<PAGE>   1

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

                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                            ------------------------

                                   FORM 10-Q

                                   (MARK ONE)

[X]         QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
            EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2000

                                       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 25737

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

                            USINTERNETWORKING, INC.
             (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

<TABLE>
        <S>                                        <C>
                         DELAWARE                                  52-2078325
             (State or other jurisdiction of                    (I.R.S. Employer
              incorporation or organization)                  Identification No.)

               ONE USI PLAZA, ANNAPOLIS, MD                        21401-7478
         (Address of principal executive offices)                  (Zip Code)
</TABLE>

       Registrant's telephone number, including area code: (410) 897-4400

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

     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 [ ]

              Shares outstanding of the Registrant's common stock

                                     Class
                         Common Stock, $.001 par value
                           Outstanding at May 9, 2000
                                   96,677,412

--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
<PAGE>   2

                                     INDEX
                            USINTERNETWORKING, INC.

<TABLE>
<CAPTION>
                                                                         PAGE
                                                                         ----
<S>        <C>                                                           <C>
Part I Financial Information...........................................    3
  Item 1.  CONSOLIDATED FINANCIAL STATEMENTS OF USINTERNETWORKING, INC.
           Consolidated Balance Sheets as of March 31, 2000 (unaudited)
             and December 31, 1999.....................................    3
           Consolidated Statements of Operations for the three months
             ended March 31, 2000 and 1999 (unaudited).................    4
           Consolidated Statements of Stockholders' Equity for the
             three months ended March 31, 2000 (unaudited).............    5
           Consolidated Statements of Cash Flows for the three months
             ended March 31, 2000 and 1999 (unaudited).................    6
           Notes to Consolidated Financial Statements..................    7
  Item 2.  Management's Discussion and Analysis of Financial Condition
             and Results of Operations.................................   11
  Item 3.  Quantitative and Qualitative Disclosure of Market Risk......   14

Part II Other Information..............................................   15
  Item 1.  Legal Proceedings...........................................   15
  Item 2.  Changes in Securities and Use of Proceeds...................   15
  Item 6.  Exhibits and Reports on Form 8-K............................   16

Signatures.............................................................   17
</TABLE>

                                        2
<PAGE>   3

PART I. FINANCIAL INFORMATION

ITEM 1.  CONSOLIDATED FINANCIAL STATEMENTS

                            USINTERNETWORKING, INC.

                          CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
                                                                MARCH 31,     DECEMBER 31,
                                                                  2000            1999
                                                              -------------   -------------
                                                               (UNAUDITED)
<S>                                                           <C>             <C>
ASSETS
Current assets:
  Cash and cash equivalents.................................  $ 187,154,182   $ 112,302,621
  Available-for-sale securities.............................     22,989,356      31,706,991
  Accounts receivable, less allowance of $830,865 and
    $543,447 in 2000 and 1999, respectively.................     19,841,899      16,557,356
  Due from officer..........................................      1,900,000       1,900,000
  Prepaid expenses and other current assets.................     14,443,052       6,904,595
                                                              -------------   -------------
Total current assets........................................    246,328,489     169,371,563
Deferred iMAP costs, net of accumulated amortization of
  $4,356,340 and $2,415,848 in 2000 and 1999,
  respectively..............................................     14,489,777       8,899,837
Software licenses, net of accumulated amortization of
  $4,938,190 and $3,728,103 in 2000 and 1999,
  respectively..............................................     19,593,722      10,806,710
Property and equipment, net of accumulated depreciation of
  $20,542,290 and $14,319,115 in 2000 and 1999,
  respectively..............................................    121,465,334     101,166,670
Goodwill, net of accumulated amortization of $9,438,763 and
  $7,566,763 in 2000 and 1999, respectively.................     27,801,716      29,646,621
Deferred financing costs and other assets, net of
  accumulated amortization of $385,460 and $128,029 in 2000
  and 1999, respectively....................................      5,637,359       5,562,771
                                                              -------------   -------------
Total assets................................................  $ 435,316,397   $ 325,454,172
                                                              =============   =============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
  Accounts payable..........................................  $  13,855,923   $  13,145,394
  Accrued compensation......................................      8,850,077       8,187,517
  Other accrued expenses....................................      4,583,290       3,385,262
  Deferred revenue..........................................     11,850,325       9,066,452
  Current portion of capital lease obligations..............      8,235,812       5,834,076
  Current portion of long-term debt.........................     23,230,182      12,586,553
                                                              -------------   -------------
Total current liabilities...................................     70,605,609      52,205,254
Short-term obligations expected to be refinanced............      3,446,660       2,116,753
Capital lease obligations, less current portion.............     12,400,347      11,385,029
Long-term debt, less current portion........................     33,999,093      32,286,111
Convertible subordinated notes..............................    125,000,000     125,000,000
                                                              -------------   -------------
Total liabilities...........................................    245,451,709     222,993,147

Stockholders equity:
  Common stock, $.001 par value, 450,000,000 shares
    authorized, 96,513,645 and 92,065,911 shares issued and
    outstanding in 2000 and 1999, respectively..............         96,513          92,066
  Additional paid-in capital................................    368,538,537     241,861,378
  Note receivable from officer for purchase of common
    stock...................................................     (2,250,000)     (2,250,000)
  Unearned compensation.....................................     (1,429,500)     (1,782,433)
  Accumulated deficit.......................................   (175,417,450)   (135,771,335)
  Accumulated other comprehensive income....................        326,588         311,349
                                                              -------------   -------------
  Total stockholders' equity................................    189,864,688     102,461,025
                                                              -------------   -------------
Total liabilities and stockholders' equity..................  $ 435,316,397   $ 325,454,172
                                                              =============   =============
</TABLE>

                            See accompanying notes.
                                        3
<PAGE>   4

                            USINTERNETWORKING, INC.

