<PAGE>

================================================================================

                       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 ended December 31, 2000        Commission file number 1-7228

                           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, 2000 were:
$3,463,516

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, 2000, 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

EHXIBITS BEGIN ON PAGE 34
================================================================================

                                       1


<PAGE>

                                     PART I

FORWARD-LOOKING STATEMENTS

         The statements contained in this report that are not purely historical
are forward-looking statements within the meaning of Section 27A of the
Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934,
including without limitation, statements about the Company's expectations,
beliefs, intentions or strategies regarding the future. All forward-looking
statements included in this report are based on information available to the
Company on the date hereof, and the Company assumes no obligation to update any
such forward-looking statements. The forward-looking statements contained herein
involve risks and uncertainties. The Company's actual results could differ
materially from those anticipated in these forward-looking statements as a
result of certain factors, including those set forth in this report.

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 organized 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 three
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 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. Management made an additional adjustment to the net realizable value
of the property during 2000 due to the poor results of land development zoning
tests on several of the remaining lots. This resulted in an estimated loss on
asset valuation of $75,000 for the year ended December 31, 2000. The remaining
48 acres most likely will be divided into a maximum of six lots. The number of
lots that can be sold depends primarily


                                       2

<PAGE>

on the results of percolation tests and the issuance of on-site sewage discharge
permits by the state of Maryland, among other issues. To date, the Company has
only been able to obtain sewage discharge permits for two lots.

                  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 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 by the
notes, 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 in full 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 95% of the Company's revenues for fiscal year
2000 were derived from the Arlington Square Project.

                  AWARD OF BID AND LEASE EXECUTION


                                       3
<PAGE>

         On June 22, 1998, the General Services Administration ("GSA"), an
agency of the U.S. Government, executed the lease with ASLP 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 2000,
and did not elect directors in 2000.

         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. In December of 2000, Jose Ma. C. Castro resigned
as a Director of the Company. TWC is currently searching for another Class B and
Class C Director.

(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, 2000,
approximately 95% 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."


                                       4

<PAGE>


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

         COMPETITION

         The Washington, D.C. area real estate market has fully recovered from
most of the problems associated with the early 1990's, however, the Company must
compete with other owners of real property that is now or will be for sale. A
lack of buyers and financing may 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, 2000, the Company employed three full-time persons
and two part-time persons. 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, 2000, 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      a building of approximately
Project     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         -         (172,771)      $125,000(4)

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

River       16.6 acres of land zoned
Oaks        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         -          (100,000)            0

Port-O-     7 townhouse lots totaling
Dumfries    approximately 19,436 sq. ft.
            located in Dumfries, Va.         100%        -                       14,829         -           (14,829)            0
</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 was fully paid as of
     December 31, 2000.

(3)  This amount reflects depreciation, deferred loan
     closing costs, and deferred rental concessions.

(4)  The value of the Timberlake property was written down $75,000 due to the
     poor results of land development zoning tests in several on the remaining
     lots. The property was written down an additional $1,057,449 in 1999, the
     amount of principal and interest outstanding 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.


                                       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 and parking garage 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. Also, the lease requires the tenant to pay base
rent on the parking garage subject to 5% annual increases. During 2000 and 1999,
the Company realized rental income of approximately $3,288,000 and $3,330,000,
respectively, per year, or approximately $24.36 and $24.67, respectively, per
rentable square foot based on a BOMA standard. During 2000 and 1999,
approximately 95% and 88%, 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
survived the 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.


                                       7

<PAGE>


                  ESCROW AND RESERVE ACCOUNTS

         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, 2000, 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                                         34,589
                                                            -------------
                                                              23,802,721
                Less accumulated depreciation                 (7,727,691)
                                                             ------------
                Total                                         $16,075,030
                                                              ===========
</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 2000 ASLP paid an
aggregate of $242,075 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


                                       8

<PAGE>

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 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 2000 and 1999, the Company
recorded revenues of $113,578 and $112,807 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 six lots, depending 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 only been able to obtain sewage discharge permits for two 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 $24,340 per annum.
The rent increases annually at a rate of 3%.

