<PAGE>

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                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-KSB

                ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
                       THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year                                Commission file number 1-7228
ended December 31, 1999

                           THE WASHINGTON CORPORATION
                 (Name of Small Business Issuer in Its Charter)

              MARYLAND                      52-1157845
         (State of Incorporation)           (I.R.S. Employer Identification No.)

                             4550 Montgomery Avenue
                            Bethesda, Maryland 20814
                    (Address of principal executive offices)
                                 (301) 657-3640
                           (Issuer's telephone number)

                                  -------------

           SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
                                      None

           SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
                 Class B Common Stock, $.01 par value per share

                                  -------------

Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Securities Exchange Act during the past 12 months (or for
such shorter period that the registrant was required to file such reports), and
(2) has been subject to such filing requirements for the past 90 days.
Yes  X  No
   ----   ----

Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B in this form, and no disclosure will be contained, to the best of
registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-KSB or any amendment to
this Form 10-KSB. [ X ]

The registrant's revenues for the fiscal year ended December 31, 1999 were:
$3,598,743

The Registrant has been unable to ascertain any market for the Registrant's
securities, and, therefore, the Registrant believes that the best estimate of
the market value of its voting stock held by non-affiliates is $0 at the present
time.

As of December 31, 1999, the number of shares outstanding of each class of the
registrant's classes of common stock were as follows:
                    1,640,327 shares of Class A Common Stock
                      21,476 shares of Class B Common Stock
                      45,119 shares of Class C Common Stock


EXHIBITS BEGIN ON PAGE 36              1
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<PAGE>

                                     PART I


ITEM 1.  DESCRIPTION OF BUSINESS

(a) BUSINESS DEVELOPMENT

         The Washington Corporation (individually, "TWC" and together with its
affiliates that are consolidated with it for financial reporting purposes, the
"Company"), a Maryland corporation, was founded in 1979. The Company's
operations consist of the ownership of real estate, both income-producing and
unimproved, and office building management, primarily in the metropolitan
Washington, D.C. area. The Company has been pursuing a plan to divest its four
remaining non-income-producing properties, and has obtained appropriate
financing and a long-term lease for its primary income-producing asset.

         RECENT DEVELOPMENTS. The following are descriptions of material
developments within the past three years.

                  TIMBERLAKE

          TWC, through a wholly-owned subsidiary, the Nanjemoy Associates
Limited Partnership ("NALP") owned 361 acres in Charles County, Maryland for
future residential development (the "Timberlake Project"). NALP defaulted on its
quarterly interest payments on the purchase money mortgage made to NALP ("PMM")
that was secured by 313 of the 361 acres comprising the Timberlake property. The
principal amount of the PMM was $880,000 and it matured on January 15, 1998. The
PMM was not guaranteed by TWC and the note contained a provision that the holder
will rely solely on the property for repayment of the PMM. This default resulted
in NALP losing 313 of the 361 acres of land due to foreclosure action by the
note holder on February 2, 1999. As a result, the approved preliminary site plan
was voided together with the various entitlements for the development of the
property. For the fiscal year ending December 31, 1998, the net book value of
the property was reduced by the $880,000 principal balance on the PMM, and
$177,449 of accrued interest and real estate taxes. Management has estimated the
value of the remaining property to be $200,000, resulting in an additional
estimated loss on asset valuation of $97,771 for the fiscal year ended December
31, 1999. The remaining 48 acres most likely will be divided into a maximum of
seven lots. The number of lots that can be sold depends on the results of
percolation tests and the issuance of on-site sewage discharge permits by the
state of Maryland. To date, the Company has not taken any steps to obtain
percolation tests or sewage discharge permits.

                  REFINANCING OF THE ARLINGTON SQUARE LOAN

         TWC, directly and through an affiliate, Arlington Square, Inc., a
wholly-owned subsidiary of TWC ("ASI"), owns a 74% interest in Arlington Square
Limited Partnership ("ASLP"). ASLP owns 1.07 acres of land and an office
building constructed thereon (the "Arlington Square Project") located in
Arlington, Virginia. The rent from the Arlington Square Project is the Company's
primary source of revenue.

         In November 1997, ASLP obtained a loan, secured by the Arlington Square
Project, from Allied Capital Commercial Corporation ("Allied") in the original
principal amount of $24,300,000 (the "Allied



                                       2
<PAGE>

Loan"). The interest rate on the Allied Loan was 10% and the Allied Loan also
included a 30% participation for Allied in the net cash flow and net sales
proceeds of ASLP.

         From November 1997 to November 25, 1998, ASLP's property was encumbered
by mortgage notes to Allied. The outstanding principal balance on the mortgage
loans accrued interest at a blended rate of 10%, based on the LIBOR rates. The
notes were cash-flow mortgages with all excess cash flow, as defined, being
applied to reduce the principal balance and to fund the required escrows. One of
the mortgage agreements provided for the lender to receive a participation
interest of 30% in the net cash flow and a 30% equity value in the property if
and when it is sold, with such provision to survive any payoff of the mortgage.

         On November 25, 1998, the Allied Loan was repaid with proceeds of a
loan obtained by ASLP and secured by the Arlington Square Project from
Metropolitan Life Insurance Company ("MetLife") in the original principal amount
of $21,500,000 (the "MetLife Loan"). At the closing of the MetLife Loan,
$21,500,000 was disbursed to (i) repay the Allied Loan in the amount of
$20,600,000; and (ii) to pay for costs associated with the MetLife Loan in the
amount of $373,477. The MetLife Loan has a fixed interest rate of 6.80% and
matures on December 1, 2010. See "Description of Properties - Arlington Square
Project".

         Upon refinancing of the Allied Loan, Allied gave notice of demand for
full payment of its participation interest in the equity value and net cash flow
of the Arlington Square Project. ASLP entered into a forbearance agreement with
Allied which (i) established the value for Allied's participation interest at
$1,850,000 and (ii) established a payment term of 9 1/2 years with interest at
7.5% and monthly payments at $22,739.

         On December 31, 1999, the parties to the forbearance agreement entered
into a termination of the forbearance agreement, since all further payment
obligations of the parties are contained in the Amended and Restated Promissory
Note dated as of December 1, 1998, and the related security and guarantee
agreements and amendments thereto.

                  Approximately 88% of the Company's revenues for fiscal year
1999 were derived from the Arlington Square Project.

                  AWARD OF BID AND LEASE EXECUTION

                  On June 22, 1998, the General Services Administration ("GSA"),
an agency of the U.S. Government, executed the lease which contained the
following terms: (i) a firm ten (10) year term beginning October 1, 1998 through
September 30, 2008; and (ii) fixed annual rent of $3,137,043.12 payable at the
rate of $261,420.26 per month in arrears.

         In addition, on September 16, 1998, the U.S. Fish and Wildlife Service
executed a ten year lease with ASLP for exclusive use of 231 parking spaces at
the Arlington Square building. The annual rent is $175,000 escalating at 5% per
year.

         ELECTION OF DIRECTORS

         TWC did not hold an annual or special stockholder's meeting in 1999,
and did not elect directors in 1999.


                                       3
<PAGE>

         TWC's Amended and Restated Charter ("Charter") provides that the number
of directors of TWC shall be seven (7), consisting of: (i) five (5) directors
("Class A Directors") elected by the holders of TWC's Class A Common Stock, par
value $.01 per share (the "Class A Common Stock"), voting separately as a class;
and (ii) two (2) directors (the "Class B and Class C Directors") elected by
holders of TWC's Class B Common Stock, par value $.01 per share (the "Class B
Common Stock"), and Class C Common Stock, par value $.01 per share (the "Class C
Common Stock"), voting together as a single class. In addition, under Maryland
Law, TWC is required to have at least three (3) directors. Under TWC's Bylaws,
two (2) directors, at least one of which is a Class A Director, constitute a
quorum for a Board of Directors meeting and the vote of a majority of the Class
A Directors participating at such meeting is necessary for TWC's Board of
Directors to act.

         On October 25, 1996 at TWC's last annual stockholders meeting, William
N. Demas, formerly a Class B and Class C Director was elected as a Class A
Director and Jose Ma. C. Castro was elected as a Class B and Class C Director to
fill the position held by Mr. Demas. Jonathan C. Kinney was also re-elected as a
Class B and Class C Director. These three directors continue to serve.

(b)  BUSINESS OF THE REGISTRANT

          The Company's operations consist of the ownership of real estate, both
income-producing and unimproved land, and the management of these real estate
assets.

         OWNERSHIP OF INCOME-PRODUCING PROPERTIES

         TWC, directly and through ASI, owns a 74% interest in ASLP. ASLP owns
1.07 acres of land and an office building constructed thereon located in
Arlington, Virginia. The building is leased to an agency of the U.S. Government
under a ten year lease expiring in September of 2008. See "Business Development
- Award of Bid and Lease Execution." During the year ended December 31, 1999,
approximately 88% of the Company's revenues was derived from income on the
Arlington Square Project. In November 1998, the Arlington Square Project was
refinanced, and in connection therewith, ASLP executed a promissory note and
various other loan documents and TWC entered into a guaranty agreement with
MetLife. See "Description of Properties - Arlington Square Project" and
"Business Development - Recent Developments Refinancing of the Arlington Square
Loan."

         TWC also owns a parcel of land which is leased to Fort Washington Inn
Associates ("FWIA"), a non-affiliate of the Company, until March of 2024. The
land is improved with a 222-room Holiday Inn which is owned by FWIA. TWC
receives base rent plus overage rent under the lease both of which are paid
monthly. See "Description of Properties - Fort Washington."

         OWNERSHIP OF LAND

         TWC, through wholly-owned subsidiaries, currently owns four parcels of
unimproved land - Timberlake, River Oaks, Winchester, and Port-O-Dumfries. TWC
is currently marketing or considering marketing each of these properties for
sale.

         MANAGEMENT OF REAL ESTATE

         TWC manages the Arlington Square Project. TWC receives management fees
equal to 5% of



                                       4
<PAGE>

monthly revenues of the Arlington Square Project. See "Description of Properties
- Arlington Square Project".

         COMPETITION

         The Washington area real estate market has fully recovered from most of
the problems associated with the early 1990's, however, many market segments are
still depressed, particularly for the sale of unimproved land. The Company must
compete with other owners of real property that is now or will be for sale. The
lack of buyers and financing make the sale of real estate extremely difficult.
Management believes this condition is expected to continue for the foreseeable
future. The value of improved property, such as the Arlington Square Project,
has stabilized in recent years.

         REGULATORY APPROVALS

         In the past, when the Company acquired land for development, certain
regulatory approvals and permits were required to either improve, develop, lease
or sell the property. Additional county, state and federal permits will be
required for a purchaser to develop each of the Company's four properties held
for resale and the receipt of such permits and approvals may be a condition of
any purchase contract.

         EMPLOYEES

         As of December 31, 1999, the Company employed four full-time persons
and one part-time person. Two of the Company's employees work at the Arlington
Square Project as the Chief Engineer and the Assistant Engineer.