                     CONSOLIDATED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
                                                                  THREE MONTHS ENDED
                                                                       MARCH 31,
                                                              ---------------------------
                                                                  2000           1999
                                                              ------------   ------------
                                                                      (UNAUDITED)
<S>                                                           <C>            <C>
Revenue.....................................................  $ 17,789,513   $  4,392,106
                                                              ------------   ------------
Costs and expenses:
  Direct cost of services...................................    11,249,365      3,249,347
  Network and infrastructure costs..........................     6,090,249      2,844,740
  General and administrative................................     6,224,968      4,938,834
  Sales and marketing.......................................    17,256,240      6,424,662
  Product research and development..........................       511,851        245,247
  Non-cash stock compensation expense.......................     4,124,194        135,681
  Depreciation and amortization.............................     9,329,591      3,933,625
                                                              ------------   ------------
Total costs and expenses....................................    54,786,458     21,772,136
                                                              ------------   ------------
Operating loss..............................................   (36,996,945)   (17,380,030)
Other income (expense):
  Interest income...........................................     1,903,209        258,447
  Interest expense..........................................    (4,552,379)      (569,387)
                                                              ------------   ------------
                                                                (2,649,170)      (310,940)
                                                              ------------   ------------
Net loss....................................................   (39,646,115)   (17,690,970)
Dividends accrued on Series A and Series B Convertible
  Preferred Stock...........................................       --          (1,903,850)
Accretion of common stock subject to repurchase to fair
  value.....................................................       --         (23,938,069)
Accretion of Series B Convertible Redeemable Preferred Stock
  to fair value.............................................       --             (99,252)
                                                              ------------   ------------
Net loss attributable to common stockholders................  $(39,646,115)  $(43,632,141)
                                                              ============   ============
Basic and diluted loss per common share attributable to
  common stockholders.......................................  $      (0.42)  $     (31.03)
                                                              ============   ============
</TABLE>

                            See accompanying notes.
                                        4
<PAGE>   5

                            USINTERNETWORKING, INC.
                CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
                       THREE MONTHS ENDED MARCH 31, 2000
<TABLE>
<CAPTION>

                                                    COMMON STOCK          ADDITIONAL
                                               -----------------------     PAID-IN      NOTE RECEIVABLE     UNEARNED
                                                 SHARES      PAR VALUE     CAPITAL       FROM OFFICER     COMPENSATION
                                               -----------   ---------   ------------   ---------------   ------------
<S>                                            <C>           <C>         <C>            <C>               <C>
Balance at January 1, 2000...................   92,065,911    $92,066    $241,861,378     $(2,250,000)    $(1,782,433)
  Issuance of common stock for cash..........    3,000,000      3,000     125,998,000        --               --
  Offering issuance costs....................      --           --         (6,033,045)       --               --
  Issuance of common stock in connection with
    employee bonus plan......................      --           --            922,857        --               --
  Issuance of warrants in connection with
    marketing agreement......................      --           --          2,148,000        --               --
  Issuance of restricted common stock........        2,346          2          90,162        --               (90,164)
  Common stock issued upon exercise of stock
    options..................................      504,375        505         794,757        --               --
  Common stock issued upon exercise of
    warrants.................................      964,284        964       1,471,176        --               --
  Repurchase of common stock.................      (31,647)       (32)     (1,472,108)       --               --
  Contribution of common stock to employee
    benefit plan.............................        8,376          8         242,864        --               --
  Stock compensation expense for issuance of
    common stock options at below fair market
    value....................................      --           --          2,514,496        --               --
  Amortization of unearned compensation......      --           --            --             --               443,097
  Comprehensive income:
    Net loss for the period January 1 through
      March 31, 2000.........................      --           --            --             --               --
    Other comprehensive income -- unrealized
      gain on available-for-sale
      securities.............................      --           --            --             --               --
         Total comprehensive income (loss)...      --           --            --             --               --
                                               -----------    -------    ------------     -----------     -----------
Balance at March 31, 2000 (unaudited)........   96,513,645    $96,513    $368,538,537     $(2,250,000)    $(1,429,500)
                                               ===========    =======    ============     ===========     ===========

<CAPTION>
                                                                ACCUMULATED
                                                                   OTHER           TOTAL
                                                ACCUMULATED    COMPREHENSIVE   STOCKHOLDERS'
                                                  DEFICIT         INCOME          EQUITY
                                               -------------   -------------   -------------
<S>                                            <C>             <C>             <C>
Balance at January 1, 2000...................  $(135,771,335)    $311,349      $102,461,025
  Issuance of common stock for cash..........       --             --           126,001,000
  Offering issuance costs....................       --             --            (6,033,045)
  Issuance of common stock in connection with
    employee bonus plan......................       --             --               922,857
  Issuance of warrants in connection with
    marketing agreement......................       --             --             2,148,000
  Issuance of restricted common stock........       --             --               --
  Common stock issued upon exercise of stock
    options..................................       --             --               795,262
  Common stock issued upon exercise of
    warrants.................................       --             --             1,472,140
  Repurchase of common stock.................       --             --            (1,472,140)
  Contribution of common stock to employee
    benefit plan.............................       --             --               242,872
  Stock compensation expense for issuance of
    common stock options at below fair market
    value....................................       --             --             2,514,496
  Amortization of unearned compensation......       --             --               443,097
  Comprehensive income:                             --
    Net loss for the period January 1 through
      March 31, 2000.........................    (39,646,115)                   (39,646,115)
    Other comprehensive income -- unrealized
      gain on available-for-sale
      securities.............................       --             15,239            15,239
                                                                               ------------
         Total comprehensive income (loss)...       --             --           (39,630,876)
                                               -------------     --------      ------------
Balance at March 31, 2000 (unaudited)........  $(175,417,450)    $326,588      $189,864,688
                                               =============     ========      ============
</TABLE>