         COMPETITION

         The real estate market in the Washington, D.C. area has fully recovered
from most of the problems associated with the early 1990's, however, the Company
must compete with other owners of real property that is for sale. A lack of
buyers and financing may make 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 located in Arlington, Virginia and the Fort Washington
property located in Fort Washington, Pennsylvania, as of December 31, 2000, are
fully under lease to tenants until 2008 and 2024, respectively. Leasing is
extremely competitive in these two areas.

         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 2000 or 1999. Consequently, TWC does not have any information concerning
high and low bids on any class of its common stock during 2000 or 1999.

         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 unsecured allowed claims in excess of $500 ("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,


                                       11

<PAGE>

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.

         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 OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS

MATERIAL CHANGES IN FINANCIAL CONDITION

         During the year ended December 31, 2000 the Company's total assets were
reduced by $1,111,000 from $19,402,000 to $18,343,000. Such decrease was
primarily the result of depreciation of operating property and equipment, and a
decrease in cash and cash equivalents, partially offset by an increase in escrow
deposits.

         Real estate and development property decreased by $83,000 from $408,000
at December 31, 1999 to $325,000 at December 31,2000. This decrease was the
result of an increase in the provision for estimated losses on asset valuation
on the Timberlake property.

         Operating property and equipment decreased by $783,000 from $17,194,000
at December 31, 1999 to $16,411,000 at December 31, 2000. Such decrease was
primarily the result of depreciation and the amortization of deferred rent
concessions on the Arlington Square Project.

         Cash and cash equivalents decreased by $314,000 from $740,000 at
December 31, 1999 to $426,000 at December 31, 2000. Such decrease was primarily
the result of escrow deposits made on the Arlington Square Project and a
reduction in the installment obligation on the Arlington Square Project.

         Escrow deposits increased by $171,000 from $248,000 at December 31,
1999 to $419,000 at December 31, 2000. Such increase was primarily the result of
periodic deposits made to the reserves on the Arlington Square Project.

         Other assets decreased by $48,000 from $126,000 at December 31, 1999 to
$78,000 at December 31, 2000. This decrease was primarily the result of a
reduction of accounts receivable in Arlington Square, Inc. for the build out of
the Arlington Square Project.

         During the year ended December 31, 2000, the Company's total
liabilities decreased by $561,000 from $23,196,000 at December 31, 1999 to
$22,635,000 at December 31, 2000. Such decrease was primarily the result of a
reduction in installment obligation for the Arlington Square Project and a
reduction in accounts payable and other liabilities.

         Notes payable - Arlington Square Project decreased by $485,000 from
$22,899,000 at December


                                       12

<PAGE>

31, 1999 to $22,414,000 at December 31, 2000. Such decrease was the result of
principal payments on the two mortgages.

         Accounts payable and other liabilities decreased by $72,000 from
$166,000 at December 31, 1999 to $94,000 at December 31, 2000. Such decrease was
primarily the result of a decrease in accrued expenses.

RESULTS OF OPERATIONS

         Revenues decreased by $135,000 from $3,598,000 for the year ended
December 31, 1999 to $3,463,000 for the year ended December 31, 2000. Such
decrease was primarily the result of a decrease in other income partially offset
by an increase in operating property income.

         Operating property rental income increased by $40,000 from $3,248,000
for the year ended December 31, 1999 to $3,288,000 for the year ended December
31, 2000. 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 decreased by $210,000 from $235,000 for the year ended
December 31, 1999 to $25,000 for the year ended December 31, 2000. This decrease
was attributable to a reduction in build out fees earned by Arlington Square,
Inc. related to the build-out of the Arlington Square Project.

         Total expenses increased by $173,000 from $2,974,000 for the year ended
December 31, 1999 to $3,147,000 for the year ended December 31, 2000. This
increase is primarily due to an increase in operating property expenses, an
increase in general and administrative expenses, partially offset by a decrease
in interest expense.

         During 2000 and 1999, the Company recorded a provision for estimated
losses due to the reduction in net realizable value of certain real estate and
development properties of the Company in the amount of $83,000 and $98,000,
respectively.

         Interest expense decreased by $10,000 from $1,559,000 for the year
ended December 31, 1999 to $1,549,000 for the year ended December 31, 2000. This
decrease was the result of current payments on the Arlington Square Project
mortgage balance.

