<PAGE>


                       SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D.C. 20549

                                    FORM 10-Q

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

For the quarterly period ended                        September 30, 1998
                               -----------------------------------------

                                   OR

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

For the transition period from                         to
                             -------------------------      -----------------  
 
                             -------------------------

                                                Commission file number  1-6035
                                                                      ----------

                              The Titan Corporation
 -------------------------------------------------------------------------------
             (Exact name of registrant as specified in its charter)

              Delaware                                            95-2588754
    -------------------------------                           ----------------
    (State or other jurisdiction of                           (I.R.S. Employer
    incorporation or organization)                           Identification No.)

3033 Science Park Road, San Diego, California                        92121
---------------------------------------------                  ----------------
    (Address of principal executive offices)                       (Zip Code)

(Registrant's telephone number, including area code)            (619) 552-9500
                                                              ------------------

 -------------------------------------------------------------------------------
              (Former name, former address and former fiscal year,
                         if changed since last report.)

     Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.

                                    Yes  X   No
                                       ----     ----
     The number of shares of registrant's common stock outstanding at November
10, 1998, was 32,875,757.


                                        1

<PAGE>

                         PART I - FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS

                              THE TITAN CORPORATION

                      CONSOLIDATED STATEMENT OF OPERATIONS
                      (in thousands, except per share data)

<TABLE>
<CAPTION>
                                          Three months ended   Nine months ended
                                             September 30,       September 30,
                                          -----------------   -----------------
                                            1998      1997       1998     1997
                                          --------  --------   --------  --------
<S>                                       <C>       <C>        <C>       <C>
Revenues................................. $ 68,662  $ 61,827   $195,911  $189,270
                                          --------  --------   --------  --------
Costs and expenses:
    Cost of revenues.....................   52,527    47,687    149,503   144,840
    Selling, general and administrative
      expense............................    8,296     9,155     24,590    25,807
   Research and development expense......      990     2,163      3,809     6,232
   Special acquisition related charges
      and other..........................    3,093     5,000      4,553     5,000
                                          --------  --------   --------  --------
      Total costs and expenses...........   64,906    64,005    182,455   181,879
                                          --------  --------   --------  --------

Operating profit (loss)..................    3,756    (2,178)    13,456     7,391
Interest expense.........................   (1,720)   (1,692)    (5,161)   (4,848)
Interest income..........................       73       261        261       671
                                          --------  --------   --------  --------
Income (loss) from continuing operations
   before cumulative effect of change in
   accounting principle and income taxes.    2,109    (3,609)     8,556     3,214
Income tax provision.....................      759       645      3,168     2,869
                                          --------  --------   --------  --------
Income (loss) from continuing operations
   before cumulative effect of change in
   accounting principle..................    1,350    (4,254)     5,388       345
Cumulative effect of change in
   accounting principle, net of taxes....      ---       ---    (17,728)      ---
Loss from discontinued operations,
   net of taxes..........................   (5,344)  (11,490)    (5,344)  (13,306)
                                          --------  --------   --------   -------

Net loss.................................   (3,994)  (15,744)   (17,684)  (12,961)
Dividend requirements on preferred stock.      176       219        605       655
                                          --------  --------   --------  --------

Net loss applicable to common stock...... $ (4,170) $(15,963)  $(18,289) $(13,616)
                                          --------  --------   --------  --------
                                          --------  --------   --------  --------
Basic earnings per share:
  Income (loss) from continuing
     operations before cumulative effect
     of change in accounting principle... $    .04  $   (.15)  $    .15  $   (.01)
  Cumulative effect of change in
     accounting principle................      ---       ---       (.57)      ---
  Loss from discontinued operations......     (.17)     (.38)      (.17)     (.45)
                                          --------   --------   -------- --------
  Net loss............................... $   (.13) $   (.53)  $   (.59) $   (.46)
                                          --------  --------   --------  --------
                                          --------  --------   --------  --------
  Weighted average shares.................  31,766    29,854     31,159    29,711
                                          --------  --------   --------  --------
                                          --------  --------   --------  --------
Diluted earnings per share:
  Income (loss) from continuing
     operations before cumulative effect
     of change in accounting principle... $    .04  $   (.15)  $    .15  $   (.01)
  Cumulative effect of change in
     accounting principle................      ---       ---       (.44)      ---
  Loss from discontinued operations......     (.17)     (.38)      (.13)     (.45)
                                          --------  --------   --------  --------
  Net loss............................... $   (.13) $   (.53)  $   (.42) $   (.46)
                                          --------  --------   --------  --------
                                          --------  --------   --------  --------
  Weighted average shares................   32,548    29,854     40,747    29,711
                                          --------  --------   --------  --------
                                          --------  --------   --------  --------
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
                                 
                                       2
<PAGE>

                              THE TITAN CORPORATION

                           CONSOLIDATED BALANCE SHEET
                  (in thousands, except shares and par values)

<TABLE>
<CAPTION>
                                                    September 30,   December 31,
                                                         1998          1997
                                                    -------------   ------------ 
<S>                                                 <C>             <C> 
ASSETS
Current assets:
   Cash and cash equivalents....................... $  4,710         $ 11,353
   Investments.....................................      ---            4,499
   Accounts receivable - net.......................   86,585           69,508
   Inventories.....................................    9,107           17,633
   Net assets of discontinued operations...........      ---            1,802
   Prepaid expenses and other......................    2,172            2,707
   Deferred income taxes...........................   10,165            7,950
                                                    --------         --------
      Total current assets.........................  112,739          115,452
Property and equipment - net.......................   24,855           26,951
Goodwill - net.....................................   39,137           21,274
Other assets.......................................    6,319            8,639
Net assets of discontinued operations..............      780            3,552
                                                    --------         --------
   Total assets                                     $183,830         $175,868
                                                    --------         --------
                                                    --------         --------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
   Lines of credit................................. $    ---         $ 21,880
   Accounts payable................................   20,278           14,919
   Acquisition debt................................    3,000              ---
   Current portion of long-term debt...............    1,298            1,266
   Accrued compensation and benefits...............   11,872           12,851
   Other accrued liabilities.......................    8,073            9,092
   Net liabilities of discontinued operations......    5,471              ---
                                                    --------         --------
      Total current liabilities....................   49,992           60,008
                                                    --------         --------
Long-term debt.....................................   30,769           37,565
Line of credit.....................................   39,000              ---
Other non-current liabilities......................   14,010           11,996
Series B cumulative convertible redeemable 
   preferred stock, $-0- and $3,000 liquidation 
   preference, 6% cumulative annual dividend,
   issued and outstanding: 0 and 500,000...........      ---            3,000
Stockholders' equity:
   Preferred stock: $1 par value, authorized
      2,500,000 shares:
       Cumulative convertible, $13,897 liquidation
         preference: 694,872 shares issued and
         outstanding...............................      695              695
       Series A junior participating: authorized
         250,000 shares: none issued...............      ---              ---
   Common stock: $.01 par value, authorized
      45,000,000 shares, issued and outstanding:
      32,833,158 and 31,152,330....................      327              311
   Capital in excess of par value..................   70,004           64,884
   Retained earnings (deficit).....................  (18,388)             ---
   Treasury stock (962,530 and 971,894 shares),
      at cost......................................   (2,579)          (2,591)
                                                    --------         --------
      Total stockholders' equity...................   50,059           63,299
                                                    --------         --------
   Total liabilities and stockholders' equity...... $183,830         $175,868
                                                    --------         --------
                                                    --------         --------
</TABLE>
  The accompanying notes are an integral part of these consolidated financial
   statements.