                            See accompanying notes.
                                       5
<PAGE>   6

                            USINTERNETWORKING, INC.

                     CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
                                                                  THREE MONTHS ENDED
                                                                       MARCH 31,
                                                              ---------------------------
                                                                  2000           1999
                                                              ------------   ------------
                                                                      (UNAUDITED)
<S>                                                           <C>            <C>
OPERATING ACTIVITIES
Net loss....................................................  $(39,646,115)  $(17,690,970)
Adjustments to reconcile net loss to net cash used in
  operating activities:
  Depreciation..............................................     7,457,591      2,592,625
  Amortization..............................................     1,872,000      1,341,000
  Non-cash compensation expense.............................     4,124,194        135,681
  Non-cash interest expense.................................        65,950         62,974
  Changes in operating assets and liabilities:
     Accounts receivable....................................    (3,284,543)    (1,314,570)
     Prepaid expenses and other current assets..............    (5,492,140)       101,970
     Deferred iMAP costs....................................    (5,589,940)    (1,158,998)
     Accounts payable.......................................       710,529      2,401,838
     Accrued compensation...................................       662,560       (267,043)
     Other accrued expenses.................................     1,198,028       (509,330)
     Deferred revenue.......................................     2,783,873        421,282
                                                              ------------   ------------
Net cash used in operating activities.......................   (35,138,013)   (13,883,541)

INVESTING ACTIVITIES
Purchases of property and equipment.........................   (30,924,878)    (8,302,152)
Purchases of available-for-sale securities..................   (12,129,696)       --
Proceeds from sale of available-for-sale securities.........    20,862,570        --
                                                              ------------   ------------
Net cash used in investing activities.......................   (22,192,004)    (8,302,152)

FINANCING ACTIVITIES
Proceeds from exercise of employee stock options............       795,263        --
Expenses from issuance of Series B Convertible Preferred
  Stock.....................................................       --             (99,252)
Proceeds from issuance of common stock, net of offering
  costs.....................................................   119,967,955        --
Proceeds from issuance of long-term debt....................    15,799,139      3,337,600
Payments to former shareholders of acquired business........       --          (8,500,000)
Payments on long-term debt..................................    (2,179,444)      (497,458)
Payments on capital lease obligations.......................    (2,201,335)      (348,124)
                                                              ------------   ------------
Net cash provided by (used in) financing activities.........   132,181,578     (6,107,234)
                                                              ------------   ------------
Net increase (decrease) in cash and cash equivalents........    74,851,561    (28,292,927)
Cash and cash equivalents at beginning of period............   112,302,621     43,802,465
                                                              ------------   ------------
Cash and cash equivalents at end of period..................  $187,154,182   $ 15,509,538
                                                              ============   ============
</TABLE>

                            See accompanying notes.
                                        6
<PAGE>   7

                            USINTERNETWORKING, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           MARCH 31, 2000 (UNAUDITED)

1.  BASIS OF PRESENTATION

     The accompanying unaudited consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-Q and Article 10 of
Regulation S-X. Accordingly, they do not include all of the information and
disclosures required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments (consisting
of normal recurring accruals) considered necessary for a fair presentation have
been included. For further information, refer to the consolidated financial
statements and notes thereto included in the Company's annual report on 10K for
the year ended December 31, 1999. Operating results for the three months ended
March 31, 2000 are not necessarily indicative of the results that may be
expected for the year ending December 31, 2000.

2.  LOSS PER SHARE

     The following table sets forth the computation of basic and diluted loss
per common share:

<TABLE>
<CAPTION>
                                                                  THREE MONTHS ENDED
                                                                       MARCH 31,
                                                              ---------------------------
                                                                  2000           1999
                                                              ------------   ------------
<S>                                                           <C>            <C>
Numerator:
  Net loss..................................................  $(39,646,115)  $(17,690,970)
  Dividends on Series A and Series B Convertible Preferred
     Stock..................................................       --          (1,903,850)
  Accretion of common stock subject to repurchase to fair
     value..................................................       --         (23,938,069)
  Accretion of Series B Convertible Redeemable Preferred
     Stock to fair value....................................       --             (99,252)
                                                              ------------   ------------
                                                              $(39,646,115)  $(43,632,141)
                                                              ============   ============
Denominator:
  Weighted-average number of shares of common stock
     outstanding and not subject to repurchase during the
     period.................................................    94,676,274      1,406,250
                                                              ------------   ------------
Basic and diluted loss per common share.....................  $      (0.42)        (31.03)
                                                              ============   ============
</TABLE>

     Basic loss per share is based upon the average number of shares of common
stock outstanding during the periods.