ITEM 2.  DESCRIPTION OF PROPERTIES

         The Company's operations involve ownership of income-producing
properties and unimproved land. The Company currently owns four principal
properties and leases its corporate headquarters.

         The following table summarizes, as of December 31, 1999, the Company's
ownership interests in its four principal properties and in two properties of
secondary importance. More detailed disclosure relating to the principal
properties follows immediately after the table.



                                       5
<PAGE>

                   THE WASHINGTON CORPORATION AND SUBSIDIARIES
                          REAL ESTATE PROPERTIES OWNED

<TABLE>
<CAPTION>

                                                        ENCUM-
                                                        BRANCES
                                             PERCEN-    INCLUDING                            COSTS      WRITE UP/
                                              TAGE      ACCRUED       LOAN                CAPITALIZED   (DOWN) TO           NET
                                              OWNER-    INTEREST     MATURITY             SUBSEQUENT TO     FAIR            BOOK
NAME                   DESCRIPTION             SHIP    AND TAXES      DATE       LAND      PURCHASE      VALUE            VALUE
------------------------------------------------------------------------------------------------------------------------------------
<S>            <C>                             <C>     <C>           <C>      <C>         <C>           <C>         <C>
Arlington      46,481 sq. ft. of land with
Square
  Project      a building of approximately
               135,000 sq. ft. in
               Arlington County, Va.             74%   $21,105,417   12/10            0   12,352,799     2,307,794   $17,193,631 (3)
                                                       $ 1,672,613   06/08

Timberlake     48 acres of land zoned
               for residential development
               located in Charles
               County, Md.  (1)                 100%       -                    297,771       -            (97,771)  $   200,000 (4)

Ft. Washington 7.3 acres of land with a
               222-room hotel located in
               Ft. Washington, Pa.  (2)         100%       -                    400,000       -              -       $   400,000

River Oaks     16.6 acres of land zoned
               for commercial development
               located in Prince William
               County, Va.                      100%       -                  1,821,670      520,220    (2,141,890)  $   200,000

Winchester     23.21 acres of land zoned
               for multi-family garden
               apartments located in
               Memphis, Tn.                     100%       -                    100,000       -            (95,000)        5,000

Port-O-        7 townhouse lots totaling
Dumfries       approximately 19,436 sq. ft.
               located in Dumfries, Va.         100%       -                     14,829       -            (11,829)        3,000

</TABLE>


(1)   This property is owned by an wholly owned subsidiary of TWC.
(2)   The lease on this property is subordinated to a first mortgage secured by
      the land and the leasehold which consists of a 222-room Holiday Inn. The
      Company has no payment obligation on the loan which had a balance of $0 as
      of December 31, 1999.
(3)   This amount reflects depreciation, deferred loan closing costs, and
      deferred rental concessions.
(4)   The value of the Timberlake property was written down an additional
      $1,057,449 in 1999, the amount of principal and interest outstanding on a
      loan secured by an additional 3.3 of the original 361 acres of the
      property, to reflect the foreclosure by the lender on such 313 acres. Also
      in 1998, the value of the property was written down $547,122 to reflect
      the lower property value.


                                       6
<PAGE>

PROPERTIES

         ARLINGTON SQUARE PROJECT

         TWC, directly and through a wholly-owned affiliate, owns a 74% interest
in ASLP. ASLP owns 1.07 acres of land and an office building containing 135,000
gross square feet constructed thereon located in Arlington, Virginia. The
building is 100% leased to an agency of the U.S. Government under a ten year
lease expiring in September of 2008. The terms of the lease require the tenant
to pay base rent plus its proportionate share of certain operating expense
increases. During 1999 and 1998, the Company realized rental income from such
lease and the previous lease amounting to approximately $3,330,000 and
$3,181,000, respectively, per year, or approximately $24.67 and $23.39,
respectively, per rentable square foot based on a BOMA standard. During 1999 and
1998, approximately 88% and 96%, respectively, of the Company's revenues was
derived from the Arlington Square Project.

                  On November 25, 1998, the Allied Loan was repaid with proceeds
of a loan secured by the Arlington Square Project from MetLife in the original
principal amount of $21,500,000. At the closing of the MetLife Loan, $21,500,000
was disbursed (i) to repay the Allied Loan in the amount of $20,600,000; (ii) to
pay for certain costs associated with the MetLife Loan; and (iii) to fund an
escrow account for future tenant improvements in the amount of $656,000. The
MetLife Loan has a fixed interest rate of 6.80% and matures on December 1, 2010.
See "Description of Properties - Arlington Square Project".

         The Allied Loan, closed on November 21, 1997, included a 30%
participation for Allied in the net cash flow and equity of the Arlington Square
Project (the "Allied Participation Interest"). The Allied Participation Interest
survives any repayment of the Allied Loan. Therefore, upon refinancing of the
Allied Loan with the MetLife Loan, the Company entered into a forbearance
agreement with Allied for the repurchase of the Allied Participation Interest.
Under the forbearance agreement, the Company agreed to pay Allied $1,850,000 for
the Allied Participation Interest, payable over 9 1/2 years at 7.5% interest
requiring monthly payments of $22,739. In return, Allied agreed to forbear on
certain of its surviving rights and subordinated its deed of trust to MetLife's
deed of trust.

                  FORBEARANCE TERMINATION

         On December 31, 1999, the parties to the forbearance agreement entered
into a termination of the forbearance agreement, since all further payment
obligations of the parties are contained in the Amended and Restated Promissory
Note dated as of December 1, 1998, and the related security and guarantee
agreements and amendments thereto.

                  INTEREST PAYMENTS AND AMORTIZATION

         The annual interest rate on the outstanding principal balance of the
Metlife Loan in the amount of $21,500,000 is 6.80% payable in monthly principal
and interest payments of $147,058. The note matures on December 1, 2010. The
MetLife Loan is amortized over 26 years with a balloon payment of all remaining
indebtedness after 12 years. Prepayment of the MetLife Loan is not permitted
during the first six years of the term, and is permitted thereafter with a
prepayment penalty.

                  ESCROW AND RESERVE ACCOUNTS


                                       7
<PAGE>

         The MetLife Loan requires that ASLP fund $20,155 monthly into an escrow
account held by MetLife for the purpose of paying the semi-annual payments of
real estate taxes. ASLP is also required to deposit $12,500 per month into a
Leasing Escrow account held by MetLife for the purpose of accumulating the funds
that may be required to pay for any improvement required under the terms of a
new ten year lease with the U.S. Government.

                  AGREEMENTS SECURING PAYMENT OF THE METLIFE LOAN

         Payment of obligations under the MetLife Loan are secured by (i) the
Deed of Trust, Security Agreement and Fixture Filing, dated November 25, 1998
among ASLP and trustees for the benefit of MetLife (the "MetLife Deed of
Trust"); (ii) the Assignment of Leases dated November 25, 1998 between ASLP and
MetLife; and (iii) the Assignment of Contracts and Agreements dated November 25,
1998, between ASLP and MetLife.

         In a Guaranty Agreement dated November 25, 1998, TWC has guaranteed to
MetLife the payment and performance of certain obligations of ASLP under the
Note and the other documentation related to the MetLife Loan. In a separate
Unsecured Indemnity Agreement, dated November 25, 1998, TWC has indemnified
MetLife against any Environmental Claims, as defined in the Unsecured Indemnity
Agreement, which directly or indirectly relate to the Arlington Square Property.
Finally, TWC has entered into a Subordination of Management Agreement dated
November 25, 1998, whereby TWC subordinates all of its rights under the
Management Agreement between TWC and ASLP to any obligations of ASLP to MetLife.

                  GENERAL INFORMATION

         For federal income tax purposes at December 31, 1999, the basis of the
Arlington Square Project, including the land, building, tenant improvements on
the project and equipment (including asset adjustments under Section 754 of the
Internal Revenue Code of 1986, as amended) are stated as follows:

<TABLE>

<S>                                                <C>
                  Land                             $  2,791,072
                  Building                           19,389,512
                  Tenant improvements                 1,587,548
                  Equipment                              29,126
                                                   ------------
                                                     23,797,258

                  Less accumulated depreciation      (7,077,615)
                  Total                            $ 16,719,643

</TABLE>

Depreciation is determined using the straight-line method over the estimated
useful lives of the assets. Building and tenant improvements are depreciated
over 31.5 and 39 years respectively, and equipment is depreciated over seven
years. The realty tax rate on the project is .986%, and in 1999 ASLP paid an
aggregate of $212,386 in realty taxes.

         FORT WASHINGTON

         TWC owns a fee simple interest in a parcel of land on which a 222-room
hotel is built. The property is located in Ft. Washington, Pennsylvania.
Pursuant to a certain Lease Agreement dated March 24, 1974, TWC, as landlord, is
paid an annual minimum rent of $66,000, plus one percent of gross room sales,
but not less than $1,000 a month. The lease provides that upon termination of
the



                                       8
<PAGE>

lease on March 29, 2024, the property together with all improvements thereon
shall accrue to the landlord free and clear of all liens. The Company believes
that the Fort Washington property is adequate for its present use. During 1999
and 1998, the Company recorded revenues of $112,807 and $111,285 respectively,
under the lease agreement.

         TIMBERLAKE

         TWC, through wholly-owned subsidiaries, owns 48 acres for future
residential development in Charles County, Maryland. The Company has no plans
for the future development of the Timberlake property, as its preliminary site
plan was voided by the foreclosure by the note holder on 313 additional acres.
The Company believes that the remaining 48 acres can be divided into a maximum
of seven lots, depending on the results of percolation tests and the issuance of
on-site sewage discharge permits by the State of Maryland. The Company has not
taken any steps to obtain such tests or permits or to otherwise prepare to
divide the property into lots. See "Business Development - Recent Developments -
Timberlake."

         RIVER OAKS

         TWC, through a wholly-owned subsidiary, owns 100% of the partnership
interests of Four Year Trail Limited Partnership. The partnership owns 16.6
acres of land located in Prince William County, Virginia, known as River Oaks.
The Company has no obligations on this property except for the periodic payment
of real estate taxes.

          COMPANY HEADQUARTERS

         TWC has an operating lease for its office space at 4550 Montgomery
Avenue, Suite 220 North, Bethesda, Maryland 20814, which expires on January 31,
2004. Currently, TWC's rent obligations under the lease are $22,944 per annum.
The rent increases annually at a rate of 3%.

         COMPETITION

         The real estate market in the Washington Area has fully recovered from
most of the problems associated with the early 1990's, however, many market
segments are still depressed, particularly for the sale of unimproved land. When
it attempts to sell its properties, the Company must compete with other owners
of real property that is for sale. The lack of buyers and financing makes the
sale of the Company's properties extremely difficult. The value of the Arlington
Square Project has stabilized in recent years.

         Competition for tenants to lease land and office space is also very
strong, however, the Company's two principal income producing properties, the
Arlington Square Project and the Fort Washington property, as of December 31,
1999, are fully under lease to tenants until 2008 and 2024, respectively.

         INSURANCE

         In the opinion of management of the Company, all of the Company's
primary real estate assets are adequately covered by insurance.


