | (489 | ) |
| Cash and cash equivalents, beginning of period                      |   |                          | 55      |   |                          |   | 7,111 |   |
| Cash and cash equivalents, end of period                            |   | $                             | 7,411   |   |                          | $      | 6,622 |   |

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NOTE 1. BASIS OF PRESENTATION

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|                                                                 |   | Three Months Ended |   |
|----------------------------------------------------------------------|--------|--------------------|--------|
|                                                                 |   | June 30,           |   |
|                                                                 |   | 2010               |   |   | 2009 |   |
| Product revenue                                                      |   | $                  | 2,235  |   |   | $ | 1,520 |   |
|                                                                 |   |               |   |   |   |   |   |   |
| Income (loss) before benefit for income taxes                        |   | $                  | 350    |   |   | $ | (229 | ) |
| (Provision) benefit for income taxes                                 |   |               | (141   | ) |   |   | 105 |   |
| Income (loss) from operations of discontinued operations, net of tax |   |               | 209    |   |   |   | (124 | ) |
| Loss on sale of discontinued operations, net of tax benefit of $25   |   |               | (36    | ) |   |   | - |   |
| Effect of discontinued operations, net of tax                        |   | $                  | 173    |   |   | $ | (124 | ) |

|                                                                 |   | Six Months Ended |   |
|----------------------------------------------------------------------|--------|------------------|--------|
|                                                                 |   | June 30,         |   |
|                                                                 |   | 2010             |   |   | 2009 |   |
| Product revenue                                                      |   | $                | 4,404  |   |   | $ | 2,856 |   |
|                                                                 |   |             |   |   |   |   |   |   |
| Income (loss) before benefit for income taxes                        |   | $                | 570    |   |   | $ | (557 | ) |
| (Provision) benefit for income taxes                                 |   |             | (229   | ) |   |   | 247 |   |
| Income (loss) from operations of discontinued operations, net of tax |   |             | 341    |   |   |   | (310 | ) |
| Loss on sale of discontinued operations, net of tax benefit of $25   |   |             | (36    | ) |   |   | - |   |
| Effect of discontinued operations, net of tax                        |   | $                | 305    |   |   | $ | (310 | ) |

|                                      |   | June 30, |   |   | December 31, |   |
|-------------------------------------------|--------|----------|--------|--------|--------------|--------|
|                                      |   | 2010     |   |   | 2009         |   |
| Accounts receivable                       |   | $        | 1,018  |   |         | $      | 946 |   |
| Inventory                                 |   |     | 797    |   |         |   | 864 |   |
| Prepaid expenses and other current assets |   |     | 21     |   |         |   | 22 |   |
| Property and equipment, net               |   |     | 190    |   |         |   | 226 |   |
| Total current assets                      |   | $        | 2,026  |   |         | $      | 2,058 |   |
|                                      |   |     |   |   |         |   |   |   |
| Accounts payable                          |   | $        | 300    |   |         | $      | 186 |   |
| Total current liabilities                 |   | $        | 300    |   |         | $      | 186 |   |

|                                                                                                    |   | June 30, |   |   | December 31, |   |
|---------------------------------------------------------------------------------------------------------|--------|----------|--------|--------|-------------------|--------|
|                                                                                                    |   | 2010     |   |   | 2009              |   |
| Contract receivables, net                                                                               |   |     |   |   |              |   |
| Billed receivables                                                                                      |   | $        | 22,742 |   |              | $      | 28,203 |   |
| Unbilled receivables(1):                                                                                |   |     |   |   |              |   |   |   |
| Revenues recorded in excess of milestone billings on a fixed price contract with the State of Tennessee |   |     | 11,602 |   |              |   | 18,004 |   |
| Retainages and fee withholdings                                                                         |   |     | 184    |   |              |   | 689 |   |
| Other unbilled receivables                                                                              |   |     | 28,114 |   |              |   | 26,256 |   |
| Total unbilled receivables                                                                              |   |     | 39,900 |   |              |   | 44,949 |   |
| Allowance for doubtful accounts                                                                         |   |     | (714   | )      |              |   | (583 | ) |
| Contract receivables, net                                                                               |   | $        | 61,928 |   |              | $      | 72,569 |   |
|                                                                                                    |   |     |   |   |              |   |   |   |