         Operating property expenses increased by $175,000 from $870,000 for the
year ended December 31, 1999 to $1,045,000 for the year ended December 31, 2000.
This increase is due to an increase in operating expenses relating to the
Arlington Square Project.

         General and administrative expenses increased by $21,000 from $448,000
for the year ended December 31, 1999 to $469,000 for the year ended December 31,
2000. This increase is due to an increase in administrative expenses relating to
The Washington Corporation.

         Net income before depreciation and amortization decreased by $308,000
to income of $316,000 for the year ended December 31, 2000 from $624,000 for the
year ended December 31, 1999. Such decrease was a result of an increase in total
expenses as described above, and a decrease in revenues.

         Depreciation and amortization increased by $7,000 from $809,000 for the
year ended December


                                       13

<PAGE>

31, 1999 to $816,000 for the year ended December 31, 2000. This increase is
primarily depreciation from the Arlington Square Project.

         Net loss increased by $314,000 from a net loss of $185,000 for the year
ended December 31, 1999 to a net loss of $499,000 for the year ended December
31, 2000. This increase was the result of the changes in the items described
above, primarily the reduction in build out fees earned by Arlington Square,
Inc. related to the build out of the Arlington Square Project.

LIQUIDITY AND CAPITAL RESOURCES:  OUTLOOK

         The Company's primary sources of funds for 2000 came from rental income
and property management fees. As of December 31, 2000, the Company had cash and
cash equivalents and escrow deposits totaling approximately $845,000 of which
$419,000 was escrow deposits. The Company expects its primary source of funds
for 2001 to continue to be rents received on the Arlington Square Project.

         During 2000, cash and cash equivalents decreased by $314,000 as
compared to a decrease of $88,000 for 1999. This decrease in 2000 was primarily
due to the result of escrow deposits made on the Arlington Square Project and a
reduction in the installment obligation on the Arlington Square Project. 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.

         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. In December of 2000, Jose Ma. C. Castro resigned as a
Director of the company. TWC is currently searching for another Class B and
Class C Director.

         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.

                                       14

<PAGE>


ITEM 7.  FINANCIAL STATEMENTS



                   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
                                                                                PAGES
                                                                                -----
         <S>                                                                     <C>
         Independent Auditor's Report                                              16

         Consolidated Balance Sheets at December 31, 2000 and 1999                 17

         Consolidated Statements of Operations for the years ended
           December 31, 2000 and December 31, 1999                                 18

         Consolidated Statements of Stockholders' (Deficiency) Equity              19

         Consolidated Statements of Cash Flows                                     20

         Notes to Consolidated Financial Statements                               21-27
</TABLE>


                                       15


<PAGE>

[ARONSON FETRIDGE & WEIGLE LOGO]                       700 KING FARM BOULEVARD
                                                     ROCKVILLE, MARYLAND 20850
                                                            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,
2000 and 1999, and the related Consolidated Statements of Operations,
Deficiency in Stockholders' Equity and Cash Flows for the years then 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 require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of THE
WASHINGTON CORPORATION AND SUBSIDIARIES as of December 31, 2000 and 1999, 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 11 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 11. The eventual outcome
of these matters are not presently determinable and the consolidated
financial statements to not include any adjustments that might be necessary
should the Company be unable to continue in existence.

ARONSON, FETRIDGE & WEIGLE

/s/ ARONSON, FETRIDGE & WEIGLE

Rockville, Maryland
February 2, 2001

CERTIFIED PUBLIC ACCOUNTANTS
AND MANAGEMENT CONSULTANTS           16      [Moores Rowland International LOGO]
--------------------------------------------------------------------------------

<PAGE>

THE WASHINGTON CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
AT DECEMBER 31, 2000 AND 1999



<TABLE>
<CAPTION>
                                                                                      2000                     1999
                                                                               -------------------      -------------------
<S>                                                                            <C>                      <C>
ASSETS
  Real estate and development property (Notes 1 and 2)                                   $325,002                 $408,000
  Operating property and equipment, net (Notes 1,2 and 5)                              16,410,644               17,193,631
  Cash and cash equivalents (Note 1)                                                      426,367                  740,401