     Diluted loss per common share is equal to basic loss per common share
because if potentially dilutive securities were included in the computation, the
result would be anti-dilutive. These potentially dilutive securities consist of
stock options and warrants.

                                        7
<PAGE>   8
                            USINTERNETWORKING, INC.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                           MARCH 31, 2000 (UNAUDITED)

3.  PROPERTY AND EQUIPMENT

     Property and equipment consists of the following:

<TABLE>
<CAPTION>
                                                            MARCH 31,     DECEMBER 31,
                                                               2000           1999
                                                           ------------   -------------
<S>                                                        <C>            <C>
Building and land........................................  $ 21,565,207   $ 19,534,132
Furniture and fixtures...................................     4,441,442      4,120,661
Equipment and automobiles................................     4,218,664      3,353,722
Computers and software...................................   102,457,851     79,430,230
Leasehold improvements...................................     9,324,460      9,047,040
                                                           ------------   ------------
          Total..........................................   142,007,624    115,485,785
Accumulated depreciation.................................   (20,542,290)   (14,319,115)
                                                           ------------   ------------
          Total..........................................  $121,465,334   $101,166,670
                                                           ============   ============
</TABLE>

     Substantially all property and equipment is collateralized under financing
arrangements.

4.  LONG-TERM DEBT AND CONVERTIBLE SUBORDINATED NOTES

     Long-term debt consists of the following:

<TABLE>
<CAPTION>
                                                               MARCH 31,    DECEMBER 31,
                                                                 2000           1999
                                                              -----------   ------------
<S>                                                           <C>           <C>
Notes payable to banks due in June and July 2001 and bearing
  interest at 9% per annum. These notes are payable in
  aggregate monthly installments of principal and interest
  of $8,893 with all unpaid principal and interest due at
  maturity. These notes are secured by mortgages on the real
  property purchased with the proceeds and with $106,913 in
  letters of credit pledged as additional security..........  $   819,389   $   828,127
Notes payable due July 1, 2001 through October 1, 2002 and
  bearing interest at 11.31% to 15.4% per annum. These notes
  are payable in aggregate monthly installments of principal
  and interest of $585,282 and are collateralized by ceratin
  furniture, fixtures, equipment, and software..............   14,373,861    15,148,548
Notes payable due January 2002 through March 2002 and
  bearing interest at 9.96% to 11.91% per annum. The notes
  are payable in quarterly installments of $2,892,191 with
  all unpaid principal and interest due at maturity. These
  notes are collateralized by certain software licenses.....   14,616,511     1,743,754
Note payable due August 1, 2001 and bearing interest at
  15.4% per annum. The note is payable in aggregate monthly
  installments of principal and interest of $158,000 with
  all unpaid principal and interest due at maturity. This
  note is collateralized by certain software licenses.......    3,113,625     3,282,222
Note payable due on May 1, 2002 and bearing interest at
  12.39% per annum. This note is payable in aggregate
  monthly installments of principal and interest of $391,705
  and is collateralized by certain equipment................    9,188,945     9,868,975
</TABLE>

                                        8
<PAGE>   9
                            USINTERNETWORKING, INC.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                           MARCH 31, 2000 (UNAUDITED)

4.  LONG-TERM DEBT AND CONVERTIBLE SUBORDINATED NOTES (CONTINUED)

<TABLE>
<CAPTION>
                                                               MARCH 31,    DECEMBER 31,
                                                                 2000           1999
                                                              -----------   ------------
<S>                                                           <C>           <C>
Notes payable due on February 2005 and bearing interest at
  7.5% per annum. The note is payable in aggregate monthly
  installments of principal and interest of $79,352 with all
  unpaid principal and interest due at maturity. The note is
  secured by a mortgage on the real property purchased with
  the proceeds..............................................    8,475,501     7,012,681
Notes payable due on March 1, 2001 and bearing interest at
  6.6% per annum. These notes are payable in aggregate
  monthly installments of principal and interest ranging
  from $10,908 to $28,237 and are collateralized by the
  general assets of the Company.............................      453,393       562,162
Notes payable due between March 17, 2003 and September 4,
  2004 and bearing interest at rates from 8.25% to 10.25%
  per annum. The notes are payable in aggregate monthly
  installments of principal and interest ranging from $533
  to $1,274 and are secured by automobiles purchased with
  the proceeds..............................................      112,768       117,012
Note payable due on December 29, 2003 bearing interest at
  9.8% per annum. The note is payable in monthly principal
  installments of $98,858 plus interest and is
  collateralized by a $750,000 certificate of deposit and
  certain building improvements.............................    4,453,125     4,750,000
Note payable to former shareholders of Conklin, bearing
  interest at 10% per annum and due with accrued interest on
  October 8, 2001...........................................    2,000,000     2,000,000
                                                              -----------   -----------
Total.......................................................   57,607,118    45,313,481
Less: current portion.......................................   23,230,182    12,586,553
Less: discounts.............................................      377,841       440,817
                                                              -----------   -----------
                                                              $33,999,095   $32,286,111
                                                              ===========   ===========
</TABLE>

     Aggregate maturities of long-term debt at March 31, 2000 are as follows:

<TABLE>
<S>                                                           <C>
April 1, 2000 through December 31, 2000.....................  $17,281,296
2001........................................................   22,123,244
2002........................................................    9,344,836
2003........................................................    1,707,215
2004........................................................      474,678
2005 and thereafter.........................................    6,675,849
                                                              -----------
          Total.............................................  $57,607,118
                                                              ===========
</TABLE>

     At March 31, 2000, the fair value of long-term debt approximates its
carrying value.