                                       9
<PAGE>

         INVESTMENT POLICIES

         No limitations exist on the percentage of the Company's assets which
may be invested in any one investment, or type of investment, although approval
by the shareholders of a majority of the outstanding shares of Class A, Class B
and Class C Common Stock, voting jointly as a class, is required before a sale
or other disposition of all or substantially all of the assets of the Company or
any material subsidiary.

         Management's objective for the foreseeable future is to retain the
income-producing properties and to prepare for sale all non-income-producing
real estate assets. In the foreseeable future, the Company contemplates no new
investments in real estate, interests in real estate, real estate mortgages or
securities of, or interests in, entities primarily engaged in real estate
activities. In addition, during such period, the Company does not intend to
acquire other assets, either primarily for possible capital gain or primarily
for income.

ITEM 3.  LEGAL PROCEEDINGS

None.

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

None.



                                       10
<PAGE>

                                     PART II


ITEM 5.  MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

         Under TWC's Amended and Restated Charter, filed July 30, 1992 with the
Maryland Department of Assessments and Taxation ("TWC's Charter"), TWC has three
classes of common stock: Class A Common Stock, Class B Common Stock, and Class C
Common Stock (Class A, B and C Common Stock collectively referred to herein as
the "New Common Stock"). At the present time, there is no established public
trading market for any class of the New Common Stock. As of December 31, 1999,
there were 123 record holders of the Class A Common Stock, 418 record holders of
the Class B Common Stock, and 16 record holders of the Class C Common Stock.

         TWC has been unable to ascertain any market for TWC's common stock
during 1999 or 1998. Consequently, TWC does not have any information concerning
high and low bids on any class of its common stock during 1999 or 1998.

         TWC has not paid any dividends or distributions on its common stock
since 1990.

         Under TWC's Charter and except as may otherwise be required by law,
holders of Class A Common Stock are entitled to receive 100% of all dividends
and other distributions (the "Dividend Preference") made by TWC in respect of
its capital stock until such time as dividends and other distributions paid to
the holders of Class A Common Stock equal, in aggregate, to approximately
$5,500,000 (the "First Trigger").

         Following the First Trigger, if it occurs, the holders of Class A
Common Stock are to receive approximately 98.6%, and holders of Class B Common
Stock are to receive the remaining approximate 1.4%, of all dividends and other
distributions paid in respect of TWC's capital stock until such time as the
Dividend Preference paid to the holders of Class A Common Stock equal 100% of
the Allowed Class 7 Claims (the "Second Trigger"). Until the occurrence of the
Second Trigger, if any, the holders of Class C Common Stock have no right to
receive any dividends in respect of Class C Common Stock.

         In addition, under the Charter, the Class A Common Stock has an
aggregate liquidation preference in an amount equal to approximately $11,000,000
reduced (but not below zero) by the aggregate amount of dividends and other
distributions paid to the holders of the Class A Common Stock.

         Under the Charter, following the Second Trigger, if it occurs, all
outstanding shares of Class A Common Stock, Class B Common Stock and Class C
Common Stock will automatically be converted into a single class of common stock
(the "Single Class Common Stock"). Upon such conversion, the holders of Class B
Common Stock and the holders of the Class C Common Stock will receive an
aggregate of 25% of the outstanding shares of the Single Class Common Stock,
such 25% to be allocated PRO rata based on the number of shares of Class B
Common Stock and Class C Common Stock outstanding at the time of such
conversion. Except as otherwise provided in the Charter or required by law, upon
the occurrence of the Second Trigger: (i) shares of the Single Class Common
Stock will rank PARI PASSU and will share equally, share for share, in any
dividends or other distributions made by TWC, and will be identical in all
respects; and (ii) the holders of the Single Class Common Stock will be entitled
to one vote per share on all matters submitted for shareholder vote.


                                       11
<PAGE>

         Following the Second Trigger, if it occurs, TWC is required to provide
the holders of outstanding shares of Class A Common Stock, Class B Common Stock
and Class C Common Stock with a quarterly statement (which may be contained in
reports periodically filed by TWC with the Securities and Exchange Commission or
regularly provided by TWC to its shareholders) of the then-current amount of the
Dividend Preference and other distributions theretofore paid to the holders of
Class A Common Stock. As of December 31, 1998, the then-current amount of the
Dividend Preference was approximately $11,000,000. The aggregate amount of the
Dividend Preference paid to holders of the Class A Common Stock was $0.

ITEM 6.  MANAGEMENT'S DISCUSSION AND ANALYSIS

MATERIAL CHANGES IN FINANCIAL CONDITION

         During the year ended December 31, 1999, the Company's total assets
were reduced by $1,664,000 from $21,118,000 to $19,454,000. Such decrease was
primarily the result of depreciation of operating property and equipment and an
increase in the valuation allowance of $1,155,000 on Timberlake, offset, in
part, by increases in cash and cash equivalents and escrow deposits.

                  Real estate and development  property  decreased by $1,155,000
from $1,563,000 at December 31, 1998 to $408,000 at December 31,1999. This
decrease was primarily the result of an increase in the valuation allowance of
$1,155,000 on the Timberlake property.

         Operating property and equipment decreased by $772,000 from $17,966,000
at December 31, 1998 to $17,194,000 at December 31, 1999. Such decrease was
primarily the result of depreciation and the amortization of deferred rent
concessions on the Arlington Square Project, offset, in part, by the
capitalization of repair costs on the Arlington Square Project.

         Cash and cash equivalents decreased by $89,000 from $829,000 at
December 31, 1998 to $740,000 at December 31, 1999. Such decrease was primarily
the result of escrow deposits made on the Arlington Square Project.

         Escrow deposits increased by $190,000 from $58,000 at December 31, 1998
to $248,000 at December 31, 1999. Such increase was primarily the result of
periodic deposits made to the reserves on the Arlington Square Project.

         Other assets increased by $162,000 from $302,000 at December 31, 1998
to $464,000 at December 31, 1999. This increase was the result of an increase in
rent receivable on the Arlington Square Project and build out fees earned by
Arlington Square, Inc.

         During the year ended December 31, 1999, the Company's total
liabilities decreased by $1,479,000 from $24,726,000 at December 31, 1998 to
$23,247,000 at December 31, 1999. Such decrease was primarily the result of the
default of the purchase money mortgage on the Timberlake Project and the
subsequent foreclosure.

         Notes payable - Arlington Square Project decreased by $451,000 from
$23,350,000 at December 31, 1998 to $22,899,000 at December 31, 1999. Such
decrease was the result of principal payments on the two mortgages.


                                       12
<PAGE>

         Other notes and loans payable decreased by $892,000, from $892,000 to
$0, as a result of the default of the purchase money mortgage on the Timberlake
Project and the subsequent foreclosure. (See "Business Development - Recent
Developments - Timberlake").

         Accrued interest payable decreased by $180,000 from $311,000 at
December 31, 1998 to $131,000 at December 31, 1999. This decrease was the result
of the default of the purchase money mortgage on the Timberlake Project. (See
"Business Development - Recent Developments - Timberlake").

         Accounts payable and other liabilities increased by $45,000 from
$173,000 at December 31, 1998 to $218,000 at December 31, 1999. Such increase
was primarily the result of an increase in accrued expenses.

RESULTS OF OPERATIONS

         Revenues increased by $271,000 from $3,328,000 for the year ended
December 31, 1998 to $3,599,000 for the year ended December 31, 1999. Such
increase was primarily the result of an increase in operating property income
and other income.

         Operating property rental income increased by $67,000 from $3,181,000
for the year ended December 31, 1998 to $3,248,000 for the year ended December
31, 1999. This increase was the result of increased income received from the
Arlington Square Project, which is the Company's primary source of rental
income.

         Other income increased by $212,000 from $23,000 for the year ended
December 31, 1998 to $235,000 for the year ended December 31, 1999. This
increase was attributable to build out fees earned by Arlington Square, Inc.
related to the build-out of the Arlington Square Project.

         Total expenses decreased by $1,145,000 from $4,119,000 for the year
ended December 31, 1998 to $2,974,000 for the year ended December 31, 1999. This
decrease is primarily due to a decrease in interest expense, a decrease in
provision for estimated losses on asset valuation adjustments, and a decrease in
general and administrative expenses, offset, by an increase in operating
property expenses and other expenses.

         During 1998, the Company recorded a provision for estimated losses on
asset dispositions in the amount of $547,000. For 1999, the Company increased
the provision by an additional $98,000. This provision was due to the reduction
in net realizable value of certain real estate and development properties of the
Company.

         Interest expense decreased by $697,000 from $2,256,000 for the year
ended December 31, 1998 to $1,559,000 for the year ended December 31, 1999. This
decrease was the result of a refinancing of the mortgage on the Arlington Square
Project in 1998, and the resulting one-time recognition of the additional
interest liability to the previous mortgage lender.

         Operating property expenses increased by $63,000 from $807,000 for the
year ended December 31, 1998 to $870,000 for the year ended December 31, 1999.
This increase is due to an increase in operating expenses relating to the
Arlington Square Project.


                                       13
<PAGE>

         General and administrative expenses decreased by $22,000 from $470,000
for the year ended December 31, 1998 to $448,000 for the year ended December 31,
1999. This decrease is due to a decrease in administrative expenses relating to
the Arlington Square Project.

         Other expenses decreased by $39,000 from $39,000 for the year ended
December 31, 1998 to $0 for the year ended December 31, 1999. This decrease was
primarily the result of a decrease in consulting fees.

         Net income (loss) before depreciation and amortization increased by
$1,415,000 to income of $624,000 for the year ended December 31, 1999 from a
loss of $791,000 for the year ended December 31, 1998. Such increase was a
result of a decrease in total expenses as described above, including an increase
in revenues.

         Depreciation and amortization decreased by $604,000 from $1,413,000 for
the year ended December 31, 1998 to $809,000 for the year ended December 31,
1999. This decrease was the result of a one-time amortization for the
un-amortized portion of the loan closing costs from the previous mortgage lender
on the Arlington Square Project in 1998.

         Net loss before extraordinary loss decreased by $2,019,000 from a net
loss of $2,204,000 for the year ended December 31, 1998 to a net loss of
$185,000 for the year ended December 31, 1999. This decrease was the result of
the changes in the items described above.

         Extraordinary loss decreased by $1,750,000 from $1,750,000 for the year
ended December 31, 1998 to $0 in 1999. The extraordinary loss in 1998 was the
result of a one-time charge incurred on the Arlington Square project as a result
of interim financing. The lender required a participation interest in the
Arlington Square project as a condition of entering into the mortgage agreement.
When the mortgage was refinanced in 1998, the participation interest was valued
at $1,750.000.

LIQUIDITY AND CAPITAL RESOURCES:  OUTLOOK

         The Company's primary sources of funds for 1999 came from rental income
and property management fees. As of December 31, 1999, the Company had cash and
cash equivalents and escrow deposits totaling approximately $988,000 of which
$248,000 was escrow deposits. The Company expects its primary source of funds
for 2000 to again be rents received on the Arlington Square Project.