                                     3
<PAGE>


                              THE TITAN CORPORATION

                      CONSOLIDATED STATEMENT OF CASH FLOWS
                            (in thousands of dollars)

<TABLE>
<CAPTION>
                                                         Nine months ended
                                                           September 30,
                                                         ------------------
                                                          1998        1997
                                                        ---------   --------
<S>                                                     <C>         <C>
CASH FLOWS FROM OPERATING ACTIVITIES:

Income (loss) from continuing operations.............   $(12,340)   $    345
Adjustments to reconcile income (loss) from 
   continuing operations to net cash provided by 
   (used for) operating activities, net of effects 
   of businesses acquired:
      Depreciation and amortization..................      4,976       6,160
      Deferred income taxes and other................        (35)      1,119
      Poolings of interests..........................        (99)       (211)
      Cumulative effect of change in accounting
         principle...................................     17,728         ---
      Write-down of assets, investments and
         environmental accrual.......................        ---       5,000
      Changes in operating assets and liabilities,
         net of the effects of businesses acquired
         and business sold:
         Accounts receivable.........................    (14,089)     (4,650)
         Inventories.................................     (2,198)        678
         Prepaid expenses and other assets...........      1,167      (1,531)
         Accounts payable............................      3,815       1,234
         Accrued compensation and benefits...........     (1,659)       (966)
         Restructuring activities....................        ---        (815)
         Other liabilities...........................     (4,703)     (4,302)
                                                        --------    --------
Net cash provided by (used for)
   continuing operations.............................     (7,437)      2,061
                                                        --------    --------
Loss from discontinued operations....................     (5,344)    (13,306)
Changes in net assets of discontinued operations ....      2,843       5,221
                                                        --------    --------
Net cash used for discontinued operations............     (2,501)     (8,085)
                                                        --------    --------
Net cash used for operating activities...............     (9,938)     (6,024)
                                                        --------    --------

CASH FLOWS FROM INVESTING ACTIVITIES:

Capital expenditures.................................     (1,834)     (3,388)
Acquisition of business, net of cash acquired........    (11,679)        ---
Purchase of investments..............................        ---     (12,321)
Sale of investments..................................      4,499       9,483
Other................................................       (298)        320
                                                        --------    --------
Net cash used for investing activities...............     (9,312)     (5,906)
                                                        --------    --------

CASH FLOWS FROM FINANCING ACTIVITIES:

Additions to debt....................................     17,120      14,751
Retirements of debt..................................     (1,406)     (4,285)
Redemption of Series B preferred stock...............     (3,000)        ---
Dividends paid.......................................       (605)       (655)
Proceeds from stock issuances........................        631         347
Other................................................       (133)       (522)
                                                        --------    --------
Net cash provided by financing activities............     12,607       9,636
                                                        --------    --------

Net decrease in cash and cash equivalents............     (6,643)     (2,294)
Cash and cash equivalents at beginning of period.....     11,353       5,614
                                                        --------    --------

Cash and cash equivalents at end of period...........   $  4,710    $  3,320
                                                        --------    --------
                                                        --------    --------
</TABLE>
              The accompanying notes are an integral part of these
                       consolidated financial statements.
 
                                      4
<PAGE>


                              THE TITAN CORPORATION

                 CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY

                (in thousands of dollars, except per share data)
<TABLE>
<CAPTION>
                                        Cumulative                  Capital
                                        Convertible                in Excess     Retained
                                        Preferred      Common        of Par      Earnings     Treasury
                                          Stock         Stock        Value       (Deficit)      Stock       Total
                                      ------------  ----------    ---------     -----------  -----------  ---------
<S>                                   <C>           <C>           <C>            <C>         <C>          <C>   
NINE MONTHS ENDED SEPTEMBER 30, 1998
Balances at December 31, 1997          $    695      $   311        $ 64,884      $    ---    $  (2,591)   $ 63,299
   Poolings of interests                                                               (99)                     (99)
   Conversion of subordinated
      debentures                                          15           5,343                                  5,358
   Stock repurchase                                       (1)           (752)                                  (753)
   Conversion of warrants                                  1             349                                    350
   Exercise of stock options and
      other                                                1             280                         12         293
   Shares contributed to employee
      benefit plans                                                     (100)                                  (100)
   Dividends on preferred stock -
      Cumulative convertible, $.75
        per share                                                                     (521)                    (521)
      Series B, 6% annual                                                              (84)                     (84)
   Net loss                                                                        (17,684)                 (17,684)
                                       --------      -------        --------      --------     ---------   --------
Balances at September 30, 1998         $    695      $   327        $ 70,004      $(18,388)    $ (2,579)   $ 50,059
                                       --------      -------        --------      --------     ---------   --------
                                       --------      -------        --------      --------     ---------   --------

NINE MONTHS ENDED SEPTEMBER 30, 1997
Balances at December 31, 1996          $    695      $   303        $ 62,553      $ 19,421     $(2,960)    $ 80,012
   Pooling of interests                                                 (545)          695         545          695
   Stock issued for acquisition                            3             503                                    506
   Exercise of stock options
      and other                                                          384           (64)       (545)        (225)
   Shares contributed to employee
      benefit plans                                                       14                       331          345
   Dividends on preferred stock -
      Cumulative convertible, $.75
        per share                                                                     (521)                    (521)
      Series B, 6% annual                                                             (134)                    (134)
   Net loss                                                                        (12,961)                 (12,961)
                                       --------      -------        --------      --------     ---------   --------
Balances at September 30, 1997         $    695      $   306        $ 62,909      $  6,436    $ (2,629)    $ 67,717
                                       --------      -------        --------      --------     ---------   --------
                                       --------      -------        --------      --------     ---------   --------
</TABLE>

  The accompanying notes are an integral part of these consolidated financial 
    statements.
                           
                                                      5

<PAGE>



                              THE TITAN CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                               SEPTEMBER 30, 1998

              (Dollar amounts in thousands, except per share data)

NOTE (1)  BASIS OF FINANCIAL STATEMENT PREPARATION

The accompanying consolidated financial information of The Titan Corporation 
and its subsidiaries ("the Company" or "Titan") should be read in conjunction 
with the Notes to Consolidated Financial Statements contained in the 
Company's Annual Report on Form 10-K/A to the Securities and Exchange 
Commission for the year ended December 31, 1997 and DBA Systems, Inc.'s 
("DBA") Annual Report on Form 10-K for the year ended June 30, 1997. The 
accompanying financial information includes all subsidiaries on a 
consolidated basis and all normal recurring adjustments which are considered 
necessary by the Company's management for a fair presentation of the 
financial position and results of operations for the periods presented. 
However, these results are not necessarily indicative of results for a full 
year. The prior year financial statements have been restated to reflect three 
mergers in 1998 (see Note 2). Additionally, certain prior year amounts have 
been reclassified to conform to the 1998 presentation.

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.

NEW ACCOUNTING STANDARDS. In January 1998, the Company adopted Statement of 
Financial Accounting Standards No. 130, "Reporting Comprehensive Income" 
("SFAS 130"). This Statement establishes standards for reporting and display 
of comprehensive income and its components in a full set of general purpose 
financial statements. The objective of the Statement is to report a measure 
of all changes in equity of an enterprise that result from transactions and 
other economic events of the period other than transactions with owners 
("comprehensive income"). Comprehensive income is the total of net income and 
all other nonowner changes in equity. The adoption of the accounting and 
disclosure provisions of SFAS 130 has had no impact on the Company's 
financial statements, as comprehensive income is the same as net income for 
all periods presented herein.

In March 1998, the Company adopted Statement of Financial Accounting 
Standards No. 132, "Employers' Disclosures about Pensions and Other 
Postretirement Benefits" ("SFAS 132"). This statement revises and 
standardizes employers' disclosures about pension and other postretirement 
benefit plans, but it does not change the measurement or recognition of those 
plans. This Statement further requires restatement of disclosure provisions 
for earlier periods provided for comparative purposes. The adoption of SFAS 
132 has had no material impact on the Company's financial statements or 
related disclosures thereto.