5.  SHORT-TERM OBLIGATIONS EXPECTED TO BE REFINANCED

     At March 31, 2000, the Company had outstanding current liabilities for the
purchase of fixed assets of $5,000,000, for which the Company had outstanding
commitments to finance on a long-term basis. The Company executed the financings
in early 2000, and therefore classified $3,446,660, or the portion of the
$5,000,000 financing that is due after March 31, 2000, as short-term obligations
expected to be refinanced, a long-term liability. The remaining $1,553,340,
which is due in 2000, is included in accounts payable at
                                        9
<PAGE>   10
                            USINTERNETWORKING, INC.
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                           MARCH 31, 2000 (UNAUDITED)

5.  SHORT-TERM OBLIGATIONS EXPECTED TO BE REFINANCED (CONTINUED)
March 31, 2000. These obligations bear interest at rates from 9% to 17% per
annum, and will mature in varying installments through January 2002.

6.  SEGMENT INFORMATION

     The following tables set forth the Company's operating segments:

<TABLE>
<CAPTION>
                                                                 THREE MONTHS ENDED
                                                                      MARCH 31,
                                                              -------------------------
                                                                 2000          1999
                                                              -----------   -----------
<S>                                                           <C>           <C>
Revenues:
  Enterprise Wide Solutions.................................  $ 7,760,442   $ 2,328,958
  E-Commerce and Web Based Solutions........................   10,029,071     2,063,148
                                                              -----------   -----------
  Consolidated..............................................  $17,789,513   $ 4,392,106
                                                              ===========   ===========
Segment operating profit:
  Enterprise Wide Solutions.................................  $ 3,023,718   $ 1,006,244
  E-Commerce and Web Based Solutions........................    3,516,430       136,515
                                                              -----------   -----------
  Consolidated..............................................  $ 6,540,148   $ 1,142,759
                                                              ===========   ===========
</TABLE>

     A reconciliation of segment operating loss to net loss during the periods
presented is as follows:

<TABLE>
<CAPTION>
                                                                  THREE MONTHS ENDED
                                                                       MARCH 31,
                                                              ---------------------------
                                                                  2000           1999
                                                              ------------   ------------
<S>                                                           <C>            <C>
Segment operating loss for all segments.....................  $  6,540,148   $  1,142,759
Network and infrastructure costs............................    (6,090,249)    (2,844,740)
Selling, general and administrative.........................   (23,481,208)   (11,363,496)
Product research and development............................      (511,851)      (245,247)
Non-cash stock compensation expense.........................    (4,124,194)      (135,681)
Depreciation and amortization...............................    (9,329,591)    (3,933,625)
Interest income.............................................     1,903,209        258,447
Interest expense............................................    (4,552,379)      (569,387)
                                                              ------------   ------------
Net loss....................................................  $(39,646,115)  $(17,690,970)
                                                              ============   ============
</TABLE>

     Revenues from one customer of the Company's Enterprise Wide Solutions
segment accounted for approximately 10.0% and 8.1% of the Company's consolidated
revenue for the three months ended March 31, 2000 and 1999 respectively.

7.  STOCK SPLIT

     In March 2000, the Company's Board of Directors approved a three for two
stock split of common stock, options, and warrants which became effective on
March 14, 2000. Accordingly, all share and per share data including stock
option, warrant, and loss per share information have been restated in the
consolidated financial statements to retroactively reflect the stock split.

                                       10
<PAGE>   11

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

     You should read the following discussion of our results of operations and
financial condition in conjunction with our consolidated financial statements
and related notes included elsewhere in this Form 10-Q. This discussion contains
forward-looking statements based on current expectations that involve risks and
uncertainties. Actual results and the timing of certain events may differ
significantly from those projected in such forward-looking statements due to a
number of factors.

OVERVIEW

     We have developed an advanced, integrated service offering that provides
our clients the ability to use leading business software applications through
our state-of-the-art Internet-based network. During 1998, we devoted
substantially all of our efforts to developing our network infrastructure,
recruiting and training personnel, establishing strategic business partnerships
with application software providers, completing two strategic acquisitions and
raising capital. During our first full year of operations in 1999, we continued
the development activities started in 1998 and began to market and sell our new
iMAP product offerings. We have incurred a cumulative net loss since inception
and expect to incur additional losses for at least the next twelve months, due
primarily to additional start-up costs related to implementation of our services
and the continued expansion and enhancement of our network. As of March 31,
2000, we had an accumulated deficit of approximately $175.4 million. As of March
31, 2000, we had 147 signed contracts with 115 clients accounting for total
revenue, assuming payment over the full contract terms, of over $194.7 million.
While we have experienced significant growth in revenue under contract in recent
periods and currently expect substantial, although potentially lower, growth in
revenue under contract throughout 2000, prior growth rates should not be
considered as necessarily indicative of future growth rates or operating results
for 2000.

     In October 1999, we purchased the assets of Conklin & Conklin, Inc. a
comprehensive provider of Lawson financial and human resources system
implementation services and a certified reseller of Lawson software licenses.
The purchase price consisted of cash of $7.7 million, assumed liabilities of
$1.5 million, and a $2.0 million secured note. The secured note is due on
October 8, 2001, and bears interest at 10%, with interest payable monthly until
the maturity date. In addition, the purchase price consists of contingent
payments of up to $4.6 million in cash. Portions of the contingent payments can
be earned by Conklin shareholders through January 2002 upon the attainment of
specified financial milestones.