         During 1999, cash and cash equivalents decreased by $88,000 as compared
to an increase of $606,000 for 1998. The increase in 1998 was primarily due to
decreased interest payments on the Timberlake Notes, a reduction in real estate
taxes and a reduction in general and administrative expenses, offset, in part,
by an increase in operating property expenses. Additionally, it is attributable
to the refinancing of debt that provided cash.

         Future sources of funds are anticipated to come from the rents and
property management fees. The Company has tried without success to sell its
remaining assets.

         TWC's agreement to manage the Arlington Square Project provides for
management fees approximating $168,000 annually. See "Description of Properties
- Arlington Square Project". The continued ownership of the Arlington Square
Project is necessary to provide the Company with sufficient cash for operations.


                                       14
<PAGE>

         The Company's primary use of operating funds is anticipated to be for
corporate overhead expenses and principal and interest payments on the ASLP
Notes.

         On October 25, 1996 at TWC's annual stockholders meeting, William N.
Demas, formerly a Class B and Class C Director was elected as a Class A Director
and Jose Ma. C. Castro was elected as a Class B and Class C Director to fill the
position held by Mr. Demas. Jonathan C. Kinney was also re-elected as a Class B
and Class C Director. These three directors continue to serve.

         The Company does not have a plan to address its liquidity problems
other than to continue to try to sell assets held for investment and to continue
to manage and collect rents from the Arlington Square Project. If these attempts
are not successful, or, if the Arlington Square Project were to suffer a
significant setback, the Company may be forced to sell its remaining properties
for significantly less than recorded values and/or seek protection from its
creditors under the Bankruptcy Code.



                                       15
<PAGE>


ITEM 7.  FINANCIAL STATEMENTS

                   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

<TABLE>
<CAPTION>

                                                                                 Pages
                                                                                 -----

<S>                                                                              <C>
         Independent Auditor's Report                                              17

         Consolidated Balance Sheets at December 31, 1999 and 1998                 18

         Consolidated Statements of Operations for the years ended
           December 31, 1999 and December 31, 1998                                 19

         Consolidated Statements of Stockholders' (Deficiency) Equity              20

         Consolidated Statements of Cash Flows                                     21

         Notes to Consolidated Financial Statements                               22-29

</TABLE>



                                       16


<PAGE>

                                                        700 KING FARM BOULEVARD
                                                      ROCKVILLE, MARYLAND 20850
[ARONSON FETRIDGE & WEIGLE LOGO]                             PHONE 301.231.6200
                                                               FAX 301.231.7630
                                                                 WWW.AFWCPA.COM


                             INDEPENDENT AUDITOR'S REPORT


Board of Directors and Shareholders
THE WASHINGTON CORPORATION
Bethesda, Maryland

We have audited the accompanying Consolidated Balance Sheets of THE WASHINGTON
CORPORATION and Subsidiaries (the "Company") as of December 31, 1999 and
1998, and the related Consolidated Statements of Operations, Stockholders'
Equity and Cash Flows for the years ended.  These consolidated financial
statements are the responsibility of the Company's management.  Our
responsibility is to express an opinion on these financial statements based
on our audits.

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

In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of The
WASHINGTON CORPORATION and Subsidiaries as of December 31, 1999 and 1998, and
the results of their operations and their cash flows for the years then ended
in conformity with generally accepted accounting principles.

The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern.  As discussed in Note 13 to the
financial statements, the Company has incurred continuing losses from
operations and has been unable to dispose of certain of its real estate
assets.  As a result, the Company may not be able to continue to meet its
obligations as they come due.  These factors raise substantial doubt about
the Company's ability to continue as a going concern.  Management's plans in
regard to these matters are also discussed in Note 13.  The eventual outcome
of these matters are not presently determinable and the consolidated
financial statements do not include any adjustments that might be necessary
should the Company be unable to continue in existence.

            /s/ Aronson, Fetridge & Weigle

Rockville, Maryland
March 8, 2000


CERTIFIED PUBLIC ACCOUNTANTS
AND MANAGEMENT CONSULTANTS                                           [MRI LOGO]
-------------------------------------------------------------------------------

                                       17

<PAGE>

THE WASHINGTON CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
AT DECEMBER 31, 1999 AND 1998

<TABLE>
<CAPTION>

                                                                      1999                1998
                                                                   ------------       ------------
<S>                                                                <C>                <C>
ASSETS

  Real estate and development property (Notes 1,2, and 6)          $    408,000       $  1,563,220
  Operating property and equipment, net (Notes 1,2, 5 and 6)         17,193,631         17,965,953
  Cash and cash equivalents (Note 1)                                    740,401            828,893
  Escrow deposits (Note 5)                                              247,964             57,655
  Land purchase leaseback (Note 3)                                      400,000            400,000
  Other assets (Note 4)                                                 463,927            301,884
                                                                   ------------       ------------
Total Assets                                                       $ 19,453,923       $ 21,117,605
                                                                   ============       ============

LIABILITIES

 Note payable - Arlington Square Project (Note 5)                  $ 22,898,870       $ 23,350,000
 Other notes and loans payable (Note 6)                                       0            891,698
 Accrued interest payable                                               130,758            310,985
 Accounts payable and other liabilities                                 217,707            173,298
                                                                   ------------       ------------
Total Liabilities                                                    23,247,335         24,725,981
                                                                   ------------       ------------

COMMITMENTS AND CONTINGENCIES (Notes 2,3,5,10,11 and 12)



STOCKHOLDERS' (DEFICIT) EQUITY

  Common stock, $.01 par value; shares issued (Notes 1 and 9)
     Class  A  - 1,640,327 shares                                        16,403             16,403
     Class B - 21,476 shares                                                215                215
     Class C - 45,119 shares                                                451                451
     Additional paid-in capital                                       2,804,821          2,804,821
     Accumulated deficit                                             (6,615,301)        (6,430,266)
                                                                   ------------       ------------
     Total Stockholders' (Deficit) Equity                            (3,793,411)        (3,608,376)

     Total Liabilities and Stockholders' (Deficit) Equity          $ 19,453,924       $ 21,117,605
                                                                   ============       ============

</TABLE>



The accompanying Notes to Consolidated Financial Statements are an integral part
of these financial statements.



                                       18
<PAGE>

THE WASHINGTON CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998

<TABLE>
<CAPTION>

                                                                             1999             1998
                                                                          -----------       -----------
<S>                                                                       <C>               <C>
REVENUES

  Operating property rental income (Note 2)                               $ 3,247,726       $ 3,181,202
  Rent from land purchase leaseback (Note 3)                                  112,807           111,285
  Other income                                                                235,491            23,051
  Interest income                                                               2,719            12,350

        Total revenues                                                      3,598,743         3,327,888
                                                                          -----------       -----------

EXPENSES

  Provision for estimated losses on asset value adjustments (Note 2)           97,771           547,122
  Interest expense (Notes 5 and 6)                                          1,558,577         2,255,559
  Operating property expenses                                                 870,484           806,651
  General and administrative expenses                                         447,490           470,269
  Other expenses                                                               39,000

                                                                          -----------       -----------
       Total expenses                                                       2,974,322         4,118,601
                                                                          -----------       -----------

NET (LOSS) INCOME BEFORE DEPRECIATION AND AMORTIZATION
    AND EXTRAORDINARY LOSS                                                    624,421          (790,713)

DEPRECIATION AND AMORTIZATION (NOTE 1)                                        809,456         1,413,746

                                                                          -----------       -----------
NET LOSS BEFORE EXTRAORDINARY LOSS                                           (185,035)       (2,204,459)

EXTRAORDINARY LOSS (NOTE 12)                                                        0        (1,750,000)

                                                                          -----------       -----------
NET LOSS                                                                     (185,035)       (3,954,459)
                                                                          ===========       ===========

LOSS PER COMMON SHARE:

  Net loss before extraordinary loss                                      ($     0.11)      ($     1.34)
                                                                          ===========       ===========

  Net loss from extraordinary items                                       $      0.00       ($     1.07)
                                                                          ===========       ===========

  Net loss                                                                ($     0.11)      ($     2.41)
                                                                          ===========       ===========

Weighted average common shares outstanding                                  1,640,327         1,640,327
                                                                          ===========       ===========

</TABLE>

The accompanying Notes to Consolidated Financial Statements are an integral part
of these financial statements.


                                       19
<PAGE>

THE WASHINGTON CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS'  EQUITY
FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998

<TABLE>
<CAPTION>

                                                  ADDITIONAL
                                  COMMON            PAID-IN         ACCUMULATED
                                   STOCK            CAPITAL            DEFICIT          TOTAL
                                -----------       -----------       -----------       -----------
<S>                             <C>               <C>               <C>               <C>
BALANCE, JANUARY 1, 1998        $    17,069       $ 2,804,821       ($2,475,807)      $   346,083

NET LOSS                                  0                 0        (3,954,459)      ($3,954,459)
                                -----------       -----------       -----------       -----------

BALANCE, DECEMBER 31, 1998           17,069         2,804,821        (6,430,266)      ($3,608,376)

NET LOSS                                                               (185,035)      ($  185,035)
                                -----------       -----------       -----------       -----------

BALANCE, DECEMBER 31, 1999      $    17,069       $ 2,804,821       ($6,615,301)      ($3,793,411)
                                ===========       ===========       ===========       ===========

</TABLE>



The accompanying Notes to Consolidated Financial Statements are an integral part
of these financial statements.


                                       20
<PAGE>

THE WASHINGTON CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998

<TABLE>
<CAPTION>

                                                                                     1999            1998
                                                                                  ----------      ----------
<S>                                                                               <C>           <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss                                                                           ($185,035)    ($3,954,459)
Adjustments to reconcile net loss to net cash provided
by operating activities:
  Provision for estimated losses on asset value adjustments                           97,771         547,122
  Depreciation and amortization                                                      743,856       1,414,924
  Amortization of deferred rent concessions                                           65,600         159,557
  Amortization of debt discount on participation liability                                 0         100,000
  Extraordinary loss from equity participation                                             0       1,750,000
  Increase in deferred rental concession                                                   0        (656,000)
(Increase)  Decrease in other assets                                                (162,043)         53,110
(Decrease)increase in accrued interest payable                                        (2,778)         51,693
 Increase in accounts payable and other liabilities                                   44,409         108,220
                                                                                  ----------      ----------
      Net cash provided (used) by operating activities                               601,780        (425,833)
                                                                                  ----------      ----------

CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of fixed assets                                                             (37,134)              0
Withdrawals from restricted escrows                                                  201,550         958,710
Deposits to restricted escrows                                                      (391,860)       (447,017)
                                                                                  ----------      ----------
        Net cash provided (used) in investing activities                            (227,444)        511,693
                                                                                  ----------      ----------

CASH FLOWS FROM FINANCING ACTIVITIES:
  Curtailments of mortgage loan                                                     (451,130)    (20,600,000)
  Proceeds from mortgage loan                                                              0      21,500,000
  Curtailments on notes payable                                                      (11,698)         (6,311)
  Payment of loan fees and settlement costs                                                0        (373,477)
          Net cash used in financing activities                                     (462,828)        520,212
                                                                                  ----------      ----------

NET CHANGE IN CASH AND CASH EQUIVALENTS                                             (88,492)         606,072

CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD                                       828,893         222,821
                                                                                  ----------      ----------

CASH AND CASH EQUIVALENTS, END OF PERIOD                                            $740,401        $828,893
                                                                                  ==========      ==========

SUPPLEMENTAL CASH FLOW INFORMATION
  Interest paid during the year                                                   $1,561,355      $2,103,866
                                                                                  ==========      ==========

  Noncash transactions
    During 1998, the Company satisfied an obligation to the mortgage holder for
  a 30% participation interest in its real property by establishing the value of
  that interest at $1,850,000 and agreeing to pay that obligation on an
  installment basis over 9.5 years (Note 5).

