UNITED STATES
                      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 AND 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

COMMISSION FILE NUMBER 33-44510

                     COMPUTER TECHNOLOGY ASSOCIATES, INC.
            (Exact name of registrant as specified in its charter)

      COLORADO                                 84-0797618
(State or other jurisdiction of              (I.R.S. Employer
incorporation or organization)               Identification No.)

6903 ROCKLEDGE DRIVE, BETHESDA, MARYLAND     20817
(Address of principal executive offices)            (Zip Code)

                                (301) 581-3200
             (Registrant's telephone number, including area code)

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 [ ]

Indicate the number of shares outstanding of each  of  the issuer's classes of
common stock as of SEPTEMBER 30, 1998.

COMMON STOCK, $.01 PAR VALUE                            8,664,662
         (Class)                                  (Number of Shares)
<PAGE>
                     COMPUTER TECHNOLOGY ASSOCIATES, INC.
                                  FORM 10-Q
                   FOR THE QUARTER ENDED SEPTEMBER 30, 1998

                                    INDEX

                       PART I. -- FINANCIAL INFORMATION

Item 1. Financial Statements:

        Condensed Consolidated Balance Sheets
        September 30, 1998 and December 31, 1997

        Condensed Consolidated Statements of Operations
        Three months and nine months ended September 30, 1998 and 1997

        Condensed Consolidated Statements of Cash Flows
        Nine months ended September 30, 1998 and 1997

        Notes to Condensed Consolidated Financial Statements

Item 2. Management's Discussion and Analysis of Financial Condition
        and Results of Operations


                        PART II. -- OTHER INFORMATION

Item 1. Legal Proceedings

Item 2. Changes in Securities

Item 3. Defaults Upon Senior Securities

Item 4. Submission of Matters to a Vote of Security Holders

Item 5. Other Information

Item 6. Exhibits and Reports on Form 8-K


                    *    *    *    *    *    *

        Signature

<PAGE>
                       PART I. -- FINANCIAL INFORMATION

ITEM 1.   FINANCIAL STATEMENTS


<TABLE>
<CAPTION>
              COMPUTER TECHNOLOGY ASSOCIATES, INC.
              CONDENSED CONSOLIDATED BALANCE SHEETS
                ($000's except for share amounts)

                               DECEMBER 31, 1997   SEPTEMBER 30, 1998
                                                      <UNAUDITED>
<S>                           <C>                <C>

ASSETS
Current assets:
   Cash and cash equivalents             $     -          $     -
   Accounts receivable, net               33,300           41,116
   Other current assets                    1,222              735
   Recoverable income taxes                3,576                -
                                          ------           ------
Total current assets                      38,098           41,851

Furniture and equipment, net               3,044            3,591
                              
Other assets, net                          4,146            1,669
                                         -------          -------
                                         $45,288          $47,111
</TABLE>


See accompanying notes to the unaudited condensed consolidated financial
statements.
<PAGE>

<TABLE>
<CAPTION>
                 COMPUTER TECHNOLOGY ASSOCIATES, INC.
                CONDENSED CONSOLIDATED BALANCE SHEETS
                   ($000's except for share amounts)

                                         DECEMBER 31, 1997  SEPTEMBER 30,
                                                                1998
                                                             (Unaudited)
<S>                                     <C>                <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
    Notes payable--line of credit                   $7,445         $ 9,296
    Current portion of long-term debt                1,667           1,667
    Accounts payable                                 5,788           6,621
    Accrued expenses                                 3,156           4,321
    Excess of billings over costs and
    contract prepayments                             2,738           3,795
    Other current liabilities                          270             175
    Accrued tender offer                             2,019               -
    Income taxes payable                                 -             590
    Deferred income taxes                            2,427           2,800
                                                    ------          ------
    Total current liabilities                       25,510          29,265

Long-term debt, less current portion                 3,333           2,083

Other long-term liabilities                            635               -

Stockholders' equity:
    Preferred stock, $.01 par value
    1,000,000 shares authorized and
    none issued                                          -               -
    Common Stock, $.01 par value,                      100             100
    20,000,000 shares authorized and
    10,000,000 shares issued
    Capital in excess of par value                   7,869           7,858
    Retained earnings                               14,528          14,976
                                                    22,497          22,934
    Notes receivable from employees                  (698)           (698)
    Treasury stock, at cost
   (1,248,980 shares in 1997 and
    1,335,338 shares in 1998)                      (5,989)         (6,473)
                                                   -------         -------
   Total stockholders' equity                       15,810          15,763
                                                   -------         -------
                                                   $45,288         $47,111
</TABLE>