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|                                        |   | June 30, |    |   | December 31, |   |
|---------------------------------------------|--------|----------|---------|--------|-------------------|--------|
|                                        |   | 2010     |    |   | 2009              |   |
| Prepaid expenses and other current assets:  |   |     |    |   |              |   |
| Refundable income taxes                     |   | $        | 2,032   |   |              | $      | 1,604 |   |
| Restricted cash                             |   |     | 329     |   |              |   | 262 |   |
| Other                                       |   |     | 2,743   |   |              |   | 3,836 |   |
| Prepaid expenses and other current assets   |   | $        | 5,104   |   |              | $      | 5,702 |   |
|                                        |   |     |    |   |              |   |   |   |
| Property and equipment, net:                |   |     |    |   |              |   |   |   |
| Software                                    |   | $        | 12,205  |   |              | $      | 12,107 |   |
| Furniture and other equipment               |   |     | 9,893   |   |              |   | 9,679 |   |
| Leasehold improvements                      |   |     | 6,935   |   |              |   | 6,445 |   |
| Production equipment                        |   |     | 374     |   |              |   | 440 |   |
| Property and equipment                      |   |     | 29,407  |   |              |   | 28,671 |   |
| Less accumulated depreciation               |   |     | (16,354 | )      |              |   | (14,756 | ) |
| Property and equipment, net                 |   | $        | 13,053  |   |              | $      | 13,915 |   |
|                                        |   |     |    |   |              |   |   |   |
| Other noncurrent assets:                    |   |     |    |   |              |   |   |   |
| Deferred compensation plan investments      |   | $        | 1,417   |   |              | $      | 1,378 |   |
| Equity investments                          |   |     | 1,043   |   |              |   | 978 |   |
| Other                                       |   |     | 597     |   |              |   | 979 |   |
| Other noncurrent assets                     |   | $        | 3,057   |   |              | $      | 3,335 |   |
|                                        |   |     |    |   |              |   |   |   |
| Accrued compensation and employee benefits: |   |     |    |   |              |   |   |   |
| Accrued compensation and related taxes      |   | $        | 7,079   |   |              | $      | 9,029 |   |
| Accrued vacation                            |   |     | 5,242   |   |              |   | 4,724 |   |
| Accrued pension liability                   |   |     | 1,266   |   |              |   | 840 |   |
| Other                                       |   |     | 1,839   |   |              |   | 1,764 |   |
| Accrued compensation and employee benefits  |   | $        | 15,426  |   |              | $      | 16,357 |   |
|                                        |   |     |    |   |              |   |   |   |
| Other accrued expenses:                     |   |     |    |   |              |   |   |   |
| Deferred gain on sale of building           |   | $        | 676     |   |              | $      | 676 |   |
| Other                                       |   |     | 3,705   |   |              |   | 3,032 |   |
| Other accrued expenses                      |   | $        | 4,381   |   |              | $      | 3,708 |   |
|                                        |   |     |    |   |              |   |   |   |
| Other long-term liabilities:                |   |     |    |   |              |   |   |   |
| Accrued pension liability                   |   | $        | 20,571  |   |              | $      | 20,666 |   |
| Deferred gain on sale of building           |   |     | 3,043   |   |              |   | 3,381 |   |
| Deferred compensation plan liability        |   |     | 1,417   |   |              |   | 1,378 |   |
| Other                                       |   |     | 5,957   |   |              |   | 6,511 |   |
| Other long-term liabilities                 |   | $        | 30,988  |   |              | $      | 31,936 |   |