     In February 2000, we completed a public offering of our common stock. The
net proceeds from the sale of 3,000,000 shares of common stock were
approximately $120.0 million.

     Revenue.  We generate revenue from iMAP services and information technology
services. Revenues from professional IT services are recognized as services are
provided. iMAP revenues consist of implementation fees and monthly recurring
fees for services. Implementation fees are generally paid in advance and are
deferred and recognized ratably over the term of the iMAP service contract.
Monthly iMAP service fees are consideration for access to our network of EDCs
hosting application software, and the implementation and management of that
software. iMAP contracts generally have a three-to-five year term and revenues
are recognized ratably over the contract term. Payments received in advance of
revenue recognition, even if non-refundable, are recorded as deferred revenue.
Some contracts permit termination without cause by the clients. Contracts
permitting termination without cause generally provide for termination payments
to us that will be recognized as revenue when collectibility is assured.

     Costs and expenses.  We incur operating costs and expenses related to the
delivery of iMAP and professional IT services. They include direct costs of
service, network and infrastructure, general and administrative, sales and
marketing, product research and development, stock compensation, depreciation
and amortization expenses.

     We incur up-front costs related to the delivery of iMAP services. Product
research and development costs and the cost to operate our network and data
centers are recognized as period costs. Costs related to the acquisition of
hardware are capitalized and depreciated over the estimated useful life of the
hardware of five years. Costs related to the acquisition of software licenses
are capitalized and amortized over the lesser of

                                       11
<PAGE>   12

either three years or the term of the individual client contract, depending on
the nature of the software license agreement. Amortization is based on a
straight-line basis over the remaining useful life. Direct costs related to the
integration of software applications for a client on our network are capitalized
and amortized over the related contract period.

HISTORICAL RESULTS OF OPERATIONS--USINTERNETWORKING

Comparison of the three-month period ended March 31, 2000 to the three-month
period ended March 31, 1999

     Revenue.  For the three months ended March 31, 2000, we generated $13.8
million in iMAP revenue, and $4.0 million in professional IT services revenue.
We generated $1.2 million in iMAP revenue and $3.2 million in professional IT
services revenue for the same period in 1999. The increase of $12.6 million in
iMAP revenue can be attributable to the increase in client iMAP contracts. At
March 31, 2000, we had 147 cumulative iMAP contracts versus 24 in the same
period in 1999.

     Gross margins, direct costs of services, network and infrastructure
costs.  For the three months ended March 31, 2000, we incurred $8.7 million and
$2.5 million of direct costs related to the delivery of our iMAP and
professional IT services, respectively. For the same period in 1999, we incurred
$1.2 million related to iMAP services and $2.0 million costs related to
professional IT services. Additionally, we incurred $6.1 million of costs
related to the maintenance of our network and infrastructure for the three
months ended March 31, 2000 and $2.8 million in related costs during the same
period in 1999. Gross margins, including iMAP network and infrastructure costs,
for the three months ended March 31, 2000 were (7.2)% and 37.5% for iMAP and
professional IT services, respectively. Our margins for iMAP services are
expected to continue to improve because our business model contemplates a much
smaller increase in direct costs and network and infrastructure costs as
revenues increase. Our margins for IT services were constant in the 1999 and
2000 periods.

     General and administrative expenses.  For the three months ended March 31,
2000, we incurred $6.2 million of general and administrative expenses compared
to $4.9 million for the same period in 1999. The increase of $1.3 million
principally reflects the costs associated with increased administrative
personnel to support the growth in operations.

     Sales and marketing expenses.  For the three months ended March 31, 2000,
we incurred $17.3 million of sales and marketing expenses compared to $6.4
million for the same period in 1999. The increase of $10.8 million reflects the
costs associated with our increased efforts to market and brand our service
offerings, and the sales commissions related to the increase in iMAP revenue.

     Product research and development expenses.  For the three months ended
March 31, 2000, we incurred $0.5 million of product research and development
expenses compared to $0.2 million for the same period in 1999. The increase of
$0.3 million reflects the costs associated with the continued development of new
products and infrastructure.

     Non-cash stock compensation expense.  For the three months ended March 31,
2000, we incurred $4.1 million in non-cash compensation expense. Of this amount,
$3.8 million reflects the period's expense in connection with employee stock
options issued at an exercise price of $2.67 and an estimated fair market value
of $8.87 to $14.89 per share at the date of grant. The remaining amount of $0.3
million reflects the Company's contribution of common stock to an employee
benefit plan and the amortization of unearned compensation. The Company will
record stock compensation expense of approximately $31.3 million in future
periods through 2003 as a result of stock option grants with exercise prices
below the fair value of the underlying common stock at the date of grant. There
was minimal non-cash stock compensation expense for the comparable period in
1999.

     Depreciation and amortization.  Depreciation and amortization for the three
months ended March 31, 2000 totaled $9.3 million. Of this amount, $1.9 million
represents the amortization of the goodwill recorded upon our acquisitions of
Conklin, ACR and IIT; the remaining $7.4 million represents depreciation of our
property and equipment and the amortization of our prepaid software licenses.

                                       12
<PAGE>   13

     Interest income and expense.  For the three months ended March 31, 2000, we
incurred $4.5 million in interest expense and generated $1.9 million of interest
income. We had minimal interest income and expense during the period ended March
31, 2000. Our interest expense has increased as we continue to finance through
long-term debt and capital lease obligations investments in our network and
infrastructure. See Notes 4 and 5 to our March 31, 2000 consolidated financial
statements for a summary of our long-term debt at March 31, 2000.