In March 1998, the Accounting Standards Executive Committee issued AICPA
Statement of Position 98-1, "Accounting for the Costs of Computer Software
Developed or Obtained for Internal Use" ("SOP 98-1"). This Statement provides
guidance on accounting for the costs of computer software developed or obtained
for internal use and identifies characteristics of internal-use software as well
as assists in determining when computer software is for internal use. SOP 98-1

                                       6

<PAGE>

is effective for fiscal years beginning after December 15, 1998, with earlier 
application permitted. The Company has not yet determined what impact, if 
any, the adoption of the accounting and disclosure provisions of SOP 98-1 
will have on the Company's financial statements, results of operations or 
related disclosures thereto.

In April 1998, the Accounting Standards Executive Committee issued AICPA 
Statement of Position 98-5, "Reporting on the Costs of Start-Up Activities" 
("SOP 98-5"). This Statement provides guidance on the financial reporting of 
start-up costs and organization costs and requires that such costs of 
start-up activities be expensed as incurred. SOP 98-5 is effective for fiscal 
years beginning after December 15, 1998, with earlier application permitted. 
Prior to the issuance of SOP 98-5, companies had the option of capitalizing 
or expensing costs associated with start-up activities in accordance with 
generally accepted accounting principles. SOP 98-5 broadly defines start-up 
activities as one-time activities related to the opening of a new facility, 
the introduction of a new product or service, the commencement of business in 
a new territory, the establishment of business with a new class of customer, 
the initiation of a new process in an existing facility or the commencement 
of a new operation.

The Company adopted SOP 98-5 in the current quarter ended September 30, 1998, 
recording a one-time, non-cash charge reflected as the cumulative effect of a 
change in accounting principle of $17,728, net of an estimated tax benefit of 
$1,970. The charge primarily represents previously capitalized start-up costs 
incurred in the Company's broadband communications business and deferred 
pre-contract costs as well as non-recurring engineering costs previously 
carried in inventory in accordance with SOP 81-1 in the Company's 
Communications Systems segment. As required by SOP 98-5, the cumulative 
charge is reflected as if recorded at the beginning of the current year.

NOTE (2)  MERGERS AND ACQUISITION

On August 24, 1998, the Company consummated a merger with VisiCom, 
Laboratories, Inc. ("VisiCom"), a California Corporation, in a 
stock-for-stock transaction. VisiCom specializes in information technology 
solutions and has become part of Titan's Emerging Technologies segment. Titan 
issued approximately 4,168,000 shares of common stock in exchange for all 
the outstanding shares of VisiCom and assumed VisiCom stock options 
representing approximately 593,200 shares of Titan common stock, based on an 
exchange ratio of .4465 shares of Titan common stock for each share of 
VisiCom's common stock. The merger constituted a tax-free reorganization and 
has been accounted for as a pooling of interests.

On June 30, 1998, the Company consummated a merger with Horizons Technology, 
Inc. ("Horizons"), a Delaware corporation, in a stock-for-stock transaction. 
Horizons is a provider of systems engineering and program management 
services, computer systems integration and high-end software and has become 
part of Titan's Information Technologies segment. Titan issued approximately 
3,200,000 shares of common stock in exchange for all the outstanding shares 
of Horizons stock based on exchange ratios of approximately .37 and .82 
shares of Titan's common stock for each share of Horizons' common stock and 
Horizons' preferred stock, respectively. The merger constituted a tax-free 
reorganization and has been accounted for as a pooling of interests.

                                       7

<PAGE>

On February 27, 1998, the Company consummated a merger with DBA Systems, Inc. 
("DBA"), a Florida Corporation, in a stock-for-stock transaction. DBA is a 
developer and manufacturer of digital imaging products, electro-optical 
systems and threat simulation/training systems. DBA's products and systems 
are primarily used by the defense and intelligence communities; accordingly, 
it is included in Titan's Information Technologies segment. Titan issued 
approximately 6,100,000 shares of common stock for all the outstanding shares 
of DBA stock based on an exchange ratio of approximately 1.37 shares of Titan 
common stock for each share of DBA stock. The merger constituted a tax-free 
reorganization and has been accounted for as a pooling of interests.

The special charges of $3,093 and $4,553 in the three and nine months ended 
September 30, 1998, respectively, primarily represent the costs and expenses 
related to these mergers.

In connection with the merger with Delfin Systems in October 1998 (see Note 
6), the Company will record the costs related to this transaction during the 
fourth quarter of 1998. In addition, the Company is currently developing an 
integration plan which will include, but not be limited to, the consolidation 
and closure of duplicate facilities, centralization of administrative 
functions and the consolidation of management information systems. The 
Company will record a charge in the fourth quarter of 1998 for such costs 
related to this integration plan.

In connection with its acquisition of DBA, Titan acquired land and a building 
which are included in other non-current assets. DBA recorded a $2.0 million 
charge in its quarter ended September 30, 1997 to recognize an impairment in 
the value of this asset. Management is actively marketing the property for 
sale through various channels and believes that the carrying value of this 
asset, as reflected in the accompanying financial statements for the quarter 
ended September 30, 1998, is stated at an amount that is fully recoverable.

DBA also recorded a $3.0 million charge in the quarter ended September 30, 
1997, in recognition of certain environmental matters at its Kissimmee 
facility including, but not limited to, soil contamination and potential 
asbestos and lead based paint contamination. These matters became known to 
DBA as a result of an environmental study performed as part of Titan's 
acquisition due diligence process. The accrual has been recorded in 
accordance with SFAS No. 5 and SOP 96-1 and represents an initial estimate 
which could change significantly as further studies are performed. In the 
accompanying balance sheet, approximately $.2 million is included in other 
current liabilities and the remaining $2.8 million is included in other 
non-current liabilities based on the estimated timing of continued 
assessments and remediation work to be performed. The Company has commenced 
its pre cleanup activities which are expected to continue through at least 
fiscal 1998.

Also, concurrent with this acquisition, DBA recorded certain charges, in 
addition to those noted above, aggregating to $4.8 million, relating to the 
write down of certain assets to estimated net realizable value in the quarter 
ended December 31, 1997.

Effective January 1, 1998, VisiCom's March 31, Horizons' January 31 and DBA's 
June 30 fiscal year-ends have been changed to coincide with the Company's 
year-end. The 1997 financial statements presented have been restated to 
include the combined results of operations, financial position and cash flows 
of VisiCom, Horizons and DBA as if the mergers had occurred at the beginning 
of the periods presented.

                                       8

<PAGE>

The combining periods of Titan, DBA, Horizons and VisiCom are as follows:

<TABLE>
<CAPTION>

                             Fiscal Year 1996
                           ----------------------------------
<S>                        <C>
Titan                      Fiscal year ended December 1996 
DBA                        Fiscal year ended June 1996 
Horizons                   Fiscal year ended January 1997 
VisiCom                    Fiscal year ended March 1997
</TABLE>

<TABLE>
<CAPTION>
                              Fiscal 1997 Quarterly Periods
                           --------------------------------------
                           Q1 '97     Q2 '97    Q3 '97     Q4 '97
                           --------   -------   --------   -------
<S>                        <C>        <C>       <C>        <C>
Titan                      March 97   June 97   Sept. 97   Dec. 97
DBA                        March 97   June 97   Sept. 97   Dec. 97
Horizons                   April 97   July 97   Oct.  97   Jan. 98
VisiCom                    June  97   Sept.97   Dec.  97   Mar. 98
</TABLE>

A pooling of interests adjustment has been made in the consolidated 
statements of cash flows and consolidated statements of stockholders' equity 
for the nine months ended September 30, 1997 to reflect the activity for DBA 
in the six months ended December 31, 1996, as reported in DBA's Form 10-Q for 
the fiscal quarter ended December 31, 1996. The poolings of interests 
adjustments in the consolidated statement of cash flows and consolidated 
statement of stockholders' equity for the nine months ended September 30, 
1998, reflect the activity for Horizons for the month ended January 31, 1998, 
and the activity for VisiCom for the three months ended March 31, 1998, 
included in Titan's results of operations in both the year ended December 31, 
1997, and the nine months ended September 30, 1998. Revenues from continuing 
operations for VisiCom for the three months ended March 31, 1998, were 
$8,413. Revenues from continuing operations for Horizons for January 1998 
were $2,032.