See accompanying notes to the unaudited condensed consolidated financial
statements.
<PAGE>

<TABLE>
<CAPTION>
                 COMPUTER TECHNOLOGY ASSOCIATES, INC.
            CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                 ($000's Except for Per Share Amounts)
                              (Unaudited)

                                THREE MONTHS ENDED   Nine Months Ended
                                   SEPTEMBER 30,       SEPTEMBER 30,

                                   1997       1998     1997      1998
<S>                              <C>        <C>      <C>        <C>
Contract revenues                $26,090    $30,372  $69,650    $83,105
Cost of contract revenues         22,392     23,723   58,793     65,412
Selling, general and
administrative expenses            2,588      4,033    6,591     10,891
Other expenses                       203        489      541      1,258
                                   -----      -----    -----     ------
Operating profit                     907      2,127    3,725      5,544

Interest expense                     786        289    1,329        854
                                     ---      -----    -----      -----
Income before income taxes           121      1,838    2,396      4,690

Income taxes                          46        690      899      1,760
                                    ----      -----    -----      -----
INCOME FROM CONTINUING
OPERATIONS                            75      1,148    1,497      2,930

Income(loss) from discontinued
operations, net of income taxes    2,925          -    1,526     (2,482)
                                 -------     ------   ------     ------
Net income                       $ 3,000     $1,148   $3,023     $  448

Earnings (loss) per share:
  CONTINUING OPERATIONS           $ 0.01     $ 0.13  $ 0.16      $ 0.34
  DISCONTINUED OPERATIONS           0.32       0.00    0.16       (0.29)
                                  ------     ------  ------      ------
                                  $ 0.33     $ 0.13  $ 0.32      $ 0.05
Earnings (loss) per share
-assuming dilution:
  CONTINUING OPERATIONS           $ 0.01     $ 0.13  $ 0.16      $ 0.32
  DISCONTINUED OPERATIONS           0.32       0.00    0.16       (0.27)
                                  ------     ------  ------      ------
                                  $ 0.33     $ 0.13  $ 0.32      $ 0.05
</TABLE>

See accompanying notes to the unaudited condensed consolidated financial
statements.
<PAGE>

<TABLE>
<CAPTION>
              COMPUTER TECHNOLOGY ASSOCIATES, INC.
         CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                            ($000's)
                           (Unaudited)

                                          NINE MONTHS ENDED
                                            SEPTEMBER 30,

                                         1997             1998
<S>                                    <C>            <C>
Operating activities:
  Net income (loss)                     $3,023           $   448
  Non-cash expenses, net               (16,446)            2,090
  Changes in assets and
  liabilities, net                      12,436             1,556
                                        ------             -----
  Net cash provided by operating
  activities                             ( 987)            4,094

Investing activities
  Proceeds from sale of
   Discontinued operations              11,689                -
  Proceeds from sale of
   Division                                438                -
  Investments in furniture and
  equipment                             (2,076)          (1,577)
                                        ------           -------
  Net cash provided by operating                         (1,577)
  activities                             10,051

Financing activities:
   Net borrowings (repayments)
   under bank line of credit
   agreement                            (8,979)            1,851
   Purchases of treasury stock               -           (2,639)
   Repayment of long-term debt               -           (1,750)
   Other financing activities,
   net                                     (94)               21
                                        ------           -------
   Net cash provided by (used
   in) financing activities             (9,073)          (2,517)

                                        -------          -------
Net increase (decrease) in cash and
cash equivalents                           $(9)            $   -
</TABLE>
See accompanying notes to the unaudited condensed consolidated financial
statements.
<PAGE>
                     COMPUTER TECHNOLOGY ASSOCIATES, INC.
             NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                 (Unaudited)

NOTE 1.   Basis of Presentation

     In  the  opinion  of  management,  the  accompanying unaudited  condensed
consolidated financial statements contain all  adjustments, consisting only of
normal  recurring  adjustments,  necessary  to present  fairly  the  Company's
financial position as of September 30, 1998 and  the results of its operations
and its cash flows for the periods ended September  30,  1997  and  1998.  The
results  of operations presented are not necessarily indicative of the results
that may be expected for the year ending December 31, 1998.

     The accompanying  financial statements should be read in conjunction with
the audited financial statements  for  the  year ended December 31, 1997 which
are contained in the Company's Annual Report  on  Form  10-K  filed  with  the
Securities and Exchange Commission.