     We generated significant interest income in the first quarter of 2000 from
the temporary investment of the proceeds of our February common stock offering
and November 1999 debt offering.

FUTURE ASSESSMENT OF RECOVERABILITY AND IMPAIRMENT OF GOODWILL

     In connection with our acquisition of IIT, ACR and Conklin we recorded
goodwill that is being amortized on a straight line basis over its estimated
useful life. At March 31, 2000, the unamortized portion of these intangibles was
$27.8 million, which represented 6.4% of total assets and 14.6% of stockholders'
equity. Goodwill represents the amount that we paid for these acquired
businesses in excess of the fair value of the acquired tangible and separately
measurable intangible net assets. We have estimated the useful life of our
goodwill to be five years based upon several factors, the most significant of
which is the susceptibility of acquired businesses to change as a result of
technological advances and the rapidly changing needs of their customers.

     We periodically review the carrying value and recoverability of our
unamortized goodwill and other intangible assets for impairment. If the facts
and circumstances suggest that the goodwill or other intangible assets may be
impaired, the carrying value of this goodwill will be adjusted by an immediate
charge against income during the period of the adjustment. The length of the
remaining amortization period may also be shortened, which will result in an
increase in the amount of goodwill amortization during the period of adjustment
and each period thereafter until fully amortized. Once adjusted, there can be no
assurance that there will not be further adjustments for impairment and
recoverability in future periods. We have integrated the acquired businesses
into our primary iMAP service offerings. Therefore, in evaluating impairment a
principal factor we consider is the failure to achieve expected cash flows from
operations.

LIQUIDITY AND CAPITAL RESOURCES

     At March 31, 2000, we had cash and cash equivalents of $187.2 million and
available-for-sale securities of $23.0 million.

     For the three months ended March 31, 2000, we used $35.0 million of cash in
operating activities, $22.3 million in investing activities and generated $132.2
million through financing activities. Included in financing activities was
$120.0 million raised from a public common stock offering in February 2000. We
invested these proceeds primarily in short term cash and cash equivalents.
During the three months ended March 31, 2000, we purchased $12.1 million of
marketable securities and sold $20.9 million of marketable securities. We used
the proceeds of the sale of the marketable securities to fund our operations.

     For the first quarter of 2000, we purchased $30.9 million of property and
equipment, which consisted primarily of computer hardware and software necessary
to support the increase in our iMAP clients and expenditures for equipment used
by our administrative personnel. These expenditures in the comparable 1999
period were $8.3 million. We have no material commitments for the acquisition of
property and equipment at March 31, 2000, but estimate that our capital
expenditures for the remainder of 2000 will be approximately $106.0 million.

     We have used debt and capital leases to partially finance our capital
investments for the development of our infrastructure and the hardware required
to support the increase in our iMAP clients. As of March 31, 2000, we had
obtained commitments for secured financing from several sources, including
Oracle Credit Corporation ($15.0 million), Cisco System Capital Corporation
($8.8 million), Venture Lending & Leasing II, Inc. ($10.0 million), Finova
Capital Corporation ($11.7 million), Transamerica Business Credit Corporation
($9.0 million), Charter Financial Corporation ($5.0 million), LINC Capital ($6.0
million) and EMC

                                       13
<PAGE>   14

Corporation ($8.2 million). At March 31, 2000, the total of our secured
financing commitments was $98.4 million, of which $93.9 million had been funded.

     We believe that these resources, together with the net proceeds received
from the issuance of our common stock in the February offering, will be
sufficient to fund our operations for at least the next twelve months. The
majority of the base infrastructure required to provide our iMAP services has
been purchased. As a result, our capital expenditures for the next several years
will now largely be success-based, consisting of software licenses, hardware and
the expansion of existing data center facilities required to implement iMAP
solutions for our new customers. These new customer contracts are expected to
have an average term of three to five years; however, we anticipate that many of
our customers will renew their contracts due to the cost and complexity of
switching service providers.

     If we expand more rapidly than currently anticipated, if our working
capital needs exceed our current expectations or if we make acquisitions, we
will need to raise additional capital from equity or debt sources. We cannot be
sure that we will be able to obtain the additional financing to satisfy our cash
requirements or to implement our growth strategy on acceptable terms or at all.
If we cannot obtain such financing on terms acceptable to us, we may be forced
to curtail our planned business expansion and may be unable to fund our ongoing
operations. We are presently pursuing a variety of sources of other debt and
capital financing, but no additional commitments have been obtained to date.

YEAR 2000 COMPLIANCE

     Year 2000 Issue.  The Year 2000 issue is a result of computer programs or
systems, which store or process date-related information using only two digits
to represent the year. These programs or systems may not be able to properly
distinguish between a year in the 1900's and a year in the 2000's. Failure of
these programs or systems to distinguish between the two centuries could cause
the programs or systems to yield erroneous results or even to fail.

     Effect on USi.  To date, we have not experienced any material difficulties
associated with the Year 2000 and we have not incurred any material liability or
costs due to the Year 2000 issue. Our total expenses related to Year 2000
compliance through March 31, 2000 were $1.0 million. We do not anticipate that
we will incur any material additional costs due to Year 2000 compliance.

ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

     We are exposed to market risk from changes in interest rates. In addition,
changes in the quoted market price of our common stock will effect the fair
value of convertible subordinated notes.