   During 1999, the Company defaulted on a purchase money mortgage secured by
  real estate. The default resulted in a foreclosure of 313 acres of land
  recorded on the financial statement at $1,057,449, that was used to satisfy a
  $880,000 note payable secured by the property and $177,449 of accrued
  interest.


</TABLE>

The accompanying Notes to Consolidated Financial Statements are an integral part
of these financial statements.


                                       21
<PAGE>

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1
ACCOUNTING POLICIES
PRINCIPLES OF CONSOLIDATION

         The accompanying consolidated statements include the accounts of The
Washington Corporation ("TWC") and all entities over 50% owned by TWC
(collectively, the "Company"). All significant intercompany transactions have
been eliminated in consolidation. The Company considers its operating activities
to be all within one operating segment.

REVENUE RECOGNITION AND DEFERRED RENTAL CONCESSIONS

         Profit on the sale of real estate is recognized at the time the sale is
settled. Rental income from leases, with scheduled rental increases during their
lease terms, is recognized for financial reporting purposes on a straight-line
basis net of amortization of deferred rental concessions.

REAL ESTATE AND DEVELOPMENT PROPERTY EXPENSES

         The Company records its real estate and development property at the
lower of accumulated cost or estimated net realizable value. The Company follows
the policy of charging, as current expenses, the holding costs of real estate
such as taxes, insurance and interest, to the extent the properties are not
currently being developed. Direct development and engineering costs are
capitalized as part of property cost. No interest was capitalized during either
of the periods noted above.

OPERATING PROPERTY AND EQUIPMENT - ARLINGTON SQUARE PROJECT

         At December 31, 1999 and 1998, operating property and equipment is
stated at the net "fresh start" value of $23,000,000, less related accumulated
depreciation and amortization of related intangibles. For "fresh start"
reporting purposes, the Arlington Square Project was revalued to an amount equal
to the original amount of the non-recourse debt secured by the property.
Depreciation is calculated using the straight-line method over the estimated
useful lives of the assets. Buildings and related improvements are depreciated
over 31.5 and 39 years, respectively. Tenant improvements are amortized using
the straight-line method over the lesser of the term of the life of the
respective lease or the useful life of the improvements. Deferred rental
concessions are amortized over the term of the lease.

         At December 31, 1999 and 1998, operating property and equipment
consisted of:

<TABLE>
<CAPTION>

                                           1999                1998
                                        ------------       ------------
<S>                                     <C>                <C>
Land, building and equipment            $ 23,250,980       $ 23,363,353
Tenant improvements                        1,603,452          1,587,548
Deferred rental concessions, net             574,000            639,600
Deferred loan closing costs, net             278,668            310,516
                                        ------------       ------------
                                          25,707,100         25,901,017
Less depreciation and amortization        (8,513,469)        (7,935,064)
                                        ------------       ------------
                                        $ 17,193,631       $ 17,965,953
                                        ============       ============

</TABLE>


                                       22
<PAGE>

CASH AND CASH EQUIVALENTS

         For purposes of the statements of cash flows, the Company considers all
highly liquid instruments purchased with a maturity of three months or less to
be cash equivalents. The Company periodically has cash balances which may exceed
federally insured limits. The Company does not believe that this results in any
significant credit risk.

ESCROW DEPOSITS

          At December 31, 1999 and 1998, deposited funds of $247,964 and
$57,655, primarily for the Arlington Square Project as required by the lender,
were restricted for replacement reserve, and tax and insurance escrows.

MANAGEMENT ESTIMATES

         The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.

ASSET IMPAIRMENT

         It is the Company' policy to review long-lived assets and certain
identifiable intangibles to be held and used for impairment whenever events or
changes in circumstances indicate that the carrying amount of an asset may not
be recoverable.

NOTE 2
REAL ESTATE AND DEVELOPMENT PROPERTY

         Residential development efforts in the past included the acquisition of
raw land for the development of planned sites or finished building lots for sale
to homebuilders. The Company, through a wholly-owned subsidiary, owned 363 acres
known as Timberlake in Charles County, Maryland at December 31, 1998. During
1998, management assessed the property's net realizable value and recorded a
$547,122 adjustment to income to lower the property value. In February, 1999,
313 acres of this project was foreclosed upon by the lender. Upon foreclosure,
the recorded value of the property was reduced by $1,057,449 which represented
the outstanding principal balance of $880,000 plus accrued interest of $177,449.
Management has estimated the net realizable value of the property's remaining 48
acres to be $200,000, resulting in an estimated loss on asset valuation of
$97,771 for the year ended December 31, 1999.

         The Company also owns 16.6 acres, known as River Oaks, that was
intended to be a retail development site in Prince William County, Virginia.
Pursuant to its Chapter 11 reorganization plan, the lender has released its debt
and security interest on the property in exchange for the Company's release of
the lender's development obligations. The property had been revalued in "fresh
start" accounting to $200,000.

         In addition, the Company owns 23.21 acres in Memphis, Tennessee zoned
for multi-family



                                       23
<PAGE>

garden apartments and seven townhome lots in Dumfries, Virginia. These
properties are recorded on the balance sheet at an aggregate value of $8,000.

NOTE 3
LAND LEASE

         The Company owns a fee simple interest in land underlying a hotel
located in Ft. Washington, Pennsylvania. The property had an original cost and
current value of $400,000. The minimum annual rent under the lease, which
expires in 2024, is $66,000 plus one percent of gross room sales of the
property, but not less than $1,000 a month. As of December 31, 1999, the minimum
lease payments due pursuant to this lease through expiration are as follows:

<TABLE>

<S>               <C>                                           <C>
                  2000                                              78,000
                  2001                                              78,000
                  2002                                              78,000
                  2003                                              78,000
                  2004                                              78,000
                  Thereafter                                     1,579,500
                                                                ----------
                                                                $1,969,500

</TABLE>

NOTE 4
OTHER ASSETS

         Other assets includes rent receivable from the tenant in the Arlington
Square Project in the amounts of $285,901 and $257,473 at December 31, 1999 and
December 31, 1998, respectively.

NOTE 5
INSTALLMENT OBLIGATIONS - ARLINGTON SQUARE PROJECT

         From November 1997 to November 25, 1998, ASLP's property was encumbered
by two mortgage notes to Allied in the amount of $24,300,000. The outstanding
principal balance on the mortgage loans accrued interest at a blended rate of
10%, based on the LIBOR. The notes were cash-flow mortgages with all excess cash
flow, as defined, being applied to reduce the principal balance and to fund the
required escrows. One of the mortgage agreements provided for the lender to
receive a participation interest of 30% in the net cash flow and a 30% equity
value in the property if and when it is sold, with such provision to survive any
payoff of the mortgage.

         On November 25, 1998, ASLP refinanced the above described mortgages
with a new mortgage with MetLife in the amount of $21,500,000, secured by a
first deed of trust on the land and building. This note bears interest at 6.8%
and both principal and interest are payable in monthly installments of $147,058
beginning in January 1999, with the outstanding principal of approximately $15.9
million balance due on December 1, 2010.

         On December 1, 1998, ASLP entered into a forbearance agreement with
Allied whereby Allied gave notice of demand for full payment of its
participation interest in the equity value of the property and established the
value of that interest at $1,850,000, including Allied's cash flow interest for
the period October 1 through December 31, 1998. Under the agreement, the
partnership is to pay Allied its participation interest in equal monthly
installments of $22,739, including interest at 7.5% over a term of



                                       24
<PAGE>

9 1/2 years. Allied's participation interest is collaterized by a deed of trust
in the real estate and is guaranteed by all of the partners. Each partner's
guarantee is secured by a pledge of its interest in the partnership. Allied
agreed to forebear on certain of its surviving rights from the mortgage note,
including an abatement of its right to the property's net cash flow, provided
all payments under the agreement are paid when due. In addition, Allied
subordinated its deed of trust to the deed of trust of MetLife.

         At December 31, 1999, the scheduled future maturities of the
obligations is as follows:

<TABLE>
<CAPTION>

               Year Ending
               December 31                                        Amount
               -----------                                        ------
<S>               <C>                                         <C>
                  2000                                        $   483,819
                  2001                                            518,882
                  2002                                            556,491
                  2003                                            596,833
                  2004                                            640,106
                  Thereafter                                   20,102,739
                                                              -----------
                                                              $22,898,870

         On December 31, 1999, the parties to the forbearance agreement entered
into a termination of the forbearance agreement, since all further payment
obligations of the parties are contained in the Amended and Restated Promissory
Note dated as of December 1, 1998.

NOTE 6
OTHER NOTES AND LOANS PAYABLE

         Other notes and loans payable at December 31, 1999 and 1998 consisted
of the following:

<CAPTION>

                                                                                         1999              1998
                                                                                     ------------       ----------
<S>               <C>                                                                   <C>             <C>
                  Notes payable collateralized by real estate bearing interest
                  at 10%, payable interest only until final
                  maturity in January,  1998.  The real estate  securing  this
                  note was foreclosed upon in February 1999 in satisfaction of
                  this note payable.                                                     ----           $  880,000

                  Note payable with bank, secured by automobile, bearing interest
                  at 8.25%, payable in monthly principal and interest payments
                  of $630, due August 7, 2000. Paid in full in 1999.                     ----               11,698
                                                                                     ------------       ----------

                                      Total                                              ----           $  891,698
                                                                                     ============       ==========

</TABLE>



                                       25
<PAGE>

NOTE 7
INCOME TAXES

         As of December 31, 1999, the Company had tax net operating loss
carryforwards of approximately $18,226,000. The deferred tax asset associated
with these net operating loss carryforwards of approximately $7,290,000 is
offset by the valuation allowance applied to the deferred tax asset. The net
operating losses for income tax reporting purposes will expire as follows:

<TABLE>

<S>               <C>        <C>                <C>      <C>
                  2004 -     $1,309,000         2007 -   $9,405,000
                  2005 -      5,652,000         2008 -    1,429,000
                  2006 -        155,000         2018 -       91,000
                                                2019 -      185,000

</TABLE>

NOTE 8
RELATED PARTY TRANSACTIONS

         During 1999 and 1998, the Company engaged a law firm in which one
current director of the Company serves as partner in the firm. During 1999 and
1998, the Company paid $9,636 and $16,033, respectively, in fees to this law
firm. During 1999, the Company paid $20,023 of consulting fees for construction
services to an entity affiliated with another current director.