  Escrow deposits                                                                         418,833                  247,964
  Land purchase leaseback (Note 3)                                                        400,000                  400,000
  Accounts receivable - Arlington Square Project                                          284,012                  285,901
  Other assets (Note 4)                                                                    78,257                  126,407
                                                                               -------------------      -------------------
Total Assets                                                                          $18,343,115              $19,402,304
                                                                               ===================      ===================

LIABILITIES

 Note payable  -  Arlington Square Project (Note 5)                                   $22,413,659              $22,898,870
 Accrued interest payable                                                                 127,870                  130,758
 Accounts payable and other liabilities                                                    93,884                  166,090
                                                                               -------------------      -------------------
Total Liabilities                                                                      22,635,413               23,195,718
                                                                               -------------------      -------------------

COMMITMENTS AND CONTINGENCIES (Notes 2, 3, 9 and 10)



STOCKHOLDERS' (DEFICIT) EQUITY

  Common stock, $.01 par value; shares issued (Note 8)
     Class A - 1,675,163 authorized, 1,640,327 shares
         issued and outstanding                                                            16,403                   16,403
     Class B - 24,429 authorized, 21,476 shares issued
         and outstanding                                                                      215                      215
     Class C - 45,639 authorized, 45,119 shares issued
         and outstanding                                                                      451                      451
     Additional paid-in capital                                                         2,804,821                2,804,821
     Accumulated deficit                                                              (7,114,188)              (6,615,301)
                                                                               -------------------      -------------------
     Total Stockholders' (Deficit) Equity                                             (4,292,298)              (3,793,411)

     Total Liabilities and Stockholders' (Deficit) Equity                              18,343,115              $19,453,924
                                                                               ===================      ===================
</TABLE>

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

                                       17


<PAGE>


THE WASHINGTON CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 2000 AND 1999


<TABLE>
<CAPTION>
                                                                                      2000                          1999
                                                                               --------------------          -------------------
<S>                                                                            <C>                           <C>
REVENUES
  Operating property rental income (Note 9)                                             $3,287,703                   $3,247,726
  Rent from land purchase leaseback (Note 3)                                               113,578                      112,807
  Other income                                                                              24,470                      235,491
  Interest income                                                                           37,765                        2,719
                                                                               --------------------          -------------------
        Total revenues                                                                   3,463,516                    3,598,743
                                                                               --------------------          -------------------

EXPENSES
  Operating property expenses                                                            1,045,479                      870,484
  Interest expense (Note 5)                                                              1,549,459                    1,558,577
  General and administrative expenses                                                      468,702                      447,490
  Provision for estimated losses on asset value adjustments (Note 2)                        82,998                       97,771
                                                                               --------------------          -------------------
       Total expenses                                                                    3,146,638                    2,974,322
                                                                               --------------------          -------------------
NET (LOSS) INCOME BEFORE DEPRECIATION AND
  AMORTIZATION                                                                             316,878                      624,421

DEPRECIATION AND AMORTIZATION (NOTE 1)                                                     815,765                      809,456
                                                                               --------------------          -------------------
NET LOSS                                                                              $  (498,887)                  $ (185,035)
                                                                               ====================          ===================


LOSS PER COMMON SHARE  (BASIC):
                                                                                       $    (0.29)                   $   (0.11)
                                                                               ====================          ===================
</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 DEFICIENCY IN STOCKHOLDERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 2000 AND 1999



<TABLE>
<CAPTION>
                                       COMMON                  ADDITIONAL
                                        STOCK                    PAID-IN                ACCUMULATED
                                      (NOTE 10)                  CAPITAL                  DEFICIT                    TOTAL
                                ---------------------     --------------------    ----------------------     ---------------------
<S>                             <C>                       <C>                     <C>                        <C>

BALANCE, JANUARY 1, 1999                  $   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)

NET LOSS                                                                                      (498,887)                ($498,887)
                                                   -                        -
                                ---------------------     --------------------    ----------------------     ---------------------

BALANCE, DECEMBER 31, 2000                $   17,069              $ 2,804,821            $  (7,114,188)             $ (4,292,298)
                                =====================     ====================    ======================     =====================
</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 CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 2000 AND 1999