     The  provision  for income taxes in the statements of operations has been
computed  using  the estimated  annual  effective  tax  rate  expected  to  be
applicable for the full year.

     Certain prior  year  balances  have  been  reclassed  to conform with the
current period presentation.

     The loss from discontinued operations for 1998 reflects  an adjustment of
$2.1  million  for  the  final settlement of the sales price of the  Company's
Space and Telecommunications  business, which was sold in the third quarter of
1997, and a binding arbitration  award of $2.0 million to a former employee of
that business. The amounts are presented  net  of  income  tax  benefit in the
Condensed   Statements   of   Operations.   Net  revenues  of  the  Space  and
Telecommunications  business  for  the  three months  and  nine  months  ended
September 30, 1997 were $32.7 million and $69.1 million, respectively.
<PAGE>

NOTE 2.   EARNINGS PER SHARE

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


<TABLE>
<CAPTION>
                                             THREE MONTHS ENDED
                                                SEPTEMBER 30,

                                             1997         1998

                                             (IN THOUSANDS, EXCEPT
                                               FOR SHARE DATA)
Numerator:
<S>                                       <C>          <C>
 Income from continuing operations        $     75     $  1,148
 Loss from discontinued operations           2,925            -
                                             -----        -----
Net income (loss) for both basic
and diluted earnings per share            $  3,000     $  1,148
Denominator:
 Denominator for basic earnings per
 share ---  Weighted average shares
 outstanding                              9,089,719    8,701,457
 Dilutive potential common shares:
     Employee stock options                 892,367      371,091
                                          ---------    ---------
Denominator for diluted earnings per
share --- Adjusted weighted average
shares and assumed conversions            9,982,086    9,072,548
</TABLE>

<TABLE>
<CAPTION>
                                              NINE MONTHS ENDED
                                                SEPTEMBER 30,

                                             1997         1998

                                             (IN THOUSANDS, EXCEPT
                                                FOR SHARE DATA)

Numerator:
<S>                                      <C>          <C>
 Income from continuing operations     $   1,497     $  2,930
 Loss from discontinued operations         1,526      (2,482)
                                       ---------     --------
Net income (loss) for both basic
and diluted earnings per share         $   3,023     $    448
Denominator:
 Denominator for basic earnings per
 share ---  Weighted average shares
 outstanding                             9,091,614   8,706,064
 Dilutive potential common shares:
     Employee stock options                214,963     446,602
                                         ---------   ---------
Denominator for diluted earnings per
share --- Adjusted weighted average
shares and assumed conversions           9,603,577   9,152,666
</TABLE>
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
          and Results of Operations

FORWARD-LOOKING STATEMENTS

In addition to historical information, this Quarterly Report contains forward-
looking  statements  relating  to  such  matters   as   anticipated  financial
performance,  business prospects and similar matters. The  Private  Securities
Litigation Reform  Act  of  1995  provides  a  safe harbor for forward-looking
statements. In order to comply with the terms of  the safe harbor, the Company
notes that a variety of factors could cause the Company's  actual  results and
experience  to  differ  materially  from  the  anticipated  results  or  other
expectations  expressed in the Company's forward-looking statements. The risks
and uncertainties  that may affect the operation, performance, development and
results of the Company's  business  include,  but  are  not  limited to, those
matters discussed herein in the section entitled "Management's  Discussion and
Analysis  of  Financial  Condition  and  Results  of  Operations."  The  words
"believe,"  "expect," "anticipate," "project" and similar expressions identify
forward-looking  statements. Readers are cautioned not to place undue reliance
on these forward-looking  statements, which reflect management's analysis only
as of the date hereof. The Company undertakes no obligation to publicly revise
these forward-looking statements to reflect events or circumstances that arise
after the date hereof.

RESULTS OF OPERATIONS

     The  following  tables  set   forth   certain   items  in  the  Company's
Consolidated Statements of Operations as a percentage of contract revenues:
<TABLE>
<CAPTION>
                                              Three months   Nine months
                                                 ended          ended
                                            SEPTEMBER 30,    SEPTEMBER 30,
                                             1997   1998   1997    1998
<S>                                         <C>     <C>    <C>     <C>
  Contract revenues                         100.0%  100.0% 100.0%  100.0%
  Cost of contract revenues                  85.8    78.1   84.4    78.7
  Selling, general and administrative
  expenses                                    9.9    13.3    9.5    13.1
  Other expenses                              0.8     1.6    0.8     1.5
                                             ----    ----   ----    ----
  Operating profit                            3.5     7.0    5.3     6.7
  Interest expense                            3.0     1.0    1.9     1.0
                                              ---     ---    ---     ---
  Income before income taxes                  0.5     6.0    3.4     5.7
  Provision for income taxes                  0.2     2.3    1.3     2.1
                                              ---     ---    ---     ---
  Income from continuing operations           0.3     3.7    2.1     3.6