| (1) | At June 30, 2010 and December 31, 2009, $0.2 million and $0.5 million, respectively, of unbilled retainages and fee withholdings are not anticipated to be billed within one year. |
|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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|                       |   | June 30, 2010 |   |         | December 31, 2009 |   |
|----------------------------|--------|---------------|--------|--------------|-------------------|--------|
|                       |   |          |   | Accumulated  |              |   |   |   |   |   | Accumulated |   |   |   |
|                       |   | Cost          |   | Amortization |              | Net    |   |   | Cost |   | Amortization |   | Net |   |
| Customer relationships     |   | $             | 1,900  |         | $                 | (292   | ) | $ | 1,608 |   |   | $ | 13,400 |   | $ | (11,643 | ) | $ | 1,757 |   |
| Customer contracts         |   |          | 3,500  |         |              | (2,546 | ) |   | 954 |   |   |   | 3,500 |   |   | (2,234 | ) |   | 1,266 |   |
| Non-competition agreements |   |          | 1,400  |         |              | (659   | ) |   | 741 |   |   |   | 1,400 |   |   | (349 | ) |   | 1,051 |   |
| 8(a) contract transition   |   |          | 130    |         |              | (130   | ) |   | - |   |   |   | 130 |   |   | (130 | ) |   | - |   |
| Total                      |   | $             | 6,930  |         | $                 | (3,627 | ) | $ | 3,303 |   |   | $ | 18,430 |   | $ | (14,356 | ) | $ | 4,074 |   |

| Remainder of 2010   |   | $ | 771   |   |
|---------------------|--------|---|-------|--------|
| 2011                |   | $ | 1,188 |   |
| 2012                |   | $ | 492   |   |
| 2013                |   | $ | 349   |   |
| 2014                |   | $ | 299   |   |
| 2015 and thereafter |   | $ | 204   |   |

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|                             |                        |   | Fair Value Measurements |   |    |   |
|----------------------------------|-----------------------------|--------|-------------------------|--------|---------|--------|
|                             |                        |   | At June 30, 2010 Using  |   |    |   |
|                             | Balance Sheet Location      |   | Level 1                 |   | Level 2 |   | Level 3 |   | Total |   |
| Assets:                          |                        |   |                    |   |    |   |   |   |   |   |
| Investments held in Rabbi Trusts | Other noncurrent assets     |   | $                       | 1,417  |    | $      | - |   | $ | - |   | $ | 1,417 |   |
|                             |                        |   |                    |   |    |   |   |   |   |   |   |   |   |   |
| Liabilities:                     |                        |   |                    |   |    |   |   |   |   |   |   |   |   |   |
| Interest rate swap               | Other long-term liabilities |   | $                       | -      |    | $      | 573 |   | $ | - |   | $ | 573 |   |

|                             |                        |   | Fair Value Measurements    |   |    |   |
|----------------------------------|-----------------------------|--------|----------------------------|--------|---------|--------|
|                             |                        |   | At December 31, 2009 Using |   |    |   |
|                             | Balance Sheet Location      |   | Level 1                    |   | Level 2 |   | Level 3 |   | Total |   |
| Assets:                          |                        |   |                       |   |    |   |   |   |   |   |
| Investments held in Rabbi Trusts | Other noncurrent assets     |   | $                          | 1,378  |    | $      | - |   | $ | - |   | $ | 1,378 |   |
|                             |                        |   |                       |   |    |   |   |   |   |   |   |   |   |   |
| Liabilities:                     |                        |   |                       |   |    |   |   |   |   |   |   |   |   |   |
| Interest rate swap               | Other long-term liabilities |   | $                          | -      |    | $      | 569 |   | $ | - |   | $ | 569 |   |