The separate and combined results of Titan, DBA, Horizons and VisiCom in 1997 
are as follows:

<TABLE>
<CAPTION>
                        Three months ended    Nine months ended
                        September 30, 1997    September 30, 1997
                        ------------------    ------------------
<S>                     <C>                   <C>
      Revenues:

        Titan               $  41,973            $ 127,212
        DBA                     5,665               19,449
        Horizons                5,955               19,661
        VisiCom                 8,234               22,948
                              -------              -------
         Combined           $  61,827            $ 189,270
                              -------              -------
                              -------              -------

      Net income (loss):

        Titan               $   1,537            $   3,030
        DBA                    (3,816)              (2,726)
        Horizons                   78                  262
        VisiCom               (13,543)             (13,527)
                              -------              -------
         Combined           $ (15,744)           $ (12,961)
                              -------              -------
                              -------              -------
</TABLE>

On March 31, 1998, the Company acquired all of the outstanding common stock 
of Validity Corporation ("Validity"), a California corporation, for $12 
million in cash, and notes payable to the shareholders of Validity totaling 
$3 million, subject to post-closing adjustments, if any, due and payable 
March 31, 1999, and bearing interest at the prime rate. The transaction has 
been accounted for as a purchase; accordingly, the consolidated balance sheet 
includes Validity as of 

                                       9

<PAGE>


September 30, 1998. The excess of the purchase price over the estimated fair 
value of net assets acquired, to be amortized on a straight-line basis over 
30 years, was approximately $18.7 million as of September 30, 1998, based on 
net assets acquired of $560. Validity's results of operations have been 
consolidated with the Company's results of operations beginning April 1, 1998.

NOTE (3)  DISCONTINUED OPERATIONS

In April 1997, the Company's Board of Directors adopted a plan to divest the 
Company's broadband communications business. The results of the broadband 
communications business have been accounted for as a discontinued operation 
in accordance with Accounting Principles Board Opinion No. 30, which among 
other provisions, anticipates that the plan of disposal will be carried out 
within one year. In the third quarter of 1998, the Company concluded 
negotiations with certain investors resulting in a cash payment in October of 
$1,800 for licensing of the broadband technology. During the first quarter of 
1998, the Company received approximately $2,600 as settlement of certain 
contingencies related to the broadband patents and intangibles as well as 
initial payments related to licensing the technology. As a result of the 
conclusion of these negotiations and the periodic review by management of the 
realizability of further proceeds from the sale of the technology, the 
remaining net assets of the broadband business were written off in the 
quarter ended September 30, 1998, resulting in a pre-tax charge to loss from 
discontinued operations of $4,638. Additionally, approximately $7,200 in 
start-up costs were written off in the cumulative effect of the change in 
accounting principle discussed above.

In addition to the discontinued operations of the broadband business as 
discussed above, the accompanying consolidated financial statements reflect 
operations discontinued by certain of the companies acquired by Titan in 
1998. These discontinued operations include the ceramic board business of 
VisiCom and the commercial software business of Horizons. The decisions to 
dispose or otherwise wind down these operations were made by the separate 
Boards of Directors of the respective acquired companies prior to entering 
into any dicussions with Titan regarding the potential acquisitions of these 
entities by Titan. All periods presented reflect these specific operations as 
discontinued operations. Revenue for these discontinued operations aggregated 
$3,200 and $2,814 for the three months and $8,099 and $5,768 for the nine 
months ended September 30, 1998 and 1997, respectively, and losses 
attributable to these discontinued operations aggregated $1,234 and $11,490 
and $5,027 and $12,964 for the same respective periods. Such losses are net 
of tax benefits of $174 and $822 for the three and nine months ended 
September 30, 1997. Aggregate charges for costs to be incurred in future 
periods in connection with the winding down of these operations amounted to 
approximately $6,800, substantially all of which was recorded by the acquired 
companies in the last quarter of 1997. Additionally, a pre-tax charge of 
$1,300 was taken in the third quarter of 1998 based on management's most 
recent review of estimated wind-down costs. Net liabilities of discontinued 
operations at September 30, 1998 consist primarily of accrued liabilities of 
approximately $12,000, primarily accruals for wind down costs, net of current 
assets of approximately $6,500. The current assets are composed primarily of 
accounts receivable and inventory. Long-term net assets of discontinued 
operations are primarily fixed assets.

                                       10

<PAGE>

NOTE (4)  DEBT

On July 29, 1998, the Company entered into a credit agreement with a bank 
syndicate under which it may borrow up to $80 million, replacing the existing 
line of credit agreement. The credit facility includes a five year $55 
million working capital line of credit and a one year $25 million component 
dedicated for acquisitions which converts any outstanding balances after one 
year into a term loan, to be repaid in increasing quarterly amounts over four 
years. The Company has the option to borrow at the bank base rate or at 
LIBOR, plus applicable margins based on the ratio of total debt to EBITDA 
(earnings before interest, taxes, depreciation and amortization). The 
agreement contains, among other financial covenants, provisions which set 
maximum debt to EBITDA limits and which require the Company to maintain 
stipulated levels of EBITDA, tangible net worth, a minimum quick ratio, and 
minimum coverage of fixed charges, as defined. Initial proceeds of $36.1 
million were used to pay off and replace the outstanding line of credit 
balances with Titan's and Horizons' banks and for working capital purposes. 
Also, as part of the terms of the merger with VisiCom discussed in Note 2, 
Titan retired VisiCom's bank line of credit of $4,980 in August 1998.

At September 30, 1998, borrowings outstanding under the working capital line 
of credit were $39,000, at a weighted average interest rate of 7.396% and 
commitments under letters of credit reducing availability under this 
agreement were $950. At September 30, 1998, the Company was in compliance 
with all financial covenants under its various debt agreements.

NOTE (5)  OTHER FINANCIAL DATA

<TABLE>
<CAPTION>
                                   September 30,     December 31,
                                      1998              1997
                                   -------------    -------------
<S>                                <C>              <C>
Inventories:

   Materials                        $  3,862         $  3,269
   Work-in-process                     3,098           12,400
   Finished goods                      2,147            1,964
                                      ------           ------
                                    $  9,107         $ 17,633
                                      ------           ------
                                      ------           ------
</TABLE>


                                       11

<PAGE>




Supplemental disclosure of cash payments is as follows:

<TABLE>
<CAPTION>
                          Three months ended        Nine months ended
                             September 30 ,           September 30,
                          ------------------      -------------------
                           1998        1997         1998        1997
                          -------    -------      -------     -------
<S>                       <C>        <C>          <C>         <C>
   Interest               $   761    $   729      $ 4,080     $ 3,681
   Income taxes                26         69          872         407
</TABLE>

During the nine month period ended September 30, 1997, the Company utilized 
treasury stock of $345 for benefit plan funding and contributions.