<TABLE>
<CAPTION>
                                                                                    2000                      1999
                                                                           ------------------------    ----------------------
<S>                                                                        <C>                         <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss                                                                             $   (498,887)             $   (185,035)
Adjustments to reconcile net loss to net cash provided
by operating activities:
  Provision for estimated losses on asset valuations                                        82,998                    97,771
  Depreciation and amortization                                                            750,165                   743,856
  Amortization of deferred rent concessions                                                 65,600                    65,600
  Interest earned on restricted escrows                                                    (20,868)                        -
  Decrease (increase) in accounts receivable - Arlington Square Project                      1,889                  (28,428)
  Decrease (increase) in other assets                                                       99,769                 (133,615)
  Decrease in accrued interest payable                                                      (2,888)                  (2,778)
  (Decrease) increase in accounts payable and other liabilities                          (123,823)                    44,409
                                                                           ------------------------    ----------------------
      Net cash provided by operating activities                                            353,955                   601,780
                                                                           ------------------------    ----------------------

CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of fixed assets                                                                  (32,778)                  (37,134)
Withdrawals from restricted escrows                                                             -                   201,550
Deposits to restricted escrows                                                           (150,000)                 (391,860)
                                                                           ------------------------    ----------------------
        Net cash used in investing activities                                            (182,778)                 (227,444)
                                                                           ------------------------    ----------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
  Curtailments of mortgage loan                                                          (485,211)                 (451,130)
  Curtailments on notes payable                                                                                     (11,698)
                                                                                                 -
          Net cash used in financing activities                                          (485,211)                 (462,828)
                                                                           ------------------------    ----------------------
NET CHANGE IN CASH AND CASH EQUIVALENTS                                                  (314,034)                  (88,492)

CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD                                             740,401                   828,893
                                                                           ------------------------    ----------------------
CASH AND CASH EQUIVALENTS, END OF PERIOD                                              $    426,367              $    740,401
                                                                           ========================    ======================
SUPPLEMENTAL CASH FLOW INFORMATION
  Interest paid during the year                                                      $   1,552,347             $   1,561,335
                                                                           ========================    ======================

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

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


                                       20


<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

         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.

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.

FINANCIAL INSTRUMENTS

         Management believes the fair market value of all financial instruments
approximates the amounts reported on the accompanying balance sheets.


                                       21

<PAGE>

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. 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 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. Management made an additional
adjustment to the net realizable value of the property during 2000 due to poor
results from land development zoning tests on several of the remaining lots.
This resulted in an estimated loss on asset valuation of $75,000 for the year
ended December 31, 2000.

         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 garden apartments and seven townhome lots in Dumfries,
Virginia. Management has estimated the net realizable value of these properties
as not having much value, resulting in an estimated loss on asset valuation of
$7,998 for the year ended December 31, 2000.


                                       22



<PAGE>

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, 2000, the minimum
lease payments due pursuant to this lease through expiration are as follows:

<TABLE>
<S>                                                           <C>
                  2001                                              78,000
                  2002                                              78,000
                  2003                                              78,000
                  2004                                              78,000
                  2005                                              78,000
                  Thereafter                                     1,501,500
                                                                ----------
                                                                $1,891,500
                                                                ==========
</TABLE>

NOTE 4
OTHER ASSETS

         Other assets includes prepaid expenses, security deposits and
management fees.

NOTE 5
ESCROW DEPOSITS

         At December 31, 2000 and 1999, deposited funds of $418,833 and
$247,964, primarily for the Arlington Square Project as required by the lender,
were restricted for replacement reserve, and tax and insurance escrows.

NOTE 6
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


                                       23

<PAGE>

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 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. 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.

         At December 31, 2000, the scheduled future maturities of the
obligations is as follows:

<TABLE>
<CAPTION>
               YEAR ENDING
               DECEMBER 31                                       AMOUNT
               -----------                                       ------
               <S>                                            <C>
                  2001                                        $     518,882
                  2002                                              556,491
                  2003                                              596,833
                  2004                                              640,106
                  2005                                              686,523
                  Thereafter                                     19,414,824
                                                                -----------
                                                                $22,413,659
                                                                ===========
</TABLE>


NOTE 7
OPERATING PROPERTY AND EQUIPMENT - ARLINGTON SQUARE PROJECT

         At December 31, 2000 and 1999, 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.