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|                        |   | June 30, |   | December 31, |   |
|-----------------------------|--------|----------|--------|--------------|--------|
|                        |   | 2010     |   | 2009         |   |
| Other long-term liabilities |   | $        | 573    |         | $      | 569 |   |

|                                                             |   | Three Months EndedJune 30, |   |   | Six Months EndedJune 30, |   |
|------------------------------------------------------------------|--------|----------------------------|--------|--------|--------------------------|--------|
|                                                             |   | 2010                       |   | 2009   |                     |   | 2010 |   | 2009 |   |
| Gain (loss) recognized in other comprehensive income, net of tax |   | $                          | -      |   | $                        | 109    |   |   | $ | (3 | ) | $ | 150 |   |

|                                          |   | Three Months Ended |   |   | Six Months Ended |   |
|-----------------------------------------------|--------|--------------------|--------|--------|------------------|--------|
|                                          |   | June 30,           |   |   | June 30,         |   |
|                                          |   | 2010               |   | 2009   |             |   | 2010 |   | 2009 |   |
| Interest cost on projected benefit obligation |   | $                  | 1,053  |   | $                | 1,066  |   |   | $ | 2,107 |   | $ | 2,133 |   |
| Expected return on plan assets                |   |               | (1,108 | )      |             | (964   | ) |   |   | (2,216 | ) |   | (1,928 | ) |
| Recognized actuarial loss                     |   |               | 275    |   |             | 303    |   |   |   | 550 |   |   | 606 |   |
| Net periodic pension expense                  |   | $                  | 220    |   | $                | 405    |   |   | $ | 441 |   | $ | 811 |   |

|                                   |   | Three Months Ended |   |   | Six Months Ended |   |
|----------------------------------------|--------|--------------------|--------|--------|------------------|--------|
|                                   |   | June 30,           |   |   | June 30,         |   |
|                                   |   | 2010               |   | 2009   |             |   | 2010 |   | 2009 |   |
| Cost of products and services          |   | $                  | 102    |   | $                | 67     |   |   | $ | 175 |   | $ | 147 |   |
| Selling, general and administrative    |   |               | 99     |   |             | 96     |   |   |   | 189 |   |   | 207 |   |
| Total share-based compensation expense |   | $                  | 201    |   | $                | 163    |   |   | $ | 364 |   | $ | 354 |   |

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|                                             |   |      |    |   |     |   |   | Weighted    |   |   |      |   |
|--------------------------------------------------|--------|-----------|---------|--------|----------|--------|--------|-------------|--------|--------|-----------|--------|
|                                             |   |      |    |   |     |   |   | Average     |   |   |      |   |
|                                             |   |      |    |   | Weighted |   |   | Remaining   |   |   |      |   |
|                                             |   |      |    |   | Average  |   |   | Contractual |   |   | Aggregate |   |
|                                             |   | Number of |    |   | Exercise |   |   | Term        |   |   | Intrinsic |   |
|                                             |   | Shares    |    |   | Price    |   |   | (in years)  |   |   | Value     |   |
| Outstanding and exercisable at December 31, 2009 |   |      | 606,843 |   |     | $      | 9.62   |        |   |   | 1.5       |   |   | $ | 981 |   |
| Granted                                          |   |      | 30,000  |   |     | $      | 13.27  |        |   |   |      |   |   |   |   |   |
| Exercised                                        |   |      | (94,650 | )      |     | $      | 8.47   |        |   |   |      |   |   |   |   |   |
| Cancelled                                        |   |      | (500    | )      |     | $      | 23.00  |        |   |   |      |   |   |   |   |   |
| Outstanding at June 30, 2010                     |   |      | 541,693 |   |     | $      | 10.01  |        |   |   | 1.6       |   |   | $ | 554 |   |
| Exercisable at June 30, 2010                     |   |      | 511,693 |   |     | $      | 9.82   |        |   |   | 1.1       |   |   | $ | 554 |   |