The following tables summarize revenues and operating profit (loss) by 
industry segment for the three and nine month periods ended September 30, 
1998 and 1997:

<TABLE>
<CAPTION>
                                            Three months ended    Nine months ended
                                               September 30 ,        September 30,
                                            ------------------    ------------------
                                             1998        1997      1998        1997
                                            ------      ------    ------      ------
<S>                                        <C>         <C>      <C>         <C>
Revenues:
   Information Technologies                $40,299     $33,449  $110,794    $106,426
   Software Systems                          5,568       4,310    13,242      12,206
   Medical Sterilization and
     Food Pasteurization                     1,933       1,719     7,101       4,348
   Communications Systems                   10,373      11,306    33,148      34,832
   Emerging Technologies and Businesses     10,489      11,043    31,626      31,458
                                            ------      ------    ------      ------
                                           $68,662     $61,827  $195,911    $189,270
                                            ------      ------    ------      ------
                                            ------      ------    ------      ------

Operating Profit (Loss):
   Information Technologies                $ 2,818     $(1,133) $ 10,658    $  7,613
   Software Systems                          1,465       1,192     3,232       2,620
   Medical Sterilization and
     Food Pasteurization                       203         (64)      843         (86)
   Communications Systems                      (11)       (373)    1,101        (806)
   Emerging Technologies and Businesses      1,602        (843)    2,074         507
                                            ------      ------    ------      ------

Segment operating profit (loss) before
   Corporate                                 6,077      (1,221)   17,908       9,848
Corporate                                   (2,321)       (957)   (4,452)     (2,457)
                                            ------      ------    ------      ------
                                           $ 3,756     $(2,178)  $13,456     $ 7,391
                                            ------      ------    ------      ------
                                            ------      ------    ------      ------
</TABLE>

The operating profit of the Information Technologies segment for the three 
and nine months periods ended September 30, 1998, reflects $929 and $2,389 of 
special charges representing costs and expenses of the mergers with Horizons, 
and with Horizons and DBA, respectively (see Note 2). In both the three and 
nine month periods in 1997, the Information Technologies segment operating 
results reflects the $2.0 million and $3.0 million charges at DBA for 
impairment of real estate held for sale and reserves for environmental 
matters, respectively, as discussed in Note 2. Corporate expenses in the 
three and nine months periods ended September 30, 1997 include other charges 
of $275 related to other merger-related expenses.

On June 18, 1998, the Company withdrew its registration statement for the 
proposed initial public offering of common stock of Linkabit Wireless, Inc., 
a wholly owned subsidiary of the Company. The registration statement was 
withdrawn due to unfavorable market conditions for initial public offerings. 
The operating results for the three and nine months ended September 30, 1998 
in the Communications Systems segment reflect $886 in costs and expenses 
related to the registration statement.

                                       12

<PAGE>

The following data summarize information relating to the per share 
computations for continuing operations before the cumulative effect of a 
change in accounting principle:

<TABLE>
<CAPTION>
                         Three months ended Sept. 30, 1998     Three months ended Sept. 30, 1997
                         ----------------------------------    ---------------------------------
                          Income      Shares      Per-Share     Income      Shares      Per-Share
                        (Numerator) (Denominator)   Amounts   (Numerator) (Denominator)   Amounts
                        ----------- ------------- ---------   ----------- ------------- ---------
<S>                     <C>         <C>           <C>         <C>         <C>           <C>        
Income (loss) from
  continuing operations   $1,350                               $(4,254)
Less preferred
  stock dividends           (176)                                 (219)
                           -----                                 -----

Basic EPS:
Income (loss) from
  continuing operations
  available to
  common stockholders      1,174       31,766     $  .04        (4,473)      29,854     $ (.15)

Effect of
  dilutive securities:

Stock options                 --          782       (.00)           --           --         --
Warrants                      --           --         --            --           --         --
Debentures                    --           --         --            --           --         --
                           -----       ------     ------         -----       ------     ------

Diluted EPS:
Income (loss) from
  continuing operations
  available to
  common stockholders
  plus assumed
  conversions             $1,174       32,548    $   .04       $(4,473)      29,854    $  (.15)
                           -----       ------     ------         -----       ------     ------
                           -----       ------     ------         -----       ------     ------
</TABLE>

<TABLE>
<CAPTION>
                         Nine months ended Sept. 30, 1998      Nine months ended Sept. 30, 1997
                         ----------------------------------    --------------------------------
                          Income      Shares      Per-Share     Income      Shares     Per-Share
                        (Numerator) (Denominator)   Amounts   (Numerator) (Denominator)  Amounts
                        ----------- ------------- ---------   ----------- ------------- ---------
<S>                     <C>         <C>           <C>         <C>         <C>           <C>        
Income from
  continuing operations   $5,388                                $  345
Less preferred
  stock dividends           (605)                                 (655)
                           -----                                 -----

Basic EPS:
Income (loss) from
  continuing operations
  available to
  common stockholders      4,783       31,159     $  .15          (310)      29,711     $ (.01)

Effect of
  dilutive securities:
Stock options                 --          757       (.00)           --           --         --
Warrants                      --           32       (.00)           --           --         --
Debentures                 1,304        8,799       (.00)           --           --         --
                           -----       ------     ------         -----       ------     ------

Diluted EPS:
Income from
  continuing operations
  available to
  common stockholders
  plus assumed
  conversions             $6,087       40,747    $   .15        $ (310)      29,711    $  (.01)
                           -----       ------     ------         -----       ------     ------
                           -----       ------     ------         -----       ------     ------
</TABLE>

                                       13

<PAGE>

In the three and nine months ended September 30, 1998, respectively, options 
to purchase 850,300 and 336,060 shares of common stock at prices ranging from 
$5.63 to $9.50 and $6.19 to $9.50 per share were not included in the 
computation of diluted EPS, as the exercise price of such options was greater 
than the average market price of the common shares. Options were not included 
in the computation of diluted EPS in the three and nine months ended 
September 30, 1997, as the effect would have been anti-dilutive. In all 
periods in both 1998 and 1997, 463,248 shares of common stock that could 
result from the conversion of cumulative convertible preferred stock were not 
included in the computation of diluted EPS, as the effect would have been 
anti-dilutive.

In 1998 and 1997, 333,333 common shares that could result from the conversion 
of Series B Cumulative Convertible Redeemable Preferred Stock were not 
included in the computation of diluted EPS, as the effect would have been 
anti-dilutive. In June 1998, the Company redeemed 416,667 shares of this 
stock at $6.00 per share. In July 1998, the Company redeemed the remainder of 
this stock. Also anti-dilutive in the nine months ended September 30, 1997, 
were warrants outstanding for 100,000 common shares. The warrants were 
exercised in June 1998.

NOTE (6)  SUBSEQUENT EVENT

On October 23, 1998, the Company consummated a merger with Delfin Systems 
("Delfin"), a California corporation, whereby Delfin became a wholly-owned 
subsidiary of The Titan Corporation in a stock-for-stock transaction. Delfin 
provides systems engineering and program management services, signal 
intelligence systems, computer systems integration and high-end software, and 
will be included in Titan's Information Technologies segment. Titan will 
issue approximately 3,628,000 shares of Titan common stock in exchange for 
all the outstanding shares of Delfin common stock and assume Delfin stock 
options representing approximately 822,600 shares of Titan common stock, 
based on an exchange ratio of approximately .5021 shares of Titan common 
stock for each share of Delfin stock. The merger constituted a tax-free 
reorganization and will be accounted for as a pooling of interests.