  Income (loss) from discontinued            11.2     0.0    2.2    (3.1)
  operations
                                             ----     ---    ---     ---
   Net income                                11.5     3.7    4.3     0.5
</TABLE>

The  following tables set forth certain items in the Company's  Statements  of
Operations by operating segment:

<TABLE>
<CAPTION>

                            THREE MONTHS ENDED   Nine months ended
(In thousands of dollars)      SEPTEMBER 30,       SEPTEMBER 30,
                              1997      1998      1997      1998

<S>                         <C>       <C>       <C>       <C>
  Contract revenues:
                              $20,711   $17,884   $57,501   $53,306
   Systems
                                5,379    12,488    12,149    29,799
   Software
                              -------   -------   -------   -------
                              $26,090   $30,372   $69,650   $83,105

  Operating profit (loss):
                               $1,524    $1,204    $3,643    $3,491
   Systems
                                (414)     1,412       623     3,311
   Software
                                1,110     2,616     4,266     6,802
   Other                         (203)     (489)     (541)  ( 1,258)
   expenses
                                -----    ------    ------    ------
                                 $907    $2,127    $3,725    $5,544
</TABLE>


THREE MONTHS AND NINE MONTHS ENDED SEPTEMBER 30, 1998 COMPARED TO
THREE MONTHS AND NINE MONTHS ENDED SEPTEMBER 30, 1997

CONTRACT  REVENUES.  Contract  revenues increased 16% to $30.4 million for the
three months ended September 30,  1998 from $26.1 million for the three months
ended  September  30, 1997, as a result  of  a  172%  increase  in  commercial
contract revenues.  Contract  revenues  increased 19% to $83.1 million for the
nine months ended September 30, 1998 from  $69.7  million  for the nine months
ended  September  30,  1997,  as  a  result  of a 177% increase in  commercial
contract revenues. Commercial contract revenues increased to $14.6 million, or
48% of total contract revenues, for the three  months ended September 30, 1998
from $5.4 million, or 21% of total contract revenues,  for  the  three  months
ended  September  30,  1997.  Commercial  contract revenues increased to $33.6
million,  or  40%  of  total contract revenues,  for  the  nine  months  ended
September 30, 1998 from  $12.1 million, or 17% of total contract revenues, for
the nine months ended September 30, 1997.

Systems engineering contract revenues decreased 14% for the three months ended
September 30, 1998 and 7%  for  the  nine months ended September 30, 1998 from
the comparable periods in 1997. Decreases  in revenues on the General Services
Administration (GSA) Eastern Zone contract,  which  ended in the third quarter
of 1997 and on the Range Instrumentation Development  (RID) program and on the
Technical Engineering and Management Support IV (TEMS IV)  program  at Hanscom
Air Force Base, which are winding down, and smaller decreases in other Federal
programs,  were  partially  offset  by  increases in contract revenues on  GSA
Schedule contracts.
<PAGE>
Software engineering contract revenues increased  132%  for  the  three months
ended September 30, 1998 and 145% for the nine months ended September 30, 1998
from the comparable periods in 1997. The increase is primarily attributable to
new Year 2000 conversion contracts with the States of Iowa, Kansas,  Michigan,
Texas and others and commercial companies such as Cessna Aircraft and Norrell.

  COST  OF  CONTRACT  REVENUES.   Cost of contract revenues increased to $23.7
million, or 78.1% of contract revenues,  for  the three months ended September
30,  1998,  from  $22.4  million,  or  85.8%  of contract  revenues,  for  the
comparable  period  in  1997.  Cost of contract revenues  increased  to  $65.4
million, or 78.7% of contract revenues,  for  the  nine months ended September
30,  1998,  from  $58.8  million,  or  84.4%  of  contract revenues,  for  the
comparable period in 1997. This decrease in cost of  contract  revenues  as  a
percentage of contract revenues resulted primarily from the increase of higher
margin commercial contracts as a percentage of overall contract revenues.