|                                                      |   | Three Months Ended |   |   | Six Months Ended |   |
|-----------------------------------------------------------|--------|--------------------|--------|--------|------------------|--------|
|                                                      |   | June 30,           |   |   | June 30,         |   |
|                                                      |   | 2010               |   | 2009   |             |   | 2010 |   | 2009 |   |
| Amounts realized or received from stock option exercises: |   |               |   |   |             |   |   |   |   |   |
| Cash proceeds received                                    |   | $                  | 648    |   | $                | 99     |   |   | $ | 669 |   | $ | 99 |   |
| Intrinsic value realized                                  |   | $                  | 337    |   | $                | 23     |   |   | $ | 398 |   | $ | 23 |   |
| Income tax benefit realized                               |   | $                  | 131    |   | $                | 8      |   |   | $ | 133 |   | $ | 8 |   |

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|                           |   |           |    |   | Weighted   |   |
|--------------------------------|--------|----------------|---------|--------|------------|--------|
|                           |   |           |    |   | Average    |   |
|                           |   | Number         |    |   | Grant-Date |   |
|                           |   | of Shares |    |   | Fair Value |   |
| Nonvested at December 31, 2009 |   |           | 165,701 |   |       | $      | 9.39 |   |
| Granted                        |   |           | 24,900  |   |       | $      | 11.22 |   |
| Vested                         |   |           | (58,485 | )      |       | $      | 9.64 |   |
| Cancelled                      |   |           | (13,601 | )      |       | $      | 9.26 |   |
| Nonvested at June 30, 2010     |   |           | 118,515 |   |       | $      | 9.66 |   |

|                                                              |   | Three Months Ended |       |   | Six Months Ended |      |
|-------------------------------------------------------------------|--------|--------------------|------------|--------|------------------|-----------|
|                                                              |   | June 30,           |       |   | June 30,         |      |
|                                                              |   | 2010               |       | 2009   |             |      | 2010 |   | 2009 |   |
|  Weighted average shares outstanding - Basic                 |   |               | 9,896,738  |   |             | 9,610,428 |   |   |   | 9,858,538 |   |   | 9,611,783 |   |
|  Diluted effect of stock options and restricted stock grants |   |               | 174,071    |   |             | 119,293   |   |   |   | 184,378 |   |   | 115,604 |   |
|  Weighted average shares outstanding - Diluted               |   |               | 10,070,809 |   |             | 9,729,721 |   |   |   | 10,042,916 |   |   | 9,727,387 |   |

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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

|   | · | Our dependency on the Federal government and changes in federal spending priorities; |
|--------|--------|--------------------------------------------------------------------------------------|

|   | · | Failure to obtain new government contracts or retain existing contracts; |
|--------|--------|--------------------------------------------------------------------------|

|   | · | The effect of Federal government in-sourcing on our business; |
|--------|--------|---------------------------------------------------------------|

|   | · | The loss of skilled personnel; |
|--------|--------|--------------------------------|

|   | · | The risk of security breaches in systems we develop, install or maintain; |
|--------|--------|---------------------------------------------------------------------------|

|   | · | Failure by Congress to timely approve budgets governing spending by Federal agencies; |
|--------|--------|---------------------------------------------------------------------------------------|

|   | · | Risks due to government contract provisions providing for rights unfavorable to us, including the ability to terminate contracts at any time for convenience; |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Potential systems or service failures that could result in liability to our company; |
|--------|--------|--------------------------------------------------------------------------------------|

|   | · | Risks associated with various, complex Federal government procurement laws and regulations; |
|--------|--------|---------------------------------------------------------------------------------------------|

|   | · | Adverse effects in the event of an unfavorable Federal audit of our contracts; |
|--------|--------|--------------------------------------------------------------------------------|

|   | · | Failure to adequately safeguard confidential information; |
|--------|--------|-----------------------------------------------------------|

|   | · | An adverse outcome related to ongoing legal proceedings; |
|--------|--------|----------------------------------------------------------|

|   | · | Competitive conditions in current markets and difficulties in entering new markets; |
|--------|--------|-------------------------------------------------------------------------------------|

|   | · | Our ability to maintain sufficient sources of financing and the risk that our financing requirements should increase; |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------|

|   | · | The adverse effect on earnings should our recorded goodwill from prior investments become impaired; and |
|--------|--------|---------------------------------------------------------------------------------------------------------|

|   | · | Economic conditions in the United States and global market conditions that are beyond our control. |
|--------|--------|----------------------------------------------------------------------------------------------------|