                                       14

<PAGE>

                              THE TITAN CORPORATION

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

                          (Dollar amounts in thousands,
                             except per share data)

RESULTS OF OPERATIONS

Consolidated results:

Revenues for the third quarter of 1998 increased from $61,827 in the third 
quarter of 1997 to $68,662. Revenues for the nine months ended September 30 
were $195,911 and $189,270 in 1998 and 1997, respectively. In both the third 
quarter and nine months ended September 30, 1998 compared to the 
corresponding periods of 1997, the Information Technologies, Software Systems 
and Medical Sterilization and Food Pasteurization segments reported increased 
revenues and operating income. The Company reported net losses of $3,994 and 
$17,684 for the third quarter and nine months of 1998 compared to $15,744 and 
$12,961 for the third quarter and nine months of 1997. Included in the third 
quarter and nine months ended September 30, 1998 are special acquisition 
related transaction charges of $3,093 and $4,553, respectively. Non-recurring 
charges related to the write-down of certain assets and accruals for certain 
environmental liabilities of $5,000 are included in the third quarter and 
nine months ended September 30, 1997. Included in the third quarter and nine 
months of 1998 and 1997 is a loss from discontinued operations of $5,344 and 
$11,490 and $5,344 and $13,306, respectively. In addition, the Company 
adopted Statement of Position (SOP) 98-5 in the third quarter of 1998, which 
resulted in a one-time, non-cash write-off of $17,728, net of an estimated 
tax benefit of $1,970, of capitalized start-up costs in the first quarter as 
a cumulative effect of a change in accounting principle.

Income from continuing operations in the third quarter and nine months of 
1998 was $1,350 and $5,388, respectively, compared to a loss of $4,254 and 
income of $345 in the third quarter and nine months of 1997. This difference 
was primarily due to the impact of the changes in revenues noted above, as 
well as the impact of the special merger related expenses in 1998 and other 
charges related to the write-down of certain assets in 1997.

Selling, general and administrative expense ("SG&A") as a percentage of 
revenue decreased from 15% in the third quarter of 1997 to 12% for the same 
period in 1998, and from 14% in the nine months of 1997 to 13% for the same 
period in 1998. These decreases were due primarily to the impact of ongoing 
cost reduction measures taken across all business segments. Research and 
development costs ("R&D") decreased overall from $2,163 in the third quarter 
of 1997 to $990 for the same period in 1998, and from $6,232 for the nine 
months of 1997 to $3,809 for the same period in 1998. This change was 
primarily due to the completion of certain development and certification 
efforts in the Communications Systems segment in early 1998.

Net interest expense increased $216 and $723 in the third quarter and nine
months ended September 30, 1998 compared to the comparable 


                                       15

<PAGE>

periods of 1997, primarily from interest related to increased borrowings on 
the Company's line of credit.

The income tax provision is a 36% and 37% effective rate in the third quarter 
and nine months of 1998 compared to a 118% and 89% effective rate in the 
third quarter and nine months of 1997, respectively. The effective rates 
recorded in 1997 were substantially and negatively impacted by the inability 
to deduct for tax purposes certain write-offs recorded primarily by companies 
acquired by Titan. These effective rates approximate the expected combined 
federal and state statutory rates, less expected credits, primarily R&D 
credits.

Business Segments:

THREE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997:

In the Information Technologies segment, revenues grew $6,850, from $33,449 
in the third quarter of 1997 to $40,299 in the third quarter of 1998. The 
increase in revenues is principally due to the revenues generated by the 
acquired business Validity, which was acquired in March 1998. Operating 
income increased $3,951 from an operating loss of $1,133 in the third quarter 
of 1997 to income of $2,818 in the third quarter of 1998. Included in the 
third quarter of 1998 are special acquisition charges of $929 related to the 
Horizons merger, and, included in the third quarter of 1997 results are 
charges of $5,000 related to the write down of certain assets of DBA to net 
realizable value and the recognition of environmental liabilities. Excluding 
the impact of these special charges and write downs, operating income 
decreased slightly from $3,867 in the third quarter of 1997 to $3,747 in 
1998. The change was due primarily to the impact of certain non-recurring 
credits which were recorded in 1997.

Software Systems segment revenues increased $1,258 from $4,310 in the third 
quarter of 1997 to $5,568 in the third quarter of 1998, primarily due to 
increased work performed on contracts with existing customers of this 
segment. The increase in operating income of $273 from $1,192 of operating 
income in the third quarter of 1997 to $1,465 in the third quarter of 1998 
was principally due to increased revenues.

Revenues and operating performance in the Medical Sterilization and Food 
Pasteurization segment improved from revenue of $1,719 and an operating loss 
of $64 in the third quarter of 1997 to revenue of $1,933 and operating income 
of $203 in the third quarter of 1998, respectively. This improvement 
primarily relates to work performed on the Company's two contracts awarded in 
late 1997 to provide in-house SureBeam sterilization systems.

Revenues in the Communications Systems segment decreased $933 from $11,306 in
the third quarter of 1997 to $10,373 in the third quarter of 1998, due to
decreased shipments made on the Company's contract with PT. Pasifik Satelit
Nusantara (PSN) to provide rural telephony terminals for a system in Indonesia.
This was partially offset by increased revenues recorded on the Company's
Mini-DAMA production contract. Operating performance for this segment improved
from an operating loss of $373 in the third quarter of 1997 to $11 in the third
quarter of 1998, principally due to increased margins, as well as the winding
down from 1997 to 1998 of significant development and certification efforts.
Operating results for the third quarter of 1998 include special charges of $886
related to costs incurred to file a registration statement with the Securities
and Exchange Commission ("SEC") for an initial public offering of 2,700,000
shares of Linkabit Wireless common stock that the Company has subsequently
withdrawn. Excluding the impact of these charges, operating performance improved

                                       16

<PAGE>

$1,248 from an operating loss of $373 in the third quarter of 1997 to 
operating income of $875 in the third quarter of 1998.

The commercial satellite communications business accounted for approximately 
$619 of the Communications Systems segment revenues generated in the third 
quarter of 1998. The commercial satellite communications business provides 
Xpress Connection terminals to PSN as well as the ground segment for the 
multi media Asia (M2A) project. The ongoing economic and political turmoil in 
Asia could result in a material and adverse impact on this segment's revenues 
for the remainder of 1998.

In the Emerging Technologies segment, revenues declined $554 from $11,043 in 
the third quarter of 1997 to $10,489 in the third quarter of 1998 primarily 
due to the wind down of the Company's environmental consulting business 
during the first quarter of 1998, partially offset by increased revenues in 
the Company's VisiCom business. Operating performance improved $2,445 from an 
operating loss of $843 in the third quarter of 1997 to operating income of 
$1,602 in the third quarter of 1998. This improvement primarily resulted from 
the impact of the increased revenues noted above, the impact of a favorable 
product mix, as well as the recognition of certain non-recurring license 
fees. Included in the third quarter of 1998 operating results are special 
acquisition charges of $1,003 related to the VisiCom merger. Excluding the 
impact of these charges, operating performance improved from an operating 
loss of $843 to operating income of $2,605.

NINE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997:

In the Information Technologies segment, revenues and operating income 
increased from $106,426 and $7,613 in the nine months ended September 30, 
1997 to $110,794 and $10,658 in the nine months ended September 30, 1998. The 
increase in revenues was primarily due to the revenues generated by the 
acquired business Validity, offset partially by the impact of the 
redeployment of Department of Defense ("DOD") funding appropriations, which 
impacted certain work the Company performs for the U.S. Navy. Included in the 
nine months ended September 30, 1998 are special acquisition charges of 
$2,389 related to the DBA and Horizons mergers, and, included in the nine 
months ended September 30, 1997 results are charges of $5,000 related to the 
write down of certain assets of DBA to net realizable value and the 
recognition of environmental liabilities. Excluding the impact of these 
special charges and write downs, operating income increased from $12,613 in 
the nine months of 1997 to $13,047 in 1998. The increase was due primarily to 
the impact of the increased revenues noted above.