         At December 31, 2000 and 1999, operating property and equipment
consisted of:

<TABLE>
<CAPTION>
                                                          2000                      1999
                                                     --------------            --------------
         <S>                                         <C>                       <C>
         Land, building and equipment                  $23,595,431                $23,599,136
         Tenant improvements                             1,603,452                  1,603,452
         Deferred rental concessions, net                  508,400                    574,000
         Deferred loan closing costs, net                  246,820                    278,668
                                                     --------------             -------------
                                                        25,954,103                 26,055,256
         Less depreciation and amortization             (9,543,459)                (8,861,625)
                                                     --------------             -------------
                                                       $16,410,644                $17,193,631
                                                     ==============             =============
</TABLE>


                                       24

<PAGE>

NOTE 8
INCOME TAXES

         As of December 31, 2000, the Company had tax net operating loss
carryforwards of approximately $19,856,000. 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>
                  2004 -   $1,309,000               2008 -    $1,429,000
                  2005 -    5,652,000               2018 -        91,000
                  2006 -      155,000               2019 -     1,565,000
                  2007 -    9,405,000               2020 -       250,000
</TABLE>

NOTE 9
RELATED PARTY TRANSACTIONS

         During 2000 and 1999, the Company engaged a law firm in which one
current director of the Company serves as partner in the firm. During 2000 and
1999, the Company paid $9,366 and $9,636, respectively, in fees to this law
firm. During the year ended December 31, 2000 and 1999, the Company paid $16,867
and $20,023, respectively, of consulting fees for construction services to an
entity affiliated with another current director.

NOTE 10
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


                                       25

<PAGE>

Trigger").

         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, 2000, the number of common shares outstanding is as
follows:


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

NOTE 11
LESSOR ARRANGEMENTS

         The Company, through its 74% interest in ASLP, owns a building and
parking garage 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,
2000 and 1999, the Company realized income from this lease of approximately
$3,288,000 and $3,248,000, net of rental concessions, respectively, or 95% and
88% 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. Also, the lease requires the tenant to pay base rent on the parking
garage subject to 5% annual increases.

         The minimum lease payments due pursuant to this lease at December 31,
2000 are as follows:

<TABLE>
<S>                                                                   <C>
                                    2001                             $ 3,261,540
                                    2002                               3,271,308
                                    2003                               3,299,277
                                    2004                               3,363,184
                                    2005                               3,374,491
                                    Thereafter                         9,341,588
                                                                       ---------
                                            Total                    $25,911,387
                                                                     ===========
</TABLE>



                                       26


<PAGE>

NOTE 12
OFFICE LEASE

         The Company is obligated under an operating lease for its office space
which expires January 31, 2004. The rent increases annually by 3%. The future
annual rents under this lease are:

<TABLE>
<S>                                                                            <C>
                                    2001                                          24,281
                                    2002                                          25,006
                                    2003                                          25,750
                                    2004                                           2,151
                                                                                --------
                                    Total                                      $  77,188
                                                                               =========
</TABLE>

         Rental expense under the Company's office lease agreements was $25,963
and $20,645 for 2000 and 1999, respectively.

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. 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 LOSS PER SHARE

         The following is a reconciliation of the numerators and denominators of
the basic net loss per share computations for 2000 and 1999:

<TABLE>
<CAPTION>
                                                        2000
                                    ------------------------------------------------
                                        LOSS              SHARES         PER SHARE
                                    (NUMERATOR)        (DENOMINATOR)       AMOUNT
                                    -----------        -------------     ---------
<S>                                 <C>                <C>               <C>
Basic net loss per share
  Net loss                         $   (498,887)         1,706,922       $    (.29)
                                   =============         =========       ===========
</TABLE>

<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>


                                       27

<PAGE>

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

None.