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|                                                  |   | Three Months Ended June 30, |   |       |
|-------------------------------------------------------|--------|-----------------------------|--------|------------|
|                                                  |   | 2010                        |   |       |   | 2009 |   |   |
| (in millions)                                         |   | $(1)                        |   |  %(1) |   |   |   | $(1) |   | %(1) |   |   |
|  Revenue                                         |   | $                           | 65.3   |       |   |   |   |   | $ | 68.1 |   |   |   |   |
|                                                  |   |                        |   |       |   |   |   |   |   |   |   |   |   |   |
|  Gross profit                                    |   | $                           | 10.2   |       |   | 15.6 | % |   |   | $ | 11.1 |   |   | 16.3 | % |   |
|  Selling, general and administrative             |   |                        | 5.1    |       |   | 7.8 | % |   |   |   | 6.2 |   |   | 9.1 | % |   |
|  Amortization of intangible assets               |   |                        | 0.4    |       |   | 0.6 | % |   |   |   | 1.0 |   |   | 1.4 | % |   |
|  Operating income                                |   |                        | 4.7    |       |   | 7.2 | % |   |   |   | 3.9 |   |   | 5.8 | % |   |
|  Interest expense, net                           |   |                        | (0.4   | )          |   | (0.6 | )% |   |   |   | (0.5 | ) |   | (0.7 | )% |   |
|  Other income, net                               |   |                        | (0.0   | )          |   | 0.0 | % |   |   |   | 0.3 |   |   | 0.4 | % |   |
|  Provision for income taxes                      |   |                        | 1.8    |       |   | 40.5 | % | (2) |   |   | 1.6 |   |   | 41.8 | % | (2) |
|  Effect of discontinued operations, net of taxes |   |                        | 0.2    |       |   | 0.3 | % |   |   |   | (0.1 | ) |   | (0.2 | )% |   |
|  Net income                                      |   | $                           | 2.8    |       |   | 4.2 | % |   |   | $ | 2.1 |   |   | 3.0 | % |   |

|                                                  |   | Six Months Ended June 30, |   |   |
|-------------------------------------------------------|--------|---------------------------|--------|--------|
|                                                  |   | 2010                      |   |   |   | 2009 |   |   |
| (in millions)                                         |   | $(1)                      |   | %(1)   |   |   |   | $(1) |   | %(1) |   |   |
|  Revenue                                         |   | $                         | 133.9  |   |   |   |   |   | $ | 135.3 |   |   |   |   |
|                                                  |   |                      |   |   |   |   |   |   |   |   |   |   |   |   |
|  Gross profit                                    |   | $                         | 21.0   |   |   | 15.6 | % |   |   | $ | 22.4 |   |   | 16.5 | % |   |
|  Selling, general and administrative             |   |                      | 11.0   |   |   | 8.2 | % |   |   |   | 12.5 |   |   | 9.3 | % |   |
|  Amortization of intangible assets               |   |                      | 0.8    |   |   | 0.6 | % |   |   |   | 1.9 |   |   | 1.4 | % |   |
|  Operating income                                |   |                      | 9.1    |   |   | 6.8 | % |   |   |   | 7.9 |   |   | 5.8 | % |   |
|  Interest expense, net                           |   |                      | (0.7   | )      |   | (0.6 | )% |   |   |   | (1.1 | ) |   | (0.8 | )% |   |
|  Other income, net                               |   |                      | 0.1    |   |   | 0.1 | % |   |   |   | 0.3 |   |   | 0.2 | % |   |
|  Provision for income taxes                      |   |                      | 3.2    |   |   | 37.4 | % | (2) |   |   | 3.0 |   |   | 42.1 | % | (2) |
|  Effect of discontinued operations, net of taxes |   |                      | 0.3    |   |   | 0.2 | % |   |   |   | (0.3 | ) |   | (0.2 | )% |   |
|  Net income                                      |   | $                         | 5.6    |   |   | 4.2 | % |   |   | $ | 3.8 |   |   | 2.8 | % |   |