Software Systems segment revenues and operating income increased $1,036 and 
$612, from $12,206 and $2,620 in the nine months ended September 30, 1997 to 
$13,242 and $3,232 in the nine months ended September 30, 1998, respectively. 
This growth primarily resulted from work performed on contracts with certain 
new customers in this business.

Revenues and operating performance in the Medical Sterilization and Food 
Pasteurization segment improved from revenues of $4,348 and an operating loss 
of $86 in the nine months ended September 30, 1997 to revenues of $7,101 and 
operating income of $843 in the nine months ended September 30, 1998. This 
improvement primarily relates to work performed on the Company's two 
contracts awarded in late 1997 to provide in-house SureBeam sterilization 
systems and the near completion of an in-house sterilization system awarded 
in early 1997.

Revenues for the Communications Systems segment decreased $1,684 from $34,832 in
the nine months ended September 30, 1997 to $33,148 in the 

                                       17

<PAGE>

nine months ended September 30, 1998, due primarily to the decreased 
shipments made on the Company's contract for a rural telephony system in 
Indonesia noted above, offset partially by increased revenues generated on 
the Company's Mini-DAMA contract. Segment operating performance improved 
$1,907 from an operating loss of $806 in the nine months ended September 30, 
1997 to operating income of $1,101 in the nine months ended September 30, 
1998. This improvement reflects the wind-down of significant development and 
certification expenditures incurred in the prior year, as well as the impact 
of the increased revenues on the Mini-DAMA contract. Operating results for 
the nine months ended September 30, 1998 include special charges of $886 
related to costs incurred to file the withdrawn registration statement with 
the SEC noted above. Excluding the impact of these charges, operating 
performance improved $2,793 from an operating loss of $806 in the nine months 
ended September 30, 1997 to operating income of $1,987 in the nine months 
ended September 30, 1998.

The Emerging Technologies segment revenues and operating performance improved 
from revenues and an operating income of $31,458 and $507 in the nine months 
ended September 30, 1997 to $31,626 and $2,074 in the nine months ended 
September 30, 1998, respectively. Increased revenues from the VisiCom 
business were offset primarily by the wind down of the Company's 
environmental consulting business during the first quarter of 1998 and, to a 
lesser extent, due to the near completion of certain of the Company's 
contracts to build linear electron accelerators. The operating performance 
improvement primarily resulted from the impact of the increased revenues 
noted above, the impact of a favorable product mix, as well as the 
recognition of certain non-recurring, non-refundable license fees. Included 
in the nine months ended September 30, 1998 operating results are special 
acquisition charges of $1,003 related to the VisiCom merger. Excluding the 
impact of these charges, operating income improved from $507 in the nine 
months ended September 30, 1997 to $3,077 in the nine months ended September 
30, 1998.

LIQUIDITY AND CAPITAL RESOURCES

During the nine months ended September 30, 1998, Titan used $7,437 for the 
operating requirements of continuing operations. Significant cash uses 
include an increase in accounts receivable balances of $14,089 primarily in 
the Information Technologies and Communications Systems segments due 
primarily to contractual billing terms, funding requirements for acquisition 
related charges of $4,553, an increase in inventories of $2,198 primarily 
related to commercial rural telephony products and digitized fingerprint 
scanners, and the funding requirements for accrued compensation obligations 
of $1,659.

Approximately $1,000 and $2,500 of the increase in receivables and inventory, 
respectively, is related to the commercial satellite communications business. 
Titan's aggregate investment in the commercial satellite communications 
business is reflected in the balance sheet primarily within the captions of 
Accounts Receivable, Inventories, and Property and Equipment and aggregates 
approximately $7,600 at September 30, 1998. The Company has negotiated a 
payment plan agreement with its customer PSN for settlement of all amounts 
due from PSN. The payment plan agreement provides for an immediate payment by 
PSN of $1,000, with the remaining balance to be paid in equal installments of 
$3,907 on September 30, 1999 and September 30, 2000. All outstanding balances 
will accrue interest at 10% per annum. At any time prior to the payment of 
the obligations in full, the Company may elect to convert all or a portion of 
the principal and interest on each payment obligation due into common stock 
of PSN, based on its then current market value. In addition, if at any time 
after the execution of this agreement, PSN sells any of its interest in 
its wholly owned subsidiary, subject to another third party obligation, PSN 
will immediately pay the lesser of the $3,907 or the total of the amount of 
the outstanding balance. In the event that 

                                       18

<PAGE>

PSN obtain financing from additional sources, the payment terms will be 
renegotiated at that time. The Company is continually assessing the impact of 
the recent events in Asia, including the currency devaluation in Indonesia, 
Malaysia, Taiwan and the Philippines, on its Communications Systems segment, 
and presently does not believe that there has been any significant impairment 
in its aggregate investment, as mentioned above. However, there can be no 
assurance that PSN will be able to satisfy their debt to Titan in accordance 
with the extended terms.

Cash of $11,679, net of cash acquired, was used for the Company's acquisition 
of Validity Corporation. Cash was provided primarily by the Company's lines 
of credit ($17,120), by the sale of investments ($4,499), and by receipts and 
receivables for licensing the technology of its broadband communications 
business ($4,395). On July 29, 1998, the Company entered into a credit 
agreement with a bank syndicate under which it may borrow up to $80 million. 
The credit facility includes a five year $55 million working capital line of 
credit and a one year $25 million component dedicated for acquisitions which 
converts any outstanding balances after one year into a term loan, to be 
repaid in increasing quarterly amounts over four years. The Company has the 
option to borrow at the bank base rate or at LIBOR, plus applicable margins 
based on the ratio of total debt to EBITDA (earnings before interest, taxes, 
depreciation and amortization). The agreement contains, among other financial 
covenants, provisions which set maximum debt to EBITDA limits and which 
require the Company to maintain stipulated levels of EBITDA, tangible net 
worth, a minimum quick ratio, and minimum coverage of fixed charges, as 
defined. Initial proceeds of $36.1 million were used to pay off and replace 
the outstanding line of credit balances with Titan's and Horizons' banks and 
for working capital purposes. Also, as part of the terms of Titan's merger 
with VisiCom, Titan retired VisiCom's bank line of credit of $4,980 in August 
1998.

Funding for the advancement of the Company's strategic goals, including 
acquisitions and continued investment in targeted commercial businesses and 
start-up ventures, is expected to continue throughout 1998. The Company plans 
to finance these requirements from a combination of sources, which include 
cash generation from the Company's core businesses and the Company's expanded 
bank line of credit as described above. One of Titan's primary strategies is 
the funding of growth in specific subsidiaries through spin-out transactions. 
If Titan is unable to implement this strategy, whether in whole or in part, 
then the Company may need to complete additional equity or debt financings to 
fund the continued expansion of its operations and potential acquisitions of 
new technologies. Any additional equity or convertible debt financings could, 
however, result in substantial dilution to the Company's stockholders. 
Management is continually monitoring and reevaluating its level of investment 
in all of its operations and the financing sources available to achieve the 
Company's goals in each business area.

The Company has a 141,000 square foot facility in Kissimmee, Florida, which 
was obtained in the acquisition of DBA. The property has been held for sale 
since June 1996. A charge was recorded by DBA in the quarter ended December 
31, 1997 to adjust the carrying value of the property to estimated fair 
market value. Management continues to actively market the property and 
regular reviews it for further impairment. Management believes that the 
recorded value of the property continues to approximate estimated fair market 
value.