NOTE 9
COMMON STOCK AND DISTRIBUTIONS

         In connection with a reorganization in 1992, the equity interests of
the Company have been restructured as follows:

         Unsecured creditors with pre-confirmation claims totaling approximately
$11,000,000 exchanged their interests for 1,675,163 shares of the Class A Common
Stock, representing 100% of such class.

         Pre-confirmation shareholders of the Company (other than controlling
shareholders as defined in the Plan) exchanged 610,736 shares of Old Common
Stock for 24,429 shares of the Class B Common Stock, representing 100% of such
class.

         Controlling shareholders of the Company exchanged their 1,134,225,
shares of Old Common Stock for 45,369 shares of the Class C Common Stock,
representing 100% of such class.

         Under the terms of the Plan, holders of the Class A Common Stock will
receive 100% of all dividends paid by the Company in respect of its capital
stock until such time as the cumulative dividends and other distributions paid
to holders of Class A Common Stock equal 50% of the allowed Class 7 bankruptcy
claims of approximately $11,000,000 (the "First Trigger").

         Following the First Trigger, the holders of the Class A Common Stock
will receive approximately 98.6% (with Class B stockholders receiving 1.4%) of
all dividends paid in respect of the Company's capital stock until such time as
the cumulative dividends and other distributions paid to holders of Class A
Common Stock equal 100% of the allowed Class 7 bankruptcy claims (the "Second
Trigger").


                                       26
<PAGE>

         Following the Second Trigger, all outstanding shares of Class A Common
Stock, Class B Common Stock and Class C Common Stock will automatically convert
into a single class of common stock.

         The holders of Class A Common Stock also have an aggregate liquidation
preference of an amount equal to the amount of Class 7 bankruptcy claims allowed
in the Company's Chapter 11 case. All dividends or distributions made with
respect to the Class A Common Stock shall reduce the liquidation preference
dollar for dollar.

         As of December 31, 1999, the number of common shares outstanding is as
follows:

<TABLE>

<S>                             <C>        <C>
                                Class A    1,640,327
                                Class B       21,476
                                Class C       45,119

NOTE 10
LESSOR ARRANGEMENTS

         The Company, through its 74% interest in ASLP, owns a building which is
100% leased to an agency of the U.S. Government under a ten year lease expiring
in September, 2008. During the years ended December 31, 1999 and 1998, the
Company realized income from this lease of approximately $3,248,000 and
$3,181,000, respectively, or 88% and 96% of total revenues, respectively. The
terms of the lease require the tenant to pay base rent plus its proportionate
share of increases in certain operating expenses.

         The minimum lease payments due pursuant to this lease at December 31,
1999 are as follows:

<CAPTION>

<S>                                 <C>                    <C>
                                    2000                   $ 3,181,202
                                    2001                     3,181,202
                                    2002                     3,181,202
                                    2003                     3,181,202
                                    2004                     3,137,043
                                    Thereafter              12,548,172
                                                           -----------
                                            Total          $28,410,023
                                                           ===========

NOTE 11
OFFICE LEASE

         In January 1999, the Company executed an operating lease as lessee, for
its office space which expires January 31, 2004. The rent increases annually by
3%. The future annual rents under this lease are:

<CAPTION>

<S>                                 <C>                          <C>
                                    2000                         23,575
                                    2001                         24,281
                                    2002                         25,006
                                    2003                         25,750
                                    2004                          2,151
                                                               --------
                                    Total                      $100,763
                                                               ========

</TABLE>


                                       27
<PAGE>

         Rental expense under the Company's office lease agreements was $20,645
and $15,828 for 1999 and 1998, respectively.


NOTE 12
EXTRAORDINARY LOSS

         In accordance with Statement of Position 97-1, "Accounting by
participating Mortgage Loan Borrowers" issued by the American Institute if
Certified Public Accountants, during 1998, the Partnership established a
participation liability and a debt-discount for the fair value of the
participation interest with its lender (Note 5).

         In 1998, the participation interest in the equity value was converted
to a note and a forbearance agreement was executed dated December 1, 1998 (Note
5). As such, the unamortized portion of the debt-discount, net of the gain on
the conversion of the participation liability, has been recorded as an
extraordinary loss of $1,750,000.

NOTE 13
GOING CONCERN

         The Company has continued to incur losses and has been unable to
liquidate certain of its real estate assets in a timely manner and is facing
certain liquidity problems in the near future if these assets cannot be
disposed. These factors raise substantial doubt about the Company's ability to
continue as a going concern. Management does not have a formal plan to address
these possible liquidity problems although they will continue to monitor and
reduce administrative costs and/or attempt to delay payment for certain services
until properties are sold. If these attempts are not successful, the Company may
be forced to sell its remaining properties for significantly less than the
recorded values and/or seek protection from its creditors under the Bankruptcy
Code. The eventual outcome of these matters cannot be determined. The
accompanying financial statements do not include any adjustments to assets or
recorded liabilities of the Company if it is forced to liquidate prematurely and
sales of assets and settlement of liabilities are not conducted in the normal
course of business.

NOTE 14
NET INCOME PER SHARE

         The following is a reconciliation of the numerators and denominators of
the basic net loss per share computations for 1999 and 1998:

<TABLE>
<CAPTION>

                                                        1999
                                    ----------------------------------------------
                                        Loss            Shares           Per Share
                                    (Numerator)      (Denominator)        Amount
                                    -----------      -------------        ------
<S>                                 <C>                <C>               <C>
Basic net loss per share
  Net loss                          $   (185,035)      1,706,922         $    (.11)
                                    ============       =========         =========

</TABLE>


                                       28
<PAGE>

<TABLE>
<CAPTION>

                                                        1999
                                    ----------------------------------------------
                                        Loss            Shares           Per Share
                                    (Numerator)      (Denominator)        Amount
                                    -----------      -------------        ------
<S>                                  <C>                 <C>             <C>
Net loss before extraordinary loss   $ (2,204,459)

Basic net loss per share
Net loss before extraordinary loss     (2,204,459)       1,706,922             (1.34)

Extraordinary loss                     (1,750,000)       1,706,922             (1.07)
                                     ------------        ---------       -----------

Net loss                             $ (3,954,459)       1,706,922       $     (2.41)
                                     ============        =========       ===========

</TABLE>



                                       29
<PAGE>

ITEM 8.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
             ACCOUNTING AND FINANCIAL DISCLOSURE

None.



                                       30
<PAGE>

                                    PART III

ITEM 9.  DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
      COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT

EXECUTIVE OFFICERS AND DIRECTORS OF THE COMPANY

         TWC's Bylaws require no less than two (2) directors, at least one of
which is a Class A Director, shall constitute a quorum for a Board of Directors
meeting and the vote of a majority of the Class A Directors participating at
such meeting is necessary for the Board to act. The Board of Directors is
composed of one (1) Class A Director and two (2) Class B Directors. On October
25, 1996, William N. Demas, formerly a Class B and Class C Director was elected
as a Class A Director and Jose Ma. C. Castro was elected as a Class B and Class
C Director to fill the position held by Mr. Demas. Jonathan C. Kinney continues
to serve as a Class B and C Director. All three directors are elected to serve
until the next annual meeting of shareholders or the next special meeting of
shareholders called for the election of directors, and until their successors
have been elected and qualified. TWC did not hold an annual or special meeting
of shareholders in 1999. See "Description of Business - Business Development -
Recent Developments."

         TWC's executive officers and directors are:

<TABLE>
<CAPTION>

         NAME                         AGE                       POSITION
         ----                         ---                       --------
<S>                                    <C>            <C>
         William N. Demas              63             Chairman of the Board of Directors,
                                                      Chief Executive Officer and President

         Jonathan C. Kinney            54             Director

         Jose Ma. C. Castro            44             Director

         Geraldine Piatt               64             Secretary

</TABLE>

         William N. Demas has been Chairman of the Board of Directors, Chief
Executive Officer and President of TWC since it was established in 1979. Mr.
Demas served as Chairman of the Board of Directors and Chief Executive Officer
of Capital Mortgage Investors, TWC's predecessor, from 1969 to 1979.

         Jonathan C. Kinney has served as a director of TWC since 1982. Mr.
Kinney is a partner at the law firm of Bean, Kinney & Korman, P.C., which has
served as the Company's counsel in various corporate and real estate
transactions since 1984.

         Jose Ma. C. Castro has served part-time as the Controller of the
Company since 1995. Mr. Castro also currently serves as a project accountant
with the engineering firm of ICF Kaiser International, Inc., a position he has
held since 1993. Mr. Castro previously served as the Controller of the Company
from 1988 through May 1993.

         Geraldine Piatt has served as the Secretary of the Company since 1992.
Ms. Piatt also serves as



                                       31
<PAGE>

property management administrator since 1989.

COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED

         Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), requires that directors and officers of a registrant and
persons owning more than ten percent of such registrant's equity securities
registered under Section 12 of the Securities Exchange Act file reports of
ownership and changes in ownership ("Section 16 Filings") with the Securities
and Exchange Commission (the "SEC"). The SEC requires that copies of all such
Section 16 Filings be furnished by the filers to the registrant. TWC has not
received any Section 16 Filings during Fiscal 1999.

ITEM 10.  EXECUTIVE COMPENSATION

SUMMARY COMPENSATION TABLE

         The following table sets forth information concerning the annual
compensation earned by the President and Chief Executive Officer of TWC (the
"Named Executive Officer") for services rendered to TWC in all capacities for
the fiscal years ended December 31, 1999 ("Fiscal 1999"), December 31, 1998
("Fiscal 1998") and December 31, 1997 ("Fiscal 1997"):

                           SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>

                                                      ANNUAL COMPENSATION
                                      -----------------------------------------------------
                                                                            OTHER                 ALL
                                                                            ANNUAL               OTHER
NAME AND PRINCIPAL POSITION           YEAR      SALARY       BONUS       COMPENSATION        COMPENSATION
---------------------------           ----      ------       -----       ------------        ------------
<S>                                   <C>        <C>           <C>             <C>             <C>
William N. Demas, Chief
 Executive Officer                    1999       74,000        -               -               24,852 (1)
 and President
                                      1998       72,843        -               -               24,852 (1)

                                      1997       38,111        -               -               24,852 (1)

</TABLE>

(1) Since August 1993, TWC has paid the premiums on a life insurance policy for
Mr. Demas ("the Demas Policy"). The amounts shown represent TWC's total annual
payments therefor in Fiscal 1999 and Fiscal 1998. In both years, TWC reduced Mr.
Demas's base salary by the amount equal to the costs of the Demas Policy.

         TWC has not granted stock options, restricted stock awards, or share
appreciation rights during Fiscal 1999, Fiscal 1998, and Fiscal 1997. Since its
reorganization in 1992, TWC has not had a long-term incentive plan or pension
plan. However, in 1992, TWC established a noncontributory Salary Reduction SEP
on behalf of its employees (including Mr. Demas), pursuant to which employees,
at their election, may defer a percentage of their annual salaries.