SG&A.  Selling,  general  and administrative expenses (SG&A) increased to $4.0
million, or 13.3% of contract  revenues,  for the three months ended September
30, 1998, from $2.6 million, or 9.9% of contract  revenues, for the comparable
period  in  1997.  SG&A  increased  to  $10.9 million, or  13.1%  of  contract
revenues, for the nine months ended September  30, 1998, from $6.6 million, or
9.5% of contract revenues, for the comparable period  in 1997. The increase in
SG&A reflects the Company's continued investment in infrastructure  and in the
initiatives  required  to  implement  the  Company's marketing strategies  and
increased focus on commercial markets.

OTHER EXPENSES.  Other expenses increased to $0.5 million for the three months
ended September 30, 1998 from $0.2 million for  the  comparable period in 1997
and to $1.3 million for the nine months ended September  30,  1998  from  $0.5
million  for  the  comparable  period  in  1997.   The  increases  are  due to
additional reserves and write-downs of certain contract receivables.

OPERATING  PROFIT.  As a result of the foregoing, the Company had an operating
profit of $2.1  million  and  $5.5 million for the three and nine months ended
September 30, 1998 and an operating  profit  of  $0.9 million and $3.7 million
for the comparable periods in 1997.

LOSS FROM DISCONTINUED OPERATIONS. The loss from discontinued  operations  for
1998  reflects  an  adjustment of $2.1 million for the final settlement of the
sales price of the Company's  Space and Telecommunications business, which was
sold in the third quarter of 1997,  and  a  binding  arbitration award of $2.0
million to a former employee of that business. The amounts  are  presented net
of income tax benefit in the Condensed Statements of Operations.
<PAGE>

LIQUIDITY AND CAPITAL RESOURCES

Operations provided $4.1 million of cash during the first nine months of 1998,
primarily from the net income after adjustment for non-cash expenses  of  $2.5
million  income  tax refunds of $4.3 million and other working capital changes
of $3.8 million offset by the increase in accounts receivable of $5.6 million.
Cash used in investing  activities was $1.6 million for purchases of furniture
and  equipment.  Cash provided  by  financing  activities  was  $2.5  million,
primarily from net  borrowings under the bank line of credit agreement of $1.9
million offset by $2.6  million  for  purchases  of  treasury  stock  and $1.8
million for repayments of long-term debt.

The Company has a credit facility with a bank providing the ability to  borrow
up  to  $20  million,  including  a revolving facility of $15 million and a $5
million  term  facility.  At  September  30,  1998,  there  was  $9.3  million
outstanding on the revolving facility and $3.8 million outstanding on the term
facility.

The  Company  believes that cash  flow  from  operations  and  available  bank
borrowings will  provide  adequate funds for continued operations for the next
twelve months.

OTHER MATTERS

     The "Year 2000" issue concerns the potential exposures related to
existing computer programs that use only two digits to identify a year in the
date field. These programs were designed and developed without considering the
impact of the upcoming change in the century. If not corrected, many computer
applications could fail or create erroneous results by or at the Year 2000.
The Company has evaluated, and continues to evaluate, the potential cost
associated with becoming Year 2000 compliant. The Company believes that its
principal payroll and human resources related systems, which are licensed from
and maintained by third party software development companies, are Year 2000
compliant. The Company is in the process of selecting new financial systems
which management expects to be Year 2000 compliant. Management does not
anticipate that the remaining costs associated with assuring that its internal
systems will be Year 2000 compliant will be material to its business,
operations or financial condition.
<PAGE>
PART II. -- OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

        None

ITEM 2. CHANGES IN SECURITIES

        None

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

        None

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

        None

ITEM 5. OTHER INFORMATION

        None

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

        (a)  Exhibits

        NUMBERDOCUMENTLOCATION
         3.1Certificate of
                         Incorporated by reference
                                                      Incorporation from
                                         Exhibit 3.1 to Amendment
                                         No. 1 to Form S-1 filed on November
                                         6, 1998

         3.2                             By-laws Incorporated by reference
                                           from Exhibit 3.2 to Amendment
                                          No. 1 to Form S-1 filed on November
                                          6, 1998

          1         Financial Data Electronic Filing Only
                    Schedule

        (b) No reports on Form 8-K were filed during the quarter ended
            September 30, 1998.


                                  SIGNATURE


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


COMPUTER TECHNOLOGY ASSOCIATES, INC.



NOVEMBER 13, 1998/S/ GREGORY H. WAGNER
Gregory H. Wagner
Executive Vice President,
 Chief Financial Officer,
 Principal Accounting Officer
 and Treasurer