| (1) | Totals may not add due to rounding.                                                                                            |
|-----|--------------------------------------------------------------------------------------------------------------------------------|
| (2) | The percentage of provision for income taxes relates to a percentage of income from continuing operations before income taxes. |

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|                                       |   | Three Months Ended June 30, |   |
|--------------------------------------------|--------|-----------------------------|--------|
|                                       |   | 2010                        |   |   | 2009 |   |
| (in millions)                              |   | $(1)                        |   | %(1) |   |   | $(1) |   | %(1) |   |
| National defense and intelligence agencies |   | $                           | 40.4   |   |   | 61.9 | % |   | $ | 39.7 |   |   | 58.3 | % |
| Homeland security                          |   |                        | 13.2   |   |   | 20.2 |   |   |   | 13.7 |   |   | 20.1 |   |
| Federal civilian agencies                  |   |                        | 6.4    |   |   | 9.8 |   |   |   | 7.9 |   |   | 11.5 |   |
| Total revenue from federal agencies        |   |                        | 60.0   |   |   | 91.9 |   |   |   | 61.3 |   |   | 89.9 |   |
| State and local government agencies        |   |                        | 5.3    |   |   | 8.1 |   |   |   | 6.5 |   |   | 9.5 |   |
| Other                                      |   |                        | 0.0    |   |   | 0.0 |   |   |   | 0.4 |   |   | 0.6 |   |
| Total revenue                              |   | $                           | 65.3   |   |   | 100.0 | % |   | $ | 68.1 |   |   | 100.0 | % |

|                                       |   | Six Months Ended June 30, |   |
|--------------------------------------------|--------|---------------------------|--------|
|                                       |   | 2010                      |   |   | 2009 |   |
| (in millions)                              |   | $(1)                      |   | %(1) |   |   | $(1) |   | %(1) |   |
| National defense and intelligence agencies |   | $                         | 84.5   |   |   | 63.1 | % |   | $ | 78.8 |   |   | 58.2 | % |
| Homeland security                          |   |                      | 26.1   |   |   | 19.5 |   |   |   | 26.8 |   |   | 19.8 |   |
| Federal civilian agencies                  |   |                      | 12.6   |   |   | 9.4 |   |   |   | 16.8 |   |   | 12.4 |   |
| Total revenue from federal agencies        |   |                      | 123.2  |   |   | 92.0 |   |   |   | 122.3 |   |   | 90.4 |   |
| State and local government agencies        |   |                      | 10.7   |   |   | 8.0 |   |   |   | 12.3 |   |   | 9.1 |   |
| Other                                      |   |                      | 0.0    |   |   | 0.0 |   |   |   | 0.7 |   |   | 0.5 |   |
| Total revenue                              |   | $                         | 133.9  |   |   | 100.0 | % |   | $ | 135.3 |   |   | 100.0 | % |

| (1) | Totals may not add due to rounding. |
|-----|-------------------------------------|