DBA also recorded a $3.0 million charge in the quarter ended September 30, 1997
in recognition of certain environmental matters including, but not limited to
soil contamination and potential asbestos and lead based paint contamination at
the Company's Kissimmee, Florida facility. These matters became known to DBA as
a result of a limited environmental study performed as part of Titan's
acquisition due diligence process. The accrual has been recorded in accordance
with 

                                       19

<PAGE>

SFAS No. 5 and SOP 96-1 and represents an initial estimate, which could 
change significantly as further studies are performed. In the accompanying 
balance sheet, approximately $.2 million is included in other current 
liabilities and the remaining $2.8 million is included in other non-current 
liabilities based on the estimated timing of remediation work to be 
performed. The Company has commenced its pre cleanup activities, which are 
expected to continue through at least fiscal 1998. 

IMPACT OF THE YEAR 2000 ISSUE: We have implemented a Year 2000 compliance 
program to address our current hardware and software products and development 
tools and all of our major computing information systems networks, desktop 
systems and infrastructure. In addition, we are contacting business 
associates such as our third party vendors, business partners, contractors 
and service providers to assess their level of readiness.

Our Software Systems group provides Year 2000 services to other companies so 
we are using internal expertise to develop and implement our program. We are 
using the same common project methodologies that we use for our customers' 
programs. We are in the process of assessing whether all of our business unit 
products and services are Year 2000 compliant. Because we are in an 
information technology company, we have been sensitive to Year 2000 issues 
for a number of years. We do not expect our current products or services to 
have material Year 2000 issues. In some cases, our government customers have 
contracted with us to modify our older products to be Year 2000 compliant. 
Our products are not sold under extended warranties so we do not expect that 
we will have to spend any material amounts to make any of our prior products 
Year 2000 compliant. However, we are in the process of assessing all of our 
products, including the products of our recently acquired businesses and we 
cannot be certain that Year 2000 issues will not arise.

As part of the program, we are reviewing all of the internally developed and 
third party software that we use for accounting, manufacturing process and 
other business functions. Because of our history of acquisitions, we have a 
number of business units that use different systems; some of which we know 
are not Year 2000 compliant. Based upon our assessment, we may elect to move 
business units to other Year 2000 compliant systems that we currently use as 
part of an overall plan to consolidate the number of different systems being 
used. We estimated the cost of moving business units to new systems will 
range from $3 million to $5 million, of which only approximately 30% is 
related to the replacement of non-compliant systems. Some of our business 
units may use internal resources to convert legacy application systems to be 
Year 2000 compliant. Finally, many of our government contracts related 
business units use an accounting package that is not currently Year 2000 
compliant. We understood that our supplier will release a Year 2000 compliant 
version during the fourth quarter of 1998. Under our maintenance agreement, 
we will receive the upgrade at no additional cost. We expect to incur any 
material Year 2000 related costs during fiscal year 1999. These fiscal 1999 
costs could have a material adverse effect on our financial position, results 
of operations or cash flows. If we cannot timely correct all Year 2000 
problems, these problems also may cause material adverse effects on our 
financial position, results of operations or cash flows.

After we complete the assessment of our Year 2000 readiness, we plan on 
developing contingency plans in the event that our internal systems or our 
third party business associates' systems are not timely corrected.

                                       20

<PAGE>

Finally, we have formed a Year 2000 steering committee to monitor 
implementation of our overall program and the plans of each of the business 
units. Each business unit has formed a steering committee to develop and 
implement compliance plans.

FORWARD LOOKING INFORMATION: CERTAIN CAUTIONARY STATEMENTS

Certain statements contained in this Management's Discussion and Analysis of 
Results of Operations and Financial Condition that are not related to 
historical results are forward looking statements. Actual results may differ 
materially from those stated or implied in the forward looking statements. 
Further, certain forward looking statements are based upon assumptions of 
future events which may not prove to be accurate. These forward looking 
statements involve risks and uncertainties including but not limited to those 
referred to in the Company's Form S-3 Registration Statement No. 333-66149 
filed October 26, 1998, regarding entry into commercial business, risk of 
international operations, and dependence on defense spending.

                                       21

<PAGE>



                              THE TITAN CORPORATION

                           PART II - OTHER INFORMATION

ITEM 2. (c) CHANGES IN SECURITIES AND USE OF PROCEEDS. 
                  On August 24, 1998, the Titan Corporation consummated a merger
                  with VisiCom Laboratories, Inc. ("VisiCom") in a stock for
                  stock transaction. Titan issued 4,167,833 shares of its common
                  stock for all of the outstanding shares of VisiCom stock based
                  on an exchange ratio of 0.447 shares of Titan common stock for
                  each share of VisiCom stock. The shares were issued in a
                  private transaction under Sec. 4(2) under the Securities Act
                  of 1933 as amended. Each shareholder represented that such
                  shareholder acquired the shares for investment without a view
                  toward distribution.

ITEM 4. (a) AND (c) SUBMISSION OF MATTERS TO A VOTE OF SECURITY
                   HOLDERS.
                  At a Special Meeting of Stockholders held on October 21, 1998,
                  the following matter was submitted and approved by
                  shareholders:

                  Amendment of the Restated Certificate of Incorporation to
                  increase the number of authorized shares of Common Stock from
                  45,000,000 to 100,000,000.

                  Affirmative Votes          15,215,716
                  Negative Votes              3,702,258
                  Abstaining                     78,474

ITEM 6.   EXHIBITS AND REPORTS ON FORM 8-K.

        (a)(3.1)  Registrant's Certificate of Amendment of Restated Certificate 
                  of Incorporation dated as of October 21, 1998. The
                  Registrant's Restated Certificate of Incorporation dated as of
                  November 6, 1998, which was Exhibit 3.1 to Registrant's 1987
                  Annual Report on Form 10-K is incorporated herein by this
                  reference. The Registrant's Certificate of Amendment of
                  Restated Certificate of Incorporation dated as of June 30,
                  1987, which was Exhibit 3.2 to Registrant's 1987 Annual Report
                  on Form 10-K is incorporated herein by this reference. 
 
        (27.1)    Financial Data Schedule for the nine months ended 
                  September 30, 1998.

                                       22

<PAGE>




          (27.2)  Restated Financial Data Schedule for the years ended December
                  31, 1997 and 1996, and for the three month, six month and nine
                  month periods ended March 31, 1997, June 30, 1997 and
                  September 30, 1997, respectively.

          (27.3)  Restated Financial Data Schedule for the year December 31, 
                  1995 and for the three month, six month and nine month periods
                  ended March 31, 1996, June 30, 1996, and September 30, 1996,
                  respectively.

        (b)       During the three months ended September 30, 1998, and the 
                  subsequent period prior to filing this report on Form 10-Q,
                  Registrant filed the following:

            (1)   Current report on Form 8-K dated October 23, 1998, to report 
                  the consummation of a merger pursuant to which Delfin Systems,
                  a California corporation ("Delfin") became a wholly owned
                  subsidiary of Titan pursuant to the Agreement and Plan of
                  Reorganization dated as of June 30, 1998 by and among the
                  Titan Corporation, Delsys Merger Corp., and Delfin Systems.

            (2)   Amendment No. One on Form 8-K/A dated August 12, 1998, to 
                  amend Form 8-K dated June 30, 1998, to provide certain
                  required financial statements.

                                       23

<PAGE>



                              THE TITAN CORPORATION

                                   SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, Registrant
has duly caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.


Dated:   November 16, 1998

                                THE TITAN CORPORATION


                                /s/ Eric M. DeMarco
                                ---------------------------------
                                By: Eric M. DeMarco
                                    Executive Vice President,
                                    Chief Financial Officer

                                /s/ Deanna H. Petersen
                                ---------------------------------
                                By: Deanna H. Petersen
                                    Vice President,
                                    Corporate Controller
                                   (Principal Accounting Officer)




                                       24