EMPLOYMENT AGREEMENT WITH WILLIAM N. DEMAS

         On July 30, 1992, William N. Demas entered into an agreement with TWC
providing for his employment as President and Chief Executive Officer of TWC
(the "Employment Agreement"). The Employment Agreement expired on July 30, 1995.

         Since the expiration of the Employment Agreement on July 30, 1995, Mr.
Demas has



                                       32
<PAGE>

been acting as the President and Chief Executive Officer of TWC without a
written employment agreement. Mr. Demas has been serving in such positions for a
base salary of approximately $63,000 per year and performs such services on a
part-time basis, not to exceed 25 hours per week. In addition, Mr. Demas
receives as benefits health insurance and reimbursement of expenses incurred on
behalf of TWC.

         In addition, since August 1993, in lieu of paying Mr. Demas' full
salary, TWC has paid the monthly premiums on a life insurance policy for Mr.
Demas.

COMPENSATION OF DIRECTORS

         In accordance with TWC's Bylaws, directors may be reimbursed for any
reasonable expenses incurred in connection with their service on the Board of
Directors. There are no other arrangements pursuant to which directors of TWC
are compensated for services as director. Messrs. Demas, Kinney and Castro did
not seek or receive any reimbursement for their expenses in Fiscal 1999.

ITEM 11.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

PRINCIPAL SHAREHOLDERS

         The following table shows with respect to each person or entity known
by TWC to be the beneficial owner of more than 5% of any class of TWC's voting
securities as of December 31, 1999, (i) the number of shares so owned, and (ii)
the percentage of all shares represented by such ownership (based upon the
number of shares outstanding in the class) as of December 31, 1999.

<TABLE>
<CAPTION>

                                                                                                     SHARES BENEFICIALLY OWNED
CLASS OF                                                                                           ----------------------------
 STOCK                                                                                             # OF SHARES    % OF CLASS(1)
 -----                                                                                             -----------    -------------
<S>                            <C>                                                                    <C>             <C>
Class A                        Kevin E. Foley,                                                        410,618         24.7
Common Stock                   Deputy Superintendent of Insurance of the State of New
                               York, as Agent of the Rehabilitator of Executive Life Insurance
                               of New York(2)

Class A                        AIF II, L.P.(3)                                                        325,242         19.6
Common Stock

Class A                        Lion Advisors, L.P.(3)                                                 325,242         19.6
Common Stock

Class C                        The Antonelli Creditors Liquidating Trust                               18,206         40.1
Common Stock

Class C                        Andrea Kinney Greene
Common Stock                                                                                            4,116          9.1

Class C                        David B. Kinney                                                          5,326         11.7
Common Stock

Class C                        David H. Kinney                                                          4,154          9.2
Common Stock

</TABLE>

-----------------
(1) For purposes of this table and the table set forth immediately below, under
the heading "Directors and Executive Officers", the percentage of shares owned
by each shareholder listed is based on the number of Class A Common Stock, Class
B Common Stock and Class C Common Stock (the "New Shares") that have been
authorized pursuant to TWC's plan of reorganization. The authorized New Shares
equal the number of New Shares issued and outstanding. Under the plan of
reorganization, shareholders could claim their New Shares until July 30, 1995,
after which date TWC would have the right to cancel any and all of the unclaimed
New Shares. Because the New Shares have not been registered



                                       33
<PAGE>

under the Securities Act of 1933, shareholders are not required to file
statements with the SEC under section 13(d) and 13(g) concerning their
beneficial ownership of such shares. The information set forth in the table is
based principally upon information provided by the Company's transfer agent and
plan of reorganization.

(2) Mr. Foley's address is 123 Williams Street, New York, NY  10038-3889.

(3) The address for AIF II, L.P. and Lion Advisors, L.P. c/o Apollo Advisors,
L.P. is 1999 Avenue of the Stars, Suite 1050, Los Angeles, CA 90067.

(4) The address for the trust is the Antonelli Liquidating Trust c/o Bailey
Realty Corporation, 1130 Connecticut Avenue, N.W., Washington, D.C. 20036.

(5) Andrea Kinney Greene, the sister of Jonathan Kinney who is a director of
TWC, owns approximately 4,116 shares of Class C Common Stock. In addition,
Andrea Kinney Greene, as custodian for her children, holds approximately 132
shares of Class B Common Stock. The address provided to TWC by Andrea Kinney
Greene is Route 2, Box 782, Purcellville, VA 22132.

(6) This total includes approximately 584 shares of Class C Common Stock over
which David B. Kinney has voting and investment powers in his capacity as
general partner of K-F Associates, a Virginia limited partnership, which
interests are owned by members of the Kinney Family. David B. Kinney is the
father of Jonathan C. Kinney. The address provided to TWC by David B. Kinney
is 754 Walker Road, 2nd Floor, Great Falls, VA 22066.

(7) Mr. David H. Kinney is the brother of Jonathan C. Kinney. The address
provided to TWC by David H. Kinney is 1056 Manning Street, Great Falls, VA
22066.

                                       34
<PAGE>

DIRECTORS AND EXECUTIVE OFFICERS

         The following table sets forth, as of December 31, 1999, information
with respect to beneficial ownership of TWC's capital stock by (i) the Named
Executive Officers, (ii) each director and (iii) all directors and executive
officers of TWC as a group.

<TABLE>
<CAPTION>

          Name and Address of                                     Amount and Nature of      Percentage of Class
           Beneficial Owner(1)          Title of Class            Beneficial Ownership         Outstanding
---------------------------------   --------------------          --------------------      -------------------
<S>                                 <C>                               <C>                         <C>
William N. Demas                    Class A Common Stock                7,608                         *
                                    Class C Common Stock                8,982(2)                   19.8

Jonathan C. Kinney                  Class A Common Stock                  523(3)                      *
                                    Class C Common Stock                4,564(4)                   10.1

Jose Ma. C. Castro                  Class A Common Stock                  198                         *

Directors and Officers as a Group   Class A Common Stock                8,131                         *
  (2 persons)                       Class C Common Stock               13,546                      29.9

</TABLE>

--------------
*   Less than 1% of outstanding shares of the Class

(1) The address for each director and officer is c/o TWC, 4550 Montgomery
Avenue, Suite 220 North, Bethesda, Maryland 20814.

(2) This total includes 1,340 shares of Class C Common Stock which Mr. Demas
owns with his wife in joint tenancy; however, it does not include
approximately 440 shares of Class C Common Stock beneficially owned by Mr.
Demas' daughter Edith Demas. In addition, Mr. Demas, as custodian for his
children, Amy, James and Sarah Demas, holds 164 shares of Class B Common
Stock.

(3) Mr. Kinney disclaims beneficial ownership of these shares of Class A
Common Stock which are held by Bean, Kinney & Korman, P.C., a law firm in
which Mr. Kinney is a stockholder.

(4) This total includes 8 shares of Class C Common Stock which are held by
Mr. Kinney's wife and 146 shares of Class C Common Stock held by Mr. Kinney
as a limited partner in K-F Associates, a limited partnership which interests
are owned by members of the Kinney Family. Mr. Kinney disclaims beneficial
ownership of shares held by K-F Associates. In addition, Mr. Kinney, as
custodian for his children, David N.A. and Rachael W.K. Kinney, holds 232
shares of Class B Common Stock.

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

         Mr. Kinney and certain members of Mr. Kinney's family (collectively,
the "Kinney Family") have a 16% ownership interest (6% of which is Mr. Kinney's
personal holding) in ASLP, a limited partnership in which the Company is the
general partner. Mr. Demas has a 7% ownership interest in ASLP. In Fiscal 1999,
Messrs. Demas and Kinney and the Kinney Family received no partnership
distributions from their limited partnership interests and do not expect to
receive any in the foreseeable future. See "Description of Properties -
Arlington Square Project.

         In Fiscal 1999 and Fiscal 1998, the Company paid legal fees of
approximately $9,636 and $16,033 respectively to Bean, Kinney & Korman, P.C.,
the law firm in which Mr. Kinney is partner and stockholder.



                                       35
<PAGE>

ITEM 13.  EXHIBITS LIST AND REPORTS ON FORM 8-K

(a)      EXHIBITS

3.1      The Company's Amended and Restated Charter, filed with the Maryland
         Department of Assessments and Taxation on July 30, 1992, which was
         filed as Exhibit 2.2 to the Company's Registration Statement on Form
         8-A filed with the Commission on August 10, 1992, is incorporated
         herein by reference.

3.2      The Company's Bylaws, dated as of July 30, 1992, which were filed as
         Exhibit 2.3 to the Company's Registration Statement on Form 8-A filed
         with the Commission on August 10, 1992, are incorporated by reference.

4.1      The Second Amended Joint Plan of Reorganization of The Washington
         Corporation, Carlin Springs Associates Limited Partnership, Second Fair
         Ridge Associates Limited Partnership and Wilson-Randolph Limited
         Partnership, dated May 28, 1992, as modified, which was filed as
         Exhibit 2.1 to the Company's Report on Form 8-K filed with the
         Commission on July 29, 1992, Commission File No. 0-20518, is
         incorporated herein by reference.

4.2      The Registration Rights Agreement, dated as of July 30, 1992, by and
         among the Company and certain holders of the Company's Class A Common
         Stock which was filed as Exhibit 4.4 to the Company's Form 10-Q filed
         with the Commission on August 14, 1992, Commission File No. 0-20518, is
         incorporated herein by reference.

10.1     Agreement of Limited Partnership of Arlington Square Limited
         Partnership dated September 17, 1985, by and among TWC Properties
         Partnership and the limited partners, which was filed as Exhibit 10.1
         to the Company's report on Form 10-KSB filed with the Commission April
         6, 1995, is incorporated herein by reference.

10.2     The U. S. Government Lease of Real Property (Arlington Square Project)
         dated May 13, 1988 including Riders 1, 2 and 3 which was filed as
         Exhibit 10 to the Company's Form 10-K filed with the Commission on
         March 29, 1990, Commission File No. 0-20518, is incorporated herein by
         reference.

10.3     The Lease Agreement dated March 24, 1974 between the Company and Fort
         Washington Inn Associates, which was filed as Exhibit 10.5 to the
         Company's Form 10-KSB filed with the Commission April 6, 1993, is
         incorporated herein by reference.

10.4     The Stock Purchase Agreement dated November 1, 1994 relating to the
         sale of 2900 South Glebe, Inc, between The Washington Corporation and
         William N. Demas, which was filed as Exhibit 10.5 to the Company's Form
         10-KSB filed with the Commission on April 6, 1995, is incorporated
         herein by reference.

10.5     The First Amendment to Agreement of Limited Partnership of Arlington
         Square Limited Partnership dated December 14, 1990, by and among TWC
         Properties Partnership, William N. Demas, John D. Wolf and The Ballston
         Corporation, which was filed as Exhibit 10.8 to the Company's report on
         Form 10-KSB filed with the Commission April



                                       36
<PAGE>

         6, 1995, is incorporated herein by reference.