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|                                                |   | Three Months Ended |   |   | Six Months Ended |   |
|-----------------------------------------------------|--------|--------------------|--------|--------|------------------|--------|
|                                                |   | June 30,           |   |   | June 30,         |   |
|                                                |   | 2010               |   | 2009   |             |   | 2010 |   | 2009 |   |
|  Fixed price, including service type contracts |   |               | 44     | %      |             | 38     | % |   |   | 45 | % |   | 37 | % |
|  Time and materials                            |   |               | 35     |   |             | 44     |   |   |   | 34 |   |   | 45 |   |
|  Cost reimbursable                             |   |               | 21     |   |             | 18     |   |   |   | 21 |   |   | 18 |   |
|                                                |   |               | 100    | %      |             | 100    | % |   |   | 100 | % |   | 100 | % |
|                                                |   |               |   |   |             |   |   |   |   |   |   |   |   |   |
|  Prime contract                                |   |               | 72     | %      |             | 71     | % |   |   | 72 | % |   | 71 | % |
|  Sub-contract                                  |   |               | 28     |   |             | 29     |   |   |   | 28 |   |   | 29 |   |
|                                                |   |               | 100    | %      |             | 100    | % |   |   | 100 | % |   | 100 | % |

|          |   | June 30, |   |   | December 31, |   |
|---------------|--------|----------|--------|--------|--------------|--------|
| (in millions) |   | 2010     |   |   | 2009         |   |
| Backlog:      |   |     |   |   |         |   |
| Funded        |   | $        | 150.6  |   |         | $      | 158.5 |   |
| Unfunded      |   |     | 211.7  |   |         |   | 276.0 |   |
| Total         |   | $        | 362.3  |   |         | $      | 434.5 |   |

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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

ITEM 4. CONTROLS AND PROCEDURES

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ITEM 1. LEGAL PROCEEDINGS

ITEM 1A. RISK FACTORS

ITEM 2.  UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

|                            |   |      |   |   |    |   |   | Total Number |   |   | Approximate              |   |
|---------------------------------|--------|-----------|--------|--------|---------|--------|--------|-------------------|--------|--------|--------------------------|--------|
|                            |   |      |   |   |    |   |   | of Shares         |   |   | Dollar Value             |   |
|                            |   |      |   |   | Average |   |   | Purchased as      |   |   | of Shares that |   |
|                            |   | Total     |   |   | Price   |   |   | Part of           |   |   | May Yet Be               |   |
|                            |   | Number    |   |   | Paid    |   |   | Publicly          |   |   | Purchased                |   |
|                            |   | of Shares |   |   | Per     |   |   | Announced         |   |   | Under the                |   |
| Period                          |   | Purchased |   |   | Share   |   |   | Programs          |   |   | Programs                 |   |
| April 1, 2010 to April 30, 2010 |   |      | 1,973  |   |    | $      | 13.55  |              |   |   | -                        |   |   | $ | - |   |
| May 1, 2010 to May 31, 2010     |   |      | 764    |   |    | $      | 13.35  |              |   |   | -                        |   |   |   | - |   |
| June 1, 2010 to June 30, 2010   |   |      | 114    |   |    | $      | 10.20  |              |   |   | -                        |   |   |   | - |   |
| Total                           |   |      | 2,851  |   |    | $      | 13.36  |              |   |   | -                        |   |   | $ | - |   |

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ITEM 6. EXHIBITS

| 31.1   | Certification of the Chief Executive Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                     |
| 31.2   | Certification of the Chief Financial Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
|   |                                                                                                                                                                                     |
| 32.1   | Certification of the Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.                                   |
|   |                                                                                                                                                                                     |
| 32.2   | Certification of the Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.                                   |

|                            | DYNAMICS RESEARCH CORPORATION                                     |
|---------------------------------|-------------------------------------------------------------------|
|                            | (Registrant)                                                      |
|                            |                                                              |
|                            |                                                              |
| Date:  August 4, 2010 | /s/ David Keleher                                                 |
|                            | Senior Vice President, Chief Financial Officer and Treasurer      |
|                            | (Principal Financial Officer)                                     |
|                            |                                                              |
| Date:  August 4, 2010 | /s/ Shaun N. McCarthy                                             |
|                            | Vice President, Corporate Controller and Chief Accounting Officer |
|                            | (Principal Accounting Officer)                                    |
|                            |                                                              |
|                            |                                                              |

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