                                       28

<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 and C 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. In December of 2000, Jose Ma. C.
Castro resigned as a Class B Director of the company. TWC is currently searching
for another Class B and C Director. Both 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 2000. 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                      64             Chairman of the Board of Directors,
                                                              Chief Executive Officer and President

         Jonathan C. Kinney                    55             Director

         Jose Ma. C. Castro                    45             Director (resigned in December 2000)

         Geraldine Piatt                       65             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.


                                       29

<PAGE>


         Geraldine Piatt has served as the Secretary of the Company since 1992.
Ms. Piatt also serves as 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 2000.

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, 2000 ("Fiscal 2000"), December 31, 1999
("Fiscal 1999") and December 31, 1998 ("Fiscal 1998"):

                           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                    2000      123,631        -               -               24,852 (1)
 and President
                                      1999       74,000        -               -               24,852 (1)

                                      1998       72,843        -               -               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 2000 and Fiscal 1999. 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 2000, Fiscal 1999, and Fiscal 1998. 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.


                                       30

<PAGE>

         Since the expiration of the Employment Agreement on July 30, 1995, Mr.
Demas has 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. The salary increase in 2000 is due to accrued and
unpaid payroll from 1998 to 2000 that was paid to Mr. Demas in 2000.

         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 2000.

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, 2000, (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, 2000.


<TABLE>
<CAPTION>
TITLE OF                                                                                            SHARES BENEFICIALLY OWNED
 CLASS                                                                                             # 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                                                     4,116            9.1
Common Stock

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


                                       31
<PAGE>

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 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.


                                       32

<PAGE>


DIRECTORS AND EXECUTIVE OFFICERS

         The following table sets forth, as of December 31, 2000, 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, which owns the Arlington Square Project. Mr. Demas
has a 7% ownership interest in ASLP. The Company owns 74% of the equity directly
and indirectly, of ASLP and is its general partner. In Fiscal 2000 and Fiscal
1999, Messrs. Demas and Kinney and the Kinney Family received partnership
distributions from their limited partnership interests of $10,500, $9,000, and
$15,000 respectively. Messrs. Demas and Kinney and the Kinney Family expect to
receive similar distributions in fiscal year 2001. See "Description of
Properties - Arlington Square Project.

         In Fiscal 2000 and Fiscal 1999, the Company paid legal fees of
approximately $9,366 and $9,636 respectively to Bean, Kinney & Korman, P.C., the
law firm in which Mr. Kinney is partner and stockholder.


                                       33

<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

                                       34

<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
         by


                                       35

<PAGE>

         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


                                       36

<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 incorporated herein by
         reference.

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
         incorporated herein by reference.

10.34    Termination of Forbearance Agreement dated December 31, 1999, by and
         among Arlington Square Limited Partnership, Arlington Square, Inc., The
         Washington Corporation, and Allied


                                       37

<PAGE>

         Capital Corporation, is incorporated herein by reference.

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 incorporated herein by reference.

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 incorporated herein by reference.

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

11.      Computation of per share earnings for the years ended December 31, 2000
         and 1999 is attached hereto.

21.      Subsidiaries of the Registrant as of December 31, 2000 is attached
         hereto.

(b)      REPORTS ON FORM 8-K. The Company filed no report on Form 8-K during
         fourth quarter of 2000.













                                       38
<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.


<TABLE>
<S>                                                  <C>     <C>
                                                     THE WASHINGTON CORPORATION


Date:        4/13/01                                          By:       /s/ WILLIAM N. DEMAS
     ----------------------------------                          -----------------------------------
                                                              William N. Demas
                                                              Chairman of the Board of Directors/
                                                              President


Date:       4/13/01                                           By:       /s/ JOSE MA. C. CASTRO
     ----------------------------------                           ----------------------------------
                                                              Jose Ma. C. Castro
                                                              Controller
</TABLE>


         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.

<TABLE>
<S>                                                  <C>      <C>
Date:       4/13/01                                           By: /s/ WILLIAM N. DEMAS
     ----------------------------------                          -----------------------------------
                                                              William N. Demas
                                                              Chairman of the Board of Directors/
                                                              President


Date:       4/13/01                                           By: /s/ JONATHAN C. KINNEY
     ----------------------------------                           ----------------------------------
                                                              Jonathan C. Kinney
                                                              Director
</TABLE>


                                       39