  Interest Rate Risk

     The fair value of our cash and cash equivalents would not be significantly
impacted by either a 10% increase or a 10% decrease in interest rates due to the
short-term nature of our portfolio.

     Our earnings and financial position are affected by changes in interest
rates as a result of our purchase of various fixed rate municipal bonds included
in available-for-sale investments. If market interest rates for municipal bonds
increase by 10%, the fair value of our available-for-sale investments will
decrease, and unrealized gains/losses recognized as other comprehensive income
will decrease by an estimated $0.7 million. Conversely, if market interest rates
for municipal bonds decrease by 10%, the fair value of our available-for-sale
investments will increase, and unrealized gains/losses recognized as other
comprehensive income will increase by an estimated $0.8 million. These amounts
are determined by discounting future cash flows using hypothetical interest
rates.

     We have financed capital expansion through various long-term debt
instruments bearing interest at both fixed and variable interest rates. At March
31, 2000, the fair value of this debt is not significantly impacted by either a
10% increase or a 10% decrease in interest rates.

                                       14
<PAGE>   15

  Other Market Risk

     Our convertible subordinated notes bear interest at 7% through November 1,
2004. The market value of these notes is affected by fluctuations in the quoted
market value of our common stock. If the quoted market value of our common stock
increased by 10%, the estimated fair value of the notes will increase by an
estimated $35 million. Conversely, if the quoted market value of our common
stock decreases by 10%, the estimated fair value of the notes will decrease by
an estimated $35 million.

     These analyses do not consider the effects of the reduced level of overall
economic activity that could exist in such an environment. Further, in the event
of a change of such magnitude, we would likely take actions to further mitigate
our exposure to the change. However, due to the uncertainty of the specific
actions that would be taken and their possible effects, the sensitivity analysis
assumes no changes in our financial structure.

PART II.  OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS

     The Company is not a party to any material legal proceedings.

ITEM 2.  CHANGES IN SECURITIES AND USE OF PROCEEDS

     (a) -- (c) None.

     On April 8, 1999, in connection with USinternetworking's initial public
offering, a Registration Statement on Form S-1 (No. 333-70717) was declared
effective by the Securities and Exchange Commission, pursuant to which 6,900,000
shares of USinternetworking's common stock were offered and sold for the account
of USinternetworking at a price of $21 per share. Generating gross offering
proceeds of $144.9 million. The managing underwriters were Credit Suisse First
Boston, Bear, Stearns & Co. Inc., BT Alex. Brown and Legg Mason Wood Walker
Incorporated. After deducting approximately $10.1 million in underwriting
discounts and $2.1 million in other related expenses, the net proceeds to
USinternetworking were approximately $132.7 million.

     The net proceeds to USinternetworking were invested in short-term,
investment-grade interest-bearing securities. USinternetworking used a portion
of the net proceeds to pay accrued dividends on its preferred stock.
USinternetworking has no specific plans at this time for the use of the
remaining proceeds and expects to use such proceeds for working capital and
general corporate purposes.

     (d) The Company filed its first registration statement under the Securities
Act effective April 8, 1999, File No. 333-70717. From the effective date of the
registration statement to March 31, 2000, the Company's use of net offering
proceeds was as follows:

<TABLE>
<S>                                                           <C>
Net offering proceeds to issuer.............................  $132,800,000
                                                              ============
Use of proceeds:
  Property, equipment and software licenses.................  $109,313,000
  Payments to former shareholders of acquired businesses....    19,291,000
Temporary investments:
  Available-for-sale securities.............................       365,000
Other expenses:
  Payment of accrued dividends..............................     3,831,000
                                                              ------------
                                                              $132,800,000
                                                              ============
</TABLE>

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

     (a) Exhibits.

        27.1 Financial Data Schedule

                                       15
<PAGE>   16

     (b) Reports on Form 8-K.

     We filed a Current Report on Form 8-K dated February 18, 2000 under which
we filed a press release relating to the announcement of our cooperative
marketing agreement with AT&T.

     We filed a Current Report on Form 8-K dated March 6, 2000 under which we
filed a press release relating to our Board of Directors approval of a three for
two stock split of our common stock for all shareholders of record at the close
of business on March 14, 2000.

     We filed a Current Report on Form 8-K dated April 24, 2000 under which we
filed a press release announcing that Ken Sichau, President of AT&T Business
Services Sales, will join USi's Board of Directors.

                                       16
<PAGE>   17

                                   SIGNATURES

     PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1934, AS AMENDED,
USINTERNETWORKING, INC. HAS DULY CAUSED THIS REGISTRATION STATEMENT TO BE SIGNED
ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN ANNAPOLIS,
MARYLAND ON MAY 15, 2000.

                                          USINTERNETWORKING, INC.

                                          By:  /s/ CHRISTOPHER R. MCCLEARY
                                            ------------------------------------
                                            Christopher R. McCleary
                                            Chairman of the Board
                                            and Chief Executive Officer

                                          By:     /s/ MARK J. MCENEANEY
                                            ------------------------------------
                                            Mark J. McEneaney
                                            Senior Vice President
                                            and Chief Financial Officer

                                       17
<PAGE>   18

                                 EXHIBIT INDEX

<TABLE>
<CAPTION>
EXHIBIT
NUMBER                           DESCRIPTION
-------                          -----------
<S>      <C>
27.1     Financial Data Schedule (EDGAR version only)
</TABLE>