10.6     The Second Amendment to Agreement of Limited Partnership of Arlington
         Square Limited Partnership dated March 8, 1991, by and among TWC
         Properties Partnership, William N. Demas, John D. Wolf, The Ballston
         Corporation and Arlington Square, Inc., which was filed as Exhibit 10.9
         to the Company's report on Form 10-KSB filed with the Commission April
         6, 1995, is incorporated herein by reference.

10.7     The Third Amendment to Agreement of Limited Partnership of Arlington
         Square Limited Partnership dated March 8, 1991, between TWC Properties
         Partnership, William N. Demas, John D. Wolf, The Ballston Corporation,
         Arlington Square Incorporated, Jonathan C. Kinney, David B. Kinney and
         Barbara A. Kinney evidencing the transfer of a 16% partnership interest
         in ASLP to Jonathan C. Kinney, David B. Kinney and Barbara A. Kinney,
         which was filed as Exhibit 10.1 to the Company's Form 10-KSB filed with
         the Commission on April 13, 1993, is incorporated herein by reference.

10.8     The Fourth Amendment to Agreement of Limited Partnership of Arlington
         Square Limited Partnership dated January 1, 1993, by and among TWC
         Properties Partnership, Arlington Square, Inc., and The Washington
         Corporation, is incorporated herein by reference.

10.9     Promissory Note in the original principal amount of $23,000,000 dated
         November 20, 1997 between Arlington Square Limited Partnership and
         Allied Capital Commercial Corporation, which was filed as Exhibit 10.9
         to the Company's Form 10-KSB filed with the Commission on May 8, 1998,
         is incorporated herein by reference.

10.10    Promissory Note in the original principal amount of $1,000,000 dated
         November 20, 1997 between Arlington Square Limited Partnership and
         Allied Capital Commercial Corporation, which was filed as Exhibit 10.10
         to the Company's Form 10-KSB filed with the Commission on May 8, 1998,
         is incorporated herein by reference.

10.11    Loan Agreement in the amount of $24,300,000 dated November 20, 1997
         between Arlington Square Limited Partnership and Allied Capital
         Commercial Corporation, which was filed as Exhibit 10.11 to the
         Company's Form 10-KSB filed with the Commission on May 8, 1998, is
         incorporated herein by reference.

10.12    Amended and Restated Agreement of Limited Partnership of Arlington
         Square Limited Partnership, which was filed as Exhibit 10.12 to the
         Company's Form 10-KSB filed with the Commission on May 8, 1998, is
         incorporated herein by reference.

10.13    Assignment of Leases and Rents dated November 20, 1997 by Arlington
         Square Limited Partnership to Allied Capital Commercial Corporation,
         which was filed as Exhibit 10.13 to the Company's Form 10-KSB filed
         with the Commission on May 8, 1998, is incorporated herein by
         reference.

10.14    Assignment of Leases and Rents (GSA) dated November 20, 1997 by
         Arlington Square Limited Partnership to Allied Capital Commercial
         Corporation, which was filed as Exhibit 10.14 to the Company's Form
         10-KSB filed with the Commission on May 8, 1998, is incorporated herein




                                       37
<PAGE>

         by reference.

10.15    Guaranty by Arlington Square Limited Partnership to Allied Capital
         Commercial Corporation, on May 8, 1998, is incorporated herein by
         reference. which was filed as Exhibit 10.15 to the Company's Form
         10-KSB filed with the Commission.

10.16    Indemnity Agreement dated November 20, 1997 between Arlington Square
         Limited Partnership and Allied Capital Commercial Corporation, which
         was filed as Exhibit 10.16 to the Company's Form 10-KSB filed with the
         Commission on May 8, 1998, is incorporated herein by reference.

10.17    Deed of Trust and Security Agreement "A" dated November 20, 1997
         between Arlington Square Limited Partnership and Allied Capital
         Commercial Corporation, which was filed as Exhibit 10.17 to the
         Company's Form 10-KSB filed with the Commission on May 8, 1998, is
         incorporated herein by reference.

10.18    Deed of Trust and Security Agreement "B" dated November 20, 1997
         between Arlington Square Limited Partnership and Allied Capital
         Commercial Corporation, which was filed as Exhibit 10.18 to the
         Company's Form 10-KSB filed with the Commission on May 8, 1998, is
         incorporated herein by reference.

10.19    Assignment of Limited Partnership interest of Ashton Glen Associates
         dated December 11, 1997 from The Washington Corporation to K-F
         Associates, which was filed as Exhibit 10.19 to the Company's Form
         10-KSB filed with the Commission on May 8, 1998, is incorporated herein
         by reference.

10.20    First Amendment to the Limited Partnership Agreement of Ashton Glen
         Associates dated December 11, 1997 which was filed as Exhibit 10.20 to
         the Company's Form 10-KSB filed with the Commission on May 8, 1998, is
         incorporated herein by reference.

10.21    Promissory Note dated November 25, 1998 in the original principal
         amount of $21,500,000 with Arlington Square Limited Partnership as
         borrower and Metropolitan Life Insurance Company as holder, which was
         filed as Exhibit 10.21 to the Company's Form 10-KSB filed with the
         Commission on June 2, 1999, is incorporated herein by reference.

10.22    Deed of Trust, Security Agreement and Fixture Filing from Arlington
         Square Limited Partnership to Keith J. Willner and Scott A. Morehouse
         as Trustees for the benefit of Metropolitan Life Insurance Company,
         dated November 25, 1998, which was filed as Exhibit 10.22 to the
         Company's Form 10-KSB filed with the Commission on June 2, 1999, is
         incorporated herein by reference.

10.23    Assignment of Leases between Arlington Square Limited Partnership and
         Metropolitan Life Insurance Company dated November 25, 1998, which was
         filed as Exhibit 10.23 to the Company's Form 10-KSB filed with the
         Commission on June 2, 1999, is incorporated herein by reference.

10.24    Assignment of Contracts and Agreements between Arlington Square Limited
         Partnership and Metropolitan Life Insurance Company dated November 25,
         1998, which was filed as Exhibit 10.24 to the Company's Form 10-KSB
         filed with the Commission on June 2, 1999, is



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<PAGE>

         incorporated herein by reference.

10.25    Unsecured Indemnity Agreement among Arlington Square Limited
         Partnership, Metropolitan Life Insurance Company and The Washington
         Corporation dated November 25, 1998, which was filed as Exhibit 10.25
         to the Company's Form 10-KSB filed with the Commission on June 2, 1999,
         is incorporated herein by reference.

10.26    Financing Statement dated November 25, 1998 executed by Arlington
         Square Limited Partnership as debtor and Metropolitan Life Insurance
         Company as secured party, which was filed as Exhibit 10.26 to the
         Company's Form 10-KSB filed with the Commission on June 2, 1999, is
         incorporated herein by reference.

10.27    Subordination of Management Agreement dated November 25, 1998 by and
         among The Washington Corporation, Arlington Square Limited Partnership
         and Metropolitan Life Insurance Company, which was filed as Exhibit
         10.27 to the Company's Form 10-KSB filed with the Commission on June 2,
         1999, is incorporated herein by reference.

10.28    Guaranty Agreement dated November 25, 1998 by and between The
         Washington Corporation, Arlington Square Limited Partnership and
         Metropolitan Life Insurance Company, which was filed as Exhibit 10.28
         to the Company's Form 10-KSB filed with the Commission on June 2, 1999,
         is incorporated herein by reference.

10.29    Subordination Agreement dated November 25, 1998, by and among Arlington
         Square Limited Partnership, Metropolitan Life Insurance Company and
         Allied Capital Commercial Corporation, which was filed as Exhibit 10.29
         to the Company's Form 10-KSB filed with the Commission on June 2, 1999,
         is incorporated herein by reference.

10.30    Subordination, Non-Disturbance and Attornment Agreement among
         Metropolitan Life Insurance Company, Arlington Square Limited
         Partnership and United States of America - General Services
         Administration dated November 25, 1998, which was filed as Exhibit
         10.30 to the Company's Form 10-KSB filed with the Commission on June 2,
         1999, is incorporated herein by reference.

10.31    Subordination, Non-Disturbance and Attornment Agreement among
         Metropolitan Life Insurance Company, U.S. Fish and Wildlife Service,
         and Arlington Square Limited Partnership, dated November 25, 1998,
         which was filed as Exhibit 10.31 to the Company's Form 10-KSB filed
         with the Commission on June 2, 1999, is incorporated herein by
         reference.

10.32    Forbearance Agreement dated December 1, 1998, by and among Arlington
         Square Limited Partnership, Arlington Square, Inc., The Washington
         Corporation, and Allied Capital Corporation, is attached hereto.

10.33    Amended and Restated Promissory Note dated December 1, 1998, in the
         original principal amount of $1,850,000 with Arlington Square Limited
         Partnership as borrower and Allied Capital Corporation as holder, is
         attached hereto.

10.34    Termination of Forbearance Agreement dated December 31, 1999, by and
         among Arlington



                                       39
<PAGE>

         Square Limited Partnership, Arlington Square, Inc., The Washington
         Corporation, and Allied Capital Corporation, is attached hereto.

10.35    First Modification to Deed of Trust and Security Agreement "B" dated
         November 24, 1998, by and between Arlington Square Limited Partnership
         and Allied Capital Corporation, is attached hereto.

10.36    Second Modification to Deed of Trust and Security Agreement "B" dated
         December 31, 1999, by and between Arlington Square Limited Partnership
         and Allied Capital Corporation, is attached hereto.

10.37    Guarantor's Consent and Acknowledgment dated November 24, 1998, by and
         between Arlington Square Limited Partnership and Allied Capital
         Corporation, is attached hereto.

11.      Computation of per share earnings for the years ended December 31, 1999
         and 1998 is attached hereto.

21.      Subsidiaries of the Registrant as of December 31, 1999 is attached
         hereto.

(b)      REPORTS ON FORM 8-K. The Company filed no report on Form 8-K during
         fourth quarter of 1999.



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<PAGE>

                                   SIGNATURES

         In accordance with Section 13 or 15(d) of the Exchange Act, the
registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.

                                      THE WASHINGTON CORPORATION

Date:       4/14/00                         By: /s/ WILLIAM N. DEMAS
     ------------------                        --------------------------------
                                            William N. Demas
                                            Chairman of the Board of Directors/
                                            President

Date:       4/14/00                         By: /s/ JOSE MA. C. CASTRO
     ------------------                        --------------------------------
                                            Jose Ma. C. Castro
                                            Controller

         In accordance  with the Exchange Act, this report has been signed below
by the following persons on behalf of the registrant and in the capacities and
on the dates indicated.



Date:     4/14/00                           By: /s/ WILLIAM N. DEMAS
     ------------------                        --------------------------------
                                            William N. Demas
                                            Chairman of the Board of Directors/
                                            President

Date:     4/14/00                           By: /s/ JONATHAN C. KINNEY
     ------------------                        --------------------------------
                                            Jonathan C. Kinney
                                            Director

Date:     4/14/00                           By: /s/ JOSE MA. C. CASTRO
     ------------------                        --------------------------------
                                            Jose Ma. C. Castro
                                